Consideration and Adoption of Resolution No. 2014-14: A resolution approving the City of Flagstaff 2014/2015 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, 2014.

Subsidiary Decisions Points: 
Staff is presenting Community Development Block Grant (CDBG) funding options to City Council at the April 8, 2014 agenda review for discussion and consideration.

The 2014/2015 CDBG allocation is $570,941, an increase of $5,169 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 $44,527.73 for a grand total of $615,468.73 available for the 2014/15 allocation.

Effective Governance - The City of Flagstaff is considered an entitlement community and receives an annual allocation of CDBG funding. CDBG funds over the past 15 years have provided benefit to thousands of Flagstaff residents.

No

A)  Approve Resolution No. 2014-14 and authorize its submission to HUD.
B)  Modify the AA Plan and authorize its submission to HUD at a later time.
C)  Not approve Resolution No. 2014-14, not submit the AA Plan to HUD and risk losing CDBG funding for 2014/2015 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 8, 2013 staff received Council guidance to conduct a formal public proposal process to assess the community need for CDBG funds. In addition, Council asked staff to research possible infrastructure options within target neighborhoods. In the 2014 CDBG process, nine external agency proposals were received along with two City of Flagstaff requests.  

Housing staff is responsible for determining whether a proposed activity is eligible, and for 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 governmental representative, and one representative from a brokerage firm) 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 the week of March 24, 2014.

Housing Activities	Proposal/Project	Request	Ranking
BOTHANDS, Inc.	Financial Assist. & Counseling	$150,000	106
The Guidance Center	Inverrary House Minor Rehab	$32,651	100
Catholic Charities	Shelter Rehabilitation	$27,200	90
Northland Family Help Center	Rehab - Sustainable HVAC System	$115,000	48
City of Flagstaff	Owner Occupied Housing Rehab	$125,000	NR
City of Flagstaff	Arroyo Park - Phase 2	$100,000	NR
Public Service Activities	Proposal/Project	Request	Ranking
Northland Hospice	Operational Asst. - Olivia White	$20,000	106
Catholic Charities	PATH Operational Assistance	$30,000	104
Flagstaff Shelter Services	Women's Shelter Operations	$38,911	103
DNA People's Legal	Housing Legal Asst.	$25,070	85
Big Brothers Big Sisters	Program Recruiter	$24,905	80

HUD requires that funded activities implement strategies from the Consolidated Plan.  All recommended activities further this goal.  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 = $47,600 currently for a family of four).

HUD has two funding caps with regard to the use of CDBG funds. Public Service Activities 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 is prepared to present and discuss the following recommendations with City Council at the April 8, 2014 agenda review. 

Public Service Funding Recommendation
Federal CDBG regulations do not allow more than 15% of funds to be spent on Public Service Activities; $91,000 for Program Year 14/15. The top ranked agencies total a recommendation allocation of $88,911. As CDBG regulations prohibit going above the 15% cap, and $2,089 is not enough to fund an additional activity, staff is recommending to add the remaining balance into the Housing Activities recommendations, where there is no cap.  Below are the funding recommendations for the Public Service Category:

Public Service Activities	Proposal/Project	Request	Recommendation	Ranking
Northland Hospice	Operational Asst, - Olivia White	$20,000	$20,000	106
Catholic Charities	PATH Operational Asst.	$30,000	$30,000	104
Flagstaff Shelter Services	Women's Shelter Operations	$38,911	$38,911	103

Housing Funding Recommendation
There is $404,557.73 ($402,468.73+$2,089) in CDBG funds available for Housing Activities.  Below are the funding recommendations for the Housing Category:

Housing Activities	Proposal/Project	Request	Recommendation	Ranking
BOTHANDS, Inc.	Financial Assist. & Counseling	$150,000	$150,000	106
The Guidance Center	Inverrary House Minor Rehab	$32,651	$32,651	100
Catholic Charities	Shelter Rehabilitation	$27,200	$27,200	90
City of Flagstaff	Owner Occupied Housing Rehab	$125,000	$110,000	NR
City of Flagstaff	Arroyo Park - Roadway Access Improvements	$100,000	$84,706.73	NR

Administration Recommendation        
CDBG administration and compliance are limited to 20% of the allocation.                                                                                                                                                                                             

The attached Resolution 2014-14 is reflective of the recommendations listed above.   The 2014/2015 CDBG recommendations are based on a total of $615,468.73 in available funding and an estimated City of Flagstaff indirect rate of 7%. 

• The 2014/2015 allocation is $570,941, a $5,169 increase from 2013/2014.  
• In addition to the annual allocation, there is $41,844.70 available from prior year program income and $2,683.03 in reallocated funds for a total of $615,468.73 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 derive from activities that complete their scope of work but do not spend down all of their funds. This year's reallocated funding comes from the leftover funding of the 2012/2013 Flagstaff Shelter Services - Rehabilitation of Shelter grant.
• Federal CDBG regulations do not allow more than 15% of funds to be spent on public service activities; $91,000.  Staff is recommending an allocation of $88,911.
• CDBG administration and compliance are limited to 20% of the allocation; $122,000.
  • Of the $122,000, an estimated 7% or $39,966 will be required for the City’s indirect allocation, leaving 13% or $82,034 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.