COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS FOR FISCAL YEAR (FY)

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1 COMMUNITY DEVELOPMENT DEPARTMENT MEMORANDUM AGENDA ITEM 8.8. DATE: TO: FROM: SUBJECT: The Honorable City Council Bryan Cook, City Manager Via: Michael Forbes, AICP, Community Development Director~ Scott Reimers, Planning Manager By: Adam L. Gulick, Associate Planner COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS FOR FISCAL YEAR (FY) RECOMMENDATION: The City Council is requested to: a) Hold a public hearing regarding the proposed allocation of CDBG funds for FY ; b) Authorize the City Manager to amend CDBG-funded program allocations up to 50 percent of the approved allocation; c) Authorize staff to modify the Home Improvement Program Guidelines to eliminate the interest for the Rehabilitation Loan Program; and d) Consider adopting the staff recommended CDBG-funded programs and allocations for FY ; the total CDBG funds include the estimated allocation of $176,000 for FY , plus $65,400 of unallocated funds carried over from FY : I. ii. Ill. IV. Housing Rehabilitation Loan Program: Asbestos Testing and Removal Program: Youth Scholarship Program: Handyworker Grant Program: Total FY CDBG Budget: $140,000 $ 45,000 $ 26,400 $ 30,000 $241,400

2 Page 2 of 6 BACKGROUND: 1. In 1974, the CDBG Program was enacted through the Housing and Community Development Act of According to City records, the City has been receiving CDBG funds from the Los Angeles County Community Development Commission (LACDC) since On August 20, 2014, the City was informed of the 2014 income guidelines through a CDBG Bulletin (Attachment "A"). Since the 2015 income guidelines have not been released, the City is required to follow the 2014 income guidelines until further notice. 3. On December 11, 2014, City staff was notified at a CDBG quarterly meeting that the City's anticipated allocation for FY would be approximately $176, On December 22, 2014, a public notice was published in the Temple City Tribune stating the intended CDBG-funded programs and allocations for FY (Attachment "B"). ANALYSIS: The CDBG Program was established with the primary objective of developing viable communities by creating suitable living environments, maintaining and creating decent housing, and creating and maintaining job opportunities for low- and moderate-income persons. Every city receives an annual CDBG allocation based upon population. Cities in Los Angeles County with a population under 50,000, such as Temple City, receive funds through the LACDC. CDBG funds can only be used to accomplish certain pre-designated national objectives set forth by this federal program. Specifically, funds need to address slum and blighted conditions, to assist or benefit low- and moderate-income families, to assist with emergency conditions (natural disaster) threatening public health and safety, or to meet the needs of special population groups, such as the disabled or senior citizens. Due to the high average household income levels in the community, Temple City has been challenged in developing eligible programs. In the past, the City has used CDBG funds for the Housing Rehabilitation Loan Program, the Handyworker Assistance Program, the Youth Scholarship Program, the installation of American with Disabilities Act (ADA) approved surfacing for the playgrounds at Temple City Park and Live Oak Park, the installation of ADA ramps at various intersections throughout the City, and ADA improvements to public parking lots along Las Tunas Drive and Temple City Boulevard.

3 Page 3 of 6 The City is required to allocate $241,400 of CDBG funds for FY This includes the City's estimated annual allocation of $176,000 for FY and $65,400 of unallocated funds that have carried over from the previous fiscal year and program income (i.e., interest received from loans paid back from the Housing Rehabilitation Loan Program). This figure may be adjusted by the LACDC based upon the eventual United States Department of Housing and Urban Development (HUD) allocation of CDBG funds distributed to the LACDC. If the allocation is more or less, staff will add or subtract funds from the Housing Rehabilitation Loan Program and/or the associated Asbestos Testing and Abatement Program. The City is required to conduct a public hearing to solicit input from the community and to ensure that the proposed CDBG Projects meet community needs and HUD guidelines. The City published a 30-day notice in the newspaper (Attachment "B") notifying the public of the City's intended CDBG programs and allocations. For FY , it is staff's assessment that the following CDBG-funded programs continue at the funding levels recommended below for the community's benefit and in a manner consistent with the program constraints outlined above. Alternatively, the City Council has the option to modify the proposed allocations and/or direct City staff to explore alternative programs. Housing Rehabilitation Loan Program: This ongoing program provides deferred payment loans to extremely low-, lowand moderate-income homeowners to make necessary home repairs and/or correct Building and Zoning Code violations. This has been a popular program in the community since it was established in the mid-1990's. Last year, the City Council increased the loan amount from $25,000 to $35,000. The higher loan amount was recommended last year so participants are able to do more comprehensive improvements. However, even with increasing the loan amount from $25,000 to $35,000 this fiscal year, the City experienced decreased participation in the program. Many potential participants have declined to participate after discovering that the deferred loan has an interest rate of three percent. Since the interest on the deferred loan has recently become a deterre nt for people participating in the City's Home Improvement Loan Program, City staff recommends eliminating the interest. Most cities do not charge interest on home improvement loans; it is ultimately up to the jurisdiction as to whether or not they want to charge interest on the loan. There is a benefit to charging interest on the home improvement loans. When these loans are paid back to the City, the money (loan and interest earned) is recycled back into the City's future CDBG programs. However, the recent lack of participation in the loan program could result in the City accumulating excess funds that LACDC could then recapture. City staff believes that eliminating the interest will result in more participants helping the City

4 Page 4 of 6 spend its CDBG funds in a timely manner and allow the program to benefit more homeowners. Staff suggests allocating $140,000 in FY , of which includes $112,000 (i.e., equivalent to three $35,000 loans) to assist three below moderate-income households with needed repairs and $28,000 to cover the City's consultant services. Handyworker Grant Program: In 2005, the City established a grant program to assist income-eligible homeowners to complete necessary and essential home repairs. The program was geared towards smaller repairs to help improve the quality of life, such as: roof repairs or replacement, window replacement, painting, stucco, electrical and plumbing repairs or replacement. Since the City's Handyworker Grant Program also utilized Community Redevelopment Agency (CRA) Low/Moderate Income 20 percent Set-Aside Funds, staff recommended that the City Council fund other CDBG programs starting in FY However, the state legislature dissolved local CRAs and the Handyworker Grant Program was subsequently eliminated due to lack of funding. There has been a significant level of interest in the community in a small grant program from applicants on the Home Improvement Program waiting list. Due to the lack of interest from people on the waiting list for the Home Improvement Program and to expend CDBG funds in a timely manner to meet the City's drawdown requirement, City staff is recommending that the Handyworker Grant Program be reinstated for FY City staff recommends that $30,000 be allocated for the Handyworker Grant Program, of which includes $24,000 to fund approximately three grants with a maximum amount of $10,000. The program allocation would also fund up to $6,000 of program administration costs to cover the City's consultant. Asbestos/Lead-Based Paint Testing and Removal Program: This ongoing program offers grants to home improvement loan participants whose homes have tested positive for asbestos and/or lead-based paint. The grant is used to mitigate or abate hazardous conditions in conjunction with the Housing Rehabilitation Loan Program and the Handyworker Grant Program, as testing and abatement work is required since the project utilizes federal funds. The amount of funds required for abatement vary on the number of loans processed requiring asbestos and/or lead-based paint testing, and required abatement work. Depending on the scope of work, the asbestos and/or lead-based paint testing can range from $500 to $2,000 per residence. If the proposed area of construction

5 Page 5 of 6 tests positive for asbestos and/or lead-based paint, abatement work is required and can cost up to $8,000. Therefore, staff recommends that the FY allocation be $45,000. This amount would provide for abatement work, if needed, for the households that are assisted through the Housing Rehabilitation Loan Program and the Handyworker Grant Program. The $45,000 allocation also includes up to a maximum of $9,000 for administration costs for the City's consultant services. As with all of the CDBG funded programs, any funds left remaining at the end of the program's fiscal year would be carried over to the following fiscal year. Youth Scholarship Program: The Youth Scholarship Program qualifies as a "public service" program, and under the HUD CDBG guidelines, a City can only allocate a maximum of 15 percent of its annual allocation towards public service programs. This is an ongoing program that covers a portion of the recreation activity fee for members of extremely lowand low-income households. For youth under the age of 18, the scholarship would cover 75 percent of the registration fee. This is the most utilized CDBG program in the City. This program runs out of scholarships a few months before the end of the fiscal year. Staff recommends that the FY allocation be $26,400, which is approximately 15 percent of the City's annual allocation. In summary, staff is recommending that the FY CDBG funds be allocated to the City's on-going Housing Rehabilitation Loan Program, Asbestos Testing and Abatement Program, and Youth Scholarship Program. It is also recommended that the Handyworker Grant Program be reinstated utilizing CDBG funds to meet the needs of the community. CONCLUSION: The City Council is requested to review and approve the above-mentioned CDBG programs and allocations for FY or direct staff to revise the proposed CDBG programs and allocations, or explore alternative programs relating to eligible ADA Improvements or Housing Programs. Once the program and allocations are approved by the City Council, they will be forwarded to the LACDC for their review and approval. Additionally, staff recommends revising the Home Improvement Program Guidelines to eliminate the three percent interest rate for the rehabilitation loans.

6 Page 6 of 6 FISCAL IMPACT: This action will impact the FY City Budget by designating the expenditure of CDBG funds as follows: Housing Rehabilitation Loan Program: Handyworker Grant Program: Asbestos Testing and Removal Program: Youth Scholarship Program: $140,000 $ 30,000 $ 45,000 $ 26,400 ATTACHMENTS: A. CDBG Bulletin CDBG Income Guidelines B. CDBG FY Public Hearing Notice, Temple City Tribune, December 22, 2014

7 LOS ANGELES COUNTY ATTACHMENT A e~ COMMUNITY DEVELOPMENT COMMISSION 700 W. Main Street Alhambra California NUMBER: SUBJECT: REVISED 20141NCOME GUIDELINES DATE August 20, 2014 IMMEDIATELY 1 2 EFFECTIVE DATE PAGE OF TO: CDC DIVISIONS COMMUNITY-BASED ORGANIZATIONS PARTICIPATING CITIES COUNTY DEPARTMENTS OTHER PUBLIC AGENCIES The 2014 income guidelines for use in the Community Development Block Grant (CDBG) and First Five LA (F5) Programs have been revised, and are listed below. These guidelines should be used to determine compliance with each program's objective of providing benefit to eligible persons. They are also used in determining eligibility for the Public Housing and Section 8 Programs, and are ehective until a new schedule is issued. Number of Persons Extremely Low-Income low-income Moderate-Income 1 $17,150 $28,550 $46,650 2 $19,600 $32,600 $52,200 3 $22,050 $36,700 $ $24,450 $40,750 $65,200 5 $27,910 $44,050 $70,450 6 $31,970 $47,300 $75,650 7 $36,030 $50,550 $80,850 8 $40,090 $53,800 $86,100 Please note that the 2014 median family income for Los Angeles County is $60,600. These guidelines refer to the terms in determining income levels for the above-mentioned programs. In order to clarify any misunderstanding resulting from the diherences in terms between the Public Housing, Section 8, CDBG, and FS Programs, the following is provided for your information: COMPARISON OF TERMS IN DETERMINING INCOME LEVELS FS CDBG SECTION 8 %OF MEDIAN Extremely Extremely Extremely Equal to or Low-Income Low-Income Low-Income less than 30% Not Eligible Low-Income Very Low-Income 31 % to 50% Not Eligible Moderate-Income Low-Income 51 % to 80% Community Development Division-Grants Management Unit (CDD-GMU) Putting Dollars Into Action

8 Participating Agencies August20,2014 Page Two For all agencies utilizing CDBG-approved Public Service Self-Certification Forms, please be sure to incorporate these revised income guidelines into your forms immediately (the Public Service Self-Certification Form does not apply to the FS Program). Should you have any questions, please contact your Program Manager. Sincerely, SCOTI STEVENSON, Director Community Development Division SS:W :HR:RDW:rb K:\GMU COMMON\GPPA\GPA\PAT Bulletins\lncoma GuldeHnes Revised.docx

9 ATTACHMENT B CITY OF TEMPLE CITY PUBLIC HEARING NOTICE COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS Notice is hereby given that the City Council of the City of Temple City will consider the use of Community Development Block Grant Funds for fiscal year at their meeting of, at 7:30 p.m. in the City Council Chambers of the City Hall, located at 5938 Kauffman Avenue, Temple City. Community Development Block Grant (CDBG) Funds must be used to achieve the stated national objectives of this Department of Housing and Urban Development (HUD) program. Specifically, these available Federal-Government funds must be used to eliminate slum and blight conditions, assist low and moderate-income households, address "spot blight", emergency purposes, or to meet the needs of special population groups, such as the disabled. During the next fiscal year, July 1, 2015 through June 30, 2016, it is anticipated that the programs and the amounts to be expended, will be as follows: Housing Rehabilitation Loan Program ($140,000); Handyworker Grant Program ($30,000); Lead and Asbestos Testing and Removal Program ($45,000); and Youth Scholarship Program ($26,400). The aboveenumerated amounts are based upon preliminary estimates of HUD funds available through the Los Angeles County Community Development Commission. The actual amounts to be expended may be modified as part of the City's budget process to reflect the availability of funds. Any interested persons wishing to provide input on housing and community development as it relates to the use of the CDBG funds may contact the Community Development Department at City Hall by phone (626) Written comments may also be submitted to: City of Temple City Community Development Department, 9701 Las Tunas Drive, Temple City, CA Comments will be received through. Peggy Kuo City Clerk Published: Temple City Tribune Date: December 22, 2014