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HomeMy WebLinkAboutItem 02- CDBG Annual Action Plan AGENDA ITEM SUMMARY Meeting Date: 4/22/2024 Meeting Type: Work Session Staff Contact/Dept.: Erin Fifield / DPW Staff Phone No: 541-726-2302 Estimated Time: 20 minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Encourage Economic Development and Revitalization through Community Partnerships ITEM TITLE: FISCAL YEAR 2025 (FY25) COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) ANNUAL ACTION PLAN ACTION REQUESTED: Provide direction to move forward with the FY2025 CDBG Annual Action Plan, and the proposed need for a substantial amendment to prior year Action Plans. ISSUE STATEMENT: Each spring, City Council must approve funding allocations for the use of Community Development Block Grant (CDBG) funds for the next fiscal year in a document called the Annual Action Plan. The Community Development Advisory Committee makes a recommendation to Council on the funding allocation for the Annual Action Plan. Additionally, the City has awarded prior year CDBG funds to projects that have not yet been completed. This delay spending funding is putting the City’s CDBG funds at risk of being recaptured by the U.S. Department of Housing and Urban Development (HUD); it is recommended the City reallocate funds toward projects that are ready now in order to minimize this risk. ATTACHMENTS: 1: Council Briefing Memo 2: DRAFT FY25 CDBG Annual Action Plan DISCUSSION/ FINANCIAL IMPACT: The Community Development Advisory Committee (CDAC) has made a recommendation to Council for the FY25 CDBG Annual Action Plan, following two public hearings and a 30-day public comment period. The FY25 CDBG entitlement allocation is an estimated allocation; the U.S. Department of Housing and Urban Development has still not released final numbers. The CDAC’s recommendation includes a proposal on how to adjust the final allocation based on the final award. The CDAC’s Annual Action Plan recommendation includes funding for existing City programs and contributions, including the Home Repair Program and SHOP downpayment assistance program, contribution to the Lane County Human Services Commission (HSC) for social services, and grant administration and planning. Prior year CDBG funds need to be reallocated in order to not be at risk of being recaptured by HUD. The City continues to work on projects awarded CDBG funds in prior years, including funding for Relief Nursery to purchase land to expand their childcare center, and funding to plant trees in low-income, low-canopy neighborhoods. Approximately $505,000 has also been awarded to Catholic Community Services of Lane County for a construction project to build a day center for their OASIS program. That project has had a number of delays over the past few years and is currently not ready to proceed. M E M O R A N D U M City of Springfield Date: 4/22/2024 To: Nancy Newton COUNCIL From: Jeff Paschall, Community Development Division Director Erin Fifield, Community Development Analyst BRIEFING Subject: FY2025 CDBG ANNUAL ACTION PLAN MEMORANDUM ISSUE: Each spring, City Council must approve funding allocations for the use of Community Development Block Grant (CDBG) funds for the next fiscal year in a document called the Annual Action Plan. The Community Development Advisory Committee makes a recommendation to Council on the funding allocation for the Annual Action Plan. Additionally, the City has awarded prior year CDBG funds to projects that have not yet been completed. This delay spending funding is putting the City’s CDBG funds at risk of being recaptured by the U.S. Department of Housing and Urban Development (HUD); it is recommended the City reallocate funds toward projects that are ready now in order to minimize this risk. COUNCIL GOALS/ MANDATE: Encourage Economic Development and Revitalization through Community Partnerships BACKGROUND: DRAFT Fiscal Year 2025 CDBG Annual Action Plan Each year, the City is entitled to receive an allocation of CDBG funds from the U.S. Department of Housing and Urban Development (HUD). To do so, the City must develop an Annual Action Plan describing how it plans to allocate funds to address local community needs. The proposed uses of funding must align with allowed uses and with the local community needs and strategies identified in the 2020 Eugene-Springfield Consolidated Plan. Revenues The revenues expected in Fiscal Year 2025 (FY25) through the CDBG program include an entitlement allocation of $555,345 from HUD. There is currently no anticipated program income. CDBG REVENUES (estimated) Amount (TOTAL) FY 2025 Entitlement Funds $ 555,345 Other revenues $ 0 TOTAL $ 555,345 Attachment 1 Page 1 of 4 MEMORANDUM 4/17/2024 Page 2 Council Direction and Public Participation During Council work session on February 20, Council directed staff to release a DRAFT FY25 CDBG Annual Action Plan for public comment, outlining strategies and activities for funding. The draft action plan was released for public comment for 30 days in March. No comments were received. Additionally, the Community Development Advisory Committee held two public hearings on the draft plan on February 7 and April 3, 2024. No one spoke at the public hearings. Community Development Advisory Committee (CDAC) recommendation During the CDAC meeting on April 3, the CDAC discussed the current use of funds by Consolidated Plan strategies, anticipated funds carried over from prior years, and total funds that would be available for each strategy. The committee stated its support for the Springfield Home Repair Program and the Springfield Home Ownership Program (SHOP). The CDAC voted to recommend to Council the DRAFT allocation that had been published for comment, namely: Consolidated Plan Strategy Activity Amount (TOTAL) 1. Increase the supply of affordable housing Acquisition, improvements, etc - 2. Rehabilitate existing housing stock affordable to low-income persons Home Repair Program $ 260,974 3. Provide down payment assistance for home ownership Springfield Homeownership Program (SHOP) $ 100,000 4. Remove barriers to affordable and supportive housing Support programs that assure housing opportunities are provided without discrimination - 5. Support a human services delivery system to address the needs of homeless persons and special needs populations Social service funding awarded to Lane County through the Human Services Commission (15% cap) $ 83,302 6. Promote employment opportunities Economic development - 7. Make improvements to low income neighborhoods and areas of slum and blight Public improvements in sidewalks, streets - Planning and Admin (20% cap) $ 111,069 TOTAL $ 555,345 Attachment 1 Page 2 of 4 MEMORANDUM 4/17/2024 Page 3 To note: The U.S. Department of Housing and Urban Development has still not released the final allocation of CDBG funds for FY2025, though changes are expected to be minimal. As such, the CDAC further recommends that any changes to funding (either increased or decreased) be adjusted as follows: • Maximize the funding allowed to “Support a Human services Delivery System” and Grant Planning and Admin; and • Make any remaining funding adjustments proportional to the two other strategies as currently proposed. This allocation is also shown in Attachment 2 (page 7) of the FY2025 CDBG Annual Action Plan. Question #1: Does Council want to move forward with the FY2025 CDBG Annual Action Plan with the CDAC’s recommendation allocation? Next steps Following Council direction, a final draft of the FY2025 CDBG Annual Action Plan will come to Council during the May 6 Council Regular Session for approval and submission to the U.S. Department of Housing and Urban Development. Prior year CDBG funds needs to be reallocated in order to not be at risk of being recaptured In addition to the anticipated $555,345 in new CDBG entitlement funds, the City also anticipates having approximately $850,000 in prior year CDBG funds that have been awarded to projects but not yet spent down. Per HUD regulations, a CDBG recipient needs t o be spending funds in a timely manner otherwise those funds are at risk of being recaptured by HUD. Staff have been working with our HUD representative over the past year to address the timeliness issue. It has been advised that we have a workout plan in place on how we are planning to spend down funds by next year in order to meet HUD’s timeliness test. For projects that are not ready to proceed, a workout plan would include reallocating those funds toward projects that are ready. Three outstanding projects funded with prior year CDBG funds The oldest CDBG funds we have allocated right now (approximately $505,000 in total; $35,000 of which has already been spent toward the environmental review) were awarded spring of 2021 and 2022 to Catholic Community Services of Lane County (CCSLC) for a construction project to build a day center for their OASIS program serving homeless families with children. This project has had a number of delays over the past few years (including a HUD environmental review that is still underway, increased construction costs that have created a financing gap, and staff turnover at CCSLC). CCSLC continues to support this project but it is currently not ready to proceed. Given these delays, it is not likely that this project would be completed in the next year. Other outstanding projects include $85,000 toward tree planting in low-income neighborhoods, and $218,000 to Relief Nursery to purchase land to expand their child care center. The City has purchased trees; the City’s Operations Department is aiming to plant the trees in the next month or so. The environmental review for Relief Nursery’s proposed project is also underway. This project was awarded funds by the City in spring 2023. Those funds are expected to be used for acquisition later this summer. Attachment 1 Page 3 of 4 MEMORANDUM 4/17/2024 Page 4 City can reallocate funds to other strategies that can spend the funds quickly Giving the timing to spend funds, staff have identified two options to quickly spend approximately $470,000 in CDBG funds: 1) Re-allocate $140,000 to payoff a loan a. The City currently has a Section 108 loan outstanding with HUD for about $140,000. [The loan was made in 2009 to help DevNW purchase their existing building on Main Street, which holds four units of low-income qualified housing on the 2nd floor.] The City can use CDBG funds to pay off this loan early. Meanwhile, DevNW will continue to make their loan payments as planned; those payments will then be receipted in as CDBG program income and can be used for future CDBG projects. 2) Re-allocate approximately $330,000 toward another Strategy in the Consolidated Plan a. There are other strategies in the Consolidated Plan that have projects that could use funds now. Examples include: acquiring land for affordable housing, rehab the existing housing stock for low-income persons (e.g. rehab projects for older income-qualified rental developments in Springfield in need of repairs); support a human services delivery system (e.g. increase accessibility in public buildings); and make improvements to low-income neighborhoods (e.g. street, sidewalk, accessibility improvements). OASIS program can be funded with future CDBG funds when the project is more certain Council can still support the OASIS program through a construction project in the future with CDBG funds when that project is ready to proceed. Staff can continue to work with CCSLC to help present a viable project. In the meantime, the City is aiming to complete the HUD-required environmental review for this project, a required component before CDBG funds can be spent. The environmental review, once approved by HUD, will be valid for 5 years, a time during which CCSLC can come back and request CDBG funding when the project is ready to proceed. Next steps Following Council direction, if funds are directed to be reallocated, the City will follow its citizen participation plan. A proposed substantial amendment will be published for comment for 30 days. The proposal would be to reallocate $470,000 in CDBG funds away from the CCS OASIS project, putting approximately $140,000 toward payoff of the Section 108 loan, and the remaining funds toward one of the other Consolidated Plan strategies. In the meantime, staff will gather more information about readily available projects for consideration of the remaining $330,000 in funds to reallocate. The CDAC will hold a public hearing on the proposed amendments and make a recommendation to Council on specific strategies to fund. Final approval will come back to Council during Regular Session on June 17. Question #2: Does Council want to move forward with a substantial amendment to prior year CDBG Action Plans in order to reallocate the funds previously awarded to CCSLC for the OASIS program? RECOMMENDED ACTION: Provide direction to move forward with the FY2025 CDBG Annual Action Plan, and the proposed need for a substantial amendment to prior year Action Plans. Attachment 1 Page 4 of 4 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 1 City of Springfield – CDBG Program Fiscal Year 2025 Annual Action Plan This summary describes specific housing and community development actions and activities the City of Springfield proposes to undertake with Community Development Block Grant (CDBG) funds during the program year beginning July 1, 2024 and ending June 30, 2025 (Fiscal Year 2025). It is one part of the Eugene-Springfield Fiscal year (FY) 2025 Annual Action Plan. Communities that are entitled to receive funds from U.S. Department of Housing and Urban Development (HUD) must complete a Consolidated Plan every five years as well as annual Action Plans. The Consolidated Plan provides an assessment of needs of low- and moderate- income persons and a strategic five-year plan for taking actions to address those needs using Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) funds received by the Cities of Eugene and Springfield. The Annual Action Plan describes specific actions to be undertaken in a particular year with federal funds. The content of the Annual Action Plan is guided by HUD. Springfield and Eugene adopted the most recent five-year Eugene-Springfield Consolidated Plan in 2020. The Cities of Eugene and Springfield each receive an annual entitlement allocation of CDBG funds directly from HUD. The two Cities also receive HOME funds from HUD through the Eugene- Springfield HOME Consortium. The City of Eugene is the lead agency in the HOME Consortium. A summary of planned uses by the Eugene-Springfield HOME Consortium for the use of HOME funds is available from the City of Eugene, as well as a summary of planned uses of Eugene CDBG funds. The following describes only the planned uses of CDBG funds received by the City of Springfield. Coordination and Collaboration The Cities of Eugene and Springfield collaborate in multiple ways to plan for and implement affordable housing and community development activities. The Cities of Eugene and Springfield jointly prepare the five-year Consolidated Plan and coordinate preparation of the Annual Action Plans, and Comprehensive Annual Performance and Evaluation Report. There are multiple forms for communication and collaboration between the jurisdictions and other public agencies, affordable housing developers, social service providers, and other interested parties. The Lane County Human Services Commission (HSC) and Poverty & Homelessness Board (PHB) offer ongoing opportunities for collaboration and communication. Citizen Participation The City of Springfield encourages public participation in identifying specific needs and uses of CDBG funds in FY 2025. The City of Springfield Community Development Advisory Committee Attachment 2 Page 1 of 7 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 2 (CDAC) is composed of community residents and was established by the City of Springfield to make recommendations concerning program policy and project selection to the City Council. On March 1, 2024, Springfield released its DRAFT CDBG Annual Action Plan. A public comment period is held open until April 3, 2024. The CDAC will two public hearings to hear about needs and priorities from the community as part of this process, including the proposed uses in the draft allocation. The first public hearing was held February 7, 2024. The second public hearing is scheduled for April 3, 2024. This year, the City did not release a CDBG Request for Proposals. Springfield’s City Council held one work session on February 20, approving the proposed allocation for comment. The Council will meet again on April 22 to discuss the needs and strategies, including the recommendation of the CDAC for funding. The budget allocation is included in Attachment A. Springfield Housing Strategy The City has developed a housing strategy to address the low supply of housing and to foster housing choice and affordability in the short and long term. Springfield is focused on implementing a strategy that will make the most impact on addressing Springfield’s affordable housing needs, recognizing that the City needs increasing housing units at all levels of the housing continuum. Activities Benefiting Low- and Moderate-Income Persons Generally, Springfield's CDBG-funded programs and projects are provided to benefit low- income residents living within the city limits of Springfield. Individuals participating in a CDBG- funded program are required to meet HUD Income Guidelines. In order to meet the CDBG National Objective of Benefit to Low and Moderate-Income Persons, CDBG-funded projects must either serve a specific low-income area or provide tangible benefit to low- and moderate- income clientele (services, economic opportunities, housing). Funded programs and projects undergo periodic staff monitoring to ensure compliance with CDBG regulations. All of the allocations in Springfield’s Annual Action Plan for FY 2025 would benefit low- and moderate- income persons. Activities for the Prevention or Elimination of Slum and Blighted Conditions Another national objective of the CDBG program is the prevention or elimination of slums and blighted conditions in neighborhoods and communities, either by designating a specific area or by addressing conditions on a spot basis. In 2014, Springfield re-designated a Springfield Downtown Redevelopment Area, in compliance with CDBG regulations. The Downtown Redevelopment Area is pictured below. Attachment 2 Page 2 of 7 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 3 Attachment 2 Page 3 of 7 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 4 Strategies to Address Priority Needs The City of Springfield receives an annual allocation of Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development (HUD). For FY 2025, the City of Springfield is estimating it will receive an entitlement allocation of $555,345. Attachment A shows the sources of funding, and proposed uses, for the FY 2025 CDBG Annual Action Plan. The 5-year Eugene-Springfield 2020 Consolidated Plan emphasizes goals and strategies to meet priorities needs of renters, homeowners, people experiencing homelessness, and non-homeless special needs populations. Additional needs include increased employment opportunities as well as low-income neighborhoods and areas of slum and blight. The priority strategies described below are intended to address one or more priority needs. The following narrative describes proposed allocations of Springfield CDBG funds for FY 2025 as it relates to each strategy identified in the Eugene-Springfield 2020 Consolidated Plan. Certain strategies in Springfield are met through the Eugene-Springfield HOME allocations, and are indicated below. More details can be found regarding the allocation of HOME funds in the Eugene FY 2025 DRAFT Annual Action Plan. In addition to the proposed allocations listed below, Springfield is also proposing to allocate 20% of new entitlement funds toward Grant Planning and Administration, for a total of $111,069. Affordable Housing Affordable housing goals are intended to address HUD program objectives to provide decent, safe, and affordable housing and address critical housing needs of low-income people in our community. A total of four affordable housing goals are included in the Eugene-Springfield 2020 Consolidated Plan. Increase the Supply of Affordable Housing  Housing Development – The City of Springfield recognizes that the housing supply is low, particularly affordable housing for low-income residents, and previous allocations have aimed to add a net increase of units to the housing supply. In FY 2023, the City received $1.5 million in American Rescue Plan Act (ARPA) funds to put toward acquiring land for affordable housing. Given that these funds are more flexible than using CDBG funds for this same activity, the City has focused on using ARPA funds toward this strategy and has reallocated prior year CDBG funds away from this activity. Additional funds allocated through the FY 2025 HOME Allocation will help to address this strategy in Springfield. (see FY 2025 HOME Allocation)  Community Housing Development Organization (CHDO) Operating Support – (see FY 2025 HOME Allocation) Rehabilitate Existing Housing Stock Springfield Home Repair - The City of Springfield plans to continue to provide assistance to qualified low-income homeowners through its Home Repair Program. This program is Attachment 2 Page 4 of 7 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 5 funded from the new CDBG entitlement grant. Increased construction costs of labor and materials, plus an interest in expanding the program, bring the proposed allocation for this program to $260,974. Provide Down Payment Assistance for Home Ownership  Springfield Home Ownership Program - The City of Springfield is committed to supporting low-income homebuyers. In FY 2023, the City revamped the homebuyer assistance program by increasing the maximum loan amount per household, and working with lenders to find creative ways to help support homeownership. The City is partnering with DevNW to help administer this program. In FY 2025, the City is proposing to allocate an additional $100,000 in CDBG funds toward this program. Remove Barriers to Affordable and Supportive Housing  There are currently no funds allocated to this strategy. In 2020, Springfield conducted an Analysis of Impediments to Fair Housing Choice. In previous years, Springfield has worked with interns from the University of Oregon on this strategy to promote equal access in housing choice. Springfield is focused on promoting information on the City website, and to our community partners. In FY 2024, Springfield updated its website to include information about removing discriminatory covenants from residential property, and directing the City Attorney to petition Lane County Circuit Court for the removal of discriminatory covenants from City-owned property. Springfield continues to seek opportunities to affirmatively further fair housing and inform others about fair housing. Community Development Community development goals are intended to satisfy HUD program objectives by providing human services; creating jobs; improving access to public facilities; and furthering neighborhood revitalization, planning, and community-building activities. A total of three community development goals were included in the Eugene-Springfield 2020 Consolidated Plan. Support a Human Services Delivery System  Non-profit services through the Human Services Commission (HSC) – City of Springfield collaborates with Lane County to fund human service providers. The Human Services Commission (HSC) is the intergovernmental board that guides the use of funds and oversees the activities of agencies receiving funds. Agencies to be funded are determined through a competitive Request for Proposals (RFP) administered by the HSC. Springfield is proposing to allocate 15% of new entitlement funds to the HSC for a total of $ 83,302 in FY 2025.  Non-profit capital facility improvements – In prior year CDBG Action Plans, the City allocated a total of $505,494 in funding toward Catholic Community Services of Lane County’s project to develop an addition to their community service center to serve homeless families with children. The City continues to work with Catholic Community Services toward completing this project, including wrapping up the HUD-required environmental review. The City has also allocated $225,000 toward Relief Nursery’s Attachment 2 Page 5 of 7 Eugene-Springfield FY 2025 Annual Action Plan City of Springfield CDBG program 6 project to acquire land in order to expand their existing service center. The City continues to work toward completing that HUD-required environmental review. Promote Economic Development  There are currently no FY2025 funds allocated toward this strategy. Make Strategic Investments to Improve Neighborhoods  Public improvements in low-income neighborhoods – Through the FY 2023 Request for Proposals, the City’s Development and Public Works Department identified a need to address the increased heat index within low income neighborhoods. The City allocated $85,000 toward a tree planting pilot project to increase the canopy in high heat low- income neighborhoods. The City continues to work on this project. There are no additional funds allocated toward this strategy. Attachment 2 Page 6 of 7 ATTACHMENT A CDBG REVENUES (estimated) TOTAL FUNDS FY 2025 Entitlement Funds (EN) $ 555,345 Other Funds • Carryforward from previous years • Program Income in FY24 $ 0 TOTAL $ 555,345 CDBG EXPENDITURES (estimated) Consolidated Plan Strategy Activity Amount (TOTAL) 1. Increase the supply of affordable housing Acquisition, improvements, etc - 2. Rehabilitate existing housing stock affordable to low-income persons Home Repair Program $ 260,974 3. Provide down payment assistance for home ownership Springfield Homeownership Program (SHOP) $ 100,000 4. Remove barriers to affordable and supportive housing Support programs that assure housing opportunities are provided without discrimination - 5. Support a human services delivery system to address the needs of homeless persons and special needs populations Human Services Commission (HSC) $ 83,302 Non-profit capital improvements - 6. Promote employment opportunities Economic development - 7. Make improvements to low income neighborhoods and areas of slum and blight Public improvements in sidewalks, streets - Address causes of slum and blight - Planning and Administration $ 111,069 TOTAL $ 555,345 Attachment 2 Page 7 of 7