Housing Staff is seeking direction from Flagstaff City Council on the allocation of the 2020/2021 Community Development Block Grant (CDBG) funds and the CDBG-CV funding as part of the (Coronavirus Aid, Relief and Economic Security) Act. Staff will be back in front of the Council for a funding decision on the use of these funds on May 19, 2020.

The desired action on May 19 is twofold:

1. Approval of the City of Flagstaff’s 2020/2021 Annual Action Plan, a required submission to the U.S. Department of Housing and Urban Development (HUD), as part of the Community Development Block Grant (CDBG) process.
    
2. Approval of a second substantial amendment to the 2019/2020 Annual Action Plan authorizing the City to de-obligate previously allocated Owner Occupied Housing Rehabilitation funds and incorporate CDBG-CV funding allocations.

Staff is seeking Council direction on funding recommendations for the use of  2020/2021 CDBG and CDBG-CV funding. Staff needs this direction to bring forward two resolutions on May 19 as a required submission to the U.S. Department of Housing and Urban Development (HUD) as part of the Community Development Block Grant (CDBG) program.

Financial Impact:

CDBG 2020/2021 Annual Action Plan
Approval of Resolution 2020-26 is critical to the City of Flagstaff receiving its annual CDBG entitlement allocation. The 2020/2021 CDBG allocation is $611,295.  In addition, the City of Flagstaff is able to include program income and reallocated funds from past year grants to increase funding available for projects. Those additional funds equal $48,986.00.  Therefore, a grand total of $660,281.00 is available for the 2020/2021 program year, through the Annual Action Plan process. The proposed allocation takes into consideration the City’s financial impacts by including the estimated indirect rate of 10%.

CDBG 2019/2020 Amended Annual Action Plan
Approval of Resolution 2020-25 will amend the City of Flagstaff’s 2019/2020 Due to the health and safety concerns caused by the pandemic Annual Action Plan and expedite CDBG-CV funding into the Flagstaff community. The amendment will de-obligate up to $164,000 in funds previously allocated to the City of Flagstaff’s Owner Occupied Housing Rehabilitation Program, which has been temporarily paused due to the health and safety concerns caused by the pandemic, and incorporate CDBG-CV funds provided by the CARES (Coronavirus Aid, Relief, and Economic Security) Act. The City of Flagstaff CDBG-CV allocation is $359,604. For this proposed allocation, the City has waived the indirect rate of 10% in order to maximize community benefit.

Policy Impact:

The City of Flagstaff Council's CDBG Priorities: 

• Provide affordable housing (rental and ownership)
• Address homelessness
• Improve neighborhood revitalization
• Promote workforce job training
• Support education/ early childhood development

Connection to Council Goal, Regional Plan, CAAP, and/or Strategic Plan:

REGIONAL PLAN:

Goal NH.1. Foster and maintain healthy and diverse urban, suburban, and rural neighborhoods in the Flagstaff region.

• Policy NH.1.1. Preserve and enhance existing neighborhoods.

Goal NH.4. All housing is safe and sanitary.

• Policy NH.4.1. Expand the availability of affordable housing throughout the region by preserving existing housing, including housing for very low-income persons.
• Policy NH.4.3.Address accessibility issues and other housing barriers to persons with disabilities or special needs.
• Policy NH.4.4. Encourage green practices in housing construction and rehabilitation that support durable, healthy, and energy efficient homes.
• Policy NH.4.5. Renovate the existing housing stock to conserve energy and reduce utility and maintenance costs for owners and occupants.
• Policy NH.4.7. Enforce compliance with fair housing laws.

Goal NH.5. Eliminate homelessness.

• Policy NH.5.1. Provide adequate resources for families with children experiencing homelessness.
• Policy NH.5.2. Provide adequate resources for individuals experiencing homelessness.
• Policy NH.5.3. Support and expand programs that prevent homelessness.
• Policy NH.5.4. Make transitional housing resources available to populations experiencing homelessness.

Has There Been Previous Council Decision on This:

Staff received Council direction on local priorities during the January 29^th, 2019 Council meeting. Those priorities are identified in Policy Impact above and Background/ History below.

Background/History:

CDBG 2020/2021 Annual Action Plan
In order to receive CDBG funding, the City must complete and submit to HUD the required 2020-2021 Annual Action Plan. This plan describes how CDBG funds will be used in the coming year.

Every two years, staff requests funding guidance from Council on CDBG Priorities and the overall CDBG process for the coming two years.  In January 2019, Council received an overview of the CDBG program and established five priorities:

1. Provide affordable housing (rental and ownership)
2. Serve those experiencing homelessness
3. Improve neighborhood revitalization
4. Promote workforce job training
5. Support education/ early childhood development

In the 2020 CDBG process, five external agency proposals were received.  There was one internal City of Flagstaff request. The total requested in CDBG funding from all proposals was $791,640. $660,281.00 is available for the 2020/2021 program year, through the Annual Action Plan process.

Housing staff are responsible for determining whether a proposed activity is eligible and conducting a risk assessment of the project and applying agency. Federal funds require administrative knowledge, capacity to ensure compliance and timely expenditure of funds.  A ranking committee comprised of three community representatives and three City staff met to review the external proposals and rank them by consensus. Rankings primarily serve as a risk and benefit assessment and are the guiding input for staff recommendations forwarded to City Council.

Below is a list of the proposals in order of ranking. The proposals are categorized by Housing and Public Service categories as HUD has two separate funding limits and different criteria. For the 2020/2021 program year, HUD has waived the required 15% public service cap for projects that respond to, prepare for, and prevent the COVID-19 infectious disease.

Internal City of Flagstaff proposals are presented to meet City Council priorities or other unmet needs in the community and are not ranked (NR) competitively with the other proposals since the City would administer these projects directly.
 

Housing Activities	Proposal/Project	Request	Ranking
Housing Solutions of Northern Arizona	Sharon Manor Renovation	$244,400	119
Housing Solutions of Northern Arizona	Permanent Supportive Housing Acquisition	$115,000	113
City of Flagstaff	La Plaza Vieja Infrastructure	$200,000	Internal

 

Public Service Activity	Proposal/Project	Request	Ranking
Flagstaff Shelter Services	Housing as Healthcare Program	$100,000	152
Threaded Together	Sewing and Textile Employment Pathway (STEP) Program	$32,240	109
Tynkertopia	Full STEAM Ahead Job Training Program	$100,000	53

CDBG 2019/2020 Amended Annual Action Plan and CDBG-CV Funding
In order to receive and incorporate CDBG-CV funding, the City must submit to HUD the required substantial amendment to the 2019-2020 Annual Action Plan. This amendment describes how CDBG-CV funds will be used.

To determine the most efficient and effective use of the CDBG-CV funds, housing staff contacted six local, non-profit agencies who provide essential community services and have successfully administered City of Flagstaff CDBG funded projects within the last 6 years. Agencies were asked to submit an “Agency Needs Assessment” detailing urgent needs for responding to, preparing for and preventing the COVID-19 Infectious Disease. Three agencies returned needs assessments requesting $535,000 for COVID-19 related projects. The CDBG-CV funds provided by the CARES Act and allocated to the City of Flagstaff equal $359,604. The three agencies that did not submit a request for funding all sent responses supporting the requested CDBG-CV projects.  

Additionally, HUD has urged entitlement communities to consider the use of allocated CDBG funds for the prevention and response to the community spread of COVID-19. Due to the health and safety concerns caused by the pandemic, the Owner Occupied Housing Rehabilitation (OOHR) Program has been put on pause. With this, staff is recommending a de-obligation and reallocation of up to $164,000 from annual CDBG 2019/2020 entitlement from the internally administrated OOHR Program for allocation to COVID-19 response programs. This brings the total available for funding up to $533,604.

Below is a list of the agency needs received by housing staff. All agency needs are in the public service category. For the 2019/2020 program year and CDBG-CV allocations, HUD has waived the required 15% public service cap for projects that respond to, prepare for and prevent the COVID-19 infectious disease.
 

Public Service Activity	Proposal/Project	Request
Flagstaff Shelter Services	COVID-19 Infectious Disease Response	$280,000
Catholic Charities	Homeless Services	$80,000
Coconino County Health and Human Services	Eviction Prevention and Housing Stabilization	$175,000

Key Considerations:

In order to receive CDBG funding, the City must complete an Annual Action Plan that describes how CDBG funds will be used in the coming year and how the activities will accomplish the goals outlined in the 2016-2020 Consolidated Plan. The creation of the Consolidated Plan is an extensive process involving public and stakeholder input (gathered through surveys, public meetings, and a 45-day public comment period), community needs assessments and a housing market analysis. The data outlined in the Consolidated Plan helps determine the relative priority of activities and the populations that will be served in the coming years.

Expanded Financial Considerations:

CDBG 2020/2021 Annual Action Plan
For the 2020/2021 Annual Action Plan, the ranking committee, along with staff are recommending that the City of Flagstaff fully fund the external Housing Solutions of Northern Arizona Sharon Manor Rehabilitation project and two of the external public services proposals, Flagstaff Shelter Services and Threaded Together. Remaining funds would be used to partially fund the City of Flagstaff internal infrastructure project in the La Plaza Vieja target neighborhood as outlined in the chart below:

2020/2021 Allocation

Total 2020 Entitlement Award	$611,295.00
Program Income (PI) and de-obligated funds	$48,986.00
Total Available	$660,281.00
Administration (20%)
Grant Compliance and Administration	$64,974.00
Estimated City Indirect Rate of 10%	$60,026.00
Total Administration	$125,000.00

2020/2021 CDBG Funding Recommendations

Housing/Economic Development Activities	Recommended Funding	Individuals/Households Served
Housing Solutions of Northern Arizona Sharon Manor Renovation	$244,400.00	8 households
City of Flagstaff La Plaza Vieja Infrastructure	$157,433.00	2,230 individuals
Total Housing/Economic Development Activities	$401,833.00
Public Service Activities (15% Cap)	Recommended Funding
Flagstaff Shelter Services Housing as Healthcare and COVID-19 Response Program	$100,000.00	500 individuals
Threaded Together Sewing and Textile Employment Pathway and COVID-19 Response Program	$32,240.00	3 individuals
Total Public Service Activities	$132,240.00
Administration	$125,000.00
Total City of Flagstaff Fund Request	$660,281.00	2,733 individuals 8 households

CDBG 2019/2020 Amended Annual Action Plan and CDBG-CV Funding
For the 2019/2020 Amended Annual Action Plan, staff is recommending that the City of Flagstaff reallocate funds from the OOHR project and combine these funds with the CDBG-CV funds and allocate funds for Eviction Prevention and Housing Stabilization administered by Coconino County Health and Human Services, and Flagstaff Shelter Services and Catholic Charities homeless services as outlined in the chart below:

CDBG-CV and 2019 Allocation

Total CDBG CV Entitlement Award	$359,604.00
De-obligated OOHR Funds	$164,000.00
Total Available	$523,604.00
Administration (10% of CDBG-CV Allocation only)
Grant Compliance and Administration	$35,960.40
Estimated City Indirect Rate of 10%	$0
Total Administration	$35,960.40

CDBG-CV and 2019 Funding Recommendations

Public Service Activities (15% Cap)	Recommended Funding
Flagstaff Shelter Services Housing as Healthcare and COVID-19 Response Program	$250,000.00	600 individuals
Catholic Charities Homeless Services	$73,643.60	560 individuals
Coconino County Health and Human Services Eviction Prevention and Housing Stabilization	$164,000.00	91 households
Total Public Service Activities	$487,643.60
Administration	$35,960.40
Total City of Flagstaff Fund Request	$533,604.00	1,160 individuals 91 households

**In addition to CDBG-CV funds, Coconino County Health and Human Services’ Eviction Prevention and Housing Stabilization program will also receive $59,000 in City of Flagstaff General Funds per Council direction at the April 24, 2020 Budget Retreat. These funds will be leveraged with the CDBG allocation and administered as one program. Those funds are not indicated in these recommendations.

Community Benefits and Considerations:

Within the 2016-2020 Consolidated Plan and excluding administration, Flagstaff has leveraged $1,177,287.11 in CDBG expenditures with $4,805,665.71 in other, private or public funds.

Flagstaff is proud of prior year CDBG accomplishments and continues to utilize viable resources to improve the quality of life in this community. In all, approximately 6,050 individuals and an additional 31 households were beneficiaries of CDBG services during the 2018 Program Year. If funded, the above recommendations would serve an additional 2,733 individuals and 8 households in the 2020/2021 program year and an additional 1,160 individuals and 91 households in the 2019/2020 program year.

Community Involvement:

Public process requirements for the Annual Action Plan offer extensive community involvement and collaboration ranging from public meetings and public comment periods to a ranking focused committee.

First Public Meeting January 30^th, 2020

• Display advertisement (January 5^th & 12^th, 2020 – AZ Daily Sun)
• Meeting to discuss the CDBG proposal process and the Annual Action Plan

Second Public Meeting February 28^th, 2020

• Display advertisement (February 9^th & 16^th, 2020 – AZ Daily Sun)
• Meeting to review the submitted proposals and allowed public comment in preparation for making funding recommendations to City Council

 
Third Public Meeting - Council Meeting May 12 and May 19

• Display advertisement for Council meeting discussion CDBG 2020/2021 AAP, Amended 2019/2020 AAP and CDBG-CV funds (May 6^th, 2020 – AZ Daily Sun)

CDBG 2020/2021 Annual Action Plan
With efforts to attract a diverse group of social service agencies, emails were distributed to all members of Coconino County’s Continuum of Care (300 members).  Additionally, agencies that had previously requested information and/or had been involved in the CDBG proposal process in prior years received personal invitations.  The proposal format was provided at the first public meeting and placed on the City website with a submission deadline of February 20^th, 2020.  Five external agency proposals were received along with one City of Flagstaff request.

CDBG 2019/2020 Amended Annual Action Plan
Utilizing a recently published waiver of regulations, there was a five-day (instead of a 30 day) Public Comment Period from May 6^th – 11^th, 2020.  An advertisement for Public Notice was published in the Arizona Daily Sun on May 6^th, and the proposed DRAFT Resolutions, the 2019/2020 Amended Annual Action Plan and DRAFT 2020/2021 Annual Action Plan were made available on the City of Flagstaff website starting May 6^th, 2020.

With efforts to eliminate risk in federal spending, all while expediting CDBG-CV dollars to the greatest need, housing staff contacted six local, non-profit agencies who provide essential community services and have successfully administered City of Flagstaff CDBG funded projects within the last 6 years. Three agencies submitted Agency Needs Assessments detailing urgent needs for responding to, preparing for, and preventing the COVID-19 Infectious Disease. The three agencies that did not submit a request for funding sent responses supporting the requested CDBG-CV projects.