Consideration and Adoption of Resolution No. 2015-14: A resolution approving the City of Flagstaff 2015/2016 Annual Action Plan and authorizing its submission to the U.S. Department of Housing and Urban Development (HUD).

An Annual Action Plan (AA Plan) is a HUD-required document that specifies how the annual allocation of Community Development Block Grant (CDBG) funds will be spent. The submission of the AA Plan is required to maintain the City of Flagstaff’s annual entitlement allocation of CDBG  and is due to HUD on May 15, 2015.

Subsidiary Decisions Points: 
Staff presented Community Development Block Grant (CDBG) funding recommendations to City Council at the April 14, 2015 Work Session for discussion and consideration.

The 2015/2016 CDBG allocation is $579,591, an increase of $8,650 from last year. In addition, the City of Flagstaff is able to combine program income and reallocated funds from previous years to increase the funds available for allocation. Total program income and reallocated funds will equal $235,757.89 for a grand total of $815,348.89 available for the 2015/16 allocation.

COUNCIL GOALS:
4) Explore and adopt policies to lower the costs associated with housing to the end user
7) Address key issues and processes related to the implementation of the Regional Plan
10) Decrease the number of working poor


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.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors.
• Policy NH.3.1. Provide a variety of housing types throughout the City and region, including purchase and rental options, to expand the choices available to meet the financial and lifestyle needs of our diverse population.
• Policy NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.

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.4.2. Reduce substandard housing units by conserving and rehabilitating existing housing stock to minimize impacts on existing residents.
• 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 re- duce utility and maintenance costs for owners and occupants.
• Policy NH.4.6. Consider and integrate public transportation when possible in planning housing developments, to help reduce a household’s transportation costs and minimize impact on the community’s roads and transportation system.
• 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.

No formal Council decisions have been previously made, however Staff received Council direction concerning the allocation at the April 14, 2015 Work Session.

A)  Approve Resolution No. 2015-14 and authorize the submission of the AA Plan to HUD.
B)  Modify Resolution No. 2015-14 authorize its submission to HUD at the May 5, 2015 meeting.  Submitting the AA Plan to HUD later then May 15, 2015 could put the City of Flagstaff at risk for receiving 2015/2016 allocations. 
C)  Not approve Resolution No. 2015-14 and risk losing CDBG funding for 2015/2016 and possibly future allocations.

Every two years, staff comes to a Council Work Session to request guidance on Council CDBG Priorities and the overall CDBG process for the coming two years.  On January 27, 2015 Council established four priorities (housing, homelessness, neighborhood revitalization and mentally ill / serial inebriate populations) and provided guidance to conduct a formal public proposal process to assess the community need for CDBG funds. In the 2015 CDBG process, nine external agency proposals were received, along with one City of Flagstaff requests.  

Housing staff are responsible for determining whether a proposed activity is eligible, conducting a risk assessment of the project and applying agency. Federal funds require administrative knowledge and capacity to ensure compliant and timely expenditure of funds. Additionally, a committee comprised of three community representatives (one non-profit representative, one neighborhood association leader, and one community member at large) and three City staff met to review the external proposals and rank them by consensus. Rankings are created primarily to serve as a risk and benefit assessment and are a crucial part of the staff recommendations forwarded to City Council. Below is a list of the proposals in ranking order. The proposals are divided between Housing and Public Service categories as they have two separate funding limits and different criteria. 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 as the City would administer these projects directly. A comprehensive Proposal Book that included each of the below proposals was distributed to Council on April 8, 2015.

Housing Activities	Proposal/Project	Request	Ranking
Housing Solutions of Northern Arizona	Development of 3 Permanent Affordable Rentals	$205,000.00	103
Northland Family Help Center	Shelter Renovations	$25,408.00	88
The Guidance Center	ADA Improvement Project	$69,05 1.00	82
Catholic Charities Bridge House	Rehabilitation	$113,000.00	75
City of Flagstaff	Owner Occupied Housing Rehabilitation	$150,000.00	NR
Public Service Activities	Proposal/Project	Request	Ranking
DNA People’s Legal Services	Legal Services for Unlawful Eviction Prevention	$11,400.00	108
Catholic Charities	Homeless Outreach Operations	$45,000.00	102
Flagstaff Shelter Services	Operational Assistance for Housing Services	$50,000.00	94
Coconino County Community	Services Housing Stabilization	$100,000.00	90
Northland Hospice Palliative Care	Medication Coverage for LMI Olivia White Patients	$20,000.00	77

HUD requires that funded activities implement strategies from the Consolidated Plan.  All recommended activities further this goal and address Council Priorities.  Also important are project eligibility and viability.  CDBG funds must be used to further the CDBG Primary Objective to develop viable urban communities by providing decent housing, a suitable living environment and expanded economic opportunities principally for low and moderate-income persons in Flagstaff (80% of the AMI = $48,150 currently for a family of four).

HUD has two funding caps with regard to the use of CDBG funds. Public Service expenditures are capped at 15% of the allocation and Program Administration is capped at 20% of the allocation. The rest of the available funding can be spent on Housing/Economic Development Activities.

Staff presented and discussed the following recommendations with City Council at the April 14, 2015 agenda review. 

Public Service Funding Recommendation
Federal CDBG regulations do not allow more than 15% of funds to be spent on Public Service Activities; $119,261.37 for Program Year 15/16. The top ranked agencies total a recommendation allocation of $106,400, below the required cap.   Below are the funding recommendations for the Public Service Category:

Public Service Activities	Proposal/Project	Request	Recommendation	Ranking
DNA People’s Legal Services	Legal Services for Unlawful Eviction Prevention	$11,400.00	$11,400.00	108
Catholic Charities	Homeless Outreach Operations	$45,000.00	$45,000.00	102
Flagstaff Shelter Services	Operational Assistance for Housing Services	$50,000.00	$50,000.00	94

Housing Funding Recommendation
Based on the above Public Service recommendations, there is $550,948.89 in CDBG funds available for Housing Activities.  Below are the funding recommendations for the Housing Category:
 

Housing Activities	Proposal/Project	Request	Recommendation	Ranking
Housing Solutions of Northern Arizona	Affordable Rental Development	$205,000.00	$205,000.00	103
Northland Family Help Center	Shelter Renovation	$25,408.00	$25,408.00	88
The Guidance Center	ADA Improvement	$69,051.00	$69,051.00	82
Catholic Charities	Bridge House Rehabilitation	$113,000.00	$113,000.00	75
City of Flagstaff	Owner Occupied Housing Rehabilitation	$150,000.00	$138,489.57	NR

Administration Recommendation        

The attached Resolution 2015-14 is reflective of the recommendations listed above.   The 2015/2016 CDBG recommendations are based on a total of $815,348.89 in available funding and the City of Flagstaff's indirect rate for 2015/2016 of 10.2%. 

• The 2015/2016 allocation is $579,591, a $8,617 increase from 2015/2016.  
• In addition to the annual allocation, there is $215,484.77 available from prior year program income and $20,273.12 in reallocated funds for a total of $815,348.89 available to allocate. Program income is gathered through the repayment of loans of the Owner Occupied Housing Rehabilitation and Homebuyer Financial Assistance programs. Reallocated funds primarily derives from one agency's slow spend down and de-obligation of funds and other activities completing their scope of work with a remainder. This year's reallocated funding comes from the leftover funding of the 2012/2013 Coconino Community Services, Housing Stabilization with a remaining balance of $48.92 and 2013/2014 Catholic Charities, Minor Rehabilitation with a remaining balance of $224.20.
• Federal CDBG regulations do not allow more than 15% of funds to be spent on public service activities; $119,261.37.  Staff is recommending an allocation of $106,400.00.
• CDBG administration and compliance are limited to 20% of the allocation; $158,000.
  • Of the $158,000, with 10.2% or $75,648 will be required for the City’s indirect allocation, leaving 9.8% or $82,352 to be utilized for compliance and administration associated with the grant. 

CDBG funds, leveraged with other private and public funds over the past 15 years, have resulted in benefits to thousands of Flagstaff residents. 

The Annual Action Plan process has two opportunities for Community Involvement.
Involve - The public participation process is a requirement of the Plan and encourages public involvement.
Collaborate - The ranking committee is an example of public participation at the collaboration level.

A) Approve Resolution No. 2015-14 and authorize the submission of the AA Plan to HUD.
B) Modify Resolution No. 2015-14 authorize its submission to HUD at the May 5, 2015 meeting. Submitting the AA Plan to HUD later then May 15, 2015 could put the City of Flagstaff at risk for receiving 2015/2016 allocations.
C) Not approve Resolution No. 2015-14 and risk losing CDBG funding for 2015/2016 and possibly future allocations.