HomeMy WebLinkAboutAgenda Statement 1986/08/19 Item 5 COUNCIL AGENDA STATEMENT
Item 5
Meeting Date 8/19/86
ITEM TITLE: Report: Application for Rental Rehabilitation Program funds for
FY 1986-87
Resolution ' 7'pproving Rental Rehabilitation Program description
and related documents, and authorizing submittal to HUD
(4/5ths Vote: Yes NoXX )
SUBMITTED BY: Community Development Director
REVIEWED BY: City Manage' x .
The City is participating in the HUD Rental Rehabilitation Program for FY 1985-86,
having been allocated $59,000. This year HUD reduced our automatic allocation to
$28,000 (HUD reduced the grants to many small cities for fiscal year 1986-87) . We
had the option of accepting the lower grant amount or competing for a larger grant
through the State allocation process. The Department opted for the latter, and
thus we are applying for $60,000.
RECOMMENDATION: That Council approve the resolution approving the Rental
Rehabilitation Program and documents for FY 1986-87, and authorizing submittal to
HUD.
BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable.
DISCUSSION:
The Rental Rehabilitation Program of the 1983 Housing and Urban-Rural Recovery Act
is designed to increase the supply of standard housing rental units affordable to
lower-income families. The program uses a dual approach: it provides grants to
localities for rehabilitation assistance to private property owners of substandard
multi-family units occupied by lower-income families; and it provides rental sub-
sidies through the local housing authority to the low-income tenants of those
rehabilitated units to assure housing affordability. The provision of the rental
subsidies to the units' tenants avoids those frequent circumstances where debt
service incurred by property owners is passed on to the tenants in higher rents to
the degree that the tenant' s rents are no longer affordable.
The Rental Rehabilitation Program' s creation reflects the recent federal emphasis
on improving and preserving the nation's existing housing stock rather than under-
writing new housing construction. Rehabilitation is seen as more cost effective
and more socially appropriate than building new rental units.
The program also responds to the Federal trend towards local determination. After
establishing basic benefit and management requirements , the enabling Act allows
broad opportunities for local program design and flexibility.
Because our automatic allocation was substantially reduced for fiscal year 1986-87
$28,000 compared with $59,000 in fiscal year 1985-86, the department opted to
compete for a larger grant through a competitive state process. Any local entity
that received an allocation below $50,000 or did not receive any allocation is
eligible to compete. The present allocation set aside for the State Program is
$1 ,566,000. If all of the communities with allocation below $50,000 opt not to
accept the lesser amounts, then a maximum of an additional $930,000 could be made
available for the State Program for a total of $2,496,000.
Form A-113 (Rev. 11/79)
Page 2, Item . 5
Meeting Date 8/19/86
The attached program description which has previously been approved by Council ,
has been expanded slightly to incorporate information on our recent housing
rehabilitation activities and qualifications (Sections I , XVI) . New program
guidelines suggest that this information be included in our application.
While it is possible that the City will not receive an allocation through
the competitive application process, HUD officials indicate that in past
years most or all applicants have received their requested allocation.
The City has funded 2 rental rehabilitation projects which will result in the
rehabilitation of 4 units and will utilize $16,541 in HUD rental rehabilitation
funds. Administrative costs for the program are minimal . While the program
is new and few projects have been funded, it appears to be a viable rehabili-
tation program for the City.
FISCAL IMPACT: No general fund monies would be involved in the recommended
action. Program expenses would be provided by the HUD grant.
SS/sc
by the City Council of
Chula Vista, California
Dated i'' =—