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Item No. 15 - PUBLIC HEARING REGARDING THE FISCAL YEAR (FY) 2021-2022 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) ACTION PLANAGENDA ITEM NO. 15 Xft AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: May 4, 2021 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: PUBLIC HEARING REGARDING THE FISCAL YEAR (FY) 2021-2022 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) ACTION PLAN RECOMMENDATION: Pending public testimony, it is recommended that the City Council direct staff to develop a draft FY 2021-2022 CDBG Action Plan, based on the needs and priorities approved for the FY 2020-2024 Consolidated Plan. BACKGROUND: The City receives an annual grant of CDBG funds from the U.S. Department of Housing and Urban Development (HUD). CDBG is a federal program with an overall objective of developing viable urban communities by providing decent housing and a suitable living environment, and expanding economic opportunities principally for low- and moderate -income persons. According to 24 CFR 570.4, the policies and procedures used to determine CDBG allocations are described in Sections 106 and 107 of the Housing and Community Development Act of 1974. For the Entitlement Program, there are two formulas: "A" and 'B". HUD calculates the amount of funds that each entitlement grantee would receive under each of the two formulas. Formula A calculates funds to a jurisdiction based on its metropolitan area's share of three factors across all US metropolitan areas. The factors are: 1. Population, weighted at 25%; 2. People in poverty, weighted at 50%; and 3. Overcrowded units, weighted at 25% Formula B also calculates funds to a jurisdiction based on its metropolitan area's share of three factors across all US metropolitan areas, but the factors are somewhat different. The Formula B factors are: 1. Population growth lag since 1960, weighted at 20%; 2. People in poverty, weighted at 30%; and 3. Pre-1940 housing units, weighted at 50%. After HUD runs the calculations using the two formulas, it allocates the grantee the larger amount of the two. However, because HUD uses the larger amount, when it adds all the grantees' allocations together the total is higher than the amount of CDBG funding available for the Entitlement Program. So, HUD must recalculate the figures using a pro-rata reduction to reduce the total to the funding level for the Entitlement Program. The City of West Covina utilizes these funds for the Domestic Violence Victim Advocate, Senior Meals program, the Home Preservation Program, the Business Assistance Program, Public Infrastructure projects, and to fund various public service providers (i.e., food banks, homeless advocates, meals on wheels, etc.). As a condition of receiving the funds, HUD requires the City to prepare an annual Action Plan, which details the activities the City plans to undertake with the funds in the respective year. This Action plan is to be consistent with the five-year CDBG Consolidated Plan, which is a strategic and visioning document on the use of these funds. As a basis for the Consolidated Plan, an assessment and prioritization of community needs, relative to the use of CDBG funds, was required. The categories of community need identified in the current Consolidated Plan are: (1) Economic Development, (2) Homelessness, (3) Infrastructure Improvements, (4) Owner Occupied Housing, (5) Public Facilities, (6) Non -Homeless Special Needs, (7) Public Services, and (8) Rental Housing. Attachment No. 1 describes each category. To facilitate prioritization and to evaluate the categories, HUD utilizes four levels of priority: High, Medium, Low, and No Such Need. A High Priority means that activities in that category will be funded by CDBG funds. A Medium Priority means activities in that category may be funded by CDBG funds. A Low Priority means CDBG funds will not be used to fund activities in a particular category. The FY 2020-2024 CDBG Consolidated Plan, which was approved on April 6, 2021, included the prioritization shown below in Table 1. Table 1 FY 2020-2024 Consolidated Plan Priorities Categories of Need Priority Level Economic Development High Homelessness High Infrastructure Improvements High Owner Occupied Housing High Public Facilities High Non -Homeless Special Needs Medium Public Services Medium Rental Housing�J Low The categories shown as "Medium" and "Low" do not indicate that these are not priorities of the City of West Covina, but with limited CDBG funds, the City Council determined these as the priorities for CDBG funding. For example, while Rental Housing may be of high importance in the City, CDBG funds are not anticipated to fund any associated activity. DISCUSSION: This is the first of two public hearings required by HUD for the adoption of the FY 2021-2022 Action Plan. The purpose of this hearing is to provide an opportunity for citizen input relative to the identification and prioritization of community needs that may be addressed with CDBG funds in FY 2021-2022. Because this hearing occurs prior to the publication of the draft Action Plan, it is referred to as the Pre -Development Hearing. This public hearing is also the opportunity for the City Council to consider changing the prioritization of community needs for FY 2021-2022 Action Plan. However, due to the limited amount of CDBG resources available, City staff does not recommend doing so at this time. The City Council still retains the ability to fund all priorities as part of the City's annual budget process and to modify/change priorities of the Categories of Need. On March 2, 2021, the City was notified that its FY 2021-2022 allocation will be $815,844, an increase of $10,421 from the current year. Staff is seeking authorization to draft the FY 2021-2022 Action Plan, based on the priorities established in the five-year Consolidated Plan for FY 2020-2024. Once staff receives such authorization, staff can begin drafting the Action Plan as well as the process of evaluating public service providers and possible capital projects. Once drafted, the Action Plan will be made available for a required 30-day public review. Following the review, the draft will be presented to City Council for consideration in a public hearing. The approved Action Plan is due to HUD no later than August 16, 2021. OPTIONS: The City Council has the following options: 1. Approve staff recommendation; or 2. Provide alternative direction. Prepared by: Kelly McDonald, Public Services Manager Fiscal Impact FISCAL IMPACT: There is no fiscal impact resulting from this report. Attachments Attachment No. 1 - Descriptions of Categories of Need in Table 1 CITY COUNCIL GOALS & OBJECTIVES: Enhance City Facilities and Infrastructure Enhance the City Image and Effectiveness ATTACHMENT NO.1 Descriptions of Categories of Need in Table 1, Consolidated Plan Priorities This attachment describes the Categories of Need shown in Table 1 of the staff report. 1. Economic Development: Activities to address these needs will be funded by the Community & Economic Development non -housing fiords. Community & Economic Development activities and the new Business Assistance Program will address this category of need. 2. Homelessness: The allocation of CDBG funds to public services can address a portion of these needs. 3. Infrastructure Improvements: Improvements such as street rehabilitation and replacement of curbs and gutters will be funded during the Consolidated Plan cycle. (For example, projects may include street improvements.) 4. Owner -Occupied Housing: Owner housing needs will be addressed by the Housing Preservation Program (HPP). 5. Public Facilities: Public facilities may be funded during the Consolidated Plan cycle — 2020 to 2025. (For example, projects may include: accessibility improvement or parks and recreation facilities and youth centers.) 6. Public Services: A high priority was assigned to public services because CDBG funds can help to address the needs of the elderly, frail elderly, youth and other low/moderate income populations. These needs can be addressed by the 15% allocation of CDBG fiords to public services. (For example, public services may include: youth services, transportation services, and crime awareness.) 7. Non -Homeless Special Needs: The allocation of CDBG finds to public services can address a portion of the non -homeless needs. (Non -homeless special needs populations include: the elderly, persons with HIV/AIDS, disabled, homebound, and mentally ill). 8. Rental Housing: Rental housing needs are addressed by the Section 8 rental assistance program and the affordable housing developments funded by the CED Low and Moderate Income Housing Fund.