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ECONOMIC YDEVE LOPPMENTOAGENCY ORIGINAL
FROM: Emil A.Marzullo SUBJECT: U.S. Department of Housing and Urban
Interim Executive Director Development Federal Programs -
CDBG/ESG/HOME Report for the Period July
1,2009 through December 31,2009
DATE: March 5,2010
Synopsis of Previous Commission/Council/Committee Action(s):
On February 18, 2010, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend
that the Community Development Commission consider this action for approval.
--- -------- ---------- ----------------------------------------------------------------------
Recommended Motion(s):
(Mayor and Common Council)
MOTION: That the Mayor and Common Council of the City of San Bernardino receive and file the Semi-Annual Update of
the U.S.Department of Housing and Urban Development Federal Programs for the Redevelopment Agency of the
City of San Bernardino
Contact Person(s): Carey K.Jenkins Phone: (909)663-1044
Project Area(s): All Ward(s): All
Supporting Data Attached: 0 Staff Report 0 Resolution(s) ❑Agmement(s)/Contmet(s)0 Map(s) ❑LeUer(s)
FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A
//1 Budget Authority: N/A
//�/
Signature: y 4 941A_ ( 1-� Fiscal Review:
Emil A.Marzullo,Interim ec ve Director Lori i I ,Inte)` A�strative Services Director
Commission/Council Notes:
P WVndasTomm O Commiamon5 NIM3-15.10 HUD FM [POgnm Adel RepW Skd COMMISSION MEETING AGENDA
Meeting Date: 03/15./2010
Agenda Item Number: 94Y
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
U.S.DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FEDERAL PROGRAMS-
CDBG/ESG/HOME REPORT
FOR THE PERIOD JULY 1,2009 THROUGH DECEMBER 31,2009
BACKGROUND:
The City of San Bernardino ("City") receives an annual allocation of federal funds from the U.S.
Department of Housing and Urban Development ("HUD") for the purpose of implementing and
administering the following programs:
1) Community Development Block Grant("CDBG");
2) HOME Investment Partnership Act("HOME");and
3) Emergency Shelter Grant("ESG").
On May 15, 2005,the Mayor and Common Council of the City of San Bernardino ("Council") adopted the
2005-2010 Consolidated Plan ("Plan")which covers the period of FY 2005/06 through FY 2009/10 (July 1,
2005 through June 30,2010). The Plan is a planning document that represents the City's effort in fulfilling
the statutory requirements of the three formula programs: CDBG, HOME, and ESG. Over the Plan period,
the City's CDBG allocations have been as follows:
HUD Entitlement FY05/06 FY06/07 FY07/08 FY08/09
CDBG Annual Allocation $4,052,434 $3,647,079 $3,635,991 $3,503,520
Activity
CDBG Program Administration $364,634 0 0 0
Public Service Activities $300,000 $245,000 $326,491 $186,020
Code Enforcement $2,250,300 $2,250,300 $2,250,300 $2,250,300
Fire Department Leases $497,500 $534,200 $534,200 $534,200
Section 108 Loan Repayment $500,000 $502,579 $410,000 $410,000
Fair Housing Services(Mandatory) $45,000 $45,000 $45,000 $53,000
Economic Development Activities $95,000 1 $70,000 1 $70,000 $70,000
Program Income (Add'1 Public 0 0 $214,000 $143,980
Service
Total CDBG Expenditure $4,052,434 $3,647,079 $3,849,991 $3,647,500
For FY 2009/10, the City received a total of $5,468,202 in Federal HUD Community Planning and
Development Program Allocation Funds. This would include the following allocation breakdown:
Fiscal Year 2009-2010 HUD Allocations
Program TVDe Amount
CDBG $3,602,903
HOME $1,709,310
ESG $155,989
TOTAL: $5,468,202
P Up as omm De Com ionTDC WIM3-1510 D FedmlPro®am Mwel Pe nSRdm COMMISSION MEETING AGENDA
Meeting Date: 03//15/2010
Agenda Item Number: I-3y
Economic Development Agency Staff Report
HUD Federal Program Annual Report
Page 2
On March 6, 2009, a public hearing was held where the Community Development Citizen Advisory
Committee ("CDCAC") convened to conduct interviews and listen to oral testimony from various public
service agency representatives and funding requests for 26 of these non-profit organizations.
On April 20, 2009, the Community Development Commission of the City of San Bernardino
("Commission")approved the recommended allocations for the CDBG,HOME, and ESG programs.
CURRENT ISSUE:
COMMUNITYDEVELOPMENT BLOC%GRANT
HUD provides annual grants, on a formula basis, to entitled cities and counties to develop viable urban
communities by providing decent housing and a suitable living environment, and by expanding economic
opportunities. All CDBG activities must meet one of the following National Objectives:
1)Benefit low- and moderate- income("LMI")persons;
2)Aid in the prevention or elimination of slums or blight; and
3)Meet a need having a particular urgency(referred to as urgent need).
In addition to meeting one of the three National Objectives, the activity must also be eligible. Eligible
activities include, but are not limited to: acquisition of real property; relocation and demolition;
rehabilitation of residential and non-residential structures; construction of public facilities and
improvements; public services, within certain limits; activities relating to energy conservation and
renewable energy resources;and economic development and job creation/retention.
HUD regulations stipulate that planning and administration costs are capped to twenty percent of the sum
of the annual grant plus any program income derived from grant activities. Also, the total amount of
CDBG funds obligated for public services activities must not exceed fifteen percent of the annual grant
allocation plus fifteen percent of program income received during the prior year. However, in the final year
of the Plan (FY 09/10) the Agency chose to allocate only three percent for administration in order to fund
more public service agencies.
The complete FY 09/10 distribution of CDBG funds, along with program descriptions are as follows:
HUD Entitlement FY09/10
CDBG Annual Allocation $3,602,903
Activity % of Total CDBG Grant
CDBG Program Administration $118,000 3%
CDBG Planning $171,599 5%
Code Enforcement $1,928,307.00 54%
Fire Department Leases S469,622.00 13%
Section 108 Loan Repayment $410,000.00 12%
Fair Housing Services (Mandatory) $53,000.00 1%
Economic Development Activities $50,000.00 1%
Public Services Activities $402,375 110/*
Total CDBG Expenditure $3,602,903
Program Income Add'1 Public Service $238,750* *Not Included in%above
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Meeting Date: 03//15/,20010
Agenda Item Number: pc.-3
Economic Development Agency Staff Report
HUD Federal Program Annual Report
Page 3
CDBG Program Administration/Planning — CDBG funds can be used for a variety of planning activities
which consist of all costs of data gathering, studies, analysis, and preparation of plans. The City is
currently in the last year of its 2005/2010 Five Year Consolidated Plan and as a result, set aside$171,599 to
retain the services of Veronica Tam & Associates to assist in preparing the required 2010-2015 Five Year
Consolidated Plan.
CDBG funds can also be used to pay program administration including payment of reasonable
administrative costs related to the planning and execution of community development activities, program
management, coordination, monitoring, and evaluation. For FY 09/10 the Agency allocated $118,000 in
CDBG funds to pay a portion of staff salaries for those responsible for the administration of the
CDBG/ESG/HOME programs.
Code Enforcement - The City funds Code Enforcement with CDBG funds in an amount of$1,928,307 to
ensure neighborhood conditions are improved and maintained, and housing units and building structures
are safe and up to proper building codes. As part of the City's overall efforts in improving the quality of
the living and business environments, Code Enforcement efforts are also focused on dilapidated and vacant
structures to encourage property owners to eliminate unsafe conditions and building deficiencies. In
addition to Code Enforcement activities,the City also utilizes CDBG funds to demolish vacant, dangerous,
and dilapidated buildings. During FY06/07 the City allocated $862,784 in CDBG funds for demolition
activities of which $264,000 remains available for FY09/10. Please see the section of this report entitled
"Potential Program Administration issues"for further details on this component.
Fire Department Leases - Generally, the purchase of equipment with CDBG funds is an ineligible activity.
However, fire protection equipment is considered to be an integral part of a public facility. On August, 6,
2007, the City entered into a 9 year Lease Agreement with Pierce Manufacturing, Inc., for seven new fire
engines. A total of $469,662 in CDBG funds has been allocated toward the $681,200 lease payment.
Please see the section of this report entitled"Potential Program Administration Issues" for further details on
this component.
Section 108 Loan Repayment — The Section 108 Program is a loan guarantee program which enables the
City to borrow up to five times their annual entitlement grant and pledge future CDBG funds as security for
the loan. Over the Plan period, the Agency has used CDBG funds to repay 108 Loans acquired to assist
with the CinemaStar, 303 3rd Street Building,North Arden Guthrie Retail Center and El Tigre projects.
Fair Housiniz Services - CDBG regulations require that under any program or activity receiving federal
assistance that no person shall be discriminated upon because of race, color, religion, sex, disability, age,
familial status, or national origin. Fair Housing Services is a mandatory component of CDBG and in order
to be compliant with this regulatory requirement, the City contracts with Inland Fair Housing and
Mediation Board ("IFHMB"). IFHMB mitigates impediments to fair housing in San Bernardino and
provides services such as: educational assistance; landlord tenant mediation/resolution; and home buyer
counseling services. Currently,IFHMB receives$53,000 in CDBG funds annually.
Economic Development Activities - CDBG funds may be used to undertake certain economic development
activities. These activities include, but are not limited to: acquisition, construction, and rehabilitation of
commercial or industrial buildings; technical assistance to businesses; and microenterprise development.
The City works with the National Development Corporation (NDC) — Grow San Bernardino, a non-profit
PAAV .sca=Nvca=i.uomwc 201OM-15-maw Faded ft� Aamui P, samo COMMISSION MEETING AGENDA
Meeting Date: 03//15/2010
Agenda Item Number: F--3y
Economic Development Agency Staff Report
HUD Federal Program Annual Report
Page 4
organization, to provide one-on-one business consulting services to existing and potential business owners
in the City. This agency also provides grants and matching financial assistance to a variety of small and
mid-size businesses through its Business Incentive Grant Program. A total of$50,000 in CDBG funds has
been allocated to NDC for FY09/10.
The current years' expenditures for all of these activities through December 31, 2009, are highlighted
below in the following table.
Community Development Block Grant
CDBG Funding %
General Proposed Projects-City FY09/10 Expended Complete
Allocation YTD
1. City Code Enforcement $1,928,307.00 $636,896.18 33%
2. City Fire Department Leases $469,622.00 0 0%
3. Community Beautification Services $50,000.00 0 0%
4. San Bernardino Library Literacy Program $150,784.00 *0 0%
5. Center for Individual Development CID $60,341.00 0 0%
6. National Development Council C $50,000.00 $20,833.35 42%
7. Fair Housing(Mandatory) DA $53,000.00 $25,420.65 48%
8. Sec. 108 Loan Repayment .Arden Guthrie $410,000.00 $204,931.00 50%
9. CDBG Program Administration/Planning $289,599.00 0 0%
10. Public Service Providers $380,000.00 $129,242.60 34%
$3,841,653.00 $1,017„323.78 26%
-Library Literacy Program Ponds have been set aside;however.Library unable to develop prograrn to comply with HUD regulations.
Public Service Activities - CDBG funds can be used for a variety of public service activities, such as job
training, crime prevention, child care, health services, substance abuse mitigation services, fair housing
counseling, senior services and services for homeless persons. In developing the current Plan, the
community identified the following community development needs:
Community Facilities Community Services Infrastructure Economic Development
• Childcare Centers • Childcare Centers • Street • Employment Training
• Handicapped Centers • Employment Improvements • Fagade Improvements
• Health Facilities Training • Job Creation/Retention
• Homeless Facilities • Handicapped • Small Business Loans
• Parks/Rec Facilities Services • Start-Up Business
• Senior Centers • Substance Abuse Assistance
• Youth Centers Services
• Transportation
Services
• Youth Services
The CDCAC is responsible for making recommendations to the City regarding the use of CDBG public
service funds. On March 6,2009,the CDCAC interviewed several non-profit,public service providers and
recommended the funding of 24 agencies. The CDCAC recommendations were ratified by the Council on
P lAgend•ICommD Commiuion�]a1Ta3.15-le HeDFe Pm,w Moral Reymt Wdo COMMISSION MEETING AGENDA
Meeting Date: 03/15/2010
Agenda Item Number: f
Economic Development Agency Staff Report
HUD Federal Program Annual Report
Page 5
April 20, 2009 with the addition of Inland AIDS and Legal Aid Society of San Bernardino through direct
Council action for a total of 26 agencies. A total of$380,000 in CDBG ($141,250) and Program Income
Funds ($238,750) was allocated towards public service activities with grants ranging from $10,000 to
$15,000. The table below indicates the approved public service agencies along with their total year-to-date
(July 1,2009 through December 31,2009)grant expenditures.
CommunityD evelo ment Block Grant
Residents CDBG Fundin %
Public Service Agencies Served FY09/10 Expended Complete
YTD Allocation YTD
1. AI-Shifa Clinic,Inc. 355 $15,000 $4,929.38 33%
2. Asian-American Resource Center 159 $15,000 $6,250.00 42%
3. Assistance League of San Bernardino 188 $15,000 $8,874.96 59%
4. Central City Lutheran Mission 135 $15,000 $6,250.00 42%
5. Child Advocates 96 $15,000 $3,750.00 25%
6. Children's Fund,Inc. 62 $15,000 $6,041.63 40%
7. First Chance Y/CHOW, Inc.* 0 $15,000 0 0%
8. Frazee Community Center 12,487 $15,000 $6,250 42%
9. Gang Reduction Intervention Team 32 $15,000 $4,744.21 32%
10. Highland Senior Center 22,837 $15,000 $6,250.00 42%
11. Home of Neighborly Service,Inc. 16,506 $15,000 $6,249.00 42%
12. Inland AIDS 70 $15,000 $4,982.66 33%
13. Knott's Family Planning 45 $15,000 $1,218.00 8%
14. Legal Aid 127 $15,000 $6,327.80 42%
15. Lorine's Learning Academy 366 $10,000 $4,166.65 42%
16. Mary's Merc Center 5,362 $15,000 $2,083.30 14%
17. Operation Grace, Inc. 157 $10,000 $3,354.15 34%
18. Option House, Inc. 188 $15,000 $6,250.00 42%
19. Project Life Impact 559 $15,000 $4,166.72 28%
20. San Bernardino Nat'l Forest Assoc. 147 $15,000 $3,750.00 25%
21. San Bernardino Sexual Assault Svc 552 $15,000 $7,189.13 48%
22. San Bernardino YMCA 1505 $15,000 $6,211.95 41%
23. St.John's Community Center 106 $15,000 $6,250.00 42%
24. Sinfonia Mexicans 105 $15,000 $6,250.00 42%
25. Time for Change Foundation 97 $15,000 $6,250.00 42%
26. Youth Action Project, Inc. 68 $15,000 $1,203.06 8n/o
TOTAL $380,0000 $129,242.60 34%
*First Chance Y/CHOW,because of its program design,could not provide documentation to ensure compliance with HUD regulations and cancelled.
The Public Service organizations are paid monthly, on a reimbursement basis. The "Request for
Reimbursement" packets contain copies of supporting documentation to substantiate payment for services
provided. The organizations are also required to submit an "accomplishment report" that identifies the
number and ethnicity of individuals served. The Agency monitors the above public service providers on an
annual basis. Monitoring is conducted to ensure program compliance and to verify that all original
program documentation is on file.Monitoring is currently ongoing.
P end WommNv Commiuion\ 301003-15-10 HUD FM Pm AM P,O Skd COMMISSION MEETING AGENDA
Meeting Date: 03/11�5//2010
n
Agenda Item Number: y
Economic Development Agency Staff Report
HUD Federal Program Annual Report
Page 6
POTENTIAL PROGRAM ADMINISTRA TION ISSUES
In reviewing certain CDBG program activities, Agency staff has become aware of various compliance
issues that require clarification and/or potential modification. Specifically, there appears to be potential
eligibility issues associated with the City's use of CDBG funds to pay for certain fire equipment leases and
Code Enforcement activities.
As it relates to the fire equipment leases, it appears the City may be qualifying certain fire stations where
equipment is housed based on the census block group where the stations are located. However, it would
appear that certain numbers of these stations are not located in census tract block groups with 51 percent or
more of low/moderate income inhabitants. More importantly, qualifying a fire station based on the block
group in which it is located is not necessarily the correct methodology per HUD and would not be an
acceptable eligibility factor.
To qualify a fire station where fire equipment can be funded with CDBG funds, the City must typically
base it on the primary service area (primary response district) of the fire station. And, only if the primary
response district as a whole has 51 percent or more of low and moderate income population would the City
be able to qualify that station.
In addition, in establishing the eligibility of a fire station, the City should also consider if the fire station is
serving a primarily residential neighborhood or commercial neighborhood. HUD does not consider a
primarily commercial neighborhood, even if it contains 51 percent or more low/moderate income
population,as an eligible low/moderate income area. For example,the City of Alhambra has recently been
told by HUD that its Valley Boulevard is not an eligible low/moderate income area even though there are
homes behind both sides of this commercial corridor.
As a result of these observations, the Agency recommends the following as it relates to the fire equipment
leases: (1) develop a map of qualified fire stations based on the percentage of low/moderate income
population in each fire district; (2) work with the Fire Department to compile an inventory of all CDBG-
leased fire equipment and make sure they are used by the eligible fire stations(based on the map mentioned
above); and (3) track all program incomes generated as a result of any previous sales of CDBG-purchased
equipment and seek to deposit the monies into a separate account outside of the City's General Fund.
Regarding the City's Code Enforcement activities, CDBG was originally established to provide for brick-
and-mortar types of improvements to benefit primarily low and moderate income persons. As an operating
rule, CDBG funds cannot be used for routine governmental functions. In this regard, HUD considers most
Code Enforcement activities as a routine governmental function and only housing Code Enforcement
activities are CDBG-eligible. Other Code Enforcement activities, such as nuisance abatements (inoperable
cars, trash, neglected lawns, etc.), are not eligible activities. Recently, the City of National City was
required to split its Code Enforcement program into a non-CDBG eligible program and a CDBG-eligible
Housing Code Inspection program because of this very issue. While the Code Enforcement officer can also
take care of other violations on the property, the primary reason for enforcement at a particular property
must be housing code related.
Furthermore,the City should look to establish CDBG-eligible areas for the code enforcement based on the
percentage of low/moderate income persons or blighting conditions. And because only housing Code
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Agenda Item Number: r3
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HUD Federal Program Annual Report
Page 7
Enforcement is CDBG eligible, the eligible target areas should exclude primarily commercial
neighborhoods.
Also, the City should only charge to the CDBG program the equipment and supplies that are directly
related to the delivery of the CDBG-eligible activities. If the equipment and supplies are used by the entire
program,the City must apportion the expenses according to the same criteria discussed above (for example,
housing code versus non-housing code activities, in or outside of eligible areas). Certain supplies such as
uniforms, water, office supplies, etc., are general program supplies that should be the responsibility of the
City and not eligible for CDBG reimbursement.
Based on these possible issues, the Agency recommends the following: (1) work with Code Enforcement
staff to determine the capability of their computer system to track code activities by housing code-only
functions within specified City target areas; (2) from this analysis determine how Code Enforcement can
apply only that portion of expenditures that represents housing code enforcement activities within CDBG
target areas; (3) work with Code Enforcement staff to develop a map of qualified target areas based on the
percentage of low/moderate income population, excluding commercial neighborhoods; and (4) establish a
list of CDBG-eligible expenses at the beginning of each program year and budget accordingly.
EMERGENCYSHELTER GRANT
The ESG program was created to provide homeless persons with basic shelter and essential supportive
services. ESG funds can be utilized for the following activities: essential services, shelter maintenance and
operations, homeless prevention and program administration. All ESG funds must be matched by "Other"
funding sources, such as "In-Kind", donations of "Goods and Clothing" or "Cash". The entitlement
amount for the FY09/10 ESG program is $155,989. The table below shows the current distribution of ESG
funds:
Emergency Shelter Grant
ESG Funding
Public Service Agencies Residents FY09/10 Expended
Served YTD Allocation YTD Complete
1 Central City Lutheran Mission 54 $13,000.00 $5,416.70 42%
2 Frazee Homeless Shelter 41 $14,000.00 $5,729.17 41%
3 Mary's Mercy Center 3561 $25,000.00 $2,666.66 11%
4) Operation Grace 6 $8,989.00 $3,000.00 3%
5) Option House, Incorporated 494 $20,000.00 $6,666.67 33%
6) Salvation Army 5512 $60,000.00 0*
7 Time for Change Foundation 113 $15,000.00 $5,000.00 33%
Total: $155,989.00 $28,479.20
*Due to difficulties in supplying the correct additional insured language,Salvation Army was delayed in submitting its Subrecipiem Agreement. Correct
insurance information and Requests for Reimbursement have been submitted. Expenditures for this service provider should be available for the next
reporting period.
HOME INVESTMENT PARTNERSHIP ACT
The HOME Program was created by the National Affordable Housing Act of 1990 (NARA), and has been
amended several times by subsequent legislation. The objectives of the HOME program are to: (1)
provide decent affordable housing to lower-income households (defined as no greater than 80% of AMI);
(2) expand the capacity of nonprofit housing providers; (3) strengthen the ability of state and local
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Agenda Item Number. �/2' J
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HUD Federal Program Annual Report
Page 8
governments to provide housing, and (4) leverage private-sector participation in housing development
opportunities. This funding source is flexible in that it can be used for a wide variety of housing activities
including building acquisition, new construction, moderate or substantial rehabilitation, and home buyer
assistance.
Thus far in FY09/10, HOME funds have been allocated to the following Agency sponsored programs:
Affordable Housing Solutions citywide acquisition and rehabilitation of foreclosed and abandoned
properties ($2,500,000); Mobile Home Rehabilitation Program administered by NHSIE ($200,000); and the
Homebuyer Education Program administered by NHSIE utilizing HOME administrative funds ($80,000).
This leaves an unallocated balance of HOME funds in the amount of $2,122,079 and includes the
$1,709,310 provided to the Agency by HUD during the current fiscal year. It is anticipated the current
unallocated balance will eventually be transferred to Affordable Housing Solutions to continue the
acquisition of foreclosed and abandoned properties for future redevelopment. The following table
summarizes the present allocation of HOME funds:
;ROME'Investment Partnership Pro ram'
Activity Amount Expended %Expended
YTD YTD
Affordable Housing Solutions $2,500,000 $759,376 30%
NHSIE Mobile Home $200,000 $59,378* 30%
NHSIE Homebu er Education $80,000 $40,000 50%
Total $2,780,000 $858,754 31%
Includes$20,000 in administration expended,to-date.
ENVIRONMENTAL IMPACT:
This item does not meet the definition of a "project" under Section 15378 of the California Environmental
Quality Act(CEQA)and therefore there is no environmental impact.
FISCAL IMPACT:
There is no impact to the City's General Fund. The Agency's approved FY 2009-2010 Budget calls for an
allocation of$5,468,202 in HUD federal funding.
Account Budgeted Amount: $5,468,202 Balance as of: March 8, 2010
Balance after approval of this item: N/A—This is an entitlement grant received annually
RECOMMENDATION:
That the Mayor and Com/mon Council adopt the Motion.
Aa � (
Emil A.Marzullo, Interilli Executive Director
R�Wd eomm DOComm„dmncnc 20imm-15-10 mm Fedm�F,o Anw aepon SR dm COMMISSION MEETING AGENDA
Meeting Date: 03/15/20/10
Agenda Item Number: p-3l