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Home My WebLink AboutD-4 Staff Report - Azusa CDBG CARES ACT1 PUBLIC HEARING D-4 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: MATT MARQUEZ, DIRECTOR OF ECONOMIC AND COMMUNITY DEVELOPMENT DATE: MAY 18, 2020 SUBJECT: COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) CARES ACT FUNDS – CONSIDERATION TO ADOPT A RESOLUTION APPROVING $241,825 ONE TIME ONLY, SUPPLEMENTAL FY 2019-2020 CDBG FUNDS FOR THE EXPRESS PURPOSE OF RESPONDING TO, ADDRESSING, AND MITIGATING THE IMPACTS OF THE COVID-19 PANDEMIC SUMMARY: As authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, the CARES Act provides $5 billion in additional Fiscal Year (FY) 2019-2020 Community Development Block Grant (CDBG) funding to prevent, prepare for, and respond to the COVID-19 pandemic. The U.S. Department of Housing and Urban Development (HUD) was named as the responsible federal agency to administer and distribute the CARES Act funds to state and local governments that receive a CDBG allocation. As a participating city in the Los Angeles Urban County CDBG Program, the City of Azusa will receive approximately $241,825 in one-time only, supplemental FY 2019-2020 CDBG CARES Act funds for the express purpose of responding to, addressing, and mitigating the impacts of the COVID-19 pandemic. RECOMMENDATION: It is recommended that the City Council take the following action: 1)Open the public hearing, receive testimony and presentation of the proposed eligible CDBG CARES Act projects, and adoption of Resolution No. 2020-C24 approving an Azusa CDBG CARES Act Program; and, APPROVED CITY COUNCIL 5/18/2020 2 2) Authorize the City Manager, or his designee, to execute all contracts and Agreements, in a form approved by the City Attorney, with the Los Angeles County Development Authority (LACDA) and if applicable, with each approved recipient/subrecipient of the Azusa CDBG CARES Act Program. BACKGROUND: Since 1974, the City of Azusa has participated under the Los Angeles Urban County Community Development Block Grant (CDBG) Program. The Los Angeles County Development Authority (LACDA) acts as the administrative pass-through agency for participating cities to receive CDBG funds from the U.S. Department of Housing and Urban Development (HUD). Annually, the City receives approximately $400,000 in federal CDBG funds. Azusa utilizes its annual CDBG funding for various housing, public service and community development projects, such as Code Enforcement, Housing Rehabilitation, youth tutoring and educational enrichment, senior services, and, capital improvement and public infrastructure projects, specifically construction of American with Disabilities Act (ADA) compliant improvements. The table below identifies the CDBG FY 2019-2020 projects and budget amounts: FY 2019-2020 CDBG Projects and Budgets New Year Funds: $463,685 Carryover Funds: $65,168 Total Amount Available $528,853 Amount Infrastructure, Housing and Neighborhood Improvement Projects Single Family Housing Rehabilitation $185,000 Code Enforcement Program $108,000 Sidewalk and ADA Improvements $166,301 Subtotal: $459,301 Public Service Projects (15% Cap Limit of $69,552) Azusa Family Services $29,552 Neighborhood Homework House $10,000 Senior Case Management $30,000 Subtotal: $69,552 Total $528,853 On April 7, 2020, the Los Angeles County Development Authority (LACDA) notified all participating cities in the Los Angeles Urban County CDBG Program that following congressional action on March 27, 2020 to pass the Coronavirus Aid, Relief, and Economic Security Act (CARES ACT), participating cities would be eligible to receive a special, one-time only allocation of CDBG funds for the express purpose of responding to, addressing, and mitigating the impacts of the COVID-19 pandemic. Azusa’s CDBG CARES Act allocation is $241,825. Cities and counties that received CDBG CARES Act funds directly from HUD (entitlement communities) were notified approximately two to three weeks sooner and received approximately three to four more HUD directives for the use and implementation of CDBG CARES Act funds than LACDA participating cities. CDBG CARES Act technical assistance received 3 from LACDA consisted primarily of informal email correspondence from the LACDA representative (Contract Manager) following inquiries posed by the City’s CDBG Consultant. DISCUSSION: The City’s CDBG CARES Act funds may be used for a range of eligible activities that prevent, respond to, and/or mitigate the effects of COVID-19. Similar to all CDBG projects, any proposed CDBG CARES Act project must meet all CDBG reporting requirements and one of three CDBG national objectives that: • Benefit low and moderate income persons; • Aid in the prevention or elimination of slums or blight; or, • Meet an urgent need. The City understands that it is imperative to establish eligible CDBG CARES Act projects to prevent, respond to, and mitigate against COVID -19. Thus, below is a range of eligible CDBG CARES Act projects currently proposed by other cities (entitlement or non-entitlement) or LACDA. CDBG Cares Act funds may be used to supplement an existing CDBG project such as a current public service project. It should be noted that the CDBG CARES Act legislation removed the limitation on the previous cap of a fifteen (15) percent maximum amount of CDBG funds that may be used for public service projects. Thus, for the purpose of CDBG CARES Act funds, there is no limit on the amount of funds that may be allocated to an eligible CDBG CARES Act public service project. Examples of Eligible CDBG Cares Act Projects: 1. Economic Development Projects Small Business Assistance – Job Creation or Retention: With many businesses experiencing unprecedented financial hardships due to COVID- 19, retaining employees, or even hiring employees, in some cases, is a priority. To address this challenge, CDBG CARES Act funds may be used to create a CDBG Job Retention or CDBG Job Creation program. Most CDBG CARES Act Job Creation/Retention programs offer eligible small businesses that qualify a one-time direct grant. The City of El Monte is offering $10,000 grants to eligible small businesses for rent, utilities, and business services such as web site development. The City of South Gate is offering $10,000 grants to eligible businesses for payroll expenses. Although loans may be offered through a CDBG CARES Act Small Business Assistance Program, it is not recommend due to the extensive administrative burden of federal requirements for recordkeeping and monitoring, maintaining continuous loan portfolios beyond the length of the program, investigating businesses economic solvency and ability to repay, if loans are not forgivable. Therefore, staff recommends that if an Economic Development Project is considered, funding awards offered to eligible small business be considered in the form of a grant. Whether a Small Business Grant or Loan Program is selected, other criteria to be determined include: • That a business must be within Azusa city limits and have a current Azusa business license. • The amount of the grant or loan – Most cities are offering businesses direct CDBG CARES Act small business grants in the amount of $10,000. Small business grants or loans may be offered in larger amounts. Loans may be forgivable with zero or little interest. If a business lacks the ability to demonstrate that a loan may be forgiven, loan proceeds and loan interest that the City recaptures will be considered “Program Income” and must be returned to LACDA. Lastly, it is 4 strongly recommended that only one type of assistance be offered; either a loan or grant; not both. • Business Size – Limit the size of the small businesses eligible to participate. For example, businesses that have fifteen (15) or fewer employees. Will microenterprises (five employees or less) be eligible? • Years in Operation – Establish a minimum number of years in operation. For example, businesses that have been in operation for a minimum of three (3) years or more would qualify. • Financial worthiness – Set a minimum amount of annual gross revenue. For example $2 million per year. • CDBG CARES Act funds restrictions – Small businesses must document and prove that the use of CDBG CARES Act funds is for payroll, rent, to expand web design or capacity to accommodate increasing web-based services, or, to purchase supplies required in the direct provision of COVID-19 services • No Duplication of Benefit – Establish strict guidelines that prohibit a small business eligible to receive Azusa CARES Act funds from accepting another source of COVID-19 related stimulus funds (private, or through the SBA Payroll Protection Program, for example). A Small Business Assistance Program for eligible businesses will be required to meet either the Low Moderate Income Area benefit (“LMA”), or the Low Moderate Income Job Creation and Retention (“LMJ”) benefit. The LMA national objective will be used for businesses that benefit a residential neighborhood where at least 51 percent of the residents are low-and moderate-income (“LMI”) persons. Eligible businesses must be within a Low to Moderate Income Census Tract. The LMJ national objective will be used for businesses that retain permanent jobs, at least 51 percent of which (computed on a full-time equivalent basis) will be held by LMI persons. Businesses will be required to provide supporting documentation (e.g., description of job position, household annual income, and family size) demonstrating that jobs will be held by low and moderate-income persons. Furthermore, consistent with CDBG requirements, a CDBG CARES Act-funding agreement must be executed between the City and the small business recipient. If awarded CDBG CARES Act funds, the business must agree to annual audits and/or monitoring, maintenance of supporting financial documentation of CDBG CARES Act funds used, and, reporting on program outcomes and performance goals achieved. 2. Housing Services Emergency Rental Assistance - Using CDBG Cares Act funds, an emergency rental assistance program may be offered to Azusa low and moderate income residents experiencing financial hardship, such as a loss or reduction in income due to the COVID-19 pandemic. Emergency rental assistance may be a grant in a specified amount awarded to eligible low and moderate income residents (for example, $500 per eligible household). The City must pay the landlord directly on behalf of the eligible household. Emergency rental assistance payments are limited to a maximum of three months. The City of Alhambra implemented a CDBG CARES Act Emergency Rental Assistance Program. Income-eligible households may receive $500 a month for three months, from June 2020 through August 2020. The City of El Monte is offering one-time emergency rental assistance of up to $1,200 to eligible households. Other forms of residential assistance may include a utility subsidy paid directly to Azusa Light and Water, for example, on behalf of a low and moderate income resident unable to afford utility payments due to COVID- 19, or, a utility subsidy paid to a broadband service provider to increase residential internet capacity to accommodate COVID-19 related virtual home schooling. 5 3. Public Service Projects (No Public Service Cap for CDBG CARES Act funds used for COVID- 19 related efforts) Public service projects may be new or expanded to address the impact of COVID-19. Expanding existing public service activities may occur more rapidly than implementing a new public service project. For example, public service projects such as Neighborhood Homework House that offers tutoring and academic enrichment programs to Azusa youth may be modified to offer virtual services including online tutoring and classes. "Grab & Go" activity packets may be provided as an expanded service. Another example is expanding the City’s partnership with the YWCA San Gabriel Valley to offer Azusa senior adults “virtual” case management and home visits. Creating a new public service project such as restaurant meal vouchers or store branded value cards (e.g., Smart and Final) may benefit many Azusa residents and may be implemented relatively sooner than a new public service project requiring the identification and procurement of a new non-profit agency or alternate service provider. Other eligible CDBG CARES Act public service projects may include: • Counseling and mental health services, including domestic violence assistance, for persons affected by COVID-19 • Vouchers for medical testing services for COVID-19 Only eligible low and moderate income residents would qualify for participation in a CDBG CARES Act public service project. CDBG CARES ACT ALLOCATION AND TIMELINE The City’s CDBG CARES ACT allocation of $241,825 may be used to fund one or more eligible activities. It is recommended that, due to onerous CDBG requirements for project implementation, determining resident eligibility, reporting and, programmatic and financial monitoring, CDBG CARES Act projects should be limited to no more than two. Furthermore, some proposed CDBG CARES Act activities will require more sizable allocations than others. For example, given the nature, scope, and to be most impactful, a small business assistance program should be fully funded at or near $220,000. Approximately ten (10%) of the City’s CDBG CARES Act allocation will support CDBG administrative costs. Once the City Council hears and takes action on this matter, a CDBG CARES Act funding application(s) will be submitted to LACDA for review and approval. CDBG CARES Act project guidelines, eligibility determinations, and client applications will be developed. A City portal system for receiving electronic client applications and performing evaluations may be necessary. Once these tasks are complete, estimates place the start of any new or continuing CDBG CARES Act project at or near August 1, 2020. As of April 30, 2020, LACDA received one related submittal for review. CONCLUSION: The recommended CDBG CARES Acts projects and funding levels are presented in two alternative scenarios below. Council may also consider a combination both scenarios and fund a program that offers assistance to both small businesses and some type of public service. 6 CDBG CARES Act Recommended Amount SCENARIO 1 Economic Development Small Business Assistance Grants $220,000 CDBG CARES Act Program Administration $21,825 TOTAL $241,825 SCENARIO 2 Housing Services $150,000 Public Services $70,000 CDBG CARES Act Program Administration $21,825 TOTAL $241,825 FISCAL IMPACT: The City’s CDBG CARES Act one-time only allocation is $241,825. Staff anticipates the program administration costs will be covered by the CARES Act allocation. COVID-19 related expenditures were not anticipated when the FY 2019-2020 budget was adopted. The total fiscal impact to the City is unknown at this time and will depend on the needs and objectives that are identified. Approved projects will be reflected as supplemental FY 2019-2020 funds in the City Budget. CDBG CARES ACT projects will allow the City to prevent, respond to, and mitigate against COVID-19 community needs with little impact to the General Fund. Prepared by: Reviewed By: Tina Gall Matt Marquez CDBG Consultant Director of Economic and Community Development Fiscal Impact Review: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachments: 1) Census Tract Map 2) Resolution No. 2020-C24 13th St Sierra Madre Ave 11th St 9th St 8th St 3rd St 1st StAspan AveParamount StVernon AveSan Gabriel AveAzusa AvePasadena AveCerritos AveFoothill Blvd Haltern St Armsead St Mason St Arrow Hwy Foothill Blvd Sunset AveMcKinley St Foothill Blvd 10th StEncanto Pkwy5th St Virginia AveGladstone St 2nd St 3rd St 4th St Rockvale Ave6th St Citrus AveAlosta Ave Baseline Rd Barranca AveVincent AveCalle DeCielo McKeever AveMcKeever AveOrange AveSunset AveAerojet AvePark Dr LimeAve Ranburn Ave5th St Gladstone St Irwindale AveArrow Hwy Lark Ellen AveAzusa AveAvenida De La Suerte Pasadena Ave6th St Citrus AveEnid AveDanlee StMtn. View CirSunset AveAshby StMontecito Dr H idden V alley D rV irg inia A nn D rLori Ann AveEdith Ann DrBrian AveDeborah AveHollis AveLaurel Valley DrPoint O Woods DrLoren AveConey AveMillerAveGeorgia AveIndustrial St Georgia PlOrange AveLemon AveLouise AveBarbara AveVernon AveBayless St 4th St Bayless St Orange AveDuell St Virginia AveParksideSt Jerez St Momax St Solem St Barbara AveLouise AveLemon AveOrange AveLouise AveEnid AveOrange AveSunset AveGrandin AveAngeleno AveSan GabrielAveAngeleno AveDurell AveLee DrLee Pl Matchwood Pl Fenimore AveCalvados AveEdenfield AveViceroy AveGlenlyn Dr Lenfield St Hanks St PowellAveOld Mill RdSoldano AveHolmar AveRainbow Dr Pasadena AveAzusa AveMontelloDr BagnallSt HollyvaleSt Orangecrest AveTwintree AveGlenfinnan AveLimeSt 6th StCedarglen HollyvaleSt HalternSt Hollyvale St Alford St Galatea St Citrus Edge St Fondale St Nearfield St Gaillard St Ghent StRanger DrCalera AveGrantlandDrManning St McKinley St Murray AveO'Malley AveDixon St Roland St Russell StNoble AveElliott AveAzusa Ln Casita St Celeste St Renwick Rd Rosalina AveScott AveSunset AvePayson St Kirkwall RdAlamedaAve Renwick Rd Kirkwall Rd Payson St Newburgh StAspan AveVirginia AveJackkson AveEast AveZachary Padilla AveHollyvale St North StOptical DrMontoya St Adelante St Paramount St Roosevelt RdMotor AvePeckham Rd1st St Ayala AveMartin RdCalle De Las Estrellas Calle De La Luna Calle Del SolAvenida Conejo13th St12th StVista Bonita St Viewcrest DrSierra Madre Ave Mandevilla Wy O ra n g e Wy Old Sierra MadreAve Blossom HeatherCir Azusa Veterans WyGardenia Dr Desert Willow RdVosb ur g Dr Ursey DrBoxwood Ln OrtunoDrMacNeil DrGriffith StPhelpsWy Weeping WillowDr LinleySt Manresa Dr San FelipeHill HollySt PampasCt OakCt LopezLnC h estnut Ln Tangerine St Juniper Ridge Ct McKeller Ct L ila c W yHawthornWyMagnolia WyCrapemyrtleAveW ilsford W yLemonS w irl Dr Lavender W y Bougainvillea W y Palm DrLakeview Ter Ruelas Wy Monrovia Pl Mountain Wy The Promenade Palm DrRosedale AveRuby Lace Wy Barberry Wy Woodbine WyCornejoWySweetbriar LnSunriseLnChaparralLnCassiaLnBouquetCtBotanicaLn PrimroseLnRoseway Ct Purple SageDrAcaciaCt OrchardLpPalm DrPonderosa Dr Pepper Tree Dr Silver MapleDr Laurel OakDr SycamoreDr Sequoia LnUniversity Dr Calera AveMauna Loa Ave Duell St 2nd St Hanks St Rodecker DrRodecker DrDuell StDominguezPlHollyvale StStein LnPlum TreeDr Oakview Dr Poplar ViewDr S a n ta F e A v eAnnandale LnCamino DeLa Cantera Calle EvaMiranda Factor AveGalanto AveOakbank DrHanlin AveTraymore AveKirkwall RdDuggan AveNewburgh St Laxford Rd VistadelCir Fairvale AveMira LomaDr Ayon AveOrkney StHollyvaleSt Alameda AveDalton AveSoldano AveSan Gabriel Pl GrandviewDr Noble PlStonebrookSt1st St Angeleno AveSan Gabriel AveVernon AveTodd Ave10th St 8th St 12th St Alosta Ave L i t t l e D a l t o n W a s h Little Dalton W ashS o u th e rn P a cific R a il R o a d Big Dalton W ashMillerAveSouthern Pacific Rail Road Donna Beth AveCerritos AveLittle Dalton Wash210 Fwy 210 FwyCerritos Ave4006.024006.02 4044.014044.01 4043.014043.01 4042.014042.01 4042.024042.02 4044.024044.02 4045.014045.01 4045.044045.04 4045.044045.04 4041.004041.00 4040.004040.00 4043.024043.02 CDBGService Areas ATTACHMENT 2 RESOLUTION NO. 2020-C24 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING THE USE OF ADDITIONAL COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) ECONOMIC SUPPORT KNOWN AS THE CORONAVIRUS AID RELIEF AND ECONOMIC SECURITY (“CARES”) ACT, TO RESPOND TO, PREVENT AND/OR MITIGATE AGAINST THE EFFECTS OF THE NOVEL CORONAVIRUS (COVID-19) PANDEMIC WITHIN THE CITY OF AZUSA WHEREAS, on March 27, 2020, the Coronavirus Aid Relief and Economic Security Act of 2020 (“CARES”) (H.R. No. 748) was signed into law, allocating additional funding to the Community Development Block Grant (CDBG) program to respond, prevent, and mitigate against the effects of the novel coronavirus (COVID-19) ; and WHEREAS, the City of Azusa participates under the County of Los Angeles Community Development Block Grant (CDBG) Program; and WHEREAS, the Los Angeles County Development Authority is the County entity responsible for the disbursement of CDBG CARES Act Grant Funds through the Small Cities Program to the City of Azusa; and WHEREAS, the City of Azusa expects to be allocated approximately $241,825 of supplemental CDBG CARES Act funds, in addition to the City’s annual CDBG allocation; and WHEREAS, the City Council provided the opportunity for public input regarding the City's CARES Act funds. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Azusa does hereby take the following actions: SECTION 1. Consider and approve the use of supplemental CDBG CARES Act funds in the amount of $241,825 and submit approved projects and funding applications to the Los Angeles County Development Authority. SECTION 2. Approve inclusion of said supplemental CDBG CARES Act allocation of $241,825 in the City of Azusa annual budget. SECTION 3. Authorize the City Manager to execute all necessary contracts, agreements, and amendments with the Los Angeles County Development Authority and, if applicable, with approved recipients/subrecipients of the CDBG CARES Act program, together with any changes therein which may be approved by the City Manager and, as necessary, the City Attorney. SECTION 4. Authorize staff to adjust the FY 2019-2020 CDBG Program and budget, as necessary, to take into account the supplemental CDBG CARES Act allocation from the U.S. Department of Housing and Urban Development and programmatic changes necessary to fulfill the requirements of the CDBG CARES Act Program. SECTION 5. The City Clerk shall certify the adoption of this resolution. PASSED, APPROVED AND ADOPTED this 18th day of May, 2020. ____________________________________ Robert Gonzales Mayor ATTEST: ____________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2020-C-24 was duly adopted by the City Council of the City of Azusa, at a regular meeting of said City Council held on the 18th day of May 2020, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ___________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: ___________________________________ Best Best & Krieger, LLP City Attorney