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HomeMy WebLinkAbout2012/01/24 Item 06- CITY COUNCIL AGENDA STATEMENT ~~~ CffY OF --- CHUTA VISTA JANUARY 24, 2012, Item 6 ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AMENDMENT TO THE FISCAL YEAR 2008/2009 ANNUAL ACTION PLAN OF THE NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS FOR USES PREVIOUSLY APPROVED BY CITY COUNCIL AND AUTHORIZATION FOR CITY MANAGER TO PERFORM NECESSARY ACTS TO EXECUTE SAID PLAN AMENDMENT SUBMITTED BY: ASSISTANT CITY MANAGER / DIRECTOR OF DEVELOPMENT SERV CES ~ ~ G. /t REVIEWED BY: CITY MANAGER 4/STNS VOTE: YES ~ NO ~X SUMMARY In November 2008, the City of Chula Vista was awarded approximately $2.8M in one- time Neighborhood Stabilization Program (NSP) funds. The 2008-2009 Annual Action Plan Amendment will authorize the use of NSP program income funds (revenue) to meet the updated program requirement to use at a minimum twenty-five percent (25%) of program income received for very low income households and for administrative activities. The City Manager is authorized to reallocate funds received from re-sales to NSP uses, as necessary per previous Council approval. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed action for compliance with the National Environmental Protection Act (NEPA) due to the use of Federal funds and has determined that pursuant to Section 58.30 (b), Subpart D, Title 24 of the Code Federal Regulations, further review and environmental determination as appropriate, will be required for each project as it is identified. Thus, no further NEPA environmental review or documentation is necessazy at this time. RECOMMENDATION Council adopt the resolution. 6-1 JANUARY 24, 2012, Item Page 2 of 4 BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION BACKGROUND In November 2008, the City of Chula Vista City Council approved a plan to use $2.8M of NSP funds for three eligible activities to help stabilize neighborhoods. The purpose of the NSP program is to assist cities dealing with the negative effects of abandoned and foreclosed properties. At that time the City Council approved a plan to use the NSP funds and leverage HOME funds for the HUD approved activities of homebuyer assistance and the purchase of foreclosed or abandoned properties to rent. On September 1, 2009, Council approved an amendment of the Fiscal Year 2008/2009 Department of Housing and Urban Development (HUD) Annual Action Plan for NSP funds to add the eligible use to purchase and rehabilitate homes that have been abandoned or foreclosed upon, and to sell those properties to first time homebuyers. This generated additional revenue that can only be used for NSP eligible activities. City Council authorized the City Manager to reallocate funds received from resales to NSP uses, as necessary. Per HUD's recent guidance, the City prepared an amendment to the 2008-2009 Annual Action Plan to allocate twenty-five percent of program income (revenue) received for activities benefiting those earning less than 50 percent of the HUD's published Area Median Income and to allocate up to 10% of program income received for administration of the NSP programs. The table below identifies the distribution of original allocation of NSP funds, and the intended use of an approximate amount of $2,000,000 in projected revenue: Administration Program administration and $283,008 $100,000 $383,008 (u to 70%NSP Allocation) on- oin monitorin Assist in the Purchase and Households at or below 50% $1,000,000 $750,000 $1,750,000 Rehabilitation of foreclosed of Area Median Income ro erties for rental housin Down Payment and Closing Cost $1,547,064 $1,150,000 $2,697,064 Assistance & Acquisition/ Households earning at or Rehabilitation/Resell program below 120% of Area Median (5761,859 to assist first time homebuyers to Income already urchase foreclosed ro erties expended) ~ ~ ~ I 1 III III I I The 2008-2009 Annual Action Plan Amendment will authorize the use of NSP program income funds (revenue) to meet the updated program requirement to use at a minimum twenty-five percent (25%) of program income received for very low income households and for administrative activities. The City Manager is authorized to reallocate funds received from re-sales to NSP uses, as necessary per previous Council approval. 6-2 JANUARY 24, 2012, Item ~ Page 3 of 4 NSP FUNDS TO DATE To meet the HUD requirements to use a portion of the NSP funds for very low-income persons, the City originally set-aside NSP funds to partner with San Diego Housing Corporation for the purchase and rehabilitation of two properties, providing six (6) rental units for special needs populations. After taking out the administrative costs, the remaining funds were used to assist first time homebuyers and to acquire/rehabilitate/resell properties in NSP eligible tazget areas. Four (4) homebuyers utilized the program and found properties on their own, and eleven (11) properties were purchased for the purpose of reselling them to NSP eligible homebuyers using the City's partner Community HousingWorks. To date, eight (8) of the properties have been resold resulting in $1,593,300 of program income that can be used for NSP purposes. Three properties aze in the process of rehabilitation or are on the market that will generate approximately $400,000 of additional revenue for an estimated total program income of $2,000,000. With HUD's new requirement, a portion of the revenue is now being allocated to meet the very-low income requirement and to use some of the funds to administer the program. The creative strategies used in the NSP programs have proven successful. The Chula Vista NSP program has not only eliminated vacant properties but allowed families to purchase their first home as well as assist special needs households with affordable rental housing. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found that Councilmembers Castaneda and Bensoussan have property holdings within 500 feet of the boundaries or within the target neighborhoods which are the subject of this action. Due to identified conflicts during the initial target area development, City staff requested a written opinion from the Fair Political Practices Commission ("FPPC") for Councilmembers Castaneda and McCann. In response, the FPPC opined that Councilmembers Castaneda and McCann could participate in the decision on this matter because, "it does not appear that the decision to appropriate HUD finds will have a material financial effect [on a council member]." Based on the information in said FPPC letter Councilmember Castaneda does not have a conflict. In addition, given that Councilmember Bensoussan stands in the same position as Councilmembers Castaneda and McCann, it is opined that Councilmember Bensoussan also does not have conflict. CURRENT FISCAL IMPACT There is no current fiscal impact to the General Fund as expenditures are offset by the HUD grant funds. This action is only necessary for HUD reporting purposes. Budgetary changes necessary for the current fiscal yeaz have already been included in the City's adopted budget. 6-3 JANUARY 24, 2012, Item Page 4 of 4 ONGOING FISCAL IMPACT There is no ongoing fiscal impact to the General Fund as expenditures are offset by the HUD grant funds. Any additional appropriations necessary for future years will be included in proposed City Budgets. Prepared by: Jose Dorado, Project Coordinator, Development Services Department, Housing Division 6-4 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AMENDMENT TO THE FISCAL YEAR 2008/2009 ANNUAL ACTION PLAN OF THE NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS TO ALLOCATED NSP FUNDS TO ELIGIBLE USES PREVIOUSLY APPROVED BY CITY COUNCIL AND AUTHORIZATION FOR CITY MANAGER TO PERFORM NECESSARY ACTS TO EXECUTE SAID PLAN AMENDMENT WHEREAS, on May 6, 2008, pursuant to Resolution No. 2008-121, the City Council approved the Fiscal Year 2008/2009 Annual Action Plan for the Community Development Block Grant (CDBG), the HOME Investment Partnership (HOME), and the Emergency Shelter Grant (ESG) Federal Grant Programs; and WHEREAS, in September 2008, the United States Department of Housing and Urban Development (HUD) notified the City that the City is eligible to receive approximately $2.8 million in one-time CDBG funds through the new Neighborhood Stabilization Program (NSP) in addition to its annual CDBG entitlement; and WHEREAS, on November 25, 2008, Council approved the submittal of an amendment of the Fiscal Year 2008/2009 Action Plan, HUD approved the amendment on January 13, 2009, and on March 24, 2009 Council appropriated $2,830,072 in CDBG NSP funds consistent with the approved plan; and WHEREAS, on March 23, 2010, Council authorized The City Manager to reallocate unobligated NSP funds with existing non-profit NSP contractors/developers; and WHEREAS, due to an update to the NSP regulations, Council action is necessary to ensure that the City's Neighborhood Stabilization program meets the recently updated program requirements; and WHEREAS, this 2008-2009 Annual Action Plan Amendment will authorize the use of NSP program income funds for administrative activities (up to 10%) and to meet the updated program requirement to use no less than twenty-five percent of program income received to house individuals or families whose income does not exceed 50 percent of the Area Median Income. NOW, THEREFORE, BE IT RESOLVED by the City Council of Chula Vista that it amends the Fiscal Year 2008/2009 Annual Action Plan for Neighborhood Stabilization Plan (NSP) funds to allocate program income funds for administrative costs and rental activities in order to meet recently issued HUD guidance and authorizing the City Manager to perform necessary actions to execute said amendment, including to reallocate NSP funds and amend existing agreements as necessary. 6-5 Resolution No. Page 2 Presented by Gary Halbert, AICP, PE Assistant City Manager/ Development Services Director Approved as to form by %~ ~f~ ~ Glen R. Googins City Attorney 6-6