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Item 2.
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| City Council Regular | |
| Date: | 04/25/2022 |
| Title: | Public Hearing and Action on Annual Action Plan including CDBG & HOME Budget Allocations |
| Presented by: | Brenda Beckett |
| Department: | Planning & Community Services |
| Presentation: | Yes |
| Legal Review | Not Applicable |
RECOMMENDATION
City staff and the Community Development Board recommend that the City Council conduct a public hearing and approve the FY2022-2023 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 (over $47 million). Investments in CDBG and HOME has generated nearly $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. The Board is composed of six low-income neighborhood representatives and three at-large members. This composition 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, 2024 (Attachment A). The Annual Action Plan for FY2022-2023 is the third year in the Consolidated Plan’s five-year process (Attachment B).
The Consolidated Plan includes a comprehensive housing needs assessment, a housing market analysis, and an analysis of impediments to fair housing choice. Key findings establish priority needs, and City programs are developed based on findings and priorities.
Planning for the next five-year Consolidated Plan (FY2025-2029) will begin in September 2024 with a public hearing to obtain data and public comment on community needs to assist the Community Development Board in designing the application process for the upcoming program year.
Consolidated Plan Strategies: The following strategies were approved by the City Council in May 2020 and they address Billings’ housing and community development needs:
Guidance & Recommendations Process: The Community Development Board provides staff guidance relative to assessment, planning, allocation, monitoring, and reporting processes for HUD federal funding. The Board is composed of six low-income neighborhood representatives and three at-large members. This composition 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, 2024 (Attachment A). The Annual Action Plan for FY2022-2023 is the third year in the Consolidated Plan’s five-year process (Attachment B).
The Consolidated Plan includes a comprehensive housing needs assessment, a housing market analysis, and an analysis of impediments to fair housing choice. Key findings establish priority needs, and City programs are developed based on findings and priorities.
Planning for the next five-year Consolidated Plan (FY2025-2029) will begin in September 2024 with a public hearing to obtain data and public comment on community needs to assist the Community Development Board in designing the application process for the upcoming program year.
Consolidated Plan Strategies: The following strategies were approved by the City Council in May 2020 and they address Billings’ housing and community development needs:
- Create, preserve, and expand affordable housing options
- Neighborhood Revitalization: Foreclosures
- Impact Poverty
- Prevent, prepare for, and respond to the coronavirus:
- Public Facility Improvements: Handwashing stations, public restrooms improvements, infrastructure, accessibility, small-scale rehabilitation, public facility systems, rehabilitation for social distancing, touchless / nonporous surfacing, etc.
- Public Service Activities: Rent, mental health care, meal distribution, mortgage payments, internet access, utility assistance, childcare, client remote access, vaccination activities, virtual service ability, exposure prevention - staff training, additional cleaning, unmet hospital / public health needs, FEMA match, etc.
Allocation Process: To allocate CDBG and HOME resources, 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 at the end of 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:
- 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.
- Social Service Agencies - The City received three complete applications for CDBG funding over $15,000 to exclusively prepare for, prevent, and respond to the coronavirus (Alternatives, Inc., Boys and Girls Club of Yellowstone Valley, and Billings School District 2). One incomplete, and therefore ineligible, application was received from the Billings Food Bank. Applications can be viewed online here. Several other social service agencies are working towards approval through the CDBG-CV fast-track program.
- 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 an extensive public input process to prepare recommendations for the City Council 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.
- 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 HUD CDBG and HOME activities.
FISCAL EFFECTS
Anticipated Revenues: The City of Billings will receive an estimated $650,000 in new CDBG and $300,000 in HOME funding allocations for use in affordable housing and other projects benefiting low-income residents for FY2022-2023 (Attachment C). Funding from canceled projects and uncommitted fast-track CDBG-CV allocations are also included in revenues. Additional funding is also anticipated through loan repayments in programs such as First Time Home Buyer and Housing Rehabilitation. The Corporation for National and Community Service has awarded the City of Billings $529,074 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 project, program, 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.
FY2022-2023 Budget Recommendation Priorities
Community Development Board Budget recommendation priorities and estimates for the City’s core programs:
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 project, program, 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.
FY2022-2023 Budget Recommendation Priorities
Community Development Board Budget recommendation priorities and estimates for the City’s core programs:
1. Administration at maximum caps, 20% of CDBG (~$130,000) and 10% of HOME (~$30,000). Funding is reserved for administrative costs including technology and phone charges, duplication, publication of notices, motor vehicle costs, liability insurance, staff time; etc. Staff time is tracked for actual time dedicated to administration (Attachment D).
2. CDBG totaling $65,000 to compliment the AmeriCorps Volunteers in Service to America (VISTA) program. This allocation leverages $529,074 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.
o Focus areas include education, healthcare, food security, economic opportunity, housing, financial literacy, and others.
3. First Time Home Buyer program funding totaling $300,000 in HOME.
o Promote financial security, home equity, housing self-sufficiency, housing and neighborhood quality and stability.
o Increase minority homeownership, 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.
o Increase minority homeownership, 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. Foreclosure Acquisition / Rehabilitation allocation of the remaining CDBG funding after three coronavirus-impact projects are fully funded. The total allocation to the Foreclosure program is estimated at $487,553.
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.
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.
5. Affordable Housing Development would include the required 15% minimum allocation in new HOME funding for Community Housing Development Organizations (~$45,000) and all remaining HOME dollars after fully funding the First Time Home Buyer program. The estimated remaining allocation to Affordable Housing Development is $290,411.
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.
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.
Pandemic Impact: The City received three complete applications to exclusively prevent, prepare for, and respond to the coronavirus. One incomplete application was received from the Billings Food Bank, which made the application ineligible for funding. The Community Development Board reviewed each application and based their recommendations on the following:
- Board members performed in-person, on-site interviews with each applicant to review proposed projects.
- Determination of non-duplication of benefits and no other funding is / was available for the project.
- The need for the project must be clearly demonstrated and supported by data.
- The project must clearly prevent, prepare for, and respond to the coronavirus in accordance with HUD’s regulations.
The Board’s recommendations to use CDBG funding to exclusively prevent, prepare for, and respond to the coronavirus include:
1. Fast-Track Coronavirus Response: $40,000 for applications previously submitted. In December 2021, the City Council approved a fast-track process for public service applications less than or equal to $15,000 for pandemic-impact. The City received ten applications for the program and five of the applications have been approved by the City Administrator. Staff is still working with several organizations to garner approval.
2. Alternatives, Inc: $47,000 for mobile app development. Site visit conducted by Community Development Board member Shane Noble. The funds would allow Alternatives to further develop the organization’s existing TOM app to track offenders, check-ins, and agenda review for current and non-residential offenders. It will also allow the organization to collect payments electronically which limits contact with residents and staff from non-residents, limiting staff exposure and manage workforce shortages. The organization does not have the funds to expand the app due to pandemic-related reductions in revenue.
3. Billings School District: $313,300 to install HVAC systems at Washington Elementary. Site visit conducted by Community Development Board member Jim Corson. The current HVAC system at Washington Elementary has been in place since 1988. Replacing the HVAC system will be an important component in the mitigation of COVID19 and keeping school doors open. Washington Elementary school is a Title 1 school serving a high percentage of students on free and reduced lunch (60%). The school is also the home base for the Homeless Liaison. Homeless students that do not have a home school also attend Washington Elementary.
4. Boys & Girls Club: $140,000 to improve social distancing by remodeling the front entryway and foyer. Site visit conducted by Community Development Board member Hannah Olson. The Bair Family Clubhouse was designed in 1984 and was a nationally recognized structure. However, times have changed, and the ongoing COVID-19 pandemic has clearly articulated that we need more space for parents / guardians, so they can better socially distance in the foyer and around the Front Desk. The organization plans to add space that will expand the existing foyer from <120 square feet to nearly 250 square feet. The front desk area will be reconfigured to provide additional space that will allow for better traffic flow and keep those traversing the area more safely distanced.
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.
Housing Rehabilitation Loan Program: Each year, HUD requires the City to review past performance on projects and activities based on data and outcomes. From this analysis, the City is expected to make changes to programming to adjust to current conditions. All changes must be in compliance and in alignment with the priorities, goals, and strategies outlined in the current approved five-year Consolidated Plan.
After reviewing the performance of the Housing Rehabilitation Loan program, staff and the Community Development Board are not recommending an allocation for the program for FY2022-2023. The Board and staff have been considering closing the program since FY2019-2020. Initially, significant hailstorms contributed to a local contractor shortage (August 2019). In March 2020, homeowners were hesitant to engage in the program due to coronavirus contamination concerns. In the past several years, lack of available contractors willing to take on a HUD-funded project and its requirements has contributed to the contractor shortage for the program. In prior years, the City would typically receive approximately 20 applications for the program annually. However, with the ongoing contractor limitations and pandemic impacts, the City received eight applications in FY2019-2020 and two loans were closed that fiscal year. Twelve applications were received in FY2020-2021 and zero loans were closed.
A new construction boom and soaring materials costs followed the pandemic into Billings, further exacerbating the contractor and workforce shortage. The program has been on hold since May 2021 to facilitate staff time dedication for coronavirus impact projects, programs, and activities. If conditions change, the Community Development Board has the option to reopen the program in the future.
1. Fast-Track Coronavirus Response: $40,000 for applications previously submitted. In December 2021, the City Council approved a fast-track process for public service applications less than or equal to $15,000 for pandemic-impact. The City received ten applications for the program and five of the applications have been approved by the City Administrator. Staff is still working with several organizations to garner approval.
2. Alternatives, Inc: $47,000 for mobile app development. Site visit conducted by Community Development Board member Shane Noble. The funds would allow Alternatives to further develop the organization’s existing TOM app to track offenders, check-ins, and agenda review for current and non-residential offenders. It will also allow the organization to collect payments electronically which limits contact with residents and staff from non-residents, limiting staff exposure and manage workforce shortages. The organization does not have the funds to expand the app due to pandemic-related reductions in revenue.
3. Billings School District: $313,300 to install HVAC systems at Washington Elementary. Site visit conducted by Community Development Board member Jim Corson. The current HVAC system at Washington Elementary has been in place since 1988. Replacing the HVAC system will be an important component in the mitigation of COVID19 and keeping school doors open. Washington Elementary school is a Title 1 school serving a high percentage of students on free and reduced lunch (60%). The school is also the home base for the Homeless Liaison. Homeless students that do not have a home school also attend Washington Elementary.
4. Boys & Girls Club: $140,000 to improve social distancing by remodeling the front entryway and foyer. Site visit conducted by Community Development Board member Hannah Olson. The Bair Family Clubhouse was designed in 1984 and was a nationally recognized structure. However, times have changed, and the ongoing COVID-19 pandemic has clearly articulated that we need more space for parents / guardians, so they can better socially distance in the foyer and around the Front Desk. The organization plans to add space that will expand the existing foyer from <120 square feet to nearly 250 square feet. The front desk area will be reconfigured to provide additional space that will allow for better traffic flow and keep those traversing the area more safely distanced.
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.
Housing Rehabilitation Loan Program: Each year, HUD requires the City to review past performance on projects and activities based on data and outcomes. From this analysis, the City is expected to make changes to programming to adjust to current conditions. All changes must be in compliance and in alignment with the priorities, goals, and strategies outlined in the current approved five-year Consolidated Plan.
After reviewing the performance of the Housing Rehabilitation Loan program, staff and the Community Development Board are not recommending an allocation for the program for FY2022-2023. The Board and staff have been considering closing the program since FY2019-2020. Initially, significant hailstorms contributed to a local contractor shortage (August 2019). In March 2020, homeowners were hesitant to engage in the program due to coronavirus contamination concerns. In the past several years, lack of available contractors willing to take on a HUD-funded project and its requirements has contributed to the contractor shortage for the program. In prior years, the City would typically receive approximately 20 applications for the program annually. However, with the ongoing contractor limitations and pandemic impacts, the City received eight applications in FY2019-2020 and two loans were closed that fiscal year. Twelve applications were received in FY2020-2021 and zero loans were closed.
A new construction boom and soaring materials costs followed the pandemic into Billings, further exacerbating the contractor and workforce shortage. The program has been on hold since May 2021 to facilitate staff time dedication for coronavirus impact projects, programs, and activities. If conditions change, the Community Development Board has the option to reopen the program in the future.
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 at this meeting. The City Council is asked to consider public input received, if any, and make a final decision on the Annual Action Plan and accompanying CDBG and HOME budget.
Attachments
- A - FY2020-2024 Consolidated Plan
- B - FY2022-2023 Annual Action Plan Draft
- C - FY2022-2023 Estimated Revenue and Recommendations
- D - Time Tracking and Draw Procedures
- E - Allocation and Funding History