PURPOSE:

The purpose of this report is for the City to enter into an Agreement with the State of California to accept a grant to construct improvements for the Cottages Childcare Center, and approve a Cooperation Agreement with the Redevelopment Agency to administer the use of the funds.

BACKGROUND:

Proposition 46, the Housing and Emergency Shelter Trust Fund Act was approved by voters statewide in 2002.  Part of the Trust Fund is a $25 million Jobs Housing Balance Incentive Grant Program offered to local governments, who have submitted an approved Housing Element and who have demonstrated in increase in the number of building permits issued for housing during the 2001 calendar year.  These funds can be used for capital improvements that serve the community including childcare and community centers 

The City of Burbank applied for grant funds based on the State formula, which allowed for an award up to $451,100.  The City�s original application requested funds to be used to construct the proposed Peyton-Grismer Activity Center.  In June 2003, the State accepted the City�s application, however, because the State received more applications that exceeded the amount available, Burbank�s award was reduced to $397,757.  Subsequently, due to some of the funding constraints imposed by the grant, the City has modified its application to redirect the funds toward the Cottages Housing and Childcare Center project, which includes a 92-space childcare center and 20 small-lot single family homes.

 ANALYSIS & CONCLUSIONS:

The Peyton-Grismer Activity Center is part of a larger housing rehabilitation project to revitalize a blighted neighborhood characterized by apartment buildings suffering from deferred maintenance and higher rates of criminal activity.  This project is proposed to be financed from the Redevelopment Agency�s 20% Set-aside affordable housing funds.  According to both State law and the City�s prevailing wage ordinance, affordable housing projects are exempted from paying prevailing wages.  However, if the City and Agency were to use the $397,757 in State grant funds toward the Peyton-Grismer project, it would trigger a requirement to use prevailing wages for the entire $5.6 million project, and raise the project costs by at least $1 million.   

It was therefore determined that these funds should be used for another project where the Agency is already paying prevailing wages.   The Cottages Childcare Center is a prevailing wage project that also qualifies under the Jobs Housing Balance Incentive Grant Program.  It is therefore recommended that the grant funds be used for this project.   The Cottages Childcare Center is currently under-construction and is anticipated to be completed in January 2004. 

It is also recommended that the Agency appropriate $397,757 from the 20% Set-aside affordable housing account for the Peyton-Grismer project to backfill the transfer of the grant funds.  The 20% Set-aside account just recently received $412,000 in unanticipated revenue from the Agency�s profit participation in the housing portion of the Cottages Housing and Childcare Center Project.   Effectively, the Agency will be saving $397,757 in Golden State Redevelopment Project Area funds that were initially funding the Cottages Childcare Center.

FISCAL IMPACT:

The City will be receiving $397,757 (Account No. 370.ND000.48010.1072) in State grant funds and appropriated for the Cottages Childcare Center (Account No. 370.CD21A.70004.00000.13150) , and appropriating $397,757 in 20% Set-aside funds from the unappropriated fund balance (Account No. 305.ND000.30004) to backfill funding for the Peyton-Grismer Project (Account No. 305.CD23A.70005.0000.13160).  This will effectively save the Redevelopment Agency $397,757 in Golden State Redevelopment Project Area funds initially earmarked for the Cottages Childcare Center.

RECOMMENDATION:

It is recommended that the City Council and Redevelopment Agency approve the resolution authorizing a contract between the City and the State to receive and appropriate the $397,757 in grant funds, appropriate $397,757 in 20% Set-aside affordable housing funds, and approve the Cooperation Agreement that allows the Agency to administer the funds received from the City.

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