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Item 2.

City Council Regular
Date:	04/22/2024
Title:	Public Hearing & Action on Annual Action Plan including CDBG & HOME Budget Allocations
Presented by:	Brenda Beckett
Department:	Planning & Community Services
Presentation:	Yes
Legal Review:	Not Applicable
Project Number:	N/A

RECOMMENDATION

City staff and the Community Development Board recommend that the City Council conduct a public hearing and approve the FY2024-2025 Annual Action Plan and budget allocations for Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) program.

BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)

Funding Source and Intent: The City of Billings has been a recipient of U.S. Department of Housing and Urban Development (HUD) CDBG funds since the mid-1970s and HOME funds since the early 1990s (nearly $50 million). Investments in CDBG and HOME have generated over $10 million in loan repayments since 2001. Projects, programs, and activities funded through CDBG and HOME are regulated and monitored by the federal government and must be primarily targeted to address community affordable housing for low-income citizens and poverty-impact needs in Billings.

Guidance & Recommendations Process: The Community Development Board provides staff guidance relative to assessment, planning, allocation, monitoring, and reporting processes for HUD federal funding (Attachment A, Consolidated Planning Process). The Board is comprised of six low-income neighborhood representatives and three at-large members. This structure complies with a federal regulation to ensure decision-making processes include involvement from residents of low-income neighborhoods. The Board is also responsible for making funding recommendations to the City Council for its review and approval.

Planning Process: The Consolidated Plan is the primary planning document directing the City’s CDBG and HOME investments and it covers a five-year period from July 1, 2020 through June 30, 2025 (Attachment B). The Annual Action Plan for FY2024-2025 is the fourth year in the Consolidated Plan’s five-year process (Attachment C).

Allocation Process: To allocate CDBG and HOME resources via the Consolidated Plan, the Community Development Division staff and Board members facilitated an extensive process to gather public input on the use of federal funds. Applications were available at the beginning of December and due in mid-January. Applications were then forwarded to the Community Development Board and recommendations were prepared for City Council consideration. The Staff facilitated a 30-day public comment period, the City Council will take action, and the Annual Action Plan will be submitted to HUD by May 15.

STAKEHOLDERS

Stakeholders for CDBG and HOME programs include:

1. Program Recipients - The City serves low-income households through a variety of affordable housing programs such as housing development, home buyer, and foreclosure acquisition / rehabilitation programs. Full descriptions of available programs can be found online at www.BillingsMT.gov/comdev.

2. The Community Development Board - As an advisory body to the City Council, the Board provides detailed oversight to both the CDBG and HOME programs throughout the year. The Board also facilitates a public input process to prepare recommendations for the City Council's consideration. Six of nine total Community Development Board members are representatives of low-income neighborhoods either by residence or task force delegation, ensuring low-income citizen involvement of planning and allocation processes.

3. Non-Profit Organizations - Community organizations serving those experiencing poverty are supported by the Billings Metro VISTA Project. AmeriCorps VISTA members assist in the provision of social services to those in need.

ALTERNATIVES

City Council may:

Hold a public hearing and approve the Annual Action Plan, and the allocation of CDBG and HOME funding as recommended by Staff and the Community Development Board.
Hold a public hearing and approve the Annual Action Plan and the allocation of CDBG and HOME funding based on alternative funding amounts as determined by the City Council.
Not hold a public hearing and not approve the Annual Action Plan and the allocation of CDBG and HOME funding and refuse to undertake CDBG and HOME activities.

FISCAL EFFECTS

Anticipated Revenues: Although HUD has not released allocation numbers to date, the City of Billings will receive approximately $650,000 in new CDBG and $300,000 in HOME funding for use in affordable housing and other projects benefiting low-income residents for FY2024-2025 (Attachment D). The Corporation for National and Community Service has awarded the City of Billings $430,632 in federal funds to support the Billings Metro VISTA Project contingent on the City’s CDBG allocation supporting the program.

Allocation Compliance: Proposed allocations are consistent with the goals and priorities of the approved five-year Consolidated Plan for the use of CDBG & HOME resources in Billings. Allocation recommendations conform to pre-determined spending requirements on several categories including: CDBG and HOME administration caps (maximum of 20% and 10% of new funding respectively); public service caps (up to 15% of new CDBG funding); and Community Housing Development Organization set-aside for affordable housing development (minimum 15% of new HOME funding). Changes creating non-compliance with federal spending requirements would place the City’s entitlement status for federal funds at risk. Non-federal funding repayment is required for noncompliant projects, programs, and activity expenditures.

The allocation of funding is restricted by eligibility requirements for CDBG and HOME and must meet pressing citywide community needs as identified in the Consolidated Plan; affordable housing, housing choice, and poverty-impact. HUD policy prohibits the use of federal funds to supplant local government funds on projects communities typically underwrite, regardless of whether federal grant dollars are available.

FY2024-2025 Budget Recommendation Priorities

Budget recommendation priorities and estimates for the City’s core programs:

1. Administration at maximum caps, 20% of CDBG (estimated $130,000) and 10% of HOME (estimated $35,000). Funding is reserved for administrative costs including technology and phone charges, duplication, publication of notices, motor vehicle costs, liability insurance, staff time; etc.

2. CDBG totaling $75,000 to compliment the AmeriCorps Volunteers in Service to America (VISTA) program. This allocation leverages $430,632 in grant funds from the Corporation for National and Community Service.

o Provide resources to nonprofit organizations to undertake poverty-impact activities and to support the low-income individuals and families they serve.
o Focus areas include education, healthcare, food security, economic opportunity, housing, financial literacy, and others.

3. No additional funding is recommended for allocation to the First Time Home Buyer program. The City currently has over $330,000 in HOME resources dedicated to the program.

o Promote financial security, home equity, housing self-sufficiency, housing and neighborhood quality and stability.
o Increase minority home ownership, promote equal access and opportunity, and decrease segregation citywide.
o Improve affordable housing opportunities for the elderly, persons with disabilities, and other special populations.
o Reduce predatory lending through education and standardized procedures.

4. CDBG totaling $100,000 for Crime Prevention Through Environmental Design for improvements to low-income neighborhood parks.
o Support the City Council strategic plan public safety priority through the design of buildings, landscaping, and outdoor environments to discourage and prevent crime.
o Promote housing and neighborhood quality and stability in lower-income neighborhoods.

5. Foreclosure Acquisition / Rehabilitation for the property at St. Johns Avenue would be allocated an additional $82,340 to bring the maintenance and rehabilitation budget to $200,000. Remaining CDBG funding would be allocated to purchase an additional foreclosed home (estimated at $262,660).

o Mitigate the negative community impact of vacant, foreclosed properties.
o Improve affordable housing quality, condition, safety, livability, and accessibility.
o Stabilize property values in neighborhoods with existing vacant, foreclosed homes.
o Eliminate the potential for crime related to existing vacant, foreclosed properties.

6. Affordable Housing Development would include the required 15% minimum allocation in new HOME funding for Community Housing Development Organizations (estimated at $52,500) and all remaining HOME funding estimated at $262,500 (Approximtely $315,000 total).

o Expand access and availability of decent, affordable housing citywide.
o Improve the physical quality of affordable housing.
o Foster suitable living environment and quality of life through the improvement of physical conditions, including infrastructure for housing projects and housing development.

Ensuring Timeliness: Initial budget allocations may be changed to facilitate close- and shovel-ready priorities to assist the City in maintaining compliance with commitment and expenditure deadlines. This includes all repayment funding received during the program year from loans issued through programs such as First Time Home Buyer, Housing Rehabilitation, Affordable Housing Development, etc.

SUMMARY

City staff and the Community Development Board have made recommendations for CDBG and HOME budgets and the Annual Action Plan is ready for Council adoption. The City Council is asked to consider public input received at the hearing and make a final decision on the Annual Action Plan and accompanying CDBG and HOME budget.

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