CC 05-02-2023 Item No. 5. Attachment D. Updated Staff Report-Redlined
CITY COUNCIL STAFF REPORT
Meeting: May 02, 2023
Subject
Fiscal Year (FY) 2023-24 recommended funding allocations for the Community
Development Block Grant (CDBG) Program, the Below Market Rate (BMR) Affordable
Housing Fund (AHF), and the General Fund Human Services Grant (HSG).
Recommended Action
Authorize the City Manager to execute FY 2023-24 CDBG, BMR AHF, and General Fund
HSG funding agreements.
Reasons for Recommendation
Background
On November 07, 2022, the City of Cupertino issued an annual Notice of Funding
Availability (NOFA) and a Request for Proposals (RFP) (Attachment A), inviting
applicants to apply for eligible public services (two-year funding cycle) and capital
housing projects (one-year funding cycle). The funding would be part of the City’s Fiscal
Year 23-24 adopted budget. The NOFA/RFP submittal deadline was February 07, 2023.
The City received a total of ten applications during the submittal period.
At its March 9, 2023 meeting, the Housing Commission reviewed the CDBG, BMR AHF,
and General Fund HSG applications and made funding recommendations to the City
Council (Attachment C). While the CDBG program is administered through the U.S.
Department of Housing and Urban Development (HUD), the City Council has the final
approval for the BMR AHF and HSG funding requests. CDBG funding amounts will be
reduced or increased proportionately for FY 23-24 based on the final HUD allocations.
Given that the final HUD allocation may vary, the Housing Commission adopted
Resolution 17-02 (CDBG Contingency Plan, Attachment B), on May 11, 2017 to address
whether the City receives more or less CDBG funding from HUD. Public service funding
cycles have been determined by the timeframe in the City’s 2020-2025 Consolidated Plan.
The first cycle covered Fiscal Years 20-21, 21-22, and 22-23, and this current cycle will
cover Fiscal Years 23-24 and 24-25.
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Housing Commission Recommendation
The Housing Commission held a public hearing on March 9, 2023, to finalize the initial
ratings and rankings of the FY 2032-43 CDBG, BMR AHF, and General Fund HSG
funding allocations. The Commission recommended approval of the proposed FY 2023-
24 funding allocations.
CDBG Funding
HUD annually allocates CDBG funding to local jurisdictions for a range of community
development activities. Cupertino is one of nine entitlement jurisdictions within Santa
Clara County. In order to be classified as an entitlement jurisdiction and receive funds
directly from HUD, cities must have a population of 50,000 or more. Entitlement grants
are allocated on a formula basis and based on several objective measures of community
needs, including the extent of poverty, population, housing overcrowding, age of
housing, and the extent of population growth lag in relation to other metropolitan areas.
The CDBG Contingency Plan as described in Resolution 17-02 (attachment B) identifies
allocation options in the event that the funding either increases or decreases.
On February 27, 2023, HUD released a notice that the City will receive $358,910 in FY 23-
24 CDBG entitlement funding. Additionally, program income in the amount of $7,944
will be received and allocated from existing CDBG loan payoffs. There is also $222,032.28
in prior year unexpended CDBG funds. HUD regulations establish the maximum
percentages that may be allocated to CDBG administration and public services. Of the
total estimated funding, a maximum of 20% may be used for administrative costs to cover
salary and benefits of staff who operate the CDBG program, a maximum of 15% may be
used for public services, and a minimum of 65% must be used for capital housing projects.
As noted earlier, CDBG funding amounts will be reduced or increased proportionately
for FY 23-24 based on the final HUD allocations and City Council’s approval. The final
determination will be available May 15, 2023.
FY 23-24 CDBG Budget (est.)
Entitlement Amount (EN) $358,910.00
Program Income (FY 23-24) $7,944.00
Unexpended Funds (FY 21-22) $35,439.62
Unexpended Funds (FY 22-23) $186,592.66
Sub-Total $588,886.28
Program Administration (20% EN) $73,370.80
Public Service (15% EN) $55,028.10
Capital/Housing Projects (65% EN + Unexpended Funds) $460,487.38
Total $588,886.28
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HUD regulations require that eligible activities selected for funding must benefit very
low and low-income households, eliminate a blighted area, or address an urgent
(emergency) community need, and must also meet a HUD national objective. In addition,
only certain types of eligible activities qualify under the CDBG regulations. Examples of
eligible activities are:
• Public improvements
• Public service activities
• Affordable housing developments
• Property acquisition for affordable housing
• Rehabilitation of affordable units
2023-24 CDBG Program Administration Funds
An estimated total of $73,370.80 will be used for CDBG program administration, and this
falls under Budget Unit 260-72-707, CDBG General Admin. The City will use these funds
for administrative costs to cover partial salary and benefits of the City’s Housing Division
staff who operate the CDBG program.
2023-24 CDBG Capital Housing Project Funds (One-Year Funding Cycle)
An estimated total of $460,487.38 is available to be used for eligible CDBG capital housing
projects, and this falls under Budget Unit 260-72-709, CDBG Capital/Housing Projects.
This consists of FY 23-24 funding and unexpended funding from prior years. City staff
conducted extensive outreach and the NOFA/RFP was sent to over 250 contacts in the
affordable housing community. In addition, staff provided technical assistance to six
affordable housing developers and non-profits during this time, resulting in the receipt
of one application in this category, totaling $92,536.00. The City did not receive
applications for the excess $367,951.38 in funds and is, therefore, still actively seeking
eligible opportunities to expend the excess funding. When an appropriate activity is
identified, the City will complete a Substantial Amendment to the FY 22-23 and FY 23-24
Annual Action Plans to allocate the funding. Funding recommendations are listed in the
table below.
1 CDBG Capital Housing Projects
FY 23-24 Application Summary Funds
Available
Funding
Requests
Funding
Recommendations
FY 22-23
Funding
Allocations
a
Rebuilding Together Silicon
Valley- Homeowner Repair and
Rehabilitation Program
$92,536.00 $92,536.00 $88,966.00
Sub-Total $460,487.38 $92,536.00 $92,536.00 $88,966.00
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2023-24 CDBG Public Service Funds (Two-Year Funding Cycle)
An estimated total of $55,028.10 is available to be used for eligible CDBG public service
activities, and this falls under Budget Unit 260-72-710, CDBG Public Service Grants. These
activities include youth, senior and homeless services as well as other services that benefit
low- and moderate-income persons and households. The City received three applications
in this category, totaling $121,536.00, one of which was not eligible, for the reasons stated,
below. The two eligible applications totaled $63,536, resulting in a shortfall of $8,507.90.
Funding was decreased proportionally based on the City’s Contingency Plan. Funding
recommendations are listed in the table below.
The God’s Promise – Community Hub application was deemed ineligible for the
following reasons: 1) the application doesn’t leverage any other funding sources; 2) the
proposal doesn’t serve at least 51% low-moderate income (LMI) persons; 3) the project
description and milestones were not clearly defined; 4) inadequate organizational
capacity and lack of past performance measures; 5) the majority of the project budget
goes to administrative costs rather than direct service costs; and 6) the proposal doesn’t
fall within an eligible CDBG category.
City staff will make themselves available to God’s Promise to provide technical assistance
on future applications. The applications for Live Oak Adult Day Services and West Valley
Community Service’s CARE program are qualified for funding because they meet the
CDBG eligibility criteria that’s established by HUD, and they scored well on the
evaluation criteria that the Housing Commission uses to assess the applications.
2 CDBG Public Services
FY 23-24 Application Summary Funds
Available
Funding
Requests
Funding
Recommendations
FY 22-23
Funding
Allocations
a Live Oak Adult Day Services
$22,000.00 $19,054.05 $21,405.76
b
West Valley Community Services
(WVCS) – Community Access to
Resources and Education
Program (CARE)
$41,536.00 $35,974.05 $38,054.69
c God’s Promise – Community
Hub $58,000.00 Not eligible N/A
Sub-Total $55,028.10 $121,536.00 $55,028.10 $59,460.45
2023-24 BMR AHF Public Services (Two-Year Funding Cycle)
The BMR AHF receives its revenue from the payment of housing mitigation fees from
both non-residential (commercial, retail, hotel, research and development (R&D) and
industrial) and residential development projects. Formal agreements and monitoring are
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required for this program, but the requirements are less stringent than federal funding.
A total of $50,000 is available to be used for eligible BMR AHF public services, and this
falls under Budget Unit 265-72-711, BMR Affordable Housing Fund. The City received
one application in this category totaling $50,000.00. Funding recommendations are listed
in the table below.
3 BMR AHF Public Services
FY 23-24 Application Summary Funds
Available
Funding
Requests
Funding
Recommendations
FY 22-23
Funding
Allocations
a Project Sentinel – Fair Housing
Activities $50,000.00 $50,000.00 $50,000.00
Sub-Total $50,000.00 $50,000.00 $50,000.00 $50,000.00
2023-24 BMR AHF Capital Housing Project Funds (One-Year Funding Cycle)
The City estimates up to $4,900,000.00 will be available to fund eligible BMR AHF capital
housing projects for FY 23-24 after accounting for administrative and other expenses, and
this falls under Budget Unit 265-72-711, BMR Affordable Housing Fund. Over the course
of the year, staff met with multiple developers and non-profits to provide technical
assistance in order to generate affordable housing. The City did not receive any
applications for FY 23-24 BMR AHF Capital Housing Projects due to barriers such as the
high cost of land and lack of adequate funding available to leverage the development of
affordable housing. However, staff will continue to provide outreach and technical
assistance to interested affordable housing developers and non-profits throughout the
year.
2023-24 General Fund HSG Public Services (Two-Year Funding Cycle)
The General Fund HSG program is funded by the City’s General Fund. Formal
agreements and monitoring are required for this program, but the requirements are less
stringent than the requirements for federal funding. A total of $125,000 is available to be
used for eligible General Fund HSG public service activities, and this falls under Budget
Unit 100-72-712, Human Service Grants. Eligible public service activities are similar to
those under the CDBG program and include services that benefit seniors, homeless
persons and other low- and moderate-income persons and households. The City received
five applications in this category totaling $251,500, one of which was not eligible. The
four eligible applications totaled $126,500, resulting in a slight shortfall of $1,500. Funding
was decreased proportionally based on the City’s Contingency Plan. Funding
recommendations are listed in the table below.
As with the CDBG Public Service funds, The God’s Promise – Homeless Services
application was deemed ineligible for the following reasons: 1) the application doesn’t
leverage any other funding sources; 2) the project description and milestones are not
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clearly defined; 3) inadequate organizational capacity and lack of past performance
measures; and 4) the majority of the project budget goes to administrative costs rather
than direct service costs.
4 General Fund HSG Public Services
FY 23-24 Application Summary Funds
Available
Funding
Requests
Funding
Recommendation
s
FY 22-23
Funding
Allocation
s
a
Catholic Charities of Santa Clara
County – Long Term Care
Ombudsman Program
$10,000.00 $10,000 $10,000.00
b Maitri – MTH-Direct Client
Services $25,000.00 $24,678.11 $25,000.00
c
Senior Adults Legal Assistance
(SALA) – Legal Assistance to
Cupertino Elders
$16,500.00 $16,287.55
$15,000.00
d West Valley Community Services
– Haven to Home $75,000.00 $74,034.34
$65,780.00
e God’s Promise – Homeless
Services $125,000.00 Not eligible N/A
Sub-Total $125,000.00 $251,500.00 $125,000.00 $115,780.00
Sustainability Impact
Authorization of the housing funding agreements will not result in a sustainability
impact.
Fiscal Impact
CDBG programs and projects are funded by HUD grant funds. BMR AHF public services
and projects are funded by housing mitigation fees collected from residential and non-
residential development projects. General Fund HSG activities are funded through the
City’s General Fund. Budget allocations for approved funding allocations will be
included for City Council’s approval as part of the proposed and final budget.
California Environmental Quality Act
Authorization of the housing funding agreements is not a project subject to the California
Environmental Quality Act (CEQA).
Prepared by: Alec Vybiral, Assistant Housing Planner
Reviewed by: Kerri Heusler, Housing Manager
Luke Connolly, Interim Assistant Director of
Community Development
Benjamin Fu, Director of Community Development
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Approved for Submission by: Matt Morley, Assistant City Manager
Pamela Wu, City Manager
Attachments:
A - FY 2023-24 NOFA/RFP
B - Housing Commission Resolution 17-02 (CDBG Contingency Plan)
C - FY 2023-24 CDBG, BMR AHF, and HSG Funding Application Summary