HomeMy WebLinkAbout104-County CDBG Administration Recommendations - Attachment 3.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
C ounty Executive: Jeffrey V. Smith
February 23, 2010 – 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 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)
February 23, 2010 – 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 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:
February 23, 2010 – 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
Tot al $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.
February 23, 2010 – 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
February 23, 2010 – 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%.
February 23, 2010 – 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