BOS Agenda Date: May 6,2003
Agenda Item No. 37

County of Santa Clara
Office of the County Executive
Office of Affordable Housing
Housing and Community Development

CE06 050603

Prepared by: Charles Chew
Program Manager II
Reviewed by: Bill McWood
Management Analyst
Submitted by: Jane Decker

Deputy County Executive
DATE:

May 6, 2003

TO:

Board of Supervisors

FROM:
Peter Kutras Jr.

Acting County Executive
SUBJECT:

Public Hearing Regarding Funding Allocations for FY 2004 in the sum of $4,059,424 for the Community
Development Block Grant(CDBG)Program, HOME Investment Partnership Act(HOME)Program,
Emergency Shelter Grants(ESG)Program, and the Draft Annual Plan to Provide Housing, Public
Services and Community Development Activities.

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh.Jirn Beall, Liz Kniss
Acting County Executive; Peter Kutras Jr.
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BOS Agenda Date: May 6,2003
Agenda Item No.37

RECOMMENDED ACTIQN

Approve recommendations relating to funding allocations for FY 2004 in the sum of $4,059,424 for the Community
Development Block Grant(CDBG)Program, HOME Investment Partnership Act(HOME)Program, Emergency Shelter
Grants(ESG)Program, and the Draft Annual Plan, to provide Housing,Public Services and Community Development
activities.

Possible action:

a.

Conduct a public hearing regarding proposed funding allocations from the U.S. Department of Housing & Urban
Development(HUD)funds allocated to the County of Santa Clara in the total amount of $4,059,424 received for
the CDBG,HOME,and ESG Programs to provide housing, housing services, community development and
public services. The public hearing will provide the opportunity for citizens to comment on the proposed
specific allocations of funds and the draft FY 2004 Annual Plan, as required by the U.S. Department of Housing
and Urban Development.
b.

Approve the proposed allocation of FY 2004 HUD funds received for the CDBG,ESG,and HOME programs,
and the proposed contract terms, as recommended by the Housing and Community Development(HCD)
Program's Council Committee (CC). It is also recommended that the Board approve the recommended allocation
of the Board's discretionary share ($157,200) of the funding.
C.

Authorize County HCD staff to prepare all appropriate contracts, loan agreements and other necessary
documents, based on the Board's approval of the funding allocations from the CDBG and HOME competitive

pools, the Board's discretionary share, and the ESG Program, for the approval and signature of the Chairperson
of the Board following approval by County Counsel as to form and legality.
d.

Authorize County HCD staff to prepare all legal agreements/documentation necessary to fund the approved
projects(e.g. loan agreements, deeds of trust, promissory notes, subordination agreements, assignment
agreements, estoppel agreements, etc.), and authorize Chairperson of the Board to execute these agreements
following approval by County Counsel as to form and legality.

Board of Supeivisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Dale: May 6,2003
Agenda Kern No. 37

e.

Authorize County HCD staff to prepare contracts with non-entitlement cities to fund their local CDBG projects,
including unexpended city funds rolled over from the prior year. Authorize Chairperson of the Board to execute
these contracts following approval by County Counsel as to form and legality.

f.

Approve the FY 2004 Annual Plan. Authorize HCD staff to make editorial and other

necessary revisions to the draft, based on public and Board comments during the public hearing as necessary and
appropriate. Also, authorize staff to submit the approved Annual Plan to HUD,for their approval, by HDD's
May 15, 2003 deadline following review by County Counsel.

g-

Authorize the County Executive to sign the applications for federal funding, HUD form (SF424), as well as the
grant agreements, funding approval documents, certifications, and all other necessary documents required by
HUD for the County to receive FY 2004 CDBG,HOME,and ESG funds following approval by County Counsel
as to form and legality.
h.

Direct the County Executive's Office of Budget and Analysis to increase revenue and expenditures in budget
unit 168 to reflect the approved allocations in the FY 2004 Final Approved Budget.

FISCAL IMPLICATIONS

There will be no impact on the General Fund as a result of this action. These HCD programs are federally funded and
include sufficient funding to fully offset HCD administrative costs.

The new CDBG funding allocation received for FY 2004 ($2,215,000), plus estimated CDBG Program Income

($350,000), and reprogrammed funds (funds from cancelled projects or completed projects with residual funds) in the
amount of $19,015 for a total of $2,584,015, will be included in the FY 2004 Final Approved Budget under Budget Unit
168, Index 1168, Fund 0035. The County wide program income will include additional income of $300,000 from
Campbell, Morgan Hill, and Saratoga. The anticipated combined CDBG program income is $650,000.
The amount of new HOME Program funding allocation available for FY 2004 is $911,659, plus Program Income of
$20,000 and reprogrammed funds (funds from cancelled projects or completed projects with residual funds) in the
amount of $150,000 for a total of $1,081,659 will be included in the FY 2004 Final Approved Budget, under Budget
Unit 168, Index 1168, Fund 0038. Program Income results from the repayment of housing rehabilitation and
construction loans that are maintained in revolving loan fund accounts. Funds from the revolving loan accounts are then
redistributed as new loans.

The total FY 2004 federal grant for the ESG Program is $89,000 plus reprogrammed funds (funds from cancelled
projects or completed projects with residual funds)in the amount of $4,750 for a total of $93,750, which will be
included in the FY 2004 Final Approved Budget under Budget Unit 168, Index 1168, Fund 0034.

Altogether, $4,059,424 is available to the HCD program to administer housing and community development projects for

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh, Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Date;

6,2003

Agenda Item No. 37

FY 2004 (see Attachment D for summary offunding resources).
CONTRACT HISTORY

Annual contracts are executed for fiscal year funding allocations to all non-entitlement cities and all subrecipients (i.e.

nonprofit affordable housing sponsors and housing-related service providers). The contracts which will be prepared and
executed for the FY 2004 CDBG,HOME,and ESG projects recommended in this transmittal are subject to the

Contracting Principles Resolution adopted by the Board on October 28, 1997. All appropriate documents required by the
Contracting Principles policy will, therefore, be incorporated into all contract agreements pertaining to these projects.
CDBG Program

The Community Development Block Grant program was created by the Housing and Community Development Act of
1974. The County of Santa Clara has received funds to administer the CDBG program since its designation as an Urban
County in 1975. The jurisdictions which make up the Urban County include the cities/towns of Campbell, Los Altos,
Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, and Saratoga, as well as the unincorporated areas of the County.
It should be noted that the City of Cupertino has now left the Urban County to become an entitlement City and will
receive its future CDBG allocations directly from HUD. The County and the seven participating jurisdictions which

make up the Urban County have executed a joint powers agreement in order to meet the population threshhold and other
HUD mandated requirements(combined population in excess of 200,000 for receipt of the federal grant) to receive such
funding.

Activities funded by the County of Santa Clara and the participating cities since 1975 include the development of new
affordable housing units, rehabilitation of affordable housing units, construction of neighborhood centers, removal of
architectural barriers for the elderly and persons with disabilities, fair housing services, shelters for the homeless and
victims of domestic violence, and other housing-related public services.

At the end of each fiscal year, all residual and reprogrammed CDBG funds are budgeted, following Board of

Supervisors' approval of the proposed allocation of those funds. The amount anticipated, if any, will be determined at
year-end closeout.
HOME Program

The HOME Investment Partnership Act, otherwise known as the HOME Program, was enacted as Title II of the
Cranston-Gonzalez National Affordable Housing Act of 1990. The goals of the HOME program are to;

Expand the supply of decent, permanently affordable housing for lower income families, with an emphasis on
rental housing for very low income families;

Develop partnerships between Federal, State, and local levels of government, as well as private non profit
agencies and investors, to coordinate housing resources and implement affordable housing programs; and

Board of Supervisors; Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Date: May 6,2003

Agenda Item No. 37

Build the capacity of State and local governments and private non-profit agencies to implement affordable
housing programs.

HOME funds are used primarily to help finance housing construction projects. The County's funding priorities for

projects seeking FY 2004 HOME funds are based on the funding priorities identified in the Urban County Consolidated
Plan, which incorporates the HOME program goals described above.

Each participating jurisdiction in the HOME program is required to reserve at least 15% of its funds for housing to be
developed, sponsored, or owned by Community Housing Development Organizations(CHDOs). A CHDO is a private,
non-profit organization whose purpose is the provision of decent, affordable housing, which has demonstrated its
capacity for carrying out HOME eligible activities. CHDOs must have a history of serving the community within which
the housing projects to be assisted with HOME funds are to be located. All projects assisted with HOME funds are also
required to provide 25% non-federal matching funds. This year, all of the HOME projects are being developed by
CHDO's which exceeds the minimum requirements for CHDO's.

At the end of each fiscal year, all residual and reprogrammed HOME funds are budgeted, following Board of
Supervisors' approval of the proposed allocation of those funds.
ESG Program

Under the Stewart McKinney Homeless Act of 1987, Emergency Shelter Grant Program funding may only be used for
the rehabilitation of emergency shelters, essential services for homeless shelters, maintenance and utility costs for
shelters, and for homeless prevention activities, including rent payments. Since 1987, the County has allocated ESG
funds to approximately 80 projects.

Most of the agencies recommended to receive ESG funding for FY 2004 have been funded in previous years. Typical
ESG contract amounts range from approximately $4,200 to $8,450. Allocations to ESG-funded projects are awarded on
the basis of the annual Request for Proposal(REP) process.
REASONS FOR RECOMMENDATION

The recommendations meet the priorities in the Board approved 5-Year Consolidated Plan as follows:

Priority 1: Increase the Available Supply of Housing Affordable to Lower Income Households
1. Several new construction projects will be undertaken by affordable housing developers.
including:

-The Emergency Housing Consortium will continue with the progress of the new Gilroy Reception Center which will be
a 140 bed complex of shelter and transitional housing for homeless men, women and children. The next phase of the
project will be to construct affordable apartment units and 13 single family homes.

—The Emergency Housing Consortium also proposes to construct a total of9 units of housing in downtown San Jose for
Santa Clara County's youth with 4 units being transitional housing and 5 units as permanently affordable housing.

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive; Peter Kutras Jr.
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BOS Agenda Date: May 6,2003
Agenda Item No. 37

2. There are home ownership projects being developed including:

—Charities Housing Development Corporation will begin construction of 50 units of home ownership housing for lower
income, first time homebuyers in Campbell.

-South County Housing is proposing redevelopment of a site in Morgan Hill named Royal Court. The site has been
targeted by the City of Morgan Hill as severly blighted. The project will have 2 phases beginning with the construction
of 13 townhomes for lower income homeownership. HOME funds will be used for down payment assistance for 4 units.
Phase 2 will be construction of approximately 36 apartment units for lower income renters.

—South County Housing is also proposing new construction of 12 duet homes in Morgan Hill. HOME funds will be used
for construction and permanent financing of4 of the homes.

Priority 2: The Rehabilitation and Maintenance of Existing Housing:

1. Each participating city and the County's unincorporated area will continue to operate a local Housing Rehabilitation
Program by serving 18 lower-income households.

2. Economic and Social Opportunities(ESO)will continue to operate a Minor Home Repair Program in several cities
and in the unincorporated area by assisting approximately 48 households.

3. Project Match will be rehabilitating a Senior Group Residence in Los Gatos which is currently a 3 bedroom
single-family house. The rehabilitation will include the addition of 2 bedrooms and a handicapped-accessible bathroom.
Priority 3: Preserving Existing Affordable Housing:

1. Funds will be allocated to Catholic Charities to enable them to continue to provide shared housing for low income

people. It is anticipated that approximately 60 persons will be served.
Priority 4: Ensuring Equal Housing Opportunities:

1. The Santa Clara County Fair Housing Consortium, which includes the Asian

Law Alliance(ALA), Mid-Peninsula Citizens for Fair Housing(MCFH),Project Sentinel, and the Mental Health
Advocacy Project, will continue to provide resources for Urban County residents with tenant/landlord, housing
discrimination, and fair housing concerns.

2. The Empirical Research Group recently completed the Fair Housing Study which analyzed the level of fair housing
needs throughout the County of Santa Clara and the adequacy of the local response to that need. One of the
recommendations of the Study was to convene a Fair Housing Task Force whose function would be to evaluate the
remaining recommendations and a plan of implementation.

Priority 5: Increasing Housing Opportunities for Special Needs Households:
1. The Silicon Valley Independent Living Center will provide housing counseling

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Date: May 6,2003

Agenda Item No. 37

to the Urban County disabled.

2. Economic and Social Opportunities(ESO)will continue to provide handicapped access to Urban County residents
under the Minor Home Repair Program.

3. Projects funded under the Emergency Shelter Grant Program (ESG) will provide homeless persons with essential
services and homeless prevention programs. ESG funds will also be used to cover maintenance, operations, and utility
costs for homeless shelters.

4. Community Solutions, Women and Their Childrens Housing(WATCH)and InnVision are facilities for women
escaping domestic violence, which assist in providing emergency and short-term housing, food, counseling, and life
skills workshops, will be funded.

BACKGROUND

The five-year Urban County Consolidated Plan, which describes the housing and housing-related needs of the Urban
County jurisdictions, provides an overview of the communities' needs, and then sets out a strategy to meet those needs,
including the establishment offunding priorities. HCD operated under the 1995-2000 Consolidated Plan until last year
when an updated Consolidated Plan for FY 2001-2005 was approved by the Board of Supervisors on May 9, 2000. This
document approved by both the Board of Supervisors and HUD, will guide the HCD program through 2005.

An essential component of the five-year Consolidated Plan is the Annual Plan (Attachment C). The FY 2004 Annual
Plan is a yearly increment to the Consolidated Plan, which describes proposed uses of CDBG,HOME,ESG,and other
HUD funds that the County will receive during the upcoming program year. The Annual Plan contains brief descriptions
of all of the proposed CDBG,HOME and ESG projects for FY 2004 funding period. Funding allocations for the various
projects described in the Annual Plan were determined through the annual, consolidated Request for Proposal(RFP)and
application review process.

A streamlined application process was utilized for CDBG,HOME and ESG funding requests for FY 2004. The
application process began with a consolidated Request for Proposal(RFP), which was issued on November 15, 2002 for
agencies seeking CDBG,HOME,and ESG program funding. CDBG and HOME proposals submitted by the deadline of
January 10, 2003 were reviewed by Urban County Staff on February 4, 2003 and February 7, 2003. Through those
meetings, the Urban County staff recommended funding allocations. An Alternate Funding List was also developed and
is reflected in the Funding Recommendations packets. This list provides a means of quickly approving alternate projects
in the event funds become available or one of the originally approved projects is cancelled or caruiot be implemented for
some reason. This was done to reduce the time needed to approve projects which would otherwise have to return to the
Board of Supervisors for funding approval.

The Urban County staff recommendations were then reviewed by the HCD Citizen's Advisory Committee(CAC)on

February 27, 2003. The Urban County staff and CAC recommendations were then reviewed by the HCD Council
Committee on April 3, 2003 and these recommendations have been included with this transmittal for final decision by
the Board at their May 6, 2003 public hearing. The funding recommendations shown in Attachment A reflect the
deliberations and decisions made by the Council Committee at a public meeting.

Board of Supervisors; Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Date: May 6,2003
Agenda Item No.37

Also included in the CDBG funding recommendations and summarized in the Annual Plan is an estimated $650,000 of
program income generated by the repayment of housing rehabilitation loans and interest from Revolving Loan Funds
maintained by the Urban County jurisdictions. HUD requests that, at the beginning of each funding cycle, each
entitlement community indicate how it intends to utilize its estimated program income during the coming year. All of the

cities participating in the Urban County program intend to utilize the funds to provide additional housing rehabilitation
loans and some grants during the year.

In addition, each participating non-entitlement city conducted its own local Request for Proposal(RFP) process (except
the cities of Los Altos Hills and Monte Sereno) and identified projects to be funded with each cities' share of $157,200
discretionary share of the FY 2004 CDBG allocation. After the projects were identified, each city conducted at least one
public hearing before its city council and local recommendations were approved for each city's $157,200 discretionary
share (Attachment E).

As part of the overall distribution of the annual CDBG grant, the Board of Supervisors receives an allocation of CDBG
funds equal to the non-entitlement cities. These funds can be spent for any eligible activity and are not restricted to
housing activities in the manner that the housing pool funds are restricted.(Proposed funding allocations for the CDBG
and HOME programs are set forth in Attachment A,and the recommended allocation of ESG funds are described in
Attachment B).

ESG proposals submitted by the deadline of January 10, 2003 were reviewed by a sub- committee composed of Urban
County staff. Entitlement cities' representatives and HCD Council Committee members. This sub-committee met on
March 12, 2003 and made recommendations for the allocation of $93,750, as shown in Attachment B.

A determination of housing and other eligible housing—related projects to be funded from the FY 2004 CDBG,HOME
and ESG allocations must be made prior to the submission of the Annual Plan and funding applications to HUD.
Consistent with HUD regulations and policies of the Board of Supervisors, HCD staff is required to publish a notice

advising the general public of the public hearing regarding the allocations for the CDBG and HOME Programs, and the
availability of the Draft Annual Plan. HCD staff has met those requirements, and will also prepare all other documents
required by HUD for submission as part of the FY 2004 CDBG and HOME Program applications.

CONSEQUENCES OF NEGATIVE ACTION
If the Board does not take the recommended actions to hold the public hearings and make decisions regarding funding

allocations, the County of Santa Clara will not be in compliance with regulations governing the distribution of CDBG,
HOME and ESG funds, and the County, participating jurisdictions and non-profit agencies will not receive CDBG,
HOME,or ESG funding for Fiscal Year 2004. The priorities established in the 5-Year Consolidated Plan will not be
met, and the Urban County lower-income citizens will not be assisted in the ways outlined above.
STEPS EOT J.OWTNCr APPROVAT.

Upon Board approval of the actions recommended in this transmittal, obtain signature of Chairperson of the Board and
attestation by the Clerk of the Board on FY 2004 CDBG,Home and ESG contracts, loan documents and all other
documents required to complete each funding transaction. Return two copies of each contract, and other documents to
HCD,and retain one copy of each contract for the Board's files. Forward one (1) executed original contract document to

Board of Supervisors: Donald F. Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
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BOS Agenda Date; May6,2003
Agenda ttem No.37

each contractor.

ATTACHMENTS

•(Transmittal submitted on Apr 29, 2003 2:55:42 PM - PDF Version)
•Attachment A - Funding Recommendations (Miscellaneous)
• Attachment B - ESG Recommendations (Miscellaneous)

• Attachment C - Annual Plan (Miscellaneous)

• Attachment D - Summary of Funding (Miscellaneous)
• Attachment E - City Projects (Miscellaneous)

Board of Supeivisors; Donald F, Gage, Blanca Alvarado, Pete McHugh,Jim Beall, Liz Kniss
Acting County Executive: Peter Kutras Jr.
9