HomeMy WebLinkAbout04/27/1993 Item 4 - CDBG Application Strategies IIIIInlyllll�lllllll� I MEETIN_DATE
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city of San Luis OBispo
COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: Arnold Jonas, Community Development Director; By: Jeff Hook,
/associate Planner
SUBJECT: Consideration of application strategies for Community Development Block Grant
funding through the US Department of Housing and Urban Development.
CAO RECOMMENDATION: Review the CDBG issue paper and, by motion, provide
direction to staff on the appropriate application strategy.
REPORT-IN-BRIEF
The City has the option of participating in the federal Community Development Block Grant
program starting in July 1994. As explained below, the CDBG program could provide
significant funding to implement affordable housing and economic development programs. This
report introduces the CDBG program and discusses strategies for applying for the grant.
Based on meetings with the CDBG program director and city staff from the other "metro cities"
of Paso Robles and Atascadero, the report concludes that a joint "urban county" strategy would
be desirable provided that the metro cities received the same level of funding that they would ,
otherwise have received if they applied individually for CDBG funding and that they would
retain program control. A draft cooperation agreement is attached to show how such a joint
strategy might be structured.
If the City Council supports city participation in the CDBG program, the report outlines three
basic application strategies:
1. Direct staff to apply for CDBG funding for the City of San Luis Obispo individually as a
metro city, and do not apply jointly with the other cities or the County.
2. Direct staff to pursue the "urban county" strategy by jointly applying for the CDBG program
with the other incorporated cities and the County of San Luis Obispo, ensuring that the
minimum "baseline" objectives outlined in the report are met.
3. Direct staff to purse the "urban county" strategy, pursuing additional financial incentives for
the cities beyond the "baseline" objectives.
Time is of the essence, whichever strategy is chosen. The City must advise HUD by May 21,
1993 whether it intends to participate in the program and which application strategy it intends
to use.
SITUATION
The cities of San Luis Obispo-Atascadero-Paso Robles ("metro cities") have been jointly
- designated as a "Metropolitan Area" by the Federal government, and are, for the first time,
eligible to participate in the Community Development Block Grant "Entitlement Cities" Program
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administered by the U.S. Department of Housing and Urban Development (HUD), starting in
the 1994 program year. The program could annually provide up to about $1.2 million for the
metro cities or, if done on an urban county basis, about $2.5 million countywide toward housing
and economic development projects targeted for low- and moderate-income persons. This issue
paper introduces the program, and provides information to help councilmembers with strategic
decisions regarding when and how to apply for CDBG funds —decisions which may involve the
County and other incorporated cities within the County.
Background
Metropolitan cities and urban counties throughout the United States use CDBG funds to provide
affordable housing, pay for infrastructure improvements, and to stimulate local economic
development, particularly for low- and moderate-income persons. Only those central cities
which are part of "metropolitan areas" of at least 50,000 persons, and "urban counties" of at
least 200,000 persons are eligible for the program. Once these population thresholds are
reached, the city or county is notified by HUD of its "entitlement status", and invited to apply
for CDBG funding. The program is optional -- metro cities and urban counties can opt not to
participate.
Due to its population and income characteristics, California has been a major recipient of CDBG
funds. Congress allocates funds to each state based on a formula which uses population and
income levels. In 1991, California received about $322 million in block grant funds, allocated
among 123 metro cities and 16 urban counties. Entitlement cities are diverse - they range in size
from relatively small metro cities like Yuba City, to major cities like Los Angeles and San
Francisco. Some are relatively affluent, like Palm Springs, Palo Alto, and Newport Beach;
others, like National City, Pomona, and Oakland have high concentrations of low-income
households.
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Up to now, San Luis Obispo County and incorporated cities have been eligible only for the
"Small Cities" block grant program administered by the California Department of Housing and
Community Development. The State's program differs in several ways, but the primary
difference is that it is a competitive program, whereas under HUD's CDBG program,
jurisdictions are "entitled" to the funds if they meet program requirements. Although the
Entitlement Cities program is new to San Luis Obispo, other cities in the Tri-Counties area have
participated in the program for many years, including Ventura, Santa Barbara, Lompoc, Santa
Maria, and Monterey. In 1993, funding for these cities was as follows:
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Qty 1993 CDBG Funding. ($)
Ventura 837,000
Santa Barbara 1,205,000
Lompoc 498,000
Santa Maria 1,041,000
Monterey 268,000
San Luis Obispo County's Situation
In 1993, there are 19 urban counties in California participating, and according to HUD staff,
each has "cooperation agreements" with incorporated cities as joint participants in the CDBG
program. San Luis Obispo County appears to be unique, however, in its "either/or" eligibility
status due to its relatively low total population. In other words, either SLO County is entitled
as a whole — including incorporated cities and unincorporated areas; or only the three metro
cities are entitled. The County's entitlement status depends on: 1) having at least one
"metropolitan area" within its boundaries; and 2) having a population of at least 200,000
persons. Population figures for the County and incorporated cities are listed below:
City Population
Arroyo Grande 14,568
Atascadero 23,403
El Paso De Robles 20,158
Grover Beach 11,901
Morro Bay 9,736
Pismo Beach 7,690 j
San Luis Obispo 42,480
Total Incorporated 129,936
Total Unincorporated 91,966
County Total 221,902
Based on SLO County's latest Department of Finance population estimates, if one or more of
the metro cities opts not to "defer" its entitlement, the County would not qualify as an "urban
county", and therefore would not be eligible to participate in the CDBG program. Even if the
metro cities agree to defer their entitlements to enable county participation, there must also be
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enough participation by the non-metro, incorporated cities of Arroyo Grande, Pismo Beach,
Morro Bay and Grover Beach and the county unincorporated areas to maintain an urban county
population served by the CDBG program of at least 100,000. The population of the metro cities
only totals 86,041.
Unlike San Luis Obispo, Atascadero, and Paso Robles, the non-metro cities are still eligible, and
have the option to compete for the State's CDBG program. According to HUD, the populations
of cities which choose to participate in the State's program would be deducted from the urban
county population; hence, cooperation among the incorporated cities would increase the total
CDBG funding which would flow into the County. On March 29th, city managers from all
cities in the County met to discuss the CDBG program. There was general support for a
cooperative approach among the cities and the County; however the non-metro cities questioned
whether such an arrangement would be more desirable than continuing to participate in the State-
administered CDBG program. It is not essential that the non-metro cities participate in the
federal block grant program in order for San Luis Obispo or the other metro cities to receive
funding directly. The metro cities can each apply for CDBG funding individually in lieu of the
urban county approach.
According to HUD, had the cities and/or County participated in the program in 1993, they
would have been eligible for the following funding:
Community Estimated CDBG Funding M
Atascadero 207,000
Paso Robles 220,000
San Luis Obispo (city) 794,000
Total 19221,000
Urban County Strategy: 2,581,000
Net funding difference 1,360,000
By participating as an urban county, as opposed to the metro cities applying for CDBG funds
individually, more than twice the amount of funding would flow into the County for housing and
economic development projects. 1994 funding levels will depend on several factors, including:
Congressional funding decisions for the 1994 program year; 1993 population and income figures
for the County and cities; and the CDBG application strategy pursued.
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Eligible Projects/Programs
HUD's primary objectives for use of CDBG funds are:
A. To benefit low- and moderate-income persons.
B. To aid in the prevention or elimination of slums or blight.
C. To meet community development needs having a particular urgency.
At least 70 percent of the grantee's overall expenses must be used for activities that benefit low-
and moderate-income persons. Grant funds can be used for a broad range of projects. Federal
grant regulations change each program year; however based on a recent HUD publication, the
following projects and programs are eligible for CDBG funding:
■ Land acquisition and disposition (write-down) for affordable housing.
■ Removal of urban blight.
i Job training programs.
■ Conversion of non-residential structures into permanent affordable housing.
■ Rehabilitation of existing housing.
■ Economic development programs (eg. staffing, business assistance).
■ Job counseling and training.
■ Relocation assistance.
■ Removal of architectural barriers to handicapped persons.
■ Infrastructure improvements.
■ Expansion of existing shelters.
■ Improvement of slums or blighted areas.
■ Correction of serious, hazardous community conditions which wouldn't otherwise be
possible due to financing or funding limitations.
The grant can also be used for certain public services like child care, health care, education,
public safety, housing counseling, senior citizens and homeless persons, drug abuse counseling
and treatment, and energy conservation counseling and testing, provided that such funding
provides either a new or increased level of service, and the amount spent on such services does
not exceed 15 percent of the annual CDBG grant plus 15 percent of program income from the
previous year.
Up to 20 percent of the total grant funding may be used to cover the costs of overall program
management, coordination, monitoring, and evaluation, including: staff salaries, wages, and
related costs; travel costs; legal, accounting, and audit services under 3rd party contracts; goods
— and services necessary to administer the program; public information services; and costs to
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prepare federal program applications.
Activities generally not eligible for CDBG funds include: assistance buildings used for the
general conduct of government; general government expenses; political activities; purchase of
construction equipment; repairing, operating, and maintaining public facilities, improvements
or services (except in connection with other eligible activities); income payments; new housing
construction (except under special provisions).
CDBG Applicadon Strategies
After receiving notice of program eligibility, the metro cities must notify HUD of their intent
to apply for CDBG funding individually, or to defer their entitlement status to SLO County and
participate jointly with the County and other incorporated cities on or before May 21, 1993.
On January 28, 1993 representatives from SLO County, incorporated cities, the SLO Housing
Authority, People's Self-Help Housing Corporation and HUD met to discuss the CDBG program
and application procedures. On March 9, 1993, representatives from the metro cities met to
discuss the CDBG application strategies. Four possible application strategies were identified:
1. The "go it alone" approach, in which each metro city would apply for CDBG funding and
would not defer entitlement to SLO County.
2. Partial deferral, in which San Luis Obispo and one other metro city defer their entitlement
status to SLO County and the County then becomes an "urban county" for CDBG purposes
with the third metro city probably eligible to apply for CDBG funding through HUD on its
own (see HUD comment on this option below).
3. The "urban county" strategy in which all metro cities defer entitlements to SLO County
pursuant to a cooperation agreement. i
4. The "do nothing" strategy in which the metro cities would not apply individually for CDBG
funding and would not defer their entitlement status to the County.
The consensus at the strategy meeting was that the "do nothing" strategy was not a desirable nor
tenable strategy; that "partial deferral" by one or two metro cities was not a likely scenario; and
that the "urban county" strategy, while potentially difficult, was the preferred strategy provided
the cities had "ironclad" assurances of receiving at least the same funding level they would have
received if they applied individually as metro cities, and that the retained flexibility and control
over CDBG projects under their jurisdiction.
According to HUD, "partial deferral" is not feasible because, 1994 program eligibility will be
based on the County and cities' 1990 census figures. Based on the County's 1990 population
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of 217,162 persons, the required minimum urban county population of 200,000 persons could
not be maintained if any one of the three metro cities opt to "go it alone." There are pros and
cons associated with each feasible strategy:
Strategy 1 - Metro Cities
Pros
A) Would ensure independent, City Council control of the CDBG program and funds.
B) Could encourage greater local citizen participation and support.
Ci Would help develop local "grantsmanship" capacity at the city level.
D) Would afford somewhat greater status due to the direct HUD - city relationship.
E) Would require less coordination, thus improving chances that the City of San Luis Obispo
can meet application deadlines.
Cons
A) For some cities, the amount of CDBG funding might not justify the staffing costs to apply
for and administer the grants.
B) Cities are generally less experienced than the County in dealing with direct federal
entitlement programs, and may lack the in-house expertise.
C) The total amount of funding received would be less than one-half that possible under the
"urban county" approach.
D) Could be perceived as "self-serving" or uncooperative by the public or by non-entitled
jurisdictions.
Strategy 2 - Urban County
Pros
A) Entire county could receive up to twice the funding received under strategy 1.
B) Could simplify the application process since only one grant application and one
Comprehensive Housing Assistance Strategy (CHAS) document would be required, rather than
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three.
C) Could encourage greater cooperation between cities and the County in housing and economic
development programs.
D) Could still allow cities' flexibility in the use of CDBG funds through "cooperation
agreements" which are recognized by HUD
E) The County already has considerable experience with "pass-through" funding programs
(health, safety, etc.).
F) The minimum participation period is three years; however at the end of three years, the
metro cities could apply for the program independently of the County.
Cons
A) The application process could become "bogged down" due to the additional agencies
involved.
B) Cities may lose some flexibility and/or autonomy in the use of grant funds.
C) The County could incur unreimbursed administrative costs if administrative expenses exceed
20 percent allowance under HUD rules.
D) On a county-wide basis, the higher funding level may be perceived to be "growth-inducing"
to the extent that it facilitates housing, economic development and infrastructure which, but for
CDBG funding, might not have been feasible.
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Strategy 3 - Do Nothing
Pros
A) Could maintain maximum autonomy by cities and the County, since there would then be no
federal leverage over community development programs.
B) Could be perceived as the "slow" or "no-growth" alternative, since this approach would not
stimulate additional housing or economic development in the County beyond levels otherwise
possible or expected, and appeal to some community groups and individuals.
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Cons
A) No CDBG funds would be received, despite the cities' and County's worsening fiscal
picture.
B) Could be perceived as a lack of leadership or sensitivity to the housing needs of low- and
moderate-income households.
C) Would not promote regional cooperation in solving regional planning problems, like
jobs/housing balance, homelessness, farmworker housing, and emergency housing.
The Recommended Approach
At an April 13th meeting, city managers and other staff from five of the seven incorporated
cities conceptually agreed on objectives for upcoming CDBG discussions with the County of San
Luis Obispo. Three objectives were considered absolute minimum, "bottom line expectations"
to be part of any urban county strategy:
1. The amount of CDBG funds the County would "pass through" to each metro city would be
at least equal to the funds each city would be eligible to receive if it applied separately for
CDBG funds;
2. The metro cities would maintain flexibility and control over their own grant funds and
program implementation; and
3. The metro cities would receive their full block grant entitlement, including the 20%
allowance for administrative costs, without any deduction for SLO County administrative
costs.
Given that the urban county strategy could more than double the total CDBG funding flowing
into the County, the cities' representatives supported additional financial incentives to encourage
the broadest possible city participation. These additional incentives might include a guaranteed
minimum CDBG funding for all of the incorporated cities (including the non-metro cities); using
HUD's formula to set CDBG allocations for the non-metro cities; and setting aside a portion of
the CDBG funds to which the County would be entitled, which could then be made available to
all cities on a rotating, competitive, or some other equitable basis.
A subcommittee of the cities' staff intends to meet with County staff at the earliest possible date
to discuss these ideas. Staff will provide an progress update at the City Council meeting.
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Where to From Here?
According to HUD, such city/county funding relationships are commonly established under the
program. For example, the City of Solana Beach, with a population of about 14,000 persons,
has entered into a subrecipient relationship with the County of San Diego. Steve Apple,
Community Development Director in Solana Beach, indicates that under a "cooperation
agreement", the City has been able to build a new Senior Center with what amounted to an
interest-free advance on the funds the City would have received over a three-year period,
allowing significant savings on construction and earlier use of the facility. The County is
responsible for environmental clearances and HUD reporting; the City issued the request for
proposals, administered the construction contract, and handled all planning and building
approvals and inspections. Solana Beach has not experienced any problems in working with the
County of San Diego in administering its block grant.
To set the framework for joint city/county participation in the program, a "cooperation
agreement" must be entered into by the participants. Such agreements define the roles,
responsibilities and obligations of the cities and county, and satisfy HUD's statutory
requirements. Aside from certain `'boilerplate" HUD requirements, there is flexibility to modify
the agreement wording to address specific needs or concerns. Staff has reviewed HUD-approved
cooperation agreements from Solana Beach, City of Beaumont and Riverside County, and
between 16 cities and San Bernadino County. Using these examples, staff has prepared a draft
cooperation agreement and resolutions which could provide the framework to implement the
CDBG program under the urban county strategy. The draft agreement sets out the City's
minimum expectations for funding, program flexibility, and County cooperation.
The next steps in the process are likely to be:
1. Schedule the item for consideration by the city councils and the Board of Supervisors,
possibly following a two-step hearing approach:
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A. Schedule a study session to discuss the program in general, and to provide direction to staff
on the preferred application strategy (done at the SLO City Council's 4/27 meeting); and
B. Hold preliminary negotiations with SLO County.
C. Schedule a public hearing in May asking the metro city councils to consider adoption of
a "resolution of intent."
2. Cities and/or County notify HUD in writing of intention to participate in the CDBG program
individually or as part of an urban county by May 21, 1993.
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3. Schedule hearings in June to hear public comments on housing needs and possible block
grant programs.
4. Finalize the cooperation agreement, CHAS and application materials by July 1.
5. Schedule CHAS and cooperation agreement for city councils and Board approval in late
August or early September.
6. File the CDBG application materials by October 1, 1993 to be assured of participation in the
program beginning in July 1994, and possibly as early as January 1994.
ALTERNATIVES
i. Direct staff to proceed with the application process individually, and do not apply for the
CDBG program jointly with the other cities or the County.
2. Direct staff to pursue the "urban county" strategy by jointly applying for the CDBG program
with the other incorporated cities and the County of San Luis Obispo, ensuring that the
minimum "baseline" objectives outlined above are met.
3. Direct staff to purse the "urban county" strategy, pursuing additional financial incentives for
the cities beyond the "baseline" objectives.
4. Direct staff not to proceed with the application process at this time.
RECONIMENDATION
Review the CDBG issue paper and provide direction to staff on the appropriate application
strategy.
Attachments:
-Draft Cooperation Agreement
-Minutes, March 9, 1993 strategy session
-Letter from County Administrator
T�I I
A COOPERATION AGREEMENT BETWEEN THE COUNTY OF
�..' SAN LUIS OBISPO AND THE CITY OF
FOR JOINT PARTICIPATION IN THE COMMUNITY DEVELOPMENT BLOCK
GRANT PROGRAM FOR FISCAL YEARS 1993-94, 1994959 1995-96
THIS AGREEMENT is made and entered into this day of , 1993, by and
between the County of San Luis Obispo, a political subdivision of the State of California,
hereinafter called "County"; and the City of , 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". Said Act is
omnibus legislation relating to Federal involvement in a wide range of housing and community
development activities and contains eight separate titles;
WHEREAS, Title I of the Act is entitled "Community Development" and consolidates
several existing categorical programs for housing and community development into new
programs for such housing and development under block financial grants. The primary
objectives of Title I are the improvement and development of 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;
WHEREAS, The City of has been designated as an entitlement city by
the U.S. Department of Housing and Urban Development (HUD), and it has been determined
that the City is eligible to receive Community Development Block Grant (CDBG or "program")
>�, funds under HUD guidelines;
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WHEREAS, The County of San Luis Obispo has requested of HUD that the County be
designated as an "urban county", and County has been informed preliminarily, subject to final
determination, that it will qualify as an urban county and be eligible to receive program funds
provided that the County's entitled cities defer their entitlement to County to enable both the
County and the entitlement cities to jointly participate in the program;
WHEREAS, The City desires to participate jointly with the County in said program, and
is willing to defer its entitlement to the County under the terms of this agreement;
WHEREAS, The Housing and Community Development Block Grant Regulations issued
pursuant to the Act provide that qualified urban counties must submit an application to the
Department of Housing and Urban Development for funds and that 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;
WHEREAS, As the urban county applicant, the County must take responsibility and assume
all obligations of an applicant under federal statutes, including: the analysis of needs, the setting
of objectives, the development of community development and housing assistance plans, the
community development program, and the assurances or certifications;
WHEREAS, By executing this agreement, the Parties hereby give notice of their intention
to participate in an Urban County Community Development Block Grant program.
NOW THEREFORE, in consideration of the mutual promises, recitals and other provisions
hereof, the parties agree as follows:.
Cooperative Agreement
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SECTION I. General.
A. Responsible Officers. The Administrator of the County of San Luis Obispo
("Administrator") is hereby authorized to act as applicant for the Community Development
Block Grant Program and to administer block grant funding and activities under the program.
The City Administrative Officer ("CAO") is hereby authorized to act as the responsible
officer of the City under the program.
B. Full Cooperation. Parties agree to fully cooperate or to assist each other in
undertaking eligible grant programs or projects, including but not limited to community
renewal and lower income housing assistance activities, public services, and economic
development.
C. Term of Agreement. The term of this Agreement shall be for not less than a period
of three (3) years commencing on the date specified below and extending through federal
fiscal years 1994, 1995, and 1996.
SECTION H. Preparation and Submittal of CDBG Funding Applications.
A. Inclusion of City as Applicant. Parties agree that City shall be included in the
application the County shall submit to the Department of Housing and Urban Development
for Title I Housing and Community Development Block funds under the above recited Act.
B. Community Development Plan. City shall prepare a community development plan,
for the period of this agreement, which identifies community development and housing needs,
projects and programs; and specifies both short- and long-term objectives, consistent with
requirements of the Act. County agrees to: (1) include the City plan in the program
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application, and (2) include City's desired housing and community development objectives,
policies, programs, projects and plans as submitted by City in the County's program
application.
C. Preparation of "CHAS." City agrees to assist and cooperate with County in the
preparation of a Comprehensive Housing Affordability Strategy (CHAS), as required by
HUD, by providing the housing, economic and demographic data, community development
objectives, policies, programs, plans and other relevant city information reasonably necessary
for the timely and thorough completion of the CHAS.
D. Application Submittal. County agrees to commit sufficient resources to completing
and submitting the CDBG application, CHAS, and supporting documents to HUD in time
for the Parties to be.eligible to receive funding by July 1994, and to hold public hearings as
required to meet HUD requirements.
E. County Responsibility. Parties agree that the County shall, as applicant, be
responsible for holding public hearings and preparing and submitting the CDBG funding
application and supporting materials in a timely and thorough manner, as required by the Act
and the federal regulations established by HUD to secure entitlement grant funding by July
1994.
SECTION III. CDBG Program Administration.
A. Program Authorization. County Administrator is hereby authorized to carry out
activities which will be funded from the annual Community Development Block Grant from
federal fiscal year 1994, 1995, and 1996 appropriations and-from any program income
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generated from the expenditure of such funds.
B. Responsible Party. Parties agree that the County shall be the governmental entity
required to execute any-grant agreement received pursuant to the CDBG application, and that.
County shall thereby become legally liable and responsible thereunder for the proper
performance of the plan and program. City further agrees that it shall fully cooperate with
the County in all things required and appropriate to comply with the provisions of any Grant
Agreement received by the County pursuant to the Act and its Regulations..
C. City Assistance. City agrees to undertake, conduct, perform or assist the County
in performing the essential community development and housing assistance activities
identified in the City's community development plan. Pursuant to the Act and pursuant to
24 CFR 570,501 (b), the unit of local government is subject to the same requirements
applicable to subrecipients, including entering into a written agreement with the County as
set forth in 24 CFR 570.50.
SECTION IV. Use of of Prom Funds.
A. Allocation of funds. All funds received by County in accordance with its
application shall be identified and allocated to the specific projects or activities set out in the
application, and such allocated amounts shall be expended exclusively for such projects or
activities; provided, however, that a different distribution may be made when required by
HUD to comply with Title I of the Housing and Community Development Act of 1974, as
amended, subject to prior written approval by City. Parties further agree that County shall
"pass through" the allocated funds to City as subrecipient within 30 days of receipt by
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County,
County, in an amount equal to that to which City would have been entitled had it applied
separately as a "metropolitan city”, as determined by HUD, and that no "administrative" fee
or other fees will be deducted by County to meet its obligations under the terms of this
agreement. Further, with respect to such "pass through" funds, County agrees to fully
cooperate and assist City in implementing City projects and activities.
B. Administrative and Public Services Costs. County hereby acknowledges that City,
as subrecipient, incurs certain administrative costs in preparing housing and economic
development plans, program planning, management and accounting, professional support
services, and other reasonable and necessary expenses to carry out City's plan; and further,
County agrees that after "pass through" of program funds to City, County shall not use its J
remaining balance of funds in any way that would.limit City's ability to use its CDBG funds
to the maximum extent allowed by HUD for administrative, public service, or program
purposes.
C. Income Generated. City shall notify the County of any income generated by the
expenditure of CDBG funds received by the City. Such program income may be retained
by City subject to the provisions of this Agreement, the Act and its Regulations. Any
program income retained must only be used for eligible activities in accordance with all
CDBG requirements as then apply.
D. Use of Program Income. County shall monitor the use of any program income,
requiring appropriate record-keeping and reporting by the City as may be needed for this
purpose, and shall report the use of such program income to HUD. In the event of close-out
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or change of status of the City, all program income on hand or received by the City
subsequent to the close-out or change of status shall be paid to the County.
E. Change in Use of Property. City shall notify the County of any modification or
change in the use of real property acquired or improved in whole or in part using CDBG
funds that is within the control of the City, from that use planned at the time of acquisition
or improvement including disposition. Such notification shall be made within thirty (30)days
of such change of use.
F. Reimbursement Upon Sale or Transfer. City shall reimburse the County in an
amount equal to the current fair market value, less any portion thereof attributable to
expenditures of non-CDBG funds, of property acquired or improved with CDBG funds that
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is sold or transferred for a use which does not qualify under the Regulations. City shall
inform the County of such program income within thirty (30) days if the income results from
the sale or change of use of property acquired or improved with CDBG funds.
G. Fair Housing. Parties agree that no urban county funding will be 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.
H. Conflict Resolution. In the event of disagreement or objections by City or County
as to the allocation, disbursement, use, or reimbursement of CDBG funds, the Parties agree
to accept HUD's binding arbitration and written determination as to the appropriate
resolution or disposition of funds.
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Cooperative Agreement
Page 8
SECTION V. Amendment or Extension of Agreement.
A. Supplemental Statement. It is anticipated that the program application will be
approved prior to July 1, 1994 and be in effect through July 1, 1996. For each fiscal year
during the term of this Agreement, County and City shall enter into a Supplemental
Statement, prepared jointly by County and City, that will list the project(s) City will
undertake with its entitlement funds during that program year. Said agreement will set forth
the project changes, time schedule for completion of the project(s), and additional funding
sources, if any.
B. Amendments. Parties agree that a fully executed amendment or amendments to this
Agreement may be entered into at any time if required or necessary to implement the plans
contemplated hereunder, or to comply with any grant agreement or the regulations issued
pursuant to the Act.
SECTION VI. Compliance with Federal Regulations.
. A. General. Parties agree to take all actions necessary to comply with the urban
county's certification required by section 104(b) of Title I of the Housing and Community
Development Act of 1974, as amended, including Title VI of the Civil Rights Act of 1964,
and Title VIII of the Civil Rights Act of 1968; the Fair Housing Act, Section 109 of Title
I of the Housing and Community Development Act of 1974, as amended; the National
Environmental Policy Act of 1969; the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970; and other applicable laws.
B. Citizen Participation. Parties agree to comply with federal citizen participation
EXHIM"is,1`17 +-a
Cooperative Agreement ^� `
Page 9
requirements of 570.301 (a)(2), and provide citizens with:
1. An estimate of the amount of CDBG funds proposed to be used for activities that
will benefit persons of low and moderate income; and
2. A plan for minimizing displacement of persons as a result of CDBG-assisted
activities and programs, and to provide assistance to such persons.
C. Citizen Participation Plan. Parties agree to follow a citizen participation plan
which:
1. Provides for and encourages citizen participation, particularly those of low or
moderate income who reside in slum or blighted areas where CDBG funds are
proposed to be used;
2. Provides citizens with reasonable and timely access to local meetings, staff reports
and other information relating to grantee's proposed use of funds, as required by
HUD regulations related to the actual use of funds under the Act;
3. Provides for public hearings to obtain citizen views and to respond to proposals
and questions at all stages of the community development program, including at least:
1) formulation of needs; 2) review of proposed grant activities; and 3) review of
program performance; for which public hearings shall be held after adequate notice,
at times and locations convenient to potential or actual beneficiaries, and with
accommodation for handicapped persons;
4. Provides for a timely written answer to written complaints and grievances, within
30 working days where practicable;
5. Identifies how the needs of non-English speaking residents will be met in the case
of public hearings where a significant number of non-English speaking residents can
be reasonably expected to participate.
D. Parties hereby certify, to the best of their knowledge and belief, that:
1. Conflict of Interest. No federal grant monies have been paid or will be paid, by
or on behalf of the Parties, to any officer or employee of any agency, a Member of
Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with the awarding of any federal contract, the making of any
federal grant, the making of any federal loan, the entering into of any cooperative
agreement, and the extension, continuation, renewal, amendment or modification of
Cooperative Agreement
Page 10
any federal contract, grant, loan, or cooperative agreement.
2. Influence. If any funds other than federally appropriated funds have been paid
or will be paid to any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, an officer or employee of Congress,
or an employee of a Member of Congress in connection with this federal contract,
grant, loan or cooperative agreement, the undersigned shall complete and submit
standard form LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions.
3. Certification Disclosure. Parties agree to include this certification in the award
documents for all subawards at all tiers (including subcontracts, subgrants, and
contracts under grants, loans, and cooperative agreements), and that all grant
subrecipients shall certify and disclose accordingly. This certification is a material
representation of fact upon which reliance was placed when this transaction was
entered into.
E. Certification Regarding Policy Prohibiting Use of Excessive Force.
In accordance with Section 519 Public Law 101-144, (the 1990 HUD appropriations
Act), the Parties certify that they have adopted and is enforcing 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.
SECTION VII. Execution of Agreement and Recordkeeping
A. HUD Certification. The CAO or the City Attorney are hereby authorized to execute
and submit to the County the HUD Certification Form with respect to the community
development activities carried out within the boundaries of the City. It is further understood
that the County will rely upon the certifications executed by the CAO or City Attorney for
purposes of executing a certification form for submission to HUD.
B. Maintenance of Records. City shall maintain records of activities or any projects
undertaken pursuant to the program, and said records shall be open and available for
Cooperative Agreement
Page 11
inspection by auditors assigned by HUD and/or County on reasonable notice during the
normal business hours of the City.
IN WITNESS WHEREOF, the City Council of the City of San Luis Obispo and the
Board of Supervisors of the County of San Luis Obispo have authorized this Cooperation
Agreement and direct its execution by their respective administrative officers on this — day
of 1993.
County Counsel Certification
The Office of the County Counsel hereby certifies that the terms and provisions of this
Agreement are fully authorized under State and local law, and that the Agreement provides full
legal authority for the County to undertake or assist in undertaking essential community
development and housing assistance activities, specifically urban renewal and public assisted
housing.'
BY:
County Counsel
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Cooperative Agreement
Page 12
APPROVED:
John Dunn, City Administrative Officer
Robert E. Hendrix, County Administrator
ATTEST:
Diane Gladwell, City Clerk
Mitch Cooney, County Clerk
APPROVED AS TO FORM AND LEGALITY:
Jeff Jorgensen, City Attorney
JilliNgIIII
11 city of sAn tuis oaspo
990 Palm Street/Post Office Box 8100 • San Luis Obispo, CA 93403-8100
March 15, 1993
Summary of the
COMUdUN= DEVELOPMENT BLACK GRANT STRATEGY SESSION
Tuesday, March 9, 1993, 9:30 am
San Luis Obispo City Hall
Attendees: Ed Gallagher, City of Paso Robles; Shelley Fleming, City of Paso Robles; Doug
Davidson, City of Atascadero; Deb Hossli, Ken Hampian, Linda Asprion, Arnold Jonas, and .
Jeff Hook, City of San Luis Obispo.
Jeff Hook, Associate Planner for the City of San Luis Obispo, opened the meeting and
welcomed those present. He stated that the main purposes of the workshop were to 1) identify
CDBG application strategies for the three "metro cities" - Paso Robles, Atascadero, and San
Luis Obispo; 2) discuss funding and procedural implications; 3) select a recommended
application strategy; and 4) agree on a tentative schedule for the city councils to review and
provide direction to staff on whether to "go it alone" or to participate with San Luis Obispo
County.
Mr. Hook identified four possible application strategies: 1) the "go it alone" approach, in which
each metro city would apply for CDBG funding and would not defer entitlement to SLO County;
2) Partial deferral, in which San Luis Obispo and one other metro city defer their entitlement
status to SLO County and the County then becomes an "urban county" for CDBG purposes with
the third metro city probably eligible to apply for CDBG funding through HUD on its own; 3)
the "urban county" strategy in which all metro cities defer entitlements to SLO County pursuant
to a cooperation agreement similar to one between the City of Solana Beach and the County of
San Diego; and 4) the "do nothing" strategy in which the metro cities do not apply individually
for CDBG funding and do not defer their entitlement status to the County.
General discussion followed regarding the feasibility of the various strategies. The consensus
of those present was that the "do nothing" strategy was not a tenable one, that "partial deferral"
was not a likely scenario, and that the "urban county" strategy, while potentially difficult; was
the preferred strategy provided that the cities had "ironclad" assurances from the County that:
1. The amount of CDBG funds the County would "pass through" to each metro city would
be at least equal to the funds each city would be eligible to receive if it applied separately
for CDBG funds;
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CDBG Strategy Session
Page 2
2. The metro cities would maintain flexibility and control over their own grant funds and
program implementation; and
3. The metro cities would receive their full block grant entitlement, including the 20%
allowance for administrative costs, without any deduction for SLO County administrative
costs.
Ed Gallagher suggested the possibility that, under the "urban county" scenario, a portion of the
county block grant funds not allocated to cities be made available on a competitive basis to the
cities.
Ken Hampian noted that, for example, while the City operates the homeless shelter, the facility
serves the entire county. Perhaps some countywide CDBG funds could be made available to
cover costs of these types of facilities in the metro cities.
Jeff Hook noted that the metro cities could get the necessary assurances of funding and program
flexibility through a cooperation agreement with SLO County. He showed a cooperation
agreement between the City of Solana Beach and the County of San Diego that he had received
from Aaron Lambert, U.S. Department of Housing and Urban Development (HUD). He felt
that the "urban county" approach offered the greatest benefit to all parties, and that the same
cooperation questions now facing San Luis Obispo-Atascadero-Paso Robles had been successfully
dealt with elsewhere is California. He emphasized the importance of staying "on track" with
the CDBG application process, and was concerned that negotiations over additional competitive
funding beyond the amounts the cities were otherwise entitled could complicate the block grant
program and could prevent the cities' from receiving CDBG funds in the 1994 program year.
Ken Hampian felt that two agreements would probably be needed: the formal cooperation
agreement between the cities and the County; and a "memorandum of understanding" (MOU)
dealing with the specifics of the metro cities/County block grant relationship: funding amounts,
funding purposes, and provisions for economic development funds. All of those present-agreed
that the MOU could be useful and was an idea worth exploring.
Debbi Hossli asked what would happen if we followed the "urban county" strategy and one or
more non-metro cities, like Morro Bay or Arroyo Grande, chose not to participate in the HUD-
administered CDBG program so that they could continue to be eligible for the State's block grant
program. She was concerned that if non-metro cities did not participate, SLO County might still
not meet the population threshold of 200,000 persons, and thus the "urban county" strategy '
might not work even with the metro cities' cooperation.
CDBG Strategy Session
Page 3
Jeff Hook said he would pose the question to HUD and have an answer by the next CDBG
meeting.
It was agreed that the staff of the metro cities would set up council study sessions during April
to get direction on the CDBG application strategy, and that Jeff Hook would draft a cooperation
agreement and staff report by the end of March which would be available to the metro cities.
Ken Hampian noted that the administrative officers of the respective cities would be discussing
CDBG issues soon, and that the CAOs' concerns and comments should be incorporated into the
draft agreements and staff report.
April 6, 1993 was tentatively set for the next CDBG meeting, at which time the CAOs of the
incorporated cities and the County Administrator would be invited to attend.
The meeting adjourned at 11:30 am.
JhoA/L:cdbg2'.min
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County of San Luis Obispo _ 1
COL1'TY GOVERNMENT CE\-TER.M.370•SAS LUS OBISPO.CALIFORNIA 93408°(805) 781-5011
March 1, 1993
John Dunn, City Administrative Officer OFFICE OF THE
City of San Luis Obispo COUNTY ADMDL ISTRATOR
P.O. Box 8100
San Luis Obispo, CA 93403
Dear Messrs. Dunn and Hampian:
Last week, when we discussed Community Development Block Grants (CDBG), the
information I had was that little advantage could be gained by a joint application for an
economic development grant. Research by my staff had focused on state CDBG programs.
After our managers meeting, I learned more about the differences between state and federal
(HUD) funded CDBG Housing and Economic Development Programs. The latest
information I've received supports what we've been hearing about the significant advantages
to a joint CDBG (HUD) application; specifically, in terms of the federal CDBG program.
As you know, the latest census figures qualify certain urban areas of the county for federal
entitlement funds as opposed to the competitive funds they traditionally scrapped for among
other local jurisdictions. A portion of the available federal funds can be spent on specific
kinds of economic development (i.e. job development and/or retention). The upcoming
application period will be the first for San Luis Obispo, Atascadero, and Paso Robles as
entitlement agencies. It is anticipated that resulting funding could be available July 1994.
In order to estimate the amount of funding urban cities could expect to be eligible for, HUD
calculated what their current year's entitlement would have been if they were qualified:
SLO City S 794,000
Atascadero S 207,000
Paso Robles S 220.000
Total $1,221,000
If the three cities deferred their urban status to the County, to create an "Urban County",
the total amount would increase to $2,581,000. HUD officials are very supportive of a
conversion to the urbanized county status.
The benefits of greater funding eligibility and an expectation of a more comprehensive
countywide program seem well worth it. However, a complicated process must be followed
in order for the conversion to take place.
Some of the following features of the program may contribute to the complexity.
1. Once you're in (as an urbanized county), you're in for three years.
'T �7
2 Cities would have to defer their urban status to the County giving the Board of
Supervisors ultimate program administration authority (within HUD parameters)'
HUD requires agreements between entitlement cities and the County to that effect.
Typically, though, side agreements would exist between the jurisdictions to guarantee
certain minimums to the formerly entitled cities.
3. The Countv would have to administer the Program; both in the County
unincorporated areas and the incorporated cities. City staff could administer projects
within their jurisdictions. At the same time though, HUD would require the County
to perform "umbrella" functions and liaison/administrative oversight for city
administered projects. HUD allows up to 20% of available funds for administration.
4. In order to qualify as an urbanized county, a minimum of 200;000 population is
required in the application area based on 1990 census figures. In 1990, the total
county population was 217,000. If a small city didn't want to play, we could still
qualify. More significant nonparticipation would cost us the urbanized county option.
5. A comprehensive Affordable Housing Strategy (CHAS) and three year expenditure
plan must be prepared for the entire county in order to qual&y for the urbanized
county entitlement program.
This is the time line HUD expects to be followed.
- March 1, 1993 Entitlement cities receive notice thev are eligible to apply
A period.of 90 days is given in which to elect to defer to the
County for an urbanized county.
June 1, 1993 Cities must declare their status: urbanized cities or defer to
urbanized county. Formal agreements need to be worked out
December 31, 1993 Comprehensive Affordable Housing Strategy (CHAS) completed.
July 1994 Estimated time funding would be available
It looks like there's plenty to gain from achieving an urban county status. I plan to'add this
to our next San Luis Obispo County City Managers Meeting Agenda for further discussion.
Sincerely,
T )r%�
ROBERT E. HENDRIX
County Administrator
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