HomeMy WebLinkAbout104-2-17-10 Memo from OAH Director.pdf
February 17, 2010 TO: Emily Harrison Deputy County Executive FROM: Marjorie Matthews, Director (Original signed) Office of Affordable Housing SUBJECT: REPORT AND RECOMMENDATIONS FOR
STREAMLINING THE URBAN COUNTY CDBG PROGRAM IN 2010 INTRODUCTION The following report and recommendations are the result of a combination of efforts by the Office of Affordable Housing
(OAH) and a CDBG Working Group in response to the County Executive’s direction to reduce the cost to the General Fund of administering the Urban County CDBG Program. The goal was to
identify actions to reduce administrative costs to the County General Fund by streamlining the program or increasing revenues from non-General Fund sources. The Community Development
Block Grant (CDBG) Program is part of the larger Housing and Community Development (HCD) Program that also includes Home Investment Partnership Act (HOME) Funds and ARRA Recovery Funds
(CDBG-R and HPRP). The Urban County operates under a Joint Powers Agreement (JPA) whereby the County acts as the HCD Program Grantee on behalf of Campbell, Los Altos, Los Altos Hills*,
Los Gatos, Monte Sereno*, Morgan Hill, Saratoga, and the Unincorporated Area. [* contributes population but does not receive funding.] Over the 31 years of the HCD Program, the total
annual grant received by the Urban County has decreased as administrative costs have increased. The County’s cost to County of Santa Clara Office of the County Executive Office of Affordable
Housing 2310 North First Street, Suite 100 San Jose, California 95131 (408) 441-4254 FAX (408) 441-4332 Board of Supervisors: Donald F. Gage, George Shirakawa, Dave Cortese, Ken Yeager,
Liz Kniss County Executive: Jeffrey V. Smith
April 14, 2011 – 2 – Page 2 of 7 administer HCD has long exceeded the administrative allowance allowed by HUD. This fiscal year, the County General Fund supplemented the HCD budget in
the amount of $633,000. Given the continuing budget deficits projected for the County’s General Fund, this level of subsidy can no longer be provided. The Office of Affordable Housing
has taken several steps to reduce costs, including: Consolidation of two HCD Advisory Committees into one A shift to a two-year funding cycle for CDBG Public Service contracts
Collaboration with 14 cities on a single draft 5-Year Consolidated Plan Preparation of single application and monitoring forms Reduction in HCD staffing by from 10 FTEs in 2003
to 7.7 in 2010 In the fall of 2009, an Urban County CDBG Working Group was formed by the County Executive/City Managers Group composed of representatives from the participating jurisdictions,
the HCD Advisory Committee, and the non-profit community. The Working Group met three times to to discuss cost saving measures in the CDBG Allocation Process and in the administrative
procedures of both HUD and the County. During this time, the County Executive’s Office commissioned a program assessment of the Urban County HCD Program by an outside consultant. The
Working Group discussed the current tasks and costs of administering the CDBG Program, considered the program assessment by Realize Consulting Group, LLP, listened to the concerns of
the CEO of Silicon Valley Council of Non-Profits, and received a presentation by City Data Services on web-based management of CDBG Grants. The full program assessment by Realize Consulting
Group, LLC is Attachment A. The topic of the Housing Rehab Program was deferred to a later time. RECOMMENDATIONS The following recommendations to reduce the administrative burden of
the CDBG Program to the County General Fund are proposed for approval by the County Executive/City Managers Group: 1. Establish a minimum amount of $5,000 for Public Service Grants.
(Working Group) 2. Limit the maximum number of Public Service Grants for each city to five and consider shifting smaller city grants to non-CDBG funds. (Working Group) 3. Round all amounts
to the nearest $100 at the time that agreements are finalized. (Working Group)
April 14, 2011 – 3 – Page 3 of 7 4. Shift all Public Service Contracts to a 2-year concurrent cycle. (Working Group) 5. Change payment requests from monthly to quarterly or semi-annually.
(OAH) 6. Share performance and fiscal monitoring responsibilities among Urban County jurisdictions. (OAH) 7. Set city expenditure deadlines to two years to minimize roll-overs. (OAH)
8. Reduce General Fund overhead charges to the HCD Program. (County Executive) 9. Seek proposals for a web-based data management system to unify and simplify administration of CDBG Program.
(Working Group/OAH) 10. Increase administrative revenue to the County by reducing or eliminating the $15,000 administrative allowance allocated to each City. (County Executive) 11. Consider
unifying all grants under County administration for CDBG Program Year 2012/13 if above efficiencies can significantly reduce administrative costs. (Working Group) 12. Consider further
increasing the minimum amount and reducing the number of Public Service Grants for CDBG CDBG Program Year 2012/13. (OAH) Attachment B shows a proposed implementation timeline for CDBG
recommendations. BACKGROUND Overview of Urban County HCD Program The Urban County was formed in 1976 in order to attain sufficient population to become an Entitlement Jurisdiction and
receive federal Community Development Block Grants (CDBG), HOME, American Dream Down Payment Assistance (ADDI) Program and Emergency Shelter Grants (ESG, now discontinued). In 2009,
the Urban County also became eligible for ARRA Recovery (CDBG-R) and Homeless Prevention and Rapid Re-housing (HPRP) funds. The Urban County operates under a three-year renewable Joint
Powers Agreement (JPA). The current JPA is scheduled to expire on September 30, 2011. An analysis of the last eight years shows that the Urban County has received a total of $24,506,387
from these federal sources. The amount of CDBG, HOME, and ESG grants has been diminishing gradually over the years as shown in the following table:
April 14, 2011 – 4 – Page 4 of 7 Funding Year CDBG HOME ESG ARRA Total 2010 1,742,531 873,036 1,213,740 $3,829,307 2009 1,727,563 785,706 $2,513,269 2008 1,788,630 820,072 $2,608,702
2007 1,800,875 827,249 $2,628,124 2006 2,018,640 898,758 $2,917,398 2005 2,143,000 1,003,378 89,000 $3,235,378 2004 2,065,527 911,659 81,023 $3,058,209 2003 2,584,000 1,043,000 89,000
$3,716,000 Total $24,506,387 Administration of All HCD Programs The County acts as the Grantee of all HCD Programs on behalf of the participating jurisdictions and is therefore accountable
to HUD for all fiscal and performance measurements. There are several distinct programs funded by the HCD Program, including New Housing Development, Down Payment Assistance, County
and City capital projects, Single Family Housing Rehabilitation, Rental Housing Rehabilitation, Homeless Prevention, Rapid Re-housing, and Public Service Grants. Each program requires
a level of expertise within the County so that the eligibility of the projects, and of the Urban County itself, is not jeopardized. As HUD and County regulations have multiplied over
the last 31 years, so too have the number and complexity of administrative tasks. CDBG Public Service Grants HUD allows no more than 15% of the total annual CDBG grant to be used for
Public Service. While the Urban County has stayed within the annual 15% expenditure cap, the actual number of Public Service grants – 30 for the current year --is 43% of the total of
69 grants being managed. Public Service grants are not only the most numerous compared to other categories of funding, but they are also the smallest in individual amounts. The following
table shows the total number of HCD projects administered during the last three fiscal years, including the number of Public Service projects per city.
April 14, 2011 – 5 – Page 5 of 7 FISCAL YEAR/SOURCE ROLLOVER PROJECTS NEW PROJECTS Pubic Service Total New TOTAL ALL PROJECTS FY 2007/2008: Campbell 2 6 10 12 Los Altos 2 5 9 11 Los
Gatos 6 4 8 14 Morgan Hill 5 4 6 11 Saratoga 7 2 5 12 Pool -CDBG 1 14 21 22 Pool -HOME 3 n/a 3 6 TOTAL 26 35 62 88 FY 2008/2009: Campbell 0 6 10 10 Los Altos 3 6 8 11 Los Gatos 7 4 7
14 Morgan Hill 3 3 5 8 Saratoga 6 1 5 11 Pool -CDBG 1 13 20 21 Pool -HOME 5 n/a 2 7 TOTAL 25 33 57 82 FY 2009/2010: Campbell 0 5 9 9 Los Altos 1 7 9 10 Los Gatos 6 4 7 13 Morgan Hill
2 3 5 8 Saratoga 7 1 7 14 Pool-CDBG 1 10 16 17 Pool -HOME 3 n/a 4 7 TOTAL 20 30 57 78 The next table indicates that, this year, seven subrecipients are receiving multiple grants within
the Urban County CDBG Program. Subrecipient Pool Campbell Los Altos Los Gatos Morgan Hill Saratoga Totals EHC LifeBuilders $11,868 $8,661 $20,529 InnVision 17,451 5,161 $22,612 Next
Door 9,100 4,537 3,483 $17,120 Support Network 4,537 4,208 $8,745 Catholic Charities $3,744 7,370 15,500 $26,614 Live Oak 2,000 12,470 $14,470 Second Harvest $4,800 6,000 $10,800 Totals
$38,419 $26,640 $9,691 $24,640 $21,500 $120,890
April 14, 2011 – 6 – Page 6 of 7 Administrative Responsibilities Further complicating the administration of the HCD Program is the multi-year nature of federal grants administration.
Each year, OAH is administering three Program Years at one time: Past year: Fiscal roll-overs and close out, data collection and evaluation, submittal of CAPER report to HUD by September
30. Current year: Preparation and execution of contracts, requests for reimbursement, fiscal and performance, and insurance monitoring, housing inspections, and trouble-shooting. Upcoming
year: Preparation and release of RFP, evaluations of applications, preparation of recommendations to Board of Supervisors, and submittal of Annual Action Plan to HUD by May 15. Other
periodic responsibilities include preparation of the 5-year Consolidated Plan, updating the Analysis of Impediments to Housing, renewal of the JPA, and County and federal audits. FY2009/10
presented additional administrative challenges as the Urban County became eligible and applied for federal ARRA Recovery Funds and received just a 5% administrative allowance. Finally,
it should be noted that the responsibilities of the County HCD staff have increased with the continuing high turnover and reduced staffing of CDBG subrecipients. The Office of Affordable
Housing has found that fewer and fewer cities and non-profits have the time and ability to understand the complexities of CDBG regulations in order to meet the eligibility and reporting
requirements of HUD. This has necessitated significant amounts of County staff time in training and problem solving throughout the year. CDBG Administrative Allowance This year, the
County General Fund supplemented the CDBG budget by $289,500 to cover the gap between the administrative cap allowed by HUD and the actual cost of managing the Program. Analysis of the
CDBG Program during the last eight years indicates that the annual CDBG grant, the administrative allowance, and the number of grants have all decreased at about the same rate --30-36%.
However, the cost of administering the Program has increased by 19%.
April 14, 2011 – 7 – Page 7 of 7 2003 2010 Percent change Amount of grant $2,584,000 $1,742,531 -33% Number of Projects 108 71 -34% Size of awards $2,000 -$480,000 $2,000 -$542,575 No
change -+13% CDBG Admin Allowance $426,800 $273,500 -36% CDBG Admin Costs $475,000 $563,000 +19% CONCLUSION The Working Group agreed that reducing the administrative burden of managing
a large number of small grants was advisable and recommends raising minimum amounts and reducing the number of Public Service grants in the future. Participants were also in favor of
2-year contracts, contingent on performance and availability of funds, and moving to a web-based grants management system. Realize Consulting did not recommend further reductions in
staffing as a way to reduce costs, rather it was suggested that the County consider the Contra Costa consolidated model of CDBG administration for future years. The County Executive’s
Office recommends retaining the $75,000 in administrative funds that is currently dispersed to the cities. Members of the Working Group felt strongly that the value of CDBG/HOME/ARRA
grants should not be lost in our efforts to decrease the administrative burden. They expressed a desire to continue seeking ways to maximize the amount of direct funding to non-profit
organizations that provide much needed services to the community. Areas recommended for further study are: an examination of County processes to eliminate redundancies; the appropriate
staffing levels needed to administer the HCD Program; and an evaluation of the Housing Rehab Program. Attachments: A. Urban County HCD Program Assessment by Realize Consulting Group,
LLC B. Proposed Implementation Timeline for CDBG Recommendations cc: CDBG Working Group