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CC 2024-08-13_09h CDBG Funding ReallocationItem 9.h. MEMORANDUM TO: City Council FROM: Bill Robeson, Assistant City Manager/Public Works Director BY: Shannon Sweeney, City Engineer SUBJECT: Community Development Block Grant (CDBG) Funding Reallocation DATE: August 13, 2024 RECOMMENDATION: 1) Adopt a Resolution authorizing the City Manager to reallocate CDBG money previously assigned to various City projects, to the Curb Ramp and Sidewalk Improvement Element associated with the 2024 Pavement Maintenance Project. This CDBG money will be applied to costs associated with the addition and replacement of curb ramps to meet Americans with Disabilities Act (ADA) standards; and 2) Find that this item is not a project subject to the California Environmental Quality Act (CEQA) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.) IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: Table 1 shows existing funding available from the CDBG program for various City projects mentioned in Staff’s Recommendation. The total CDBG funding amount shown in Table 1 for City projects is $202,012.18. Table 1: CDBG Funding Allocation Item Amount Original Allocation Recommended Allocation 1 $59,416.49 2021 City Hall Front Entrance Project Curb Ramp and Sidewalk Improvement 2 $5,693.40 2023 CDBG Administration Curb Ramp and Sidewalk Improvement 3 $75,097.29 2023 CDBG Construction Curb Ramp and Sidewalk Improvement 4 $61,805.00 2024 CDBG Construction Curb Ramp and Sidewalk Improvement All available CDBG funds are budgeted for their respective projects. This reallocation does not impact various projects’ budgets, but simply changes the source of those funds. Projects whose funding is recommended to be reallocated from CDBG will instead be funded through the general fund, and vice versa. This recommendation does not constitute a change in budget amounts, only the funding source. The carryovers and Page 153 of 218 Item 9.h. City Council Community Development Block Grant (CDBG) Funding Reallocation August 13, 2024 Page 2 budget reallocation will be completed in the First Quarter Financial Status report. This approval will allow staff to move forward with the bidding process. BACKGROUND: On March 9, 2021, City Council approved $40,000 for a project named City Hall Front Entrance Barrier Removal Project. The proposed project would install an accessible entrance to the City Hall building, including installing exterior doors with automatic door openers that can be easily operated by citizens with mobility limitations. This project also addresses the first national CDBG objective by enhancing accessibility for individuals with disabilities on City-owned property. Since this City Hall ADA project was identified, additional funding has been made available to it. County administrative staff has confirmed that a total of $59,416.49 is allocated to this project (Item 1 in Table 1). The federal obligations associated with the CDBG funding for this project have presented insurmountable difficulties with the available funding. City staff still advocate for its completion and will be able to make progress on its implementation by removing the extra federal obligations. On February 14, 2023, City Council approved $6,111 for City administration and $56,749 for curb ramp and sidewalk improvement. Housing and Urban Development (HUD), the federal organization that administers and distributes CDBG funds, adjusted local available CDBG funds to $5,693.40 (Item 2 in Table 1) and $75,097.29 (Item 3 in Table 1), respectively. On February 13, 2024, City Council approved $58,960 in CDBG funds towards curb ramp and sidewalk improvements on sidewalks adjacent to streets being paved and in conjunction with scheduled pavement improvements. HUD increased local available CDBG funds. As a result, the City’s 2024 funds received has been increased to $61,805 (Item 4 in Table 1). ANALYSIS OF ISSUES: The 2024 Pavement Maintenance Project is at 90% design review. The project originally included the installation or replacement of 61 curb ramps adjacent to the 4.6 miles of pavement scheduled to be treated, at a cost of $1.6 mill ion solely for curb ramp work. A review of existing curb ramps revealed that all but eleven of those curb ramps meet either exception or safe harbor elements of the ADA regulations, which negates the need to replace them. The remaining eleven curb ramps need to be either installed or replaced. The engineer’s estimate solely for constructing these eleven remaining curb ramps is $167,000. A prorated portion of other curb ramp project costs, such as mobilization, stormwater monitoring, and traffic control can also be reimbursed using CDBG funds. Page 154 of 218 Item 9.h. City Council Community Development Block Grant (CDBG) Funding Reallocation August 13, 2024 Page 3 City staff worked closely with County CDBG program administration staff to ensure that this reallocation is allowed. County staff has indicated that such an allocation can be addressed through City Council approval and a letter signed by the City Manager requesting the reallocation. If any CDBG funds remain following the 2024 pavement maintenance project, these funds can be reallocated to another project at a future date. ALTERNATIVES: The following alternatives are provided for the Council’s consideration: 1. Reallocate existing City CDBG funds as shown in Table 1; 2. Leave CDBG funds as currently allocated; or 3. Provide other direction to staff. ADVANTAGES: CDBG is a federally funded program. Federal programs have significant administrative requirements including environmental review, disadvantaged business entity verification, and Section 3 (economic opportunities for low – and very low – income persons) reporting. These requirements are onerous to both City staff and contractors on small projects like the ones shown in Table 1. Smaller companies are often unwilling or unable to meet these requirements, which creates challenges in competitively bidding projects. Firms that compete on larger construction projects are more accustomed to meeting federal requirements, as larger construction projects are likely to have federal funding components associated with them. By consolidating funds into a single larger project, CDBG funds can be used more efficiently. When contractors are required to meet federal obligations, administrative requirements are an added cost to the project. On smaller projects, these costs are a larger fraction of the project cost, leaving fewer funds available for construction. The administrative cost of meeting federal regulations becomes a smaller fraction of larger jobs, especially since larger firms are better equipped to address those requirements and are more familiar with what is needed. The administrative load on City staff is reduced substantially if the funds are consolidated into one larger project rather than multiple smaller projects. City staff are required to submit regular reports, numerous forms demonstrating compliance wi th federal requirements, and reimbursement requests. By consolidating the funding, City staff will only be tasked with completing this paperwork for one large project rather than numerous small ones, which is a more efficient use of staff time. DISADVANTAGES: No disadvantages identified. All projects identified as previously funded by CDBG funds will be funded using other funding sources instead. Page 155 of 218 Item 9.h. City Council Community Development Block Grant (CDBG) Funding Reallocation August 13, 2024 Page 4 ENVIRONMENTAL REVIEW: This item is not a project subject to the California Environmental Quality Act (CEQA) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.) PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. ATTACHMENTS: 1. Proposed Resolution Authorizing CDBG Reallocation Page 156 of 218 ATTACHMENT 1 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AUTHORIZING COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REALLOCATION WHEREAS, on March 9, 2021, City Council approved CDBG funds towards a City Hall Front Entrance Barrier Removal Project; and WHEREAS, on February 14, 2023, City Council approved CDBG funds towards curb ramp and sidewalk improvements and CDBG program administration; and WHEREAS, on February 13, 2024, City Council approved CDBG funds towards curb ramp and sidewalk improvements; and WHEREAS, CDBG funds remain in these various projects as shown in Exhibit A; and WHEREAS, CDBG funds may be reallocated via a written request to the County of San Luis Obispo, signed by the City Manager; and WHEREAS, this reallocation does not change the budget or nature of projects identified in the Fiscal Year 24-25 budget, but simply consolidates all of the CDBG funds available to Curb Ramp Improvement element of the 2024 Pavement Maintenance Project, and funds the remaining projects from the general fund; and WHEREAS, consolidating these funds by reallocating them to a single project allows these funds to be used more efficiently and reduces staff administration time ; and WHEREAS, the action is exempt from the California Environmental Quality Act (CEQA) pursuant to State Guidelines Section 15060 (c)(2),(3), 15378 as it does not constitute a “project” under CEQA. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo Grande hereby recommends that existing CDBG funds currently allocated to various City projects be reallocated and consolidated to the Curb Ramp and Sidewalk Improvement project associated with the 2024 Pavement Maintenance Project as listed in Exhibit A attached hereto and incorporated herein by this reference. On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this 13th day of August, 2024. Page 157 of 218 RESOLUTION NO. PAGE 2 CAREN RAY RUSSOM, MAYOR ATTEST: JESSICA MATSON, CITY CLERK APPROVED AS TO CONTENT: MATTHEW DOWNING, CITY MANAGER APPROVED AS TO FORM: ISAAC ROSEN, CITY ATTORNEY Page 158 of 218 RESOLUTION NO. PAGE 3 EXHIBIT A REALLOCATION OF PROGRAM YEAR 2022-2024 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS Amount Original Allocation Recommended Allocation $59,416.49 2021 City Hall Front Entrance Project Curb Ramp and Sidewalk Improvement $5,693.40 2023 CDBG Administration Curb Ramp and Sidewalk Improvement $75,097.29 2023 CDBG Construction Curb Ramp and Sidewalk Improvement $61,805.00 2024 CDBG Construction Curb Ramp and Sidewalk Improvement Page 159 of 218