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HomeMy WebLinkAbout25 - Consolidated Plan Document for CDBG Funds�EwroRr CITY OF NEWPORT BEACH Hearing Date: March 14, 2000 pF e� COMMUNITY AND ECONOMIC DEVELOPMENT Agenda Item No.: 25 f= PLANNING DEPARTMENT Staff Person: Christy Teague 3300 NEWPORT BOULEVARD (949) 644 -3207 NEWPORT BEACH, CA 92658 (949) 644 -3200; FAX (949) 644 -3250 REPORT TO THE MAYOR AND CITY COUNCIL SUBJECT: 2000 -2005 Consolidated Plan Document for Community Development Block Grant Funds SUMMARY: This public hearing provides the opportunity for the City Council to receive public comments on community needs and to give direction to staff for preparation of the 2000 -2005 Five Year Consolidated Plan Document required by the Department of Housing and Urban Development for Community Development Block Grant Funds. SUGGESTED ACTION: 1. Hold public hearing to receive comments on the 2000 -2005 CDBG Five Year Consolidated Plan; and 2. Provide direction on the 2000 -2005 CDBG Five Year Consolidated Plan Document for approval at a public hearing tentatively scheduled for April 11, 2000. BACKGROUND Federal regulations establish the application process for Community Development Block Grant funds administered by the Department of Housing and Urban Development (HUD). On April 10, 1995, the City Council approved the City's 1995 -2000 Consolidated Plan Document (CPD). A new Consolidated Plan Document must be prepared for 2000 -2005. The CPD contains an assessment of the housing and community development needs of the community and a five -year strategy to address identified needs. The One Year Action Plan is a component of the CPD containing a list of activities the City will assist with CDBG funds during the coming fiscal year. The 2000 -2005 Consolidated Plan Document is tentatively scheduled for consideration by the City Council at the April 11, 2000 meeting, prior to the HUD due date of May 15, 2000. CONSOLIDATED PLAN OUTLINE The City Council has directed the majority of CDBG funds be applied to the Balboa Peninsula revitalization effort for last three fiscal years in accordance with the 1995 -2000 Consolidated Plan Document economic development goals. HUD encourages targeted use of funds on neighborhood revitalization areas such as on the Balboa Peninsula. In addition to physical improvements in the Balboa Peninsula target area, the City funds code enforcement costs on the Balboa Peninsula and miscellaneous ADA (American Disabilities Act) improvements throughout the City with CDBG funds. Prior to the Balboa Peninsula revitalization efforts, CDBG funds were spent on affordable housing projects and extensive ADA improvements to public buildings and sidewalks throughout the City. Most ADA improvements have been completed, with only a small portion of CDBG funds being used for ADA projects in recent years. Decent housing is a high priority to HUD. During the next five years, from 2000 to 2005, it is anticipated the City will be using other resources to achieve its housing goals rather than using CDBG funds. Existing in -lieu fee resources, plus affordable housing opportunities associated with the Banning Ranch development and The Irvine Company CIOSA requirements, will be used to provide affordable housing in the City during fiscal years 2000 -2005. However, the next Consolidated Plan Document developed for 2005 -2010 may focus future CDBG funding efforts on affordable housing. FUNDS ALLOCATION The City's allocation of CDBG funds is constrained by HUD standards that limit social service assistance to a maximum of 15% and administrative expenses to a maximum of 20% of the total grant. Applying these restrictions to the City's 2000 -2001 $498,000 budget will result in the following distribution: Social services $ 74,700 Administration 99,600 Balboa Revitalization/Other programs 323,700 Total budget $498,000 Social Services The following guidelines have been used in developing social service program funding recommendations. This methodology has been used for several years. First priority is given to social service programs that primarily assist the homeless. This is in conformance with Housing Element Program 12, which identifies assistance to persons and families in need of emergency shelter and transitional housing as a top priority. Organizations assisting low- income elderly are second priority, and agencies that directly benefit low- income families are third priority. Within these three groups priority is given to agencies located in or very near Newport Beach. Recommended allocations are based on the proportion of Newport Beach residents served, the agency's program budget, and the amount of funding requested. In addition, since stable program funding is important to ensuring continuity in services, staff does not recommend new social service agencies for funding unless the needs of existing programs have been satisfied. However, the funding of a new agency remains the prerogative of the City Council. By adhering to these guidelines staff has attempted to make the allocation process as fair and objective as possible. Each year, social service funding requests exceed the 15% maximum allowed by HUD. The City of Newport Beach has historically allocated the maximum to assist agencies meeting needs of the according to the above goals and priorities. Staff expects the 15% allocation to be continued in the 2000 -2005 Consolidated Plan years. If public comments warrant, or if the City Council would like to reconsider, amounts allocated to social services can be reduced. FY 2000 -2005 Consolidated Plan for CDBG Funds March 14,2000 Page 2 Administration This category includes funding for fair housing counseling, planning studies and City administration. Approximately $15,000 is allocated to the Fair Housing Council and $84,600 for planning studies and to defray the City's costs in administering the CDBG program. CDBG administration is a function of the Planning Department staff, with supporting accounting assistance by Administrative Services staff. Planning studies, such as the recently completed sign study for the Balboa Peninsula, can also be funded from the CDBG administration category. Balboa Revitalization/Other Programs Programs other than social services and administration account for 65% of the total budget, which in 2000 -2001 is $323,700. These funds have been and are proposed to be used primarily for improvements and programs identified as part of the Balboa Peninsula Revitalization efforts, code enforcement on the Balboa Peninsula and ADA improvements. One -half of a code enforcement position for the Balboa Peninsula Revitalization area is expected to continue in the 2000 -2005 Consolidated Plan. On February 22, 2000, the City Council authorized $7.5 million for the Balboa Village Pedestrian and Streetscape Improvement Plan, and this project is expected to be the primary expenditure from 2000 -2005 CDBG funds. CDBG funds will be supplemented with City off -street parking funds and City neighborhood enhancement funds. A CDBG Section 108 loan for $1.3 million is planned to be used for Phase One improvements projected for the 2001 -2002 fiscal year. Phase One includes improvements and street widening to Balboa Boulevard, Pier Parking Lot, Pier Plaza, and the Lot A connecting access to Main Street. A Section 108 loan is repaid from future CDBG funds for up to 20 years. Until the loan is obtained, annual funds designated for Peninsula improvement projects will fund construction drawings and other pre - construction costs, a facade improvement program, and code enforcement. Any unexpended funds from the annual grant will be designated and held for Phase One construction. The primary focus for this Consolidated Plan Document will be improvements on the Peninsula corresponding with the Balboa Village Pedestrian and Streetscape Improvement Plan approved by the City Council. PUBLIC NOTICE AND REVIEW Through the process described in the City's adopted Citizen Participation Plan, the public is given the opportunity to be involved in the development of the CPD and the One -Year Action Plan. On January 26, 2000, grant application forms were mailed to 57 social service agencies and developers who have previously applied for or received CDBG funds from the City. Applications were also sent to neighboring cities, the County of Orange, both Chambers of Commerce, the Board of Realtors, each business improvement district, and the Orange County Affordable Housing Clearinghouse. The City also advertised the availability of funds in the Daily Pilot on January 18, 2000. Grant applications have been received and will be presented to the City Council as part of the One Year Action Plan and 2000 -2005 Consolidated Plan tentatively scheduled for April 11, 2000. FY 2000 -2005 Consolidated Plan for CDBG Funds March 14,2000 Page 3 A public hearing was held on January 25, 2000 to obtain citizen views and comments on community needs and review the previous year's program performance. At the conclusion of the hearing the City Council directed staff to prepare the Grant Application and One Year Action Plan for FY 2000 -2001 and the 2000 -2005 Consolidated Plan Document and set the next public hearing for March 14, 2000. On March 4, 2000, a public notice was published in the Daily Pilot to receive public comments on the needs of the community prior to the preparation of the 2000 -2005 Consolidated Plan Document five year plan for CDBG funds. CONCLUSION After receiving comments by the community and the City Council, staff will complete a draft of the 2000 -2005 Consolidated Plan Document for review and discussion at a future City Council meeting, tentatively scheduled for April 11, 2000. As required by HUD regulations, copies of the Consolidated Plan Document will be available for public review and comments 30 days prior to the May 15, 2000 HUD deadline. Submitted by: SHARON Z. WOOD Assis t City Manager Attachment 1: Staff Report of January 25, 2000 Prepared by: CHRISTY D. TEAGUE, AICP Senior Planner FY 2000 -2005 Consolidated Plan for CDBG Funds March 14,2000 Page 4 (S) CITY OF NEWPORT BEACH COMMUNITY AND ECONOMIC DEVELOPMENT PLANNING DEPARTMENT 3300 NEWPORT BOULEVARD NEWPORT BEACH, CA 92658 (949) 644 -3200; FAX (949) 644 -3250 Hearing Date: Agenda Item No.: Staff Person: REPORT TO THE MAYOR AND CITY COUNCIL 25, 23 Christy Teague (949) 644 -3207 SUBJECT: Review of 1998 -1999 Community Development Block Grant Annual Performance Report, Initiation of 2000 -2001 Community Development Block Grant Application with One Year Action Plan and 2000 -2005 Five Year Consolidated Plan Document. SUMMARY: As part of the annual Community Development Block Grant application process, the City must hold a public hearing to review the 1998 -1999 Annual Performance Report. This public hearing also provides the opportunity for the City Council to receive public comment on the needs of the community and to give direction to staff for preparation of the 2000 -2001 Community Development Block Grant Application with One Year Action Plan and the 2000 -2005 Five Year Consolidated Plan Document. SUGGESTED ACTION: 1. Hold public hearing to receive comments on the 1998 -1999 Annual Performance Report, the 2000 -2001 CDBG Application with One Year Action Plan and the 2000 -2005 Five Year Consolidated Plan; and 2. Provide direction on the 2000 -2005 CDBG Five Year Consolidated Plan, and direct staff to prepare the draft 2000 -2001 CDBG Application with One Year Action Plan for City Council review and approval at a public hearing tentatively scheduled for March 14, 2000. Backeround Federal regulations establish the application process for grant funds administered by the Department of Housing and Urban Development (HUD). This public hearing is to review the prior year (1998 -1999) performance and comment on the needs for next fiscal year S (2000 -2001) allocation. The City received $495,000 in funding for the current Fiscal Year 1999 -2000. HUD has not yet established City entitlement amounts for Fiscal Year 2000 -2001, but it is anticipated that it will be similar to this year's grant. On April 10, 1995, the City Council approved a 1995 -2000 Consolidated Plan Document (CPD) and a One Year Action Plan. A One Year Action Plan is required for each fiscal year within the Five Year 1995 -2000 CPD. The CPD is a planning document that contains an assessment of the housing and community development needs of the community and a five -year strategy with a one year action plan to address identified needs. The current Fiscal Year 1999 -2000 is the fifth and final year of the 1995 -2000 Consolidated Plan Document. The One Year Action Plan contains a list of activities the City will assist with CDBG funds during the coming fiscal year and is a key component of the City's grant application. This is the first public hearing for input on the 2000 -2005 Consolidated Plan Document. The new Consolidated Plan Document will outline CDBG activities for the next five years and will include a One Year Action Plan for Fiscal Year 2000 -2001. Public Notice and Review Through the process described in the City's adopted Citizen Participation Plan, the public is given the opportunity to be involved in the development of the Consolidated Plan Document. Individual notices of this public hearing were mailed to all social service agencies that have previously requested funds, as well as local governments, business community representatives and other known interested organizations. Additionally, the City's required public hearing notice was published once in the newspaper. Interested parties also will have an opportunity to comment on the draft 2000 -2005 Consolidated Plan and the 2000 -2001 One Year Action Plan at a second public hearing, tentatively scheduled for March 14, 2000. Overview of Federal Eligibility Requirements and Criteria There are a wide variety of eligible activities under the CDBG program. The following activities were approved in the City's 1995 -2000 Five Year CPD: land acquisition, clearance, and disposition; the acquisition, development or improvement of public services and facilities in low- income areas; removal of architectural barriers; public /social services; relocation assistance; commercial property rehabilitation; job creation and economic development. CDBG program statutes establish three basic goals: 1) Provide decent housing; 2) Provide a suitable living environment; and 3) Expand economic opportunities. Activities assisted with CDBG funds must also accomplish at least one of the three national objectives of the program: 1) Benefiting low- and moderate - income persons; 2) Preventing slums and blight; or 3) Responding to urgent health and safety needs. CDBG January 25, 2000 Page 2 9 HUD regulations also require that cities spend at least 70% of their program funds to principally benefit low- and moderate- (L/M) income persons. If an activity does not benefit L/M income persons it must meet specific HUD standards to qualify under one of the other national objectives. Further details regarding program criteria and eligible activities are provided in Attachment 1. Annual Performance Report, 1998 -1999 HUD regulations also require that citizens have an opportunity to review the Annual Performance Report (APR - Attachment 2), which measures the City's performance in relation to anticipated goals as set forth in the previous One Year Action Plan. The City must make the APR available to the public for review prior to receiving citizen comment on next year's application, which is tentatively scheduled for public hearing on March 14, 1999. The APR shows that 1998 -1999 funds were spent in accordance with the allocations made in the approved CPD, as summarized below. The CDBG grant amount for 1998 -1999 was $492,000. ' Cate¢ory Budget h ExDenditures to date Public Service Activities 15% 156/6 Balboa Peninsula Revitalization 65% 52% Program Administration 20% 20% Total 1 100%1 87% Newport Beach Priorities For the 1997 -1998 and 1998 -1999 program years, Newport Beach has focused its CDBG program on economic revitalization of the Balboa Peninsula. Revitalization efforts funded by 1998 -99 CDBG funds include the Newport/Balboa Boulevard "Mixmaster" feasibility study, Balboa Peninsula sign regulations, Balboa Village Pedestrian and Streetscape Improvement Plan and additional code enforcement. For Fiscal Year 1999- 2000, a continuation of public improvement projects is underway on the Balboa Peninsula including Balboa Boulevard repaving and enhancements. In addition to economic development activities, 1998 -99 funds supported public service activities with the maximum 15% permitted by HUD. This component of Newport Beach's CDBG program is expected to continue at the same level. CDBG January 25, 2000 Page 3 7 Conclusion This public hearing is intended to satisfy HUD regulations by providing interested parties an opportunity to review the City's 1998 -1999 Annual Performance Report and submit testimony regarding community needs for consideration in the preparation of the 2000- 2001 CDBG application, the 2000 -2005 Five Year Consolidated Plan and One Year Action Plan. This is also an opportunity for the City Council to provide staff with general guidance on program areas it feels should be addressed. The application package will include community and City Council input when it is presented for a second public hearing. It is suggested that a second public hearing be tentatively scheduled for March 14, 2000 for review and approval of the City's CDBG application package for Fiscal Year 2000 -2001, the 2000 -2005 Five Year Consolidated Plan and the One Year Action Plan. Submitted by: SHARON Z. WOOD Assistant City Manager Prepared by: CHRISTY D. TEAGUE, AICP Senior Planner A&t�-�J /AO� Attachment 1: SunZay of CDBG Program Criteria and Eligible Activities Attachment 2: Annual Performance Report (APR) FA ... \SHARED\COLTNCI L \2000 \0125 CDBG January 25, 2000 Page 4 0 Attachment 1 Summary of CDBG Program Criteria and Eligible Activities A. NATIONAL OBJECTIVES: Summarized below are the CDBG program criteria under the three national objectives of benefiting low- and moderate - income persons, preventing slums and blight, and responding to urgent health and safety needs. 1. Benefiting Low- and Moderate - Income Persons Low- and moderate- (L/M) income persons are defined as persons, households or families earning less than 80% of the HUD area median income adjusted by the number of persons. The current income thresholds, which became effective January 27, 1999, are as follows: 1 Person: $ 33,450 3 Persons: $ 43,000 5 Persons: $ 51,600 7 Persons: $ 59,520 2 Persons: $ 38,250 4 Persons: $ 47,800 6 Persons: $ 55,450 8 Persons: $ 63,100 These figures are expected to be adjusted in late January, 2000. Activities that benefit L/M income persons are grouped into four categories: 1) Area benefit activities; 2) Limited clientele activities; 3) Housing activities; and 4) Job creation or retention activities. Area Benefit Activities: A qualifying area benefit activity meets the identified needs of L/M income persons residing in an area where at least 51% of the residents are L/M income persons. For cities such as Newport Beach with fewer than 25% of its populated census block groups containing 51% L/M income persons, the regulations allow "exception criteria" to be used. HUD defines an "exception criteria area" as any residential area where the proportion of L/M income persons falls within the top 25% of all residential areas of the City. For Newport Beach, there are 20 block groups containing 29% or more L/M income persons that qualify under the exception criteria. These 20 L/M income block groups are located in 8 of the City's 23 census tracts. Even though an activity occurs within an exception criteria area the activity may not necessarily qualify as benefiting L/M income persons. In order to qualify as benefiting L/M income persons, the activity must be located in a L/M income area that is predominately residential and the City must demonstrate the benefit to L/M income persons. Improvements to structures or public facilities that do not principally benefit L/M income persons will not qualify, even though the improvement occurs in an exception criteria area. For cities that are entirely or predominately comprised of L/M CDBG January 25, 2000 Page 5 I income census tracts and/or block groups, it is assumed that activities occurring within those areas benefit L/M income persons. For commercial districts located within eligible residential areas, activities to improve commercial properties must show a benefit to L/M income persons. Limited Clientele Activities: A limited clientele activity benefits a specific group of people, at least 51 % of who are L/M income persons. Generally, it is a "presumed" L/M income benefit if the activity assists groups known to be more than 51% L/M income persons. HUD defines these groups as the handicapped, elderly persons, battered spouses, abused women, homeless, illiterate persons, and migrant farm workers. If the clientele is not from a "presumed" L/M income group, documentation must be provided on family size and income to establish that at least 51 % are L/M income persons. Recent regulatory changes have added microenterprises (businesses employing 5 or fewer persons) and job training and placement to the eligible list of limited clientele activities when it is demonstrated that the activity benefits L/M income persons and meets other conditions. Housing Activities: Housing activities that create new housing or improve existing residential structures that will be occupied by L/M income persons, households and families are in this category. Job Creation or Retention Activities: A job creation or retention activity creates or retains permanent jobs, at least 51% of which are either taken by L/M income persons or considered available to L/M income persons. Only permanent jobs are eligible for assistance. The business must use a hiring practice to assure over 51% of the persons hired meet L/M income criteria. Funds can be used to assist a business in establishing or expanding its operation. To conduct a job retention activity, the City must document that the jobs will actually be lost without the CDBG assistance and that 51% of the jobs are held by L/M income persons. However, any job creation or retention effort undertaken pursuant to a Neighborhood Revitalization Strategy is considered to meet the standard CDBG L/M income area benefit requirements and businesses that receive assistance are not required to track the specific income of applicants they hire or interview, only account for the overall number of persons. 2. Preventing Slums and Blight An activity that prevents slums and blight may be done on an area or spot basis. If it is done on an area basis the activity must occur in an area that meets an adopted definition of a slum, blighted, deteriorated or deteriorating area under state or local law. If an activity is done on a spot basis, rather than in a defined area, the activity is limited to elimination of conditions detrimental to public health and safety. A redevelopment area is considered to meet the definition of slum and blight. Since the City does not have a CDBG January 25, 2000 Page 6 !a redevelopment agency, areas must be designated using a definition of slum, blight, deteriorated or deteriorating that is adopted in state or local law. 3. Urgent Health and Safety Need An urgent health and safety activity responds to a condition posing a serious and immediate threat to the health and welfare of the community. The condition must be of recent origin or recently become urgent. The City must be unable to finance the activity on its own and other resources must not be available. B. ELIGIBLE ACTIVITIES: The following is a brief discussion of the activities eligible under CDBG regulations and included in the City's five -year strategy. 1. Land Acquisition Funds can be used to assist with the acquisition of land providing the activity ultimately benefits L/M income persons or meets another national objective. The City has used CDBG funds in previous years to "write down" the cost of land for development or redevelopment of properties with new housing units. Since 1985, the City has assisted developers of five housing developments using CDBG funds, resulting in over 180 new housing units. 2. Public Facilities and Improvements Funds can be used to assist with the acquisition, construction, reconstruction or rehabilitation of public improvements or facilities such as street improvements provided the activity meets a national objective such as benefiting L/M income persons. The City has used its CDBG funds in previous years to acquire a community center, remove architectural barriers and assist public service organizations. In the next few years funds are budgeted for improvements on Balboa Peninsula such as design of an entry statement, the Balboa Boulevard beautification feasibility study, and the Newport/Balboa Boulevard "Mixmaster" feasibility study. All these activities meet the national objective of benefiting L/M income persons based on "area benefit ". 3. Public /Social Services Up to 15% of the City's entitlement funds can be used to assist public and social service agencies. These activities must address the national objective of benefiting L/M income persons. The City has funded social service agencies each year with maximum permitted 15 %. Social service agencies funded in prior years such as Friends In Service to Humanity (FISH), Street People In Need (SPIN), Young Women's Christian Association CDBG January 25, 2000 Page 7 (YWCA), Orange Coast Interfaith Shelter (OCIS), South County Seniors (SCS) meet the national objective of benefiting L/M income persons based on "limited clientele ". 4. Microenternrises Funds may be used to assist L/M income owners to develop, establish, stabilize, expand or generally support microenterprises. A "microenterprise" is a business employing 5 or fewer persons. Microenterprise was recently added as an eligible activity. The City has not funded any microenterprises in prior years. 5. Commercial Rehabilitation Funds can be offered in the form of grants, loans, and loan guarantees for facade improvements to commercial buildings provided the activity benefits L/M income persons; the project is within a neighborhood revitalization area; or the area meets the criteria for slum and blight. Buildings that contain businesses offering goods and services that are not priced or accessible to L/M income persons are not eligible. The business community has expressed interest in Commercial Rehabilitation activities such as a facade improvement program and sidewalk enhancement as part of the Balboa Peninsula Revitalization efforts. 6. Special Economic Development Funds may be used to create or retain jobs for L/M income persons as part of an economic development project. Only permanent jobs are eligible, and new jobs must be taken by or considered available to L/M income persons. When creating jobs the business must use a hiring practice that will ensure that over 51% of the new positions are filled by L/M income persons. Funds can be used to assist a business in establishing or expanding its operation. To conduct a job retention activity, the City must document that the jobs will actually be lost without the CDBG assistance and that 51% of the jobs are held by L/M income persons. The amount of assistance to a business must be proportionate to the number of jobs being created or retained, up to a maximum of $35,000 per job. The City has not specifically funded this activity but activities being funded under the category of Public Facilities and Improvements will result in the creation or retention of jobs available to L/M income persons. 7. Activities by Community Based Development Organizations A CBDO can be either a for - profit or non - profit association or corporation that has been in operation for at least a year and is organized under state or local law to engage in community development activities within an identified geographic area of operation within the City. At least 51% of its governing body's membership must be L/M income residents or other individuals representative of its geographic area of operation; it may not be an agency or instrumentality of the City, and no more than one -third of the membership of its governing body may be appointed by, or consist of, elected or other CDBG January 25, 2000 Page 8 /2 public officials or employees. Funds may be used to carry out neighborhood revitalization, community economic development, or energy conservation programs. Activities must also meet one of the national objectives. The City is not aware of any organization within the community that qualifies or could qualify under this category. CDBG January 25, 2000 Page 9 /3