HomeMy WebLinkAboutPH 1 HCDA 08-17-81DATE: August 17, 1981 Thru: Acting City Manager PUBLIC HEARING (Continued) No. 1 8-!7-81 Inter-Corn TO: Honorable Mayor and City Council FROM: Community Development S UBJ ECT: City of Tustin Participation with the County of Orange under the Housing and Community Development Act (HCDA) RECOMMENDATION Take public input on projects desired under HCDA and authorize City participation and submittal of an initial request for three year funding. BACKGROUND AND DISCUSSION On August 3, 1981, a public hearing was held to take public input on projects under HCDA. At that time Council Members expressed fears of funding liability from the Federal Government. The HCDA program does not require any matching funding from the City. All projects that are approved by HUD are completely funded by HCDA monies. When an application is submitted to HUD for approval, it is either approved or disapproved as submitted. HUD does not amend applications. There are federally funded programs and grants which do require matching funds, however, there are no regulations to that end under the HCDA. The City even though not proposing any projects has been an on going participant in the County HCDA program. The County has merely applied the funds available to us to projects in other jurisdictions. Orange County is the actual applicant with each City requesting project funds from the County. City staff still fills out and attests to progress reports under the HCDA program based on the City's original active and current passive role. Another area of concern was the Housing Assistance plan. The City's Housing Element was approved by the State in conjunction with the Housing Assistance Plan and was approved as sufficient. The City to date has been fairly active in helping to provide housing programs for low and moderate income persons. The following are some of the programs we have dealt with either directly or indirectly: 1. Tustin Gardens - 100 units for senior citizens (Section 8 program) August 17, 1981 Page Two 2. City participation in the Orange County Housing Authority. 3. Former participation in HCDA program. 4. Orange Garden Apartments (236 Housing Program) for renters assistance. 5. Ranch San Juan Conversion providing Co-ownership program (50% of units for low and moderate income persons. 6. Warmington Condominium Project on southerly terminis of Newport Avenue. 35% of units will be priced for persons with 80% to 120% of median income, The foregoing list of projects indicates a more active program of housing assistance than that provided by some communities already active in HCDA. At any given point in time, if HUD promulgated rules or regulations considered onerous by the Council; the option to withdraw from HCDA would still remain open. On August 6, 1981, the Community Development Advisory Board (CDAB) held it's second meeting and discussed the housing rehabilitation loan program with County staff. The County staff informed the CDAB of how the day to d~ administration of a low interest housing rehabilitation program would function. Under this rehabilitation program the County would completely administer the program and thus alleviate the necessity of hiring new City personnel. MAC/dar DATE: AUGUST 12, 1981 ! nter - C om TO: THE HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL JAMES G. ROURKE, CITY ATTORNEY FROM: DANIEL K. SPRADLIN, DEPUTY CITY ATTORNEY SUBJ£CI:PARTICIPATION UNDER THE HOUSING AND COMMUNITY DEVELOPMENT ACT Introduction Generally speaking, participation under the Housing and Community Development Act will require the City to engage in extensive planning efforts to develop an overall program for the improvement of living conditions for low income, elderly and handicapped individuals and families. Particularly all of the funds available under the Act are required to be utilized as to primarily benefit individuals falling within these groups. In addition, the City must commit a portion of other funds to such endeavors and will be subject to annual reviews and/or audits by the federal govern- ment to insure compliance with the Act and continued fulfillment~ of its objectives which the City is required to commit itself to achieve as a precondition to receipt of any grant funds. Discussion of the Act The Housing and Community Development Act of 1974 consists of several hundred pages. The Act has often been amended; the most recent occurring in 1980. The regulations interpreting the various provisions of the federal law consist of an additional several hundred pages. The Act itself consists of eight titles, identified as follows: Title 1 - Community Development - appearing generally as 42 U.S.C. Sections°5301, .et seq. Title 2 - Housing Assistance and Related Programs - appearing generally as 42 U.S.C. Sections 1437, et seq. Title 3 - Federal Housing Administration, Mortgage Insurance and Related Programs - appearing generally as 12 U.S.C. SeCtions 1715c-9, et seq. Title 4 - Lending Powers of Federal Savings and Loan Associations; Secondary Market Authorities - appearing generally as 20 U.S.C. 801, et seq. Title 5 - Row Housing - appearing generally as 42 U.S.C. Sections 1490e, e~ seq. Inter-Com to The Honorable Mayor and Members of the City Council Page Two August 12, 1981 Title 6 - National Urban Policy - appearing generally as 42 U.S.C. Sections'4501 et seq. Title 7 - Flood and Riot Insurance - appearing generally as 12 U.S.C. Sections~1464 et seq. Title 8 - Community Reinvestment - appearing generally as 12 U.S.C. Sections'1701j-2 et seq. Title 9 - Miscellaneous - appearing in various Sections of the United States Code. Of most importance to the City of Tustin in considering partici- pation in the Housing and Community Development Act are Titles ~ 1, 2 and 6. Each of these Titles will be discussed separately. A. Title 1 - Community Development The purpose of Title 1 - Community Development as described in the words of Congress is to'obviate blight, conserve and renew older urban areas, improve the living of low and moderate income families and to develop new centers of population growth and economic activity. Under this Title, the federal government is authorized to make grants for such purposes in fiscal 1981 not to exceed $3,810,000,000; fiscal 1982 not to exceed $3,960,000,000; and in fiscal 1983 not to exceed $4,110,000,000. A very complex allocation formula is set forth in 42 U.S.C. Section 5306. Suffice it to say that there are a substantial amount of funds available for utilization by local municipal governments in the renovation of their cities provided the preconditions for receipt of such funds are met. Each applicant seeking funding is required to present an appli- cation for a grant. No grant can be made without an applicati6n containing certain required information. In summary, the appli- cation for funds requires the following information: (1) A summary of a three-year community development plan identi- fying community developmeht and housing needs, demonstrating a comprehensive strategy for meeting those needs, and which specifies both short and long-term community development objectives "which have been developed'in accordance with area-wide development planning and national urban growth policies". (2) The application must formulate a program which (a) meets community development needs and objectives together with identi- Inter-Com to The Honorable Mayor and Members of the City Council Page Three August 12, 1981 lying estimated costs for improvements and the general location of such facilities; (b) indicates resources' other than the grant which will be made 'available to meet needs "including activities designed to revitalize neighborhoods for the benefit of low and moderate income persons"; (c) takes into account the affect of improvements on involuntary displacement of low to moderate ~ncome-'- persons together with accompanying environmental effects. (3) The application must describe a program which (a) eliminates slums or blight where such exists; (b) attempts to improve health, social and community facilities and services where necessary and insuring full participation of the handicapped; (c) attempts to improve conditions for low or moderate income persons and elderly persons residing or expecting to reside in the community. (4) The application contains a housing assistance plan which (a) accurately surveys the condition of housing stock in the community, .the needs of low income, handicapped, elderly and large families and identifies needed rehabilitation and improvements, etc.; (b) specifies realistic annual growth for the number of dwelling units or lower income persons to be assisted under the program; (c) indicates general locations of proposed housing for lower income persons. (5) The application must also make satisfactory assurances of compliance with civil rights laws. Prior to submission of an application, .the City must have under- taken preparation of a written citizen participation plan which- will accommodate the views and proposals of citizens in the com- munity, particularly those residing in blighted neighborhoods and those individuals with low and moderate incomes. The plan must include a methodology for providing citizens information about the potential receipt of funds and the range of activities contemplated by the municipality in the utilization of such funds. The City must hold public hearings on the prospective application and it must provide citizens with an opportunity to submit comments as to the proposed application. In reviewing the grant, there is a complex formula which the federal government utilizes to determine compliance with the objectives of the Act as evidenced by the application submitted by the local governmental entity. In summary it can be said that no grant.is issued .unless the local entity can certify that its community development program has been developed so as to give the maximum feasible priority to activities which will benefit Inter-Com to The Honorable Mayor and Members of the City Council Page Four August 12, 1981 low and moderate income families or aid in the prevention or elimination of blight. The County of Orange has adopted the position that all federal grant money must be used to benefit those making 80% or less of the county median income of $24,600 or, in other words, the money must be used to benefit those making less than $18,000 per year. Funds received under the program can only be utilized for certain specified purposes. In general, these activities include the acquisition of land for low income housing, the clearance, demo- lition, removal and rehabilitation of buildings and improvement§, the provision of public services such as streets, curbs, gutters, etc., improving public services concerned with employment, crime prevention, child care, health, drug abuse, education or energy conservation, or welfare or recreation needs, of persons residing in blighted areas, relocation payments and assistance for displaced individuals, and certain administrative expenses. A detailed list under the federal regulations of permissible activities is several pages long but most of the activities listed therein would fit within the above categories. Again, each activity must be designed as part of a comprehensive strategy for "giving primary attention to activities benefiting low and moderate income persons and neighborhoods". In addition, Title 1 requires the City to adopt federal labor standards and environmental review processes. Non-compliance with any provision of the Act can result in a suspension of funding and a civil action by the Attorney General. B. Title 2 - Housing Assistance and Related Programs Title 2 is principally a low income housing program which includes subsidized rents and assistance in the purchase and acquisition of low income housing projects. Programs implemented under Title 2 can be financed in substantial portion with federal funds but the federal government can require conditions to be imposed in- cluding CC & Rs to maintain the project as one which will continue to benefit low income individuals primarily. C. Title 6 - National Urban Policy This title perhaps has less impact on the City of Tustin than the previous two Titles in that it is designed primarily to encourage the ~evelopment of community development programs to Inter-Com to The Honorable Mayor and Members of the City Council Page Five August 12, 1981 minimize disparities between developing communities. Under the Title a new community development program means a program which is intended to result in a neWly built community or major addition to an existing community. Funding is available only if substantial provision for low income housing is contained in the plan. Conclusion The remaining Titles under the Housing and Community Development Act do not have a direct effect upon the City of Tustin in that the municipal government would not be an active participant necessarily. Such items as Title 3 relating to federal housing administration, mortgage insurance and related programs are primarily concerned with the impact upon financial institutions rather than governmental entities. The Act itself is extremely lengthy and complex. There are, however, substantial monies available for utilization by govern- mental entities to undertake activities encouraged by the Act. In deciding to make a grant application, the Council should recognize that it will, thereby, be making a substantial commitment with both federal funds and local monies (which are required under the Act) to programs which will primarily be of benefit for low income, moderate income, elderly and handicapped individuals. In addition, previous grant recipients under this Act have been subject to litigation brought by low income minority residents of adjacent areas on the grounds that they could be"expected to reside" in the applicant city and that the goals contained in the applicant city's application did not "adequately plan for their needs". Accordingly, any application would have to consider not only the existing housing situation and income status of existing residents within the City of Tustin but also the potential impact upon individuals who might be expected to reside in any potential low income housing project in the City. DKS:cs:D:08/07/81 DKS:cs:R:08/12/81 cc: CT 13:04 L TO: FROM: S UBJ ECT: Acting City Manager Community Develpment Depart~nent City of Tustin Participation with ~he County of Orange under the Housing and Community Development. Act (HCDA) RECOMMENDATION Take public input on projects desired under HCDA and continue the public hearing to August 17, 1981, (two hearing dates are required). At the second hearing authorize City participation and submittal of an initial request for three year funding. .~ BACKGROUND The City initially took part in this-program and successfully completed projects of neighborhood improvements on "B" Street and California at the intersection of Third Street as well as the E1 Camino storm drains. The City Council decided to become an inactive participant in the HCDA program provided the County accomplish needed projects in those County islands surrounded by the City. With that understanding, the City proposed no specific projects for funding. Under provisions of "MORGA" regarding island annexations, all but one of such islands have now been brought under City jurisdiction. Very little or no improvements were actually accomplished by the County in the intervening time under HCDA, although some study and planning did take place. It would appear appropriate that the City now resume an active role under HCDA. Projects which might be a9ailable for funding include: · Neighborhood Public Improvements (paving, curb and gutter, trees, lights, drainage facilities, etc.) - "B" Street/Mitchell - Walnut, San Juan and Orange; west of the high school · Promote Affordable Housing Construction Programs · Low Interest Housing Rehabilitation Loan Programs · Commercial Rehabilitation Loan Programs · Park Development-Columbus Tustin/Peppertree · Economic Development-e.g. Parking Facilities · Neighborhood Centers (Seniors) · Eliminate Barriers to the Handicapped City of Tustin Participation with the County of Orange Under the Housing and Co,m,,unity Development Act (HCDA) August 3, 1981 Page Two The County has an extremely tight timeframe to which the City will have to adhere. Our application must be submitted in September to be eligible for the three year funding cycle. County EMA staff is being as helpful as possible but the time constraints cause a tremendous strain on producing specific construction project specifications, plans and cost estimates for inclusion at this time. One suggestion which staff found plausible would be to plug the City into an existing County program with a request for maximum funding. This would get us "on the books" so to speak. The City would then later amend the plan to reflect public input and develop specific plans and specifications which may be done at anytime. This would also allow time to analyze if existing personnel could administer to a full City HCDA program. The' ultimate HCDA program should also be designed to mesh with Redevelopment Agency projects, budgets and personnel. The exact amount which would be available' to the City is indeterminate at the present time. A rough estimate might be gleaned from the fact that the Tustin islands alone where proposed. for budgets of $160,000 and $140,000 in 1980 and 81. We would expect the City could generate $450,000-$500,000.00 or higher during the next three years in HCDA funds. INITIAL HCDA PROGRA~I RECOMMENDATION After discussion with EMA staff and consideration of County programs available, it is recommended that initially the City Council propose participation with all available funds in the Housing Rehabilitation Loan Program. This would allow maximum use of County staff initially without necessity of the City hiring new personnel. Such a program would be oriented primarily, but not exclusively, to senior citizen occupant/owners of homes to provide low interest loans (down to 3%) for improvements and in qualified cases use of "estate" or deferred payment loans. This' would have a double benefit, especially in the original Tustin townsite residential area of assisting seniors to upgrade their homes and rejuvenating older structures of interesting quality to the community. This program also would allow grants for correction of hazardous defects of up to $1,000.00 including mobilehome owners. City of Tustin Participation with the County of Orange Under the Housing and Community Development Act (HCOA) August 3, 1981 Page Three The current County program is through Security Pacific National Bank with HCDA funds used to write down the interest rate. This creates a degree of leverage in that HCDA generates greater loan funds than the amount set aside. It would be clearly understood that such initial submittal would be subject to amendment for inclusion of precise construction projects after analysis of public input and coordination with Redevelopment Agency activities. In addition, the City is required to have citizen input via an advisory board into this project formulation and submittal. Community Development contacted Isabelle McClements of the Community Services Department regarding possible members and coordination with the Senior Citizens Coordination Council. Using the Subcommittee on Housing Outreach, a Co,~lunity Development Advisory Board (CDAB in HCDA jargon) was constructed to advise the Council on projects and this submittal. The members of the CDAB include: Janet SchwaFtz - Chairwoman Nick Ogden Ida Sternberg Jesse Dungy Fred Mesa Martha Mueller Tony Machado On July 9, the Board held a preliminary meeting to discuss the matters as related in this staff report and unanimously agreed to recommend pursuit of HCDA participation on the basis suggested herein. They will meet again on August 6, for discussion with County staff of how the day to day administration of a low interest housing rehabilitation program would function and have further comment available for the August 17, 1981 Council meeting in this regard. MWB/dat