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CC 2014-09-09_08.g. Amend Cooperative Agreement CDBGMEMORANDUM TO: CITY COUNCIL FROM: TERESA McCLISH, COMMUNITY DEVELOPMENT DIRECTOR BY: /{.#, KELLY HEFFERNON, ASSOCIATE PLANNER SUBJECT: CONSIDERATION OF AMENDMENT NUMBER 1 TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM, THE HOME INVESTMENT PARTNERSHIPS PROGRAM, THE EMERGENCY SHELTER GRANT PROGRAM, THE AMERICAN DREAM DOWN PAYMENT INITIATIVE PROGRAM, AND THE HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS (HOPWA) PROGRAM FOR FISCAL YEARS 2015 THROUGH 2018 DATE: SEPTEMBER 9, 2014 RECOMMENDATION: It is recommended that the City Council adopt a Resolution approving Amendment Number 1 to the Cooperation Agreement between the County of San Luis Obispo-and the City of Arroyo Grande (the "Amendment") for joint participation in the Community Development Block Grant Program, the Home Investment Partnerships Program, the Emergency Shelter Grant Program, the American Dream Down Payment Initiative Program, and the Housing Opportunities for Persons with AIDS Program for Fiscal Years 2015 through 2018. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: The Amendment does not create any additional impacts to financial and personnel resources. The City's final allocation for the 2014 Community Development Block Grant (CDBG) is $62,583. This represents a 2.41 % decrease from the City's 2013 allocation. Assuming the same reductions will occur in future years, it is estimated the CDBG allocation for the City will be approximately $61,075 in 2015, $59,603 in 2016 and $58,167 in 2017. The Cooperation Agreement (Agreement) includes a new provision under Section IV specifying that thirteen percent (13%) of the City's CDBG allocation for administrative costs be retained by the County to offset its overall costs to administer the program. The City would retain seven percent (7%) of the total CDBG allocation for administration. Item 8.g. - Page 1 CITY COUNCIL CONSIDERATION OF AMENDMENT NUMBER 1 TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SEPTEMBER 9, 2014 PAGE2 BACKGROUND: The City Council adopted Resolution No. 4602 on June 24, 2014 approving an Agreement to allow the City to continue its participation with the County and other participating cities for Federal CDBG, Home Investment Partnerships (HOME), Emergency Shelter Grant (ESG) and Housing Opportunities for Persons with Aids (HOPWA) funding programs. The term of this Agreement is for a period of two (2) years commencing July 1, 2015 through June 30, 2017. ANALYSIS OF ISSUES: HUD is requiring the County to amend the Cooperation Agreements with participating cities within the County to add a paragraph regarding use of public funds and to provide for a three-year term. The attached Amendment provides these changes. HUD also requires that the amendments be executed prior to the end of September, 2014. The Board of Supervisors is scheduled to consider these amendments on September 23, 2014. The County Consortium participating in the Urban County Program receives a predictable, formula-based annual grant and there is a wider range of uses for the Federal CDBG funds. The tradeoff is that the City will not be able to apply, through a highly competitive process, for a potentially greater amount of State administered funds during the term of the Agreement. Since the City does not have any census tracts that are low income, staff does not believe the City would be highly competitive. With respect to the HOME program, the City, or a Community Housing Development Organization, such as People's Self Help Housing (PSHH), can apply to the State for up to $1,000,000 annually for affordable housing projects. The HOME program is an annual statewide competition. Should the City continue in the San Luis Obispo Urban County program, the City cannot apply for these grants. However, PSHH, or a similar nonprofit organization, can apply directly to the County to fund a project located in the City. County staff largely handles administration of the CDBG program, but the City is authorized to· use up to 20% of its allocation for the cost of staff time if needed. Since 2011, the City has authorized the County to administer the City's public service grants using a portion of the City's CDBG administration funds. Per the proposed Amendment, the County would retain 13% of the City's administra~ive funds and the City would keep · the remaining 7%. This would occur regardless of whether or not the City allocated funds to public service activities. The Agreement also specifies that the City shall not recommend an individual CDBG award of less than $8,000 for public service activities due to the staff cost of processing such awards in compliance with Federal monitoring, reporting and other administrative requirements. Item 8.g. - Page 2 CITY COUNCIL CONSIDERATION OF AMENDMENT NUMBER 1 TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SEPTEMBER 9, 2014 PAGE3 On February 11, 2014, the City Council discussed using General Fund revenues to fund public service requests in lieu of CDBG funds to eliminate restrictions on the size of grants and to reduce the substantial HUD monitoring and administrative costs. The intent was to use CDBG funds more for ADA improvements, yet still provide a less cumbersome program to fund important local public service funding requests. The Council directed staff to implement the following changes to the 2015 CDBG process: • Eliminate all CDBG funding for public services; • Increase $10,000 in Local Sales Tax funding for the Five Cities Fire Authority; • Reduce General Fund funding for the Five Cities Fire Authority by $10,000; • Reduce Local Sales Tax funding for ADA ramps by $10,000; • Increase CDBG funding for removal of architectural barriers by $10,000; • Appropriate $10,000 in the General Fund for local public services grants; and • Establish a program for accepting applications for local public services grants. The Council approved an additional $10,000 for public services grants in the budget adjustments for a total of $20,000. It is anticipated that the Community Service Grant Program Committee will be formed this fall. ALTERNATIVES: The following alternatives are provided for the Council's consideration: -Adopt the Resolution approving the Amendment; Modify as appropriate and adopt the Resolution; Do not adopt the Resolution; or Provide direction to staff. ADVANTAGES: Adopting the Amendment is necessary to comply with HUD regulations. Continuation of the Agreement, as amended, will allow the Council to consider funding programs that provide important public services and programs using CDBG funds. Participation in the County program will guarantee the City will receive a specified amount of funding. DISADVANTAGES: Continuation of the Agreement does not allow the City to compete for substantial statewide CDBG funds for general and economic development projects, which could significantly exceed the amount received through the County program. However, staff does not believe the City would be competitive in the statewide CDBG program given the lack of low income census tracts that are needed to qualify. ENVIRONMENTAL REVIEW: No environmental review is required for this item. Item 8.g. - Page 3 CITY COUNCIL CONSIDERATION OF AMENDMENT NUMBER 1 TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SEPTEMBER 9, 2014 PAGE4 PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in front of City Hall on Thursday, September 4, 2014. The Agenda and report were posted on the City's website on Friday, September 5, 2014. No public comments were received. Item 8.g. - Page 4 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE APPROVING AMENDMENT NUMBER 1 TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM, THE HOME INVESTMENT PARTNERSHIPS PROGRAM, THE EMERGENCY SHELTER GRANT PROGRAM, THE AMERICAN DREAM DOWN PAYMENT INITIATIVE PROGRAM, AND THE HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS (HOPWA) PROGRAM FOR FISCAL YEARS 2015 THROUGH 2018 WHEREAS, the County of San Luis Obispo ("County"), a political subdivision of the State of California, and the City of Arroyo Grande ("City") a municipal corporation, desire to participate in the Community Development Block Grant (CDBG) program administered by the U.S. Department of Housing and Urban Development (HUD); and WHEREAS, said program will promote the public health, safety and welfare by providing grant funds to be used by the City and County to improve housing opportunities for low and moderate-income households, to encourage economic reinvestment, to improve community facilities and public services, and to provide other housing-related facilities, or services; and WHEREAS, to qualify for CDBG funds under HUD eligibility guidelines, the County must have a population of at least 200,000 persons; and WHEREAS, the City desires to continue to participate jointly with the County in said program; and WHEREAS, HUD requires that the parties enter into a Cooperation Agreement between the County of San Luis Obispo and the City of Arroyo Grande for joint participation in the Community Development Block Grant Program, the Home Investment Partnerships Program, the Emergency Shelter Grant Program, the American Dream Down Payment Initiative Program, and the Housing Opportunities for Persons with AIDS Program for Fiscal Years 2015 through 2017 to define their rights and obligations as a prerequisite to participation in the CDBG program; and WHEREAS, the City Council adopted Resolution No. 4602 on June 24, 2014 approving an Agreement to allow the City to continue participation with the County and other participating cities for Federal CDBG, Home Investment Partnerships (HOME), Item 8.g. - Page 5 RESOLUTION NO. PAGE2 Emergency Shelter Grant (ESG) and Housing Opportunities for Persons with Aids (HOPWA) funding programs; and WHEREAS, HUD requires the County to amend the Cooperation Agreement to add a paragraph regarding use of public funds and to provide for a three-year term; and WHEREAS, the proposed Amendment to the Cooperation Agreement is consistent with the General Plan and with City and County policies encouraging cooperation between agencies on issues of regional significance such as affordable housing; and WHEREAS, the proposed Amendment to the Cooperation Agreement will promote the public health, safety and welfare by enabling the City and County to participate in the U.S. Department of Housing and Urban Development's CDBG program under an "urban county" entitlement, thus making available funds for a variety of housing, economic development, and public services programs not otherwise available; and WHEREAS, the City and County enter into yearly subrecipient agreements which establish administrative policies and procedures, performance standards, and guidelines for funding specific CDBG programs and projects; and WHEREAS, the proposed Amendment to the Cooperation Agreement is not a "project" for purposes of compliance with the provisions of the California Environmental Quality Act (CEQA) and the City's CEQA Guidelines. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande, California, as follows: 1. The City Council hereby approves and authorizes the Mayor to sign the Amendment to the Cooperation Agreement with the County to enable joint participation in HU D's CDBG program in the form attached hereto as Exhibit A. 2. The City Manager is hereby authorized to act on behalf of the City in connection with the implementation of the amended Agreement, ongoing operation of the CDBG program, and other activities necessary to carry out the intent of the Cooperation Agreement. On motion of Council Member following roll call vote, to wit: AYES: NOES: ABSENT: , seconded by Council Member ',and on the the foregoing Resolution was passed and adopted this __ day of 2014. Item 8.g. - Page 6 RESOLUTION NO. PAGE3 TONYFERRARA,MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Item 8.g. - Page 7 EXHIBIT A AMENDMENTNUMBER1TO A COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF ARROYO GRANDE FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM,THE HOME INVESTMENT PARTNERSHIPS PROGRAM, THE EMERGENCY SOLUTIONS GRANT PROGRAM, AND THE HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS PROGRAM FOR FISCAL YEARS 2015 THROUGH 2018 THIS AGREEMENT is made and entered into this day of , 2014, by and between the County of San Luis Obispo, a political subdivision of the State of California, hereinafter called "County"; and the City of Arroyo Grande, a municipal corporation of the State of California, located in the County of San Luis Obispo, hereinafter called "City"; jointly referred to as "Parties." WITNESS ETH WHEREAS, in 1974, the U.S. Congress enacted and the President signed a law entitled, The Housing and Community Development Act of 1974, herein called the "Act". Said Act is omnibus legislation relating to federal involvement in a wide range of housing and community development activities and contains eight separate titles; and WHEREAS, Title I of the Act is entitled "Community Development" and governs programs for housing and community development within metropolitan cities and urban counties or communities by providing financial assistance annually for area-wide plans and for housing, public services and public works programs; and WHEREAS, the Community Development Block Grant (CDBG) Program, the HOME Investment Partnerships (HOME) Program, the Emergency Solutions Grant (ESG) Program, and the Housing Opportunities for Persons with AIDS (HO PW A) Program are consolidated under Title I of the Act; and WHEREAS, the County of San Luis Obispo has requested of the federal Department of Housing and Urban Development, hereinafter referred to as "HUD", that the County be designated as an "urban county"; and WHEREAS, the County needs to requalify as an urban county and will be eligible to receive CDBG funds provided that the County's entitled cities defer their entitlement to the County to enable both the County and the entitlement cities to jointly participate in the program; and WHEREAS, the City desires to participate jointly with the County in said program; and Item 8.g. - Page 8 WHEREAS, on July 15, 2014, the County and City entered into a Cooperation Agreement (~he Original Cooperation Agreement) in order for the County to requalify as an urban county and submitted said cooperation agreement to the U.S. Department of Housing and Urban Development (HUD); and WHEREAS, HUD reviewed said Original Cooperation Agreement and determined that it must be amended to provide for a three year term and to include additional language required by the Transportation, Housing and Urban Development, and Related agencies Appropriations Act, 2014, Public Law 113- 76. NOW THEREFORE, in consideration of the mutual promises, recitals and other provisions hereof, the Parties agree as follows: 1. The first sentence of Paragraph C, entitled "C. Term of Agreement - Automatic Renewal Provision," of Section I, entitled "SECTION I. General.," of the Original Cooperation Agreement is hereby amended and replaced to read as follows: The term of this Agreement shall be for a period of three (3) years commencing July 1, 2015 through June 30, 2018. 2. The section entitled "SECTION IV. Use of Program Funds" of the Original Cooperation Agreement is hereby amended to add a new section "I" that reads as follows: I. The City may not sell, trade, or otherwise transfer all or any portion of CDBG funds to another metropolitan city, urban county, unit of general local government, or Indian tribe, or insular area that directly or indirectly receives CDBG funds in exchange for any other funds, credits or non-Federal considerations, but must use such funds for activities eligible under Title I of the Act. 3. All other provisions of the Original Cooperation Agreement not specifically amended herein remain in full force and effect. NOW, THEREFORE, the Parties hereto have caused this Amendment Number 1 to the Cooperation Agreement to be executed and attested by their proper officer thereunder duly authorized, and their official seals to be hereunto affixed, all as of the day first above written. 2 Item 8.g. - Page 9 COUNTY OF SAN LUIS OBISPO Deputy County Counsel Date: -------------- By: ______________ _ Chairperson of the Board of Supervisors Date: -------------- ATTEST: Julie Rodewald, County Clerk Date: -------------- 3 Item 8.g. - Page 10 CITY OF ARROYO GRANDE Tony Ferrara, Mayor Date: -------------- ATTEST: Kelly Wetmore, City Clerk Date: -------------- APPROVED AS TO CONTENT: Steven Adams, City Manager Date: -------------- APPROVED AS TO FORM: Timothy J. Carmel, City Attorney Date: -------------- 4 Item 8.g. - Page 11 THIS PAGE INTENTIONALLY LEFT BLANK Item 8.g. - Page 12