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Home My WebLink About07/20/1999, 2 - AMENDMENTS TO THE 1996 AND 1997 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM YEARS council j ac enba uepont T.- 2 C I T Y OF SAN LU IS O B I S P O FROM: Arnold Jonas, Community Dev 7ment Director QD PREPARED BY: Jeff Hook, Associate Planne / SUBJECT: Amendments to the 1996 end 1997 Community Development Block Grant program years. CAO RECOMMENDATION: By motion, approve the proposed amendments and forward the Council's funding recommendations to the Board of Supervisors. DISCUSSION Background. Last month, the Housing Authority Board (HASLO) voted to purchase a vacant, .45 acre lot located at 433 Pacific Street in San Luis Obispo. HASLO has purchased the site, escrow has closed, and the Housing Authority has asked the City to re-program $300,000 in 1996 and 1997 Community Development Block Grant (CDBG) funds, previously allocated for the purchase of an affordable housing site in the Margarita Annexation Area, to purchase the Pacific Street property. The funds were allocated to the Housing Authority. The Housing Authority would also like to transfer the funding to its non-profit affiliate, the San Luis Obispo Non-Profit Housing Corporation who will develop the senior apartments. Two factors are driving this amendment request: HASLO's difficulty in purchasing a site in the Margarita Annexation area, and its desire to utilize available CDBG funds now, since a suitable property recently became available near Downtown. The City Council allocated $300,000 in 1996 and 1997 CDBG funds to the Housing Authority to help purchase an affordable housing site in the Margarita Area. For several years, HASLO has attempted to find a site in the Margarita Area of the appropriate size and location and which met the budget. A suitable site was located; however, efforts to purchase the property at an acceptable price have, so far, proven unsuccessful. Given the availability of another suitable "close-in" property, HASLO has acted to purchase property for affordable senior apartments and would like to use CDBG funds towards the purchase cost as soon as possible. The vacant, R-4 zoned Pacific Street property is suitable for apartments, located near Downtown and public transportation, and would appear to accommodate about 20 units of affordable senior housing. Program Amendments. HUD rules allow jurisdictions toamend previous CDBG program years' allocations. Program amendments require a recommendation by the City Council and a public hearing conducted by the County Board of Supervisors, acting on behalf of the Urban County. Program amendments may include any of the following: • a change in goals or policies of the Consolidated Plan; • Reprogramming of more than ten percent (10%) of the total one-year program budget of CDBG or HOME funds ; • approval of a new activity; • a substantial change in the scope or location of an approved activity; 2-1 1 Council Agenda Report - 1998 Community Development Block Grant Program Page 2 • a decision not to implement an already approved activity. The proposed amendment involves a substantial change in the location of the activity and thus, requires City Council and Board of Supervisors approval. Following City/County approval, the County will forward the amendment to HUD as a record of the final action. The proposed amendments are shown in Table 1. Acquisition of affordable housing sites will still be needed in the Margarita Area, however the City's new Inclusionary Housing Ordinance requires that new residential and commercial development projects include affordable housing, dedicate land or real property for affordable housing, or pay in-lieu fees to support affordable housing. Based on the size of the Margarita Annexation Area and the number of dwellings anticipated, the new ordinance will produce up to 150 new affordable housing units without the need for CDBG funding. The Housing Authority intends to continue to seek a housing site in the Margarita Area, and may solicit loans or grant funds other than CDBG to assist that purchase. Consequently, this amendment request should not significantly affect the attainment of affordable housing goals in the Margarita Area. TABLE 1: 1996 and 1997 CDBG Program Year Amendments ($) Activity Applicant Current Proposed Allocation Allocation 1996 PROGRAM YEAR Acquire affordable HASLO 206,600 0 housing site in the Margarita Area Acquire affordable SLO Non-Profit 0 206,600 senior housing site Housing Corp. at PacifictCarmel 1997 PROGRAM YEAR Acquire affordable HASLO 93,400 0 housing site in the Margarita Area Acquire affordable SLO Non-Profit 0 93,400 senior housing site Housing Corp. at Pacific/Carmel Totals 1 300,000 300,000 City and HUD Objectives. The proposed amendment is consistent with City-goals and with HUD objectives and rules. The General Plan Housing Element identifies elderly persons as a "special housing needs" group. It includes programs intended to expand the supply of affordable housing for senior citizens and for persons on fixed incomes. HUD has three broad national objectives: 2-2 Council Agenda Report - 1998 Community Development Block Grant Program Page 3 1. To benefit low- and moderate-income persons; 2. To aid in the prevention or elimination of slums or blight; and 3. To meet community development needs having a particularly urgency. Projects must also meet federal eligibility criteria and rules. For example, HUD requires that at least 70 percent of the Urban County's grants go to activities that benefit low- and moderate- income persons. At least 51 percent of individual project or program funds must benefit low- and moderate-income persons, and up to 20 percent of the City's total funding can be used for overall CDBG program administration and other indirect costs. The 1996 and 1997 CDBG Programs, if amended as proposed, would continue to meet these objectives and rules. ALTERNATIVE 1. Do not reallocate CDBG funds as requested. Council members may choose not to change funding allocations. Staff does not recommend this alternative because 1) The Housing Authority needs flexibility in funding to take advantage of housing opportunities as they arise; and 2) reallocating the funds to an active project will improve City and County's "timely use" of CDBG funds, an aspect of the Urban County's grant performance which has been a concern of HUD during 1998-99. Attachments: -Exhibit A: Housing Authority -Exhibit B: Vicinity Map, 433 Pacific Street ihn.:aIpmend=W-99 2-3 PL01 epwu wouawo erronuwrties Housing Authority 487 Leff Street Post Office Box 1289 San Luis Obispo CA 93406-1289 of the City of (805) 543-4478 fax (805) 543-4992 San Luis Obispo Executive Director5ecreury George J.Moylan EXHIBIT A June 14, 1999 The Honorable Mayor Allen K. Settle and City Council Members City Hall City ,of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93403 Dear Mayor Settle and Council Members : You have previously approved a sum of $300, 000 in Community Development Block Grant funding for the acquisition of an affordable housing site in the Margarita Expansion area. We have been in negotiations on property in that area for quite some time now. And while those negotiations have been cordial, and may yet result in a sale to us, no sale is pending. Recently we became aware of a site at the intersection of Pacific and Carmel Streets which is zoned properly and otherwise seems appropriate for the development of senior citizen housing. That property was brought to the attention of our Board of Commissioners and they authorized purchase of the site. We will close escrow on the site before the end of the month. Initial estimates are that we can develop 20 units on the site, the same number of units we are negotiating for in the Margarita area. As you are aware we have consistently maintained that we can build affordable housing in the community if we can secure land at no cost to the development. Typically that has meant the use of Community Development Block Grant money to acquire the site, i.e. Brizzolara Street, Poinsettia Street, and Railroad Station at Pismo and Buchon Street developments are all illustrative of this concept. Thus . we are asking your permission to transfer the funding previously set-aside for the acquisition of the Margarita site to the Pacific-Carmel Street site. At the same time we are asking you to transfer the monies from the Housing Authority to our non-profit affiliate, San Luis Obispo Non-Profit Housing Corporation who will actually develop the senior units. 2-4 We will continue to explore the purchase of the Margarita site and funds for that purchase, when it occurs, could come from a HELP loan which we are anticipating from the California Housing Finance Agency or some of the funds which are now being returned to us from the successful operation of our tax-credit developments already in management in the City. Sincerely, George J. Moylan Executive Director cc: J. Dunn J. Hook 2-5 4�. r YO ww Iva O opt owu • r. • O • Oro Al 10 -56 lk� low go . ,2 -L vicinity MA EXHIBIT B 2-6