PURPOSE

This resolution requests 1) the City Council to approve/file the FY 2006-07 Annual Plan of the Consolidated Plan (2003-08) submission involving community planning and development programs and activities; 2) File federal fund applications for the Community Development Block Grant (CDBG) and Home Investment Partnerships Programs (HOME); 3) File the 2006 Final Statement of Community Development Objectives and Projected Use of Funds; 4) Authorize the City Manager to execute U.S. Department of Housing and Urban Development (HUD) funding agreements for CDBG and HOME Programs, act as the City�s Certifying Officer under 24 CFR, Part 58 � Environmental Review Procedures, and execute sub-recipient contracts with organizations utilizing CDBG and HOME funds, as applicable; and 5) permit the extension of specific CDBG Reimbursable Contracts for capital projects.

BACKGROUND

The application process for federal funds was consolidated into one procedure pursuant to regulations dated January 5, 1995, covering 24 Code of Federal Regulations Part 91, Consolidated Submissions for Community Planning and Development Programs. The Consolidated Plan is required every five years and was last submitted for the period 2003-08.  It includes a needs assessment for housing and community development and the homeless, a housing market analysis, a strategic plan, an annual plan, a monitoring plan, program certifications, and a description of the citizen participation and consultation process undertaken.

The Consolidated Plan�s strategy describes a general assessment of needs for all households, and particularly very low and low-income households at or below 80% of median family income, including minorities, elderly, disabled, and large families. It details federal, state, local and private programs and resources available to meet eight priority needs including housing, homeless and special population(s) programs, community facility and infrastructure, economic development, and community services.

The Consolidated Plan also entails applications for four federal formula grants: 1) CDBG; 2) HOME; 3) Emergency Shelter Grant; and 4) Housing Opportunities for Persons with AIDS. Of these entitlement programs, Burbank is a recipient of and applies for CDBG and HOME funds on an annual basis. Activities eligible under the CDBG program must principally benefit persons of low and moderate income, aid in the prevention or elimination of slums and blight, or address community development needs having a particular urgency. HOME funds must serve affordable housing activities for very low and low-income households.

On a yearly basis to update the Consolidated Plan�s progress, Burbank submits an Annual Plan (Binder 1) detailing the funding and resources available to address strategy goals. Programs and activities, which meet Plan goals are described, and unit objectives by fund resource and dollars to be allocated and expended are quantified. The Annual Plan must be submitted to HUD no later than 45 days prior to the start of the fiscal year, or on or about May 15, 2006 this year.

The 2006 Annual Plan details federal, state, and local fund resources totaling over $17.8 million, including $1.35 million in federal CDBG entitlement, reallocated funds, and program income, and $813,379 in HOME funds. CDBG and HOME resources combined with the Section 8 program provide the large majority of federal funds available to address Consolidated Plan projects and activities.  

ANALYSIS:

CDBG Nationally[1]

In February 2005, President Bush�s FY 2006 budget called for eliminating the CDBG Program. Under the Strengthening America�s Communities Initiative (SACI), CDBG and 17 other federal community and economic development programs would have been eliminated and replaced by a single new and untested economic development program administered by the Department of Commerce.

A broad coalition (CDBG Coalition) of national associations and organizations representing local elected officials, community development practitioners, and nonprofit organizations condemned the SACI proposal and rallied in defense of CDBG. Congress ultimately rejected the proposal and funded the CDBG program at HUD for 2006 at $3.711 billion in formula grants. This was a 10 percent reduction compared with 2005 ($4.11 billion) and over a 14 percent reduction compared to 2004 (4.331 billion).

The President�s FY 2007 budget[2] keeps CDBG at HUD but proposes just $2.775 billion[3] for CDBG formula grants. If that funding figure is enacted, it would reduce CDBG formula funding by an additional 25 percent over the FY 2006 level. The CDBG Coalition has called for no less than $4.5 billion in CDBG formula funding for FY 2007.

The CDBG Coalition conducted a recent survey on the impact of recent reductions in the CDBG Program and generated over 350 responses from CDBG formula grantees in 43 states and the Commonwealth of Puerto Rico. These respondents represent 30 percent of all CDBG formula grantees, including 68 percent of all CDBG state programs and 28 percent of all entitlement communities. The survey�s respondents received a total of $1,845,407,116 in CDBG formula allocations for FY 2006, representing 50 percent of all 2006 CDBG formula funding.

The survey asked respondents to provide projections of what they will be able to achieve with their reduced 2006 formula allocations as compared with the results they achieved using their 2004 grants. The survey results suggest that the 14 percent reduction in CDBG formula funding over the last two fiscal years is having a substantial negative effect on the collective ability of states, cities, and counties to serve Americans in need, promote homeownership, grow local economies, and strengthen the nation�s infrastructure.

Projected reductions from states, cities, and counties include:

• 5,588 fewer businesses to be assisted, 14,881 fewer jobs to be created and 3,345 fewer jobs to be retained.

• 5,843 fewer households to be assisted through homebuyer assistance activities, including a total of 2,533 first-time homebuyers and 1,828 minority households.

• 5,064,408 fewer low-and moderate-income persons to be served.

• 255,569 fewer elderly persons to be served.

• 391, 823 fewer children and youth to be served.

• 253,187 fewer persons with special needs to be served.

• 196,150 fewer homeless persons to be served.

• 50,046 fewer households to be assisted through housing rehabilitation activities, including 5,225 elderly households.

• 1,251 new city and county public improvement projects to be canceled or delayed and 473 fewer state public improvement projects.

CDBG-Burbank (Estimated 2007)

Based on the President�s FY 2007 budget proposal, the National Association of Housing and Redevelopment Official�s (NAHRO) projection of Burbank�s entitlement for 2007 is $907,874 or $242,029 less than for 2006 assuming CDBG program income is $200,000. At a total CDBG fund availability of $1,107,874 (entitlement plus estimated program income), Burbank�s funding for 2007 capital projects would be $720,118 and public services would total $166,181 or 18 percent less for each funding category in 2007 as compared to 2006.

CDBG-Burbank (2006)

Compared with 2005 [$1,809,997 and $862,599], this year�s CDBG funding is $461,094 (25%) less and HOME funds are less by $49,220 (6%).  CDBG resources and fund use by category are as follows:

Fiscal Year 2006 Community Development Block Grant Resources

Fiscal Year 2006 Community Development Block Grant Funds by Category

* Statutory Limits: Program Administration (20%); Public Services (15%)

A 2006 Proposed Statement of Community Development Objectives and Projected Use of Funds reflect how CDBG funds are recommended for use by program, project and activity. The Burbank City Council will consider the recommendations of the Community Development Goals Committee (Goals Committee) and the City�s Executive Staff, and approve projects and activities to be submitted as the Final Statement of Community Development Objectives and Projected Use of Funds.

Fiscal year 2006 HOME funds ($732,041) will be used by the Burbank Housing Corporation (a Community Housing Development Organization) for housing acquisition and rehabilitation activities, with HOME program administration funded at $81,338 (Total: $813,379). Specific HOME projects will be approved by the City Council at a later date once projects are identified.

For CDBG capital projects, a Notice of Fund Availability and a Request for Proposals was published October 1 and 5, 2005. Proposals were accepted until October 28, 2005. A total of eight projects for $1.324 million were received.

Capital projects (Exhibit A) as recommended by the Goals Committee and the Executive Staff were considered and approved by City Council Resolution 27,156 on January 17, 2006. The approval was based on an estimated 2006 capital fund total of $965,259.

When CDBG entitlement notices were released by HUD actual capital funds available were reduced to $876,787 or $88,472 less than approved by the City Council in January 2006. Therefore, to adjust the City Council�s original approval, the Goals Committee recommends reducing the Code Enforcement program to $46,979 (Exhibit A-1)

The Executive Staff recommends reducing the Public Works Department-Sidewalk Reconstruction project to $301,528 to meet the $88,472 cut in funds, but proposes re-funding the project to the originally approved $390,000 at a future date. [In FY 2001 and FY 2002, CDBG funds of approximately $1.23 million were expended to purchase two parcels as part of the Ovrom Park project (115-123 E. Cedar and 140-144 E. Providencia at a cost of $368,000 and $865,000, respectively)]. It is likely that these funds may be reimbursed to CDBG by the City. In that eventuality, it is possible that other eligible infrastructure projects in the City�s �focus neighborhoods� which are within CDBG eligible areas may be identified.

HUD has been advised of this possible scenario and has approved the City�s planned methodology to reprogram reimbursed CDBG funds through the �substantial amendment� process. This process will necessitate public notification and citizen comment/participation, and separate action by the City Council to approve the alternate projects identified. 

For CDBG public services, a Notice of Fund Availability and a Request for Proposals was published December 17 and 21, 2005. Proposals were accepted until January 26, 2006. A total of 20 proposals were received equaling $532,612 (Binder 2).  The recommendations of both committees are reflected in Exhibit B, and also below.

This year the Goals Committee met on three occasions: On 2/16/06 to review public service proposals; on 3/3/06 to take public and organization comment; and on 3/9/06 to make recommendations. The Executive Staff met on 3/15/06 to review proposals and make recommendations.

Traditionally, the Goals Committee has considered funding agencies with limited other resources, while encouraging new programs that supplement existing City community services, and balancing the proportion of available funding between general and youth services with those supporting the homeless/needy, the disabled, senior citizens, and other very-low income residents. However, this year�s recommendation is based on two factors: 1) Public service funding is greatly reduced ($69,165) and 2) The availability or lack thereof of other resources for each organization. The Goals Committee�s comments and funding approval discussion is contained in the Committee minutes for March 9, 2006 (Attachment 1).

Since public service funding is 25 percent less than last year, the Goals Committee used this reduction as a starting point for each nonprofit organization and then made adjustments based on the need of the organization and their ability to rely on other resources. The Goals Committee recommendations follow below.

The Executive Staff took a similar approach to the Goals Committee but opted to use a straight 25 percent reduction for a majority of the organizations.

** Fund Fair Housing Council ($18,000) with CDBG Program Administrative Funds

Both committees recommend the federal requirement for fair housing services as proposed by the Fair Housing Council of the San Fernando Valley be funded ($18,000) with CDBG program administration funds.  Administration funds are recommended at the 20 percent statutory maximum or $269,781

Regarding prior year CDBG capital projects, the Community Development Department anticipates that some contracts will not meet their time of performance dates (June 30, 2006), and require a time of performance extension to June 30, 2007, with relevant amounts carried over, as applicable. With City Council approval these contracts will be extended.

Citizen Participation:

Burbank encourages any citizen and/or group comment on the Annual Plan through a combination of public notices, postings, mailings and meetings. Public comment is requested on community needs, strategies, programs, projects and activities. The Burbank City Council and the Community Development Goals Committee hold public meetings annually. The City further advertises Notices of Fund Availability and request for proposals and solicits public review and comment on Annual Performance Reports pertaining to the use of federal funds.

For 2006, the Community Development Department received one citizen comment encouraging the City to utilize CDBG funds on infrastructure projects to alleviate traffic congestion, and to not use funds for fair housing services, which in the citizen�s opinion attracts or results in unwanted and undesirable elements in the community and detracts from neighborhoods by facilitating graffiti, crime and gang activity.

In response to this comment, the 2006 Annual Plan includes $1.1 million in public works proposals to improve streets, sidewalks and alleys, and to install pedestrian ramps in CDBG eligible areas. Of the projects proposed, $745,800 has been approved to improve streets and sidewalks. An additional $1.2 million in reimbursed CDBG funding is tentatively earmarked for other infrastructure improvements to be identified at a later date.

Fair housing services are mandated by HUD and federal guidelines to provide equal housing opportunities and equal access for all citizens and particularly for those protected classes identified by state and federal law. The City must either implement the services on its own or contract out. The City contracts with the Fair Housing Council of the San Fernando Valley for these services at a cost of $18,000 annually. This contract not only fulfills the City�s mandate to provide fair housing services, but also at a much lower cost than if the City were to undertake the services itself.

FISCAL IMPACT

For 2006, Block Grant funds ($1,348,903) have decreased $461,094 (25%), while HOME funds ($813,379) are down $49,220 (6%) compared to last year.  

RECOMMENDATION

Staff recommends that the City Council adopt the proposed resolution.

Enclosures:

Binder 1: 2006-07 Annual Plan Update (Consolidated Plan 2003-08)

Binder 2: 2006-07 CDBG Public Services Proposals

Exhibit A: 2006-07 CDBG Capital Projects (Approved 1/17/06)

Exhibit A-1: 2006-07 CDBG Capital Projects (Revised Recommendations)

Exhibit B: 2006-07 CDBG Public Service Project(s) Recommendations

Attachment 1: Community Development Goals Committee Minutes (3/9/06)

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