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HomeMy WebLinkAboutItem 6j. Consider Participating in the Urban County of San Luis Obispo, Overseen by the County of San Luis Obispo, for the 2027-2029 Community Development Block Grant Program Cycles Item 6j Department: Community Development Cost Center: 4007 For Agenda of: 7/21/2026 Placement: Consent Estimated Time: N/A FROM: Timmi Tway, Community Development Director Prepared By: Ethan Estrada, Assistant Planner SUBJECT: CONSIDER PARTICIPATING IN THE URBAN COUNTY OF SAN LUIS OBISPO, OVERSEEN BY THE COUNTY OF SAN LUIS OBISPO, FOR THE 2027-2029 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM CYCLES RECOMMENDATION 1. Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, Approving the Participation in the San Luis Obispo Region Urban County, Overseen by the County of San Luis Obispo, for the 2027 -2029 Community Development Block Grant Federal Program Cycles” (Attachment A); and 2. Authorize the City Manager to sign the 2027-2029 Cooperation Agreement to participate in the San Luis Obispo Region Urban County (Attachment C). POLICY CONTEXT The recommendation to participate in the 2027 -2029 Urban County for the Community Development Block Grant program is consistent with the Major City Goals for Housing and Homelessness Response, specifically Housing and Neighborhood Livability – Healthy, Safe, and Affordable Task 21 and the Homelessness Response goal to Collaborate with Partners to Prevent and Reduce Homelessness. Annual Community Development Block Grant (CDBG) funding provides vital support for local service providers, which aligns with the City’s Homelessness Response Strategic Plan, including the following Regional Collaboration and Engagement objective: Work collaboratively with the County’s Homeless Services Division to establish and support regional priorities, equitable and transparent allocation of resources, and to implement strategies in alignment with shared regional goals. 1 Housing and Neighborhood Livability – Healthy, Safe, and Affordable Task 2: “Promote the expansion and diversification of housing opportunities for all.” Page 297 of 322 Item 6j Additionally, participation in this agreement is consistent with policies provided in the City’s Housing Element, including: HE Policy 2.4: Encourage housing production for all financial strata of the City’s population, as allocated in the Regional Housing Needs Allocation, for the 6th cycle planning period. The number of units per income category are: extremely low and very low income, 825 units; low income, 520 units; moderate income, 604 units; and above moderate income, 1,405 units. HE Policy 8.1: Encourage housing development that meets a variety of special needs, including large families, single parents, disabled persons, the elderly, students, veterans, farmworkers, the homeless, or those seeking congregate care, group housing, single - room occupancy, or cohousing accommodations, u tilizing universal design. DISCUSSION Background Currently, the City, as well as Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, and the unincorporated areas of the County San Luis Obispo (“County”), are members of the Urban County for the 2024-2026 Cooperation Agreement term. Under this current agreement, the City’s participation in the Urban County will continue until June 30, 2027. The benefits of participating as a member are described in more detail in the next section below. On June 8, 2026, the County issued a letter to all eligible jurisdictions regarding participation in the Urban County for the 2027 -2029 Cooperation Agreement (“Agreement”) term that will encompass the 2027 -2028, 2028-2029, and 2029-2030 CDBG program cycles (Attachment B). The letter informed City staff that U.S. Department of Housing and Urban Development (HUD) reduced the timeline2 provided for jurisdictions to prepare their agreements. To comply with this new timeline, the County has proposed a restructuring of this process into two phases. Phase 1 includes the a pproval of a simplified version of the Agreement (Attachment C) that only includes the federally mandated components (discussed further below); Phase 2 includes the creation of individual Memoranda of Understanding (MOU) between each of the participating jurisdictions and the County to outline all other operational details. The County intends for these MOUs to be finalized by Fall 2027. Staff will bring the MOU before Council for final approval before submittal to the County. To continue participating in the Urban County, the legislative body of the jurisdiction must adopt a resolution approving the execution of the Agreement (Phase 1) that sets the terms and requirements of participation (Attachment C). The term of the Agreement is for a period of three CDBG program cycles commencing July 1, 2027, and ending on June 30, 2029. Upon execution of the Agreement, neither the County nor the City may terminate, withdraw, or be removed from the program during the three-year program period. 2 In the invitation to participate (Attachment B) the County provided a timeline stipulating that a resolution to adopt the Agreement must be submitted to the County by July 19. The County has been notified that the City would not be able to provide a resolution by that date and that staff will provide them with one as soon as possible. The County is agreeable on this matter. Page 298 of 322 Item 6j Benefits of Participating in the Urban County The Urban County has enabled participating jurisdictions to maximize the grant funds available, as HUD is able to disperse funds directly to the Urban County. The County, via the Urban County, is then able to disperse these funds to p articipants via formula-based allocations. Without this system, the City would have to compete for CDBG funding at the state level, would not be guaranteed a consistent annual CDBG allocation, and if granted funding at the state level, would be responsible for extensive administrative duties and reporting requirements. The County provides administrative support to the City’s CDBG program as a benefit of participating in the Urban County. County staff are a liaison with HUD and are responsible for:  Federal environmental reviews (NEPA)  Labor compliance, Section 3, and IDIS3 reporting  Procurement oversight  Administering funds to and monitoring of sub -recipients  Community needs assessment  Fair housing compliance Additionally, the City establishes its own CDBG funding priorities. Given that these priorities and recommendations are consistent with HUD’s CBDG regulations, the City is able to allocate CDBG funds to recipients of its choosing. The City has received a total of $1,476,814 in CDBG grant funding within the 2024 -2025, 2025-2026, and 2026-2027 CDBG program cycles combined. A majority of these funds have been allocated to affordable housing projects and community partners who provide supportive housing services (e.g., 1422 Monterey Street, Prado Homeless Services Center, etc.). Changes to the Cooperation Agreement Structure Due to the two-phased process discussed above, starting with the 2027-2029 program cycle, the Agreement has been adjusted to only include the federally mandated components that HUD requires. In previous years, these components, as well as other operational details such as the allocation of administrative funds, were all included within the Cooperation Agreement. However, this year, following execution of the Agreement, participating jurisdictions will establish MOUs with the County to finalize all other operational details (e.g., allocation of admin funds, responsibilities of parties, public services costs, conflict resolution, etc.). Doing so allows the Urban County to remain in compliance with HUD timelines and provides participating jurisdictions and the County increased flexibility to modify these details when needed, rather than locking these details into a Cooperation Agreement that can only be modified every three years. 3 Integrated Disbursement and Information System (IDIS) – HUD’s centralized online database used to track and report on CDBG funding and accomplishments. Page 299 of 322 Item 6j Public Engagement This item has been noticed in compliance with the City’s notification requirements, as a part of the July 21, 2026, City Council Meeting Agenda. The public has the opportunity to comment on the item at and / or before the meeting. In addition, as a part of the CDBG process, public hearings are held annually to establish funding priorities, to prepare the Human Relations Committee’s funding recommendations, and Council’s final approval of CDBG funding allocations. CONCURRENCE The Community Development Department, City Manager, and City Attorney’s Office have reviewed the new Cooperation Agreement presented by the County of San Luis Obispo. ENVIRONMENTAL REVIEW The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, as the action does not constitute a “Project” under CEQA Guidelines Section 15378. FISCAL IMPACT Budgeted: Yes Budget Year: 2027-29 Funding Identified: No Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ N/A State Federal Fees Other: Total $N/A There is no direct fiscal impact from the recommended actions. Costs to administer the CDBG program will be funded through the grant itself. CDBG funds received under the program provide an outside source of funding for affordable housing and social service programs that would otherwise not be funded or would draw fu nding from other priority City programs, services, and financial sources. Page 300 of 322 Item 6j ALTERNATIVES 1. Elect to not participate in the 2027-2029 Urban County. Should Council pursue this option, the City would have to compete for CDBG funds at the state level, likely receiving less than it would have through the Urban County if awarded any funding at all. Additionally, opting out of this Cooperation Agreement would result in increased program administrative costs. 2. Elect to participate in the 2027-2029 Urban County but alter the Cooperation Agreement. Should Council pursue this option, any requested changes would have to be compliant with HUD requirements. Additionally, due to the restricted HUD timeline, any such altered Cooperation Agreement would require immediate Council approval. ATTACHMENTS A - Draft Resolution approving participation in the 2027-2029 CDBG Federal Program B - Invitation to Participate in 2027-2029 Urban County C - Draft City of San Luis Obispo 2027-2029 Cooperation Agreement Page 301 of 322 Page 302 of 322 R ______ RESOLUTION NO. _____ (2026 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING THE PARTICIPATION IN THE SAN LUIS OBISPO REGION URBAN COUNTY, OVERSEEN BY THE COUNTY OF SAN LUIS OBISPO, FOR THE 2027-2029 COMMUNITY DEVELOPMENT BLOCK GRANT FEDERAL PROGRAM CYCLES WHEREAS, the County of San Luis Obispo (“County”), a political su bdivision of the State of California, and the City of San Luis Obispo (“City”), a municipal corporation, desire to participate in the Community Development Block Grant (CDBG) Program administered by the U.S. Department of Housing and Urban Development (HUD); and WHEREAS, said program will promote the public health, safety, and welfare by providing grant funds to be used by the City and County (“parties”) to improve housing opportunities for low- and moderate-income households, to encourage economic reinvestment, to improve community facilities and public services, and to provide other housing-related facilities or services; and WHEREAS, HUD requires that the parties enter into a cooperation agreement to define their rights and obligations as a prerequisite of participation in the CDBG Program; and WHEREAS, the City desires to continue its participation for the upcoming 2027 - 2029 Community Development Block Grant federal program cycles. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that: SECTION 1. Findings. Based upon all the evidence, the City Council makes the following findings: a) The proposed Cooperation Agreement is consistent with the General Plan and with City and County policies encouraging cooperation between agencies on issues of regional significance such as affordable housing and public services. b) The proposed Cooperation Agreement will promote the public health, safety, and welfare by enabling the City and County to participate in HUD’s Urban County entitlement program, thus making funds available for a variety of housing projects, economic development, and public service programs not otherwise possible or available. c) The City and County will enter into a Memorandum of Understanding that will establish administrative policies and procedures, performance standards, funding schedules, project descriptions and funding, and guidelines for CDBG program implementation. Page 303 of 322 Resolution No. _____ (2026 Series) Page 2 R ______ SECTION 2. Environmental Determination. Participation in the San Luis Obispo region urban county does not constitute a project, as defined in California Environmental Quality Act (CEQA) Guidelines § 15378, and is not subject to environmental review. SECTION 3. Action. The City Council does hereby authorize the City Manager to sign the Urban County Cooperation Agreement with the County to enable continued joint participation in the Urban County CDBG program administered by HUD for fiscal years 2027-2029. SECTION 4. Community Development Director Authority. The Community Development Director is hereby authorized to act on behalf of the City in connection with the implementation of the agreement, on -going operation of the CDBG program, and all other activities necessary to carry out the agreement, including execution of the Cooperation Agreement and the associated Memorandum of Understanding thereto. Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _______________ 2026. ___________________________ Mayor Erica A. Stewart ATTEST: Page 304 of 322 Resolution No. _____ (2026 Series) Page 3 R ______ ______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: ______________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 305 of 322 Page 306 of 322 COUNTY OF SAN LUIS OBISPO DEPARTMENT OF SOCIAL SERVICES Homeless Services Division Devin Drake Director Linda Belch Deputy Director ____________________________________________________________________________________________________________________ __________________________________________________________________________________ County of San Luis Obispo Department of Social Services P.O. BOX 8119, San Luis Obispo, CA 93403-8119 | (P) 1-805-788-9491 | (F) 805-788-2457 | slocounty.ca.gov/dss June 8, 2026 Whitney McDonald, City Manager City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 934201 Subject: Urban County Participation Decision Letter Dear Ms. McDonald, Thank you for the City of San Luis Obispo’s continued participation in the Urban County of San Luis Obispo (“Urban County”) and for your partnership in delivering critical community development and housing programs. We are writing to invite the City to participate in the Urban County for the upcoming 2027–2029 Cooperation Agreement term. Under the City’s current 2024–2026 Cooperation Agreement, participation will continue through June 30, 2027. To ensure uninterrupted eligibility for U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) entitlement funds, participating jurisdictions must execute a new Cooperation Agreement for the next three-year cycle. Participation Requirements for the 2027–2029 Term To confirm the City’s participation in the Urban County for fiscal years 2027–2028, 2028–2029, and 2029– 2030, please complete the following steps: 1. Submit an official letter to the County stating the City’s intent to participate. • Email to Marge Castle at mrcastle@co.slo.ca.us by July 8, 2026. Page 307 of 322 ___________________________________________________________________________________________________________________________________ County of San Luis Obispo Department of Social Services P.O. BOX 8119, San Luis Obispo, CA 93403-8119 | (P) 1-805-788-9491 | (F) 805-788-2457 | slocounty.ca.gov/dss Eligibility and Funding Implications If the City elects to participate in the Urban County: • The City will be eligible for HUD CDBG entitlement funding through the Urban County for all three fiscal years. • Participation does not preclude the Urban County from applying for HOME, State CDBG, or State ESG funds. • Consistent with HUD requirements, participating jurisdictions are not eligible to apply directly to the State CDBG Program for the duration of the Cooperation Agreement. Next Steps: The County is currently drafting the 2027–2029 Cooperation Agreement and will submit to HUD for review prior to ratification. We anticipate providing this to the cities to review within the next week. The County will need to receive a signed copy of the 2027–2029 Cooperation Agreement no later than Friday, July 17th. The County will take the 2027–2029 Cooperation Agreements to the County Board of Supervisors for ratification on Tuesday, August 4th. The County must submit the Urban County qualification package to HUD no later than Monday, August 10th. If the City chooses not to participate, it must notify both the County and the HUD Los Angeles Field Office by July 8, 2026. We value our partnership with the City of San Luis Obispo and look forward to continuing to work together to support community development and housing needs across the region. Please feel free to contact us with any questions or if you need assistance preparing your council resolution. If you have any questions or concerns regarding this process or the County’s HUD programs, please contact Marge Castle, Program Manager, at (805) 788-9491. Best regards, Marge Castle Program Manager Page 308 of 322 Page 1 of 8 COOPERATION AGREEMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY OF SAN LUIS OBISPO FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM, THE HOME INVESTMENT PARTNERSHIPS PROGRAM, AND THE EMERGENCY SOLUTIONS GRANT PROGRAM FOR FISCAL YEARS 2027 THROUGH 2029 THIS COOPERATION AGREEMENT is made and entered into on the date and year last written below, by and between the County of San Luis Obispo, a political subdivision of the State of California, hereinafter called “County,” and the City of San Luis Obispo, a municipal corporation of the State of California, located in the County of San Luis Obispo, hereinafter called “City;” jointly referred to as “Parties”. WITNESSETH WHEREAS, in 1974, the U.S. Congress enacted, and the President signed a law entitled, The Housing and Community Development Act of 1974, herein called the “Act.” The Act is omnibus legislation relating to federal involvement in a wide range of housing and community development activities and contains eight separate titles; and WHEREAS, Title I of the Act is entitled “Community Development” and governs programs for housing and community development within metropolitan cities and urban counties or communities by providing financial assistance annually for area-wide plans and for housing, public services, and public works programs; and WHEREAS, the Community Development Block Grant Program (hereinafter referred to as “CDBG”), the HOME Investment Partnerships Act Program (hereinafter referred to as “HOME”), and the Emergency Solutions Grant Program (hereinafter referred to as “ESG”) are consolidated under Title I of the Act; and WHEREAS, the County has requested of the federal Department of Housing and Urban Development, hereinafter referred to as “HUD,” designate the County as an “Urban County;” and WHEREAS, the County needs to requalify as an urban county and will be eligible to receive CDBG funds provided that the County’s entitled cities defer their entitlement to the County to enable both the County and the entitlement cities to jointly participate in the program; and WHEREAS, the City desires to participate jointly with the County in the Urban County as authorized by signing this Cooperation Agreement; and Page 309 of 322 Page 2 of 8 WHEREAS, if HUD redesignates the County as an urban county, then the County may also be eligible to receive funds from the HOME Program and the ESG Program; and WHEREAS, the CDBG Regulations issued pursuant to the Act provide qualified urban counties must submit an application to HUD for funds, and cities and smaller communities within the metropolitan area not qualifying as metropolitan cities may join the County in said application and thereby become a part of a more comprehensive County effort; and WHEREAS, as the urban county applicant, the County must take responsibility and assume all obligations of an applicant under federal statues, including: the analysis of needs, the setting of objectives, the development of community development and housing assistance plans, the consolidated plan, and the assurances of certifications; and WHEREAS, by executing this Agreement, the Parties hereby give notice of their intention to participate in the urban county CDBG, HOME, and ESG Programs; and WHEREAS, the City Manager of the City of San Luis Obispo is authorized to execute this Agreement on behalf of the City; and WHEREAS, the Chairperson of the Board of Supervisors or the Chief Executive Officer of the County of San Luis Obispo is authorized to execute this Agreement on behalf of the County NOW THEREFORE, in consideration of the mutual promises, recitals and other provisions hereof, the Parties agree as follows: Page 310 of 322 Page 3 of 8 SECTION I. General. A. Full Cooperation. The County and the City agree to cooperate to undertake, or assist in undertaking, essential community development and housing assistance activities, as approved and authorized between the Parties in the CDBG Agreements, including the Consolidated Plan. B. Term of Agreement. This Agreement shall remain in effect for the three- year program period of Federal Fiscal Years 2027, 2028, and 2029, and until funds granted and program income received during the three-year period are expended and the funded activities are completed. Neither the County nor the City may terminate, withdraw, or be removed from the program during the three-year program period. The three (3) year period commences on October 1, 2027, through September 30, 2030. a. The County shall, by the date in the Urban County Qualification Deadlines published on the HUD Exchange Urban Counties website for the next qualification period, notify the Participating Jurisdictions by letter of their right not to participate in the Urban County. C. Scope of Agreement. This Agreement covers the following formula funding programs administered by HUD where the County is awarded and accepts funding directly from HUD: the CDBG Program, the HOME Program, and the ESG Program. a. The participating City understands and agrees that it may receive a formula allocation under the HOME and ESG Programs only through the Urban County. This does not preclude the Urban County or City from applying for HOME or ESG funds from the State, if the State allows. b. The participating City understands and agrees that it may not apply for grants under the State CDBG Program for the fiscal years during the period in which the Municipality participates in the Urban County’s CDBG Program. D. Amendments. The Parties agree to adopt amendment(s) to this Agreement as may be required by HUD to meet any new Urban County Qualification requirement(s), when applicable. Failure by either Party to adopt any such amendment, and to submit such amendment to HUD, will void the agreement for such qualification period. SECTION II. Program Administration. Page 311 of 322 Page 4 of 8 A. City Agreements. Pursuant to 24 CFR 570.501(b), the City is subject to the same requirements applicable to subrecipients, including the requirement of executing a written agreement with the County as set forth in 24 CFR 570.503. B. Use of Program Income. The County may transfer the program income to the City, upon its termination of Urban County participation, provided that the City begins participating as an independent CDBG Entitlement grantee and agrees to use the program income in its own CDBG Entitlement program. C. Fair Housing Implementation. The Parties agree that no Urban County funding shall be allocated or expended for activities in or in support of any cooperating unit of general local government that does not affirmatively further fair housing within its own jurisdiction or that impedes the County’s actions to comply with its fair housing certification. D. Consolidated and Further Continuing Appropriations Act. The Parties to this Agreement understand and agree that they may not sell, trade, or otherwise transfer all or any portion of CDBG funds to a Metropolitan City, Urban County, unit of general local government, or insular area that directly or indirectly receives CDBG funds in exchange for any funds, credits, or non-Federal considerations, but must use such funds for activities eligible under Title I of the Housing and Community Development Act of 1974, as amended. E. Special Provisions for the Urban County. The Urban County is prohibited from funding activities in, or in support of, any Participating Jurisdiction that impedes the County’s actions to comply with the County’s Fair Housing Certification. Noncompliance with the duty to affirmatively further fair housing by a Participating Jurisdiction may constitute noncompliance by the Urban County. SECTION III. Compliance with Federal Statutes and Regulations. A. General. The County and the City shall take all actions necessary to assure compliance with the County’s certification under Section 104(b) of Title I of the Housing and Community Development Act of 1974, as amended, that the grant will be conducted and administered in conformity with: a. Title VI of the Civil Rights Act of 1964 (and the implementing regulations at 24 CFR Part 1); Page 312 of 322 Page 5 of 8 b. The Fair Housing Act, and the implementing regulations at 24 CFR Part 100, and will comply with the obligation to duty to affirmatively further fair housing; and c. Section 109 of Title 1 of the Housing and Community Development Act of 1974, and the implementing regulations at 24 CFR Part 6, which incorporates: i. Section 504 of the Rehabilitation Act of 1973, and the implementing regulations at 24 CFR Part 8; ii. Title II of the Americans with Disabilities Act, and the implementing regulations at 28 CFR Part 35; iii. The Age Discrimination Act of 1975, and the implementing regulations at 24 CFR Part 146; iv. Section 3 of the Housing and Urban Development Act of 1968; v. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and the implementing regulations at 49 CFR Part 24; vi. Section 104(d) of Housing and Community Development Act of 1974, and the implementing regulations at 24 CFR Part 42; and d. Other applicable laws Page 313 of 322 Page 6 of 8 B. Certification Regarding Policies Prohibiting Use of Excessive Force and Regarding Enforcement of State and Local Laws Barring Entrances. The County and the City each have adopted and are enforcing: a. A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and b. A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location which is the subject of such non-violent civil rights demonstrations within its jurisdiction. NOW, THEREFORE, it is agreed between the parties hereto that: Agreement Signatures. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or scanned signature by any of the Parties and the receiving Party may rely on the receipt of such document so executed and delivered by facsimile or email as if the original had been received. The Parties hereto have caused this Agreement to be executed and attested by their proper officer thereunder duly authorized. Page 314 of 322 Page 7 of 8 IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and the year set forth below. COUNTY OF SAN LUIS OBISPO, A Political Subdivision of the State of California Jimmy Paulding Chairperson of the Board of Supervisors ATTEST: Matthew P. Pontes Ex-Officio Clerk of the Board of Supervisors BY: Deputy Clerk (SEAL) APPROVED AS TO FORM AND LEGAL EFFECT: Jon Ansolabehere County Counsel By: Deputy County Counsel Dated: Page 315 of 322 Page 8 of 8 CITY OF SAN LUIS OBISPO, a California Municipal Corporation BY: Whitney McDonald City Manager Date: APPROVED AS TO FORM AND LEGAL EFFECT: By: Christine Dietrick City Attorney Dated: Page 316 of 322