RPVCCA_CC_SR_2012_12_18_04_Proposed_2013-2014_CDBG_ProgramCITY OF
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
RANCHO PALOS VERDES
1)Approve Option #3 to fund the final year of the Home Improvement Program and an
Americans with Disabilities Act (ADA)Improvement project.
2)Authorize the Interim Director of Public Works to execute agreements for CDBG projects
with the Los Angeles County Community Development Commission.
3)Authorize the Interim Director of Public Works to adjust the program budget as
necessary to take into account the final CDBG allocation and any amounts unexpended at
the close of the fiscal year.
EXECUTIVE SUMMARY
A public meeting is conducted each year by the City Council to approve CDBG funded
projects for the upcoming fiscal year.In order to continue its participation in the upcoming
CDBG program beginning July 1,2013 through June 30,2014,the City must prepare and
submit a summary of proposed CDBG projects,including descriptions and budgets,to the
Los Angeles County Community Development Commission (LACDC)for review and
approval by February 1,2013.
Recent changes to the CDBG program will impact the source of funding for projects in FY
2013-2014.In addition to a smaller allocation of CDBG funds,the City may need to
subsidize administrative costs with general funds.Staff has prepared three different
project funding options for Council consideration.The proposed recommendation is to
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implement Option #3,which would fund two projects,the final year of the Home
Improvement Program,and an Americans with Disabilities Act (ADA)Improvement project.
BACKGROUND
The City of Rancho Palos Verdes (RPV)has participated in the Los Angeles Urban
County's Community Development Block Grant (CDBG)Program since 1986.The United
States Department of Housing and Urban Development (HUD)established this program to
fund local community development projects which principally benefit persons of low-and
moderate-income levels and/or aid in the prevention or elimination of blighted conditions.
The goal of these projects is to meet the HUD program objectives to provide housing,
economic and community development opportunities.
Pursuant to federal requirements,this public meeting was posted at City Hall,Hesse Park
and the Ladera Linda Community Center on November 21,2012.A copy of the notice is
attached to this staff report.Federal requirements also mandate that as a part of the public
meeting,the City Council and public be informed of the range of eligible and ineligible
housing and community development activities that may be funded under the CDBG
Program.Two lists of these eligible and ineligible activities are attached to this report as
Exhibits A and B,respectively.In addition, interested persons may review a copy of the
federal eligibility guidelines at the City of Rancho Palos Verdes'Public Works Department.
DISCUSSION
Over the past few years,the City has programmed its CDBG funds to support two annual
projects that benefit the local community and meet the goals of HUD.These projects are
the Home Improvement Program (HIP)and an Americans with Disabilities Act (ADA)
Improvement Project.
1)Home Improvement Program (HIP)-With a project budget of $150,000,the HIP
provides funding for approximately six to eight home improvement projects per year.Since
1998,over $1.1 MM of CDBG funds have been awarded to low/moderate income RPV
residents through a combination of $7,000 grants and/or $13,000 loans.These
improvement projects satisfy the HUD goal to provide decent,safe,and sanitary housing in
the community.Typical projects include roof repairs,window replacement,painting,etc.,
as detailed in the attached HIP brochure.
2)Americans with Disabilities Act (ADA)Improvement Projects -Depending on the
availability of CDBG funds,ADA Improvement project budgets have ranged from $50,000
to $80,000.These ADA projects meet the HUD objective to remove physical barriers for
people with disabilities.Recent projects include ADA Access Ramps throughout the
community,ADA restroom improvements at Hesse Park and City Hall,and ADA doors at
various City facilities.
Key Changes to the CDBG Program
One of the key changes that the CDBG Program has experienced is a steady decline in
funding since FY 2010-2011.In addition,the LACDC has eliminated the percentage of
funds authorized for CDBG general administration.In past years,the City was able to
allocate CDBG funds for overall grant program administration.The cost of project
administration,coordination,monitoring,reporting,and contract compliance services are
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now charged on a project-based model,which allows the City to pay for costs associated
with meeting the regulatory requirements on a per project basis.The impact of these key
changes is summarized below:
•Annual Allocations -The City's annual COBG allocation has decreased
approximately 26%over the past few years.In FY 2010-2011,RPV's annual
allocation of COBG funds was $193,185.The LACOC recently notified the City that
the projected allocation for FY 2013-2014 will be $142,918.
o The current number of COBG projects may need to be reduced from two to
one because the annual allocation may not support more than one project
budget.
•Program Administration Costs -Previously,consultant costs to administer the City's
COBG projects were fully reimbursed by COBG funds.New guidelines will restrict
the eligibility of these costs for reimbursement,and the City will need to use general
funds to pay for any ineligible costs.
1)Project administration costs -These consultant costs are for services to manage
a project.The cost to administer a project varies according to the amount of
consultant services required to manage a project,as explained below.
'.ADA Improvement Projects -administration costs are minimal (5-10%)
because the project engineer manages the project.Also,in many cases ADA
improvement projects are just a small portion of a larger road and sidewalk
rehabilitation project,so most of the costs to manage the project are already
paid for with other funds.
•HIP -administration costs are high (20%)because there are usually 6-8 HIP
projects,and each one must be managed separately.The HIP consultant
must pre-qualify applicants,conduct site evaluation and inspection visits with
homeowners and contractors,and coordinate lead and asbestos testing.In
addition documentation and project data must be submitted to the LACOC.
2)COBG Program Administration costs -These consultant costs are for overall
program management and to monitor,report and evaluate COBG projects for
compliance with LACOC and HUO guidelines.The consultant also serves as a
liaison between staff and CDC representatives and program auditors,and attends
quarterly meetings on behalf of the City.Annual costs are approximately $14,500.
•Prior to the new LACOC guidelines,these costs were fully funded by COBG
funds.They must now be charged as a direct cost to an approved COBG
project.
•For housing rehabilitation projects,administration costs are limited to 20%of
the project budget.As explained above,the 20%limit for the City's HIP is
fully expended,so the COBG Program Administration costs incurred for this
project would need to be paid for with general funds instead of COBG funds.
Staff has analyzed the impact of these changes on both of the City's current COBG
projects,the Home Improvement Program and an ADA Improvement project.Based on
the impact of these changes,three options to fund FY 2013-2014 COBG projects are
presented for Council consideration.
COBG PROGRAM OPTIONS
The City's FY 2013-2014 COBG allocation is expected to be $142,918.The following
options explain how this level of funding can be programmed to maximize the most efficient
use of COBG funds.
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Option 1 -Home Improvement Program -Allocate the entire $142,918 to fund the
Home Improvement Program project.This option will require the City to subsidize the HIP
with $15,916 of general funds to cover non-reimbursable project administration costs.The
total project budget would be $158,834.
•This option is a continuation of the current program,as is,and there would be no
additional funds available for an ADA Improvement project.
•Maintaining the HIP is becoming increasingly untenable because of the slowly
declining annual allocation over the years.Also,with the fixed nature of the cost to
administer the program,along with the restrictions of a 20%maximum
administration cost recovery,the HIP will require an increasing general fund subsidy
each year it continues
•The $15,916 project costs that must be subsidized by general funds includes $1,416
for HIP Administration and $14,500 for CDBG Program Administration.These costs
were calculated as follows:
•HIP Administration -$1,416 general funds
o The current HIP budget of $150,000 allowed for 20%of the project cost,
or $30,000 to administer the program.
o Since the FY 13-14 allocation will be only $142,918,the CDBG funding
available to cover the fixed HIP administration costs would be reduced
from $30,000 to $28,584,and $1,416 of general funds would be needed
to subsidize the difference.
•CDBG Program Administration -$14,500 general funds
o As explained above,the HIP administration costs will use the entire 20%
of eligible CDBG funding,so general funds will be required to cover the
additional costs to administer the CDBG Program.
Option 2 -ADA Improvement Project-Allocate the entire $142,918 to fund an ADA
Improvement Project,and discontinue the HIP.This option would not require a general
fund subsidy.
•Option 2 is the most efficient use of CDBG funds because all of the costs for
administration and construction would be eligible for reimbursement.No general
funds would be required to pay for any project administration costs.Additional
benefits include:
•Annual Street Rehabilitation and Sidewalk Maintenance Programs Savings
o Both of these annual rehabilitation projects have a large inventory of curbs
that require the installation of ADA access ramps.
o Using CDBG funds to install ADA access ramps would offset Street
Capital Improvement Project (CIP)program funds and Gas Tax funds that
could be re-allocated to other CIP projects.
•ADA Goals -Completing ADA projects each year helps the City meet some of its
ADA goals each year.
•One possible ramification of discontinuing the HIP might occur if there are any
outstanding project applications on the FY 2012-2013 HIP waiting list.Funds would
not be available to process and complete these outstanding applicants in FY 2013-
2014.
o There are currently three applicants on the waiting list.Some or all of these
project applications may be processed and completed in FY 2012-2013,
depending on the amount of funding available after other HIP projects are
completed during the year.
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Option 3 -Home Improvement Program and an ADA Improvement Project -Allocate
the $142,918 to fund a small HIP project,and program the remaining funds for an ADA
Improvement project.This option will require a small general fund subsidy of $4,000.The
total project budget would be $146,918.
•Option 3 minimizes the general fund subsidy for FY 2013-2014,winds down the
HIP,and allows the City to process and fund the remaining applications in the HIP
pipeline,should they be pursued by the homeowners.No one is aggrieved,and
sufficient funds remain to fund an ADA improvement project in the upcoming year.
•The two proposed CDBG project budgets would be programmed as follows:
o Home Improvement Program -$55,000 project budget:$51,000 CDBG funds
and $4,000 general funds
•There are currently three applicants on the HIP waiting list.If there are
two applicants still on the waiting list at the end of FY 12-13,and both
took the maximum $7,000 grant/$13,OOO loan package,$40,000 would
be needed to fund the projects.
•HIP administration costs would be approximately $15,000.The 20%
limit on project administration costs would allow $11,000 of these
$15,000 costs to be funded with CDBG funds.The remaining $4,000
would require a general fund subsidy.
o ADA Improvement Project -$91,918 project budget:100%CDBG funds
•The remaining allocation of CDBG funds could be used for an ADA
project
•CDBG project administration and contract compliance costs would be
fully eligible for CDBG fund reimbursement.No general fund subsidy
would be required.
If there are no outstanding project applications on the HIP waiting list at the end of FY
2012-2013,there would be no need to fund the HIP in FY 2013-2014.The CDBG funding
for the FY 2013-2014 HIP project budget could be re-programmed at that time to
supplement the ADA Improvement project.
Summary of FY 2013-2014 CDBG Program Options
General Total Project
OPTIONS COBG Funds Funds Budget
#1 Home Improvement Program $142,918 $15,916 $158,834
#2 ADA Improvement Proiect $142,918 -0-$142,918
#3 Home Improvement Program $51,000 $4,000 $55,000
ADA Improvement Project .$91.918 -0-.$91,918
TOTAL PROJECT $142,918 $4,000 $146,918
In the event that actual CDBG funding levels vary from the $142,918 preliminary estimate,
the proposed projects and budgets may be adjusted accordingly.
CONCLUSION
Staff's recommendation for Council approval is Option #3,to fund the final year of the
Home Improvement Program,and program the remaining CDBG funds for an ADA
Improvement project.The Home Improvement Program has become too costly to
administer with the new restrictions on eligible administration costs.Funding ADA
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improvement projects is a more effective use of CDBG funds,because it allows the City to
leverage its CIP and Gas Tax funds,and there are no general fund costs to the City for
project administration,If Council approves Option #3,staff will direct the HIP consultant to
limit the number of applicants in FY 12-13 to the current HIP waiting list.
FISCAL IMPACT
Approving staff's recommendation authorizes the allocation of $142,918 of CDBG funds
and $4,000 of general funds for the following projects:
Home Improvement Program
ADA Improvement Project
$51,000 CDBG funds
$4,000 General funds
$91,918 CDBG funds
Upon approval of the CDBG projects by the Community Development Commission (CDC),
the project'budgets will be programmed into the City of Rancho Palos Verdes'FY 2013-
2014 budget.
Attachments:Public Hearing Notice
Exhibit "A"-Eligible Activities
Exhibit "B"-Ineligible Activities
Home Improvement Program Brochure
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CrrvOF RANCHO PALOS VERDES
CITY OF RANCHO PALOS VERDES
PUBLIC NOTICE
PUBLIC MEETING RE ..SCHEDULED TO
DECEMBER 18,2012
2013·2014 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)PROGRAM
NOTICE 1S HEREBY GIVEN that the City Council of the'City of Rancho Palos Verdes will
conduct a pUblic meeting to receive citizen input on projects to be submitted to the U.S.
Department of Housing and Urban Development (HUD)for funding through the Community
Development Block Grant (CDBG)Program.Projects discuss~d at the meeting,which are
determined to be eligible under the Federal Guidelines,will be considered for inclusion in
the City's 2013-2014 CDBG Program.The recommended projects and proposed budget
will be considered at the public meeting.The City's 2013-2014 CDBG projects and bUdgets
will be submitted to the County of Los Angeles Community Development Commission for
inclusion in its application to HUD.All interested citizens are encouraged to attend.
Persons attending the meeting shall be furnished with the following information:1)The
amount of CDSG funds expected to be available to the City for the upcoming program
year;2)The range of housing and community development activities that may be
undertaken with CDBG funds;and 3)The specific activities that are currently funded under
the CDBG Program '
Said public meeting is re-scheduled to be held on December 18,2012 at 7:00 p.m.,in the
City Council Chambers of Hesse Park,located at 29301 Hawthorne Boulevard.
Interested parties wishing to comment on these proposed projects are invited to submit any
written comments and/or questions to Judy Huey,Senior Administrative Analyst,Public
Works Department,City of Rancho Palos Verdes,CA 90275,or may visit the public
counter,Monday through Thursday,7:30 a.m.to 5:30 p.m.and Fridays,7:30 a.m.to 4:30
p.m.
Posted on November 21,2012
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STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )SS
CITY OF RANCHO PALOS VERDES)
AFFIDAVIT OF POSTING
The undersigned,being first duly sworn,deposes and says:
That at all times herein mentioned,she was and now is the appointed City Clerk
of the City of Rancho Palos Verdes;
That on November 21,2012,she caused to be posted the following document
entitled:City of Rancho Palos Verdes,Public Notice,Public Meeting
Rescheduled to December 18,2012,2013-2014 Community Development Block
Grant (CDBG)Program,a copy of which is attached hereto,in the following
locations:
City Hall
30940 Hawthorne Blvd.
Rancho Palos Verdes
Hesse Park
29301 Hawthorne Blvd.
Rancho Palos Verdes
Ladera Linda Community Center
32201 Forrestal Drive
Rancho Palos Verdes
J certify under penalty of perjury that the foregoing is a true and cQrrect affidavit
of posting.,<..
cM~-,",,_
City ~r~rK._-:',;',~~'.
~'·<~·~S:<r,~;l<I '.<'"...:...,"
-'<,..::;,.."
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Exhibit "A"
ELIGIBLE ACTIVITIES
Community Development Block Grant (CDBG)funds may only be used for projects and
activities that meet one of the following national objectives of the program:
•Benefiting low and moderate income persons;or
•Preventing or eliminating slums or blights;or
•Meeting a particularly urgent community development need.
IF ANY OF THE ABOVE CONDITIONS ARE MET,under current guidelines,the City of Rancho
Palos Verdes may use CDBG funds for a variety of activities including:
1.Acquisition of Real Property
Example:Acquisition of land,air rights,easements,water rights,rights-of-ways,
building and other real property improvements.
2.Disposition of Real Property
Example:Disposition of real property acquired with CDBG funds through sale,
lease or donation including fees and costs associated with the transfer of
ownership of real property.
3.Public Facilities and Improvements
Example:Parking,streets,curbs,gutters and sidewalks,parks and playgrounds,
shelters for the homeless,water and sewer facilities,flood and drainage
improvements,community,senior and health centers.
4.Acquisition,Reconstruction,Rehabilitation or Installation of Privately-Owned Utilities
Example:Pay the costs of placing underground new or existing power lines owned
by private utilities.
5.Clearance,Demolition,Removal or Building and Improvements,or Movement of
Structure to Other Sites
Example:Demolition of vacant structure and removal of the debris to make a
neighborhood park and playground available to residents in a low/moderate income
neighborhood.
6.Public Services
Example:Child care,health care,job training,recreation programs,education programs,
public safety services,fair housing activities,services for senior citizens,services
for homeless persons,drug abuse counseling and treatment,and energy conservation
counseling and testing.
7.Interim Assistance
Example:Improvements to a deteriorating area as a prelude to permanent improvements
or alleviation of harmful conditions where immediate public action is necessary.
8.Relocation Payments and Assistance
Example:Relocation and payments to displaced individuals,families,businesses,
or nonprofit organizations that result from the acquisition of property for CDBG-assisted
purposes.
9.Loss of Rental Income
Example:Loss of rental income incurred in holding housing units used for the
relocation of individuals and families displaced by CDBG-assisted activities.
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10.Removal of Architectural Barriers
Example:Installation of ramps,curb cuts,wider doors,elevators,and physical
modification to buildings,facilities and improvements to make them accessible.
11.Housing Rehabilitation
Example:Financial assistance such as grants and deferred loans for the rehabilitation
of any publicly or privately-owned residential property.
12.New Housing Construction
Example:Funding for housing construction project that has received funding
through a Housing Development Grant (HODAG),or housing to be constructed
by a local development corporation,small business investment company,or
neighborhood-based nonprofit organization.
13.Code Enforcement
Example:Inspections in a low/moderate income neighborhood targeted for
rehabilitation assistance,a neighborhood facility and street reconstruction.
14.Historic Preservation
Example:Rehabilitation,preservation and restoration of historic properties.
15.Commercial or Industrial Rehabilitation
Example:Improvements to the exterior of the building and the correction of
code violations.
16.Special Economic Development
Example:Loans to pay for the expansion of a commercial business which will
create jobs for low/moderate income persons,or technical assistance to a
business facing bankruptcy.
17.Special Activities by Neighborhood-Based Nonprofit Organizations,Small
Business Investment Companies,or Local Development Corporations
Example:Provide grants or loans to carry out a neighborhood revitalization,
community economic development or energy conservation program.
18.Planning and Capacity Building
Example:Comprehensive plans,individual project plans,community development
plans,studies,analysis and data gathering.
19.Program Administration Costs
Example:Payment of costs for overall program management.
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Exhibit "B"
INELIGIBLE ACTIVITIES
Activities and projects that are ineligible for COBG funding include:
1.Buildings or portions thereof,used for the general conduct of government.
2.General government expenses.
3.Political activities.
4.Purchase of equipment,unless otherwise required for program.
5.Operating and maintenance expenses.
6.New housing construction,except housing of last resort for persons displaced
due to a CDBG project,housing to be funded through a Housing Development
Grant (HODAG),or housing to be constructed by a local development corporation,
small business investment company,or neighborhood-based nonprofit organization.
7.Income payments to an individual or family for items such as food,clothing,housing
or utilities.
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CITY OF
RANCHO PALOS VERDES
CITY COUNCIL
MAYOR
Susan Brooks
MA YOR PRO TEM
Jerry V.Duhovic
COUNCILMAN
Brian Campbell
COUNCILMAN
James E.Knight
COUNCILMAN
Anthony M.Misetich
CITY MANAGER
Carolyn Lehr
INTERIM DIRECTOR OF PUBLIC WORKS
James Hendrickson
HOME IMPROVEMENT PROGRAM
Sponsored by:
The Federal Community Development
Block Grant (CDBG)Program and the
City of Rancho Palos Verdes
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CITY OF
RANCHO PALOS VERDES
HOME
IMPROVEMENT
PROGRAM
PUBLIC WORKS DEPARTMENT
30940 Hawthorne Boulevard
Rancho Palos Verdes,CA 90275
(310)544-5252
The City of Rancho Palos Verdes
is offering a Home Improvement
Program to low and moderate
income residents of the City.
If you are in need of improvements
to your home such as those listed
in the Eligible Improvements List,
the City of Rancho Palos Verdes
may be able to help!
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PROGRAM PURPOSE
The Rancho Palos Verdes City Council
has budgeted Federal Community
Development Block Grant (CDBG)funds
to provide grants and zero percent (0%)
deferred loans to homeowners of single-
family detached dwellings.
The funds must be used to correct
hazardous structural conditions;to make
improvements considered necessary to
eliminate blight;to improve handicapped
access;and to correct building and
health code violations.
Applicants must not exceed the low-
moderate income limits listed in Table
"An.
The program will be operated on a
"FIRST COME,FIRST SERVED "basis.
In order to participate you must reside
in,and be the owner of the single family
detached dwelling,and the property
must be located in the City of Rancho
Palos Verdes.
ELIGIBLE IMPROVEMENTS
•Correction of Code Violations;
•Correction of violations of the Uniform
Building Code;
•Cost effective energy conservation
measures including solar heating,
cooling,and water systems;
•Removal of lead-based paint/asbestos
hazards;
•Removal of barriers to the handicapped;
•Removal of rodents and roaches
(pest control);
•Removal of termites;
•Repair/Replace roofing;
•Repair/Replace heating;
•Repair/Replace plumbing;
•Repair/Replace screens;
•Repair/Replace kitchen and
bath flooring (linoleum type only);
•Repair/Replace water heater;
•Repair/Replace bath fixtures;
•Repair/Replace countertops;
•Repair/Replace electrical work;
•Repair/Replace windows;
•Repair/Replace stucco;
•Repair/Replace kitchen or bath
cabinets;
•Install new smoke alarms;
•Install new insulation;
•Install new deadbolt locks;
•Painting;
•Any items determined eligible by the
Screening Committee,and/or
•The elimination of specific conditions
detrimental to public health and safety,
which have been identified by Program
Inspectors.
TABLE "A"
2012 ELIGIBILITY INCOME LIMITS FOR
CDBG FUNDED PROJECTS
Effective December 1,2011
EXTREMELY Low MODERATE
FAMILY
Low INCOME INCOME
INCOME
SIZE (80%of Area
(30%of Area (50%of Area Median Income)
Median Incomel Median Income)
1 $17,750 $29,550 $47,250
2 $20,250 $33,750 $54,000
3 $22,800 $37,950 $60,750
4 $25,300 $42,150 $67,450
5 $27,350 $45,550 $72,850
6 $29,350 $48,900 $78,250
7 $31,400 $52,300 $83,650
8 $33,400 $55,650 $89,050
Based on 2012 Median Family Income for the Los Angeles -
Long Beach Metropolitan Area is $64,800
Note:Income Limits change annually
ASSISTANCE PROVIDED
The Home Improvement Program provides
assistance in the form of a grant of up to
$7,000 and if requested,a deferred loan of
up to a maximum of $13,000 (min of
$5,000),which is payable upon the sale or
transfer of title of the property.This loan is
a zero percent (0%)interest loan.
For Additional Information Please Contact:
CITY OF RANCHO PALOS VERDES
Public Works Department
(310)544-5252
Ask for the
Home Improvement Program
Project Consultant
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