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HomeMy WebLinkAbout1991/06/18 Item 25 COUNCIL AGENDA STATEMENT Item Meeting Date JS 6/18/91 ITEM TITLE: Report: Application for Rental Rehabilitation Program funds for FY 1991-1992 Resolution \~~\~ Approving Rental Rehabilitation Program description and related documents, and authorizing submittal to HUD SUBMITTED BY: Community Development Director 0? . REVIEWED BY: City Manage~ (4/5ths Vote: Yes___No_X_) The city is participating in the U. S. Department of Housing and Urban Development Rental Rehabilitation Program for FY 1990-1991, having been allocated $68,000. Our allocation for FY 1991-1992 is $37,000. This allocation of funds is in addition to other funds that the City receives from the federal government. In order to receive these funds we must submit an application to HUD. RECOMMENDATION: That Council adopt the resolution approving the Rental Rehabilitation Program and documents for FY 1991- 1992, and authorizing the submittal to HUD. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: The Rental Rehabilitation Program (RRP) which was created by the 1983 Housing and Urban-Rural Recovery Act is designed to improve the supply of rental housing units affordable to lower-income families. The RRP uses a dual approach. First, it provides grants to localities for rehabilitation assistance to private property owners of substandard multi- family units occupied by lower-income families, and it also provides rental subsidies through the local housing authority to the low-income tenants of the rehabilitated units to assure housing affordability. The provision of the rental subsidies to the units' tenants avoids those frequent circumstances where the debt service incurred by property owners is passed on to the tenants to the degree that the tenant's rents are no longer affordable. The creation of the RRP reflects the federal emphasis on improving and preserving the nation's existing housing stock ~-I rather than underwriting new housing construction. 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. Our allocation for this year is $37,000. Last year we received $68,000. The amount of funds allocated to each jurisdiction is based on a formula which considers the following local factors: the number of low-income rental households; the number of rental units built to 1940; and the number of rental units with overcrowding, high rent costs, incomplete kitchen facilities, or incomplete plumbing. The City is receiving a significant reduction in funding because the amount of authorized funding for the RRP in Fiscal Year 1991 was less than in Fiscal Year 1990. The attached program description which has previously been approved by Council has been updated to incorporate information on our recent housing rehabilitation activities and qualifications. FISCAL IMPACT: the recommended by HUD. No general fund monies would be involved in action. Program expenses would be provided J5..,2. 1 RENTAL REHABILITATION PROGRAM CITY OF CHULA VISTA PROGRAM DESCRIPTION The City of Chula vista will encourage and assist in the rehabilitation of residential rental units in Chula vista under the Rental Rehabilitation Program authorized by the U. S. community Development and Urban-Rural Recovery Act of 1983. Grant and rental subsidy resources available from HUD will be used to increase the stock of standard rental housing in the City and to assure the affordability of such housing to lower income families. The program has been designed to maximize both improvement assistance to substandard rental units which will house larger families and affordability to very low-income households. I. PROGRAM ACTIVITIES In FY 1991-1992, the city of Chula vista will encourage and assist in the rehabilitation of approximately 5 rental dwelling units. The program will be pursued by the City's existing staff responsible for the City's Community Housing Improvement Program (CHIP) which is funded by the City of Chula vista Redevelopment Agency's Low and Moderate Income Housing Fund. Rental projects in the targeted neighborhoods will be identified for assistance consideration, using the Housing Rehabilitation Specialist/Code Enforcement Officer and the Housing Rehabilitation Administrator. Projects evidencing substandard conditions and predominant occupancy by lower income tenants will be encouraged to apply for program assistance. Proposed projects will be evaluated by the Loan Committee of the existing CHIP Rehabilitation Program for satisfaction of program goals. Approved projects will be referred to a City-selected lender or loan processor, for both market rate private rehabilitation loans and program loans. Program loans will be in the form of ten-year, 0% interest deferred loans, forgiven in full at term, provided the owner does not discriminate or convert the property to condominiums during the term of the loan. Maximum assistance will be 50% of the per unit rehabilitation cost, to a maximum of $6500 per unit for one bedroom units, $7500 per unit for two bedroom units, and $8500 per unit for units with three or more bedroom units. Program loans and attendant prohibitions will be secured by a lien on the subject property. Affected eligible tenants will receive a preference for section 8 Existing rental subsidies from the San Diego County Housing Authority. Affected lower income tenants not suitably housed in rehabilitated units will receive technical and financial relocation assistance from program funds. ~-3 2 Two staff members will be working on the Rental Rehabilitation Program, Tony ciotti and Roger Jones. Mr. Ciotti has been the City's Housing Rehabilitation Coordinator for 13 years, and he has been certified by NAHRO as a Rehabilitation Finance Specialist. He has primary responsibility for the administration and execution of the program. Roger Jones is the City's Housing Rehabilitation Specialist, and he is certified by NAHRO as a Rehabilitation Construction Specialist. He conducts the initial inspections to determine Code violations and items in need of rehabilitation. II. NEIGHBORHOOD SELECTION The Rental Rehabilitation Program will be operated in the CHIP target neighborhoods. These neighborhoods are among the lowest income neighborhoods in the city, with 1980 Census data indicating that the median income in the Census Tracts these neighborhoods comprise is below 80% of the area median income. These neighborhoods are a mix of single- family and multifamily units, with the great majority of rental rates being below prevailing market rates in Chula vista and below the current section 8 Existing Fair Market Rents. Capital Improvement activities and redevelopment of the surrounding commercial areas promise to revitalize these declining neighborhoods, but the modest nature of the housing stock and the scope of the revitalization activities will not result in gentrification of the neighborhoods. Rent levels will rise over the next five years, but not at as great a rate as rents in the market area. Selection of the neighborhoods is based on 1980 Census data, A Housinq Studv of the citv of Chula Vista, dated May 1984, and field observation. III. LOWER INCOME BENEFIT A minimum of 70% of the rental rehabilitation grant will be used to assist lower income families. One-hundred percent lower income benefit will be striven for, but achieving that level is unlikely. No neighborhoods in Chula Vista are so significantly lower income, and no rental projects are so significantly substandard, that more than 70% low income occupancy of a rental project would likely be encountered. If 100% lower income occupancy were necessary, significant numbers of non-lower income families would have to be displaced by the property owner/applicant, which the city feels is an unacceptable circumstance. Given the characteristics of the Chula Vista neighborhoods and the displacement which would result, no practical program design exists which would achieve 100% low income benefit level. Through the public hearing process to consider the program description, the public has been consulted regarding the inability to achieve a 100% lower income benefit level. J~-~ 3 IV. USE OF RENTAL REHABILITATION GRANTS FOR HOUSING FOR FAMILIES A minimum of 70% of the units assisted under the program will be two-bedroom or larger. First priority for assistance will go to three bedroom units. As apartment projects in Chula vista seldom contain three bedroom units, outreach will be concentrated on rental duplexes. All assistance given under the program will be approved by the City's CHIP Loan Committee, using as one of their criteria for project selection the goal of a minimum of 70% total program assistance to units of two bedrooms or larger and highest priority to three-bedroom units. V. USE OF RENTAL REHABILITATION GRANTS FOR UNITS IN SUBSTANDARD CONDITION THAT ARE OCCUPIED BY VERY LOW-INCOME FAMILIES Priority will be given to projects with substandard units occupied by very low-income families. All assistance given under the program will be approved by the City'S CHIP Loan Committee, using as one of their criteria for project selection the priority to projects with substandard units occupied by very low-income families. VI. SELECTION OF PROPOSALS Proposals will be selected by the CHIP Loan Committee based on the following criteria: a. Correction of substandard units, especially those occupied by very low income families. b. predominance of assistance to large families in lower-income categories, with a minimum of 70% of all units assisted being two bedrooms or larger, and with highest priority going to three-bedroom units. c. Maximum stimulation of private investment. d. Minimization of displacement of tenants. The Loan Committee will also evaluate the pro forma and loan processing information in order to select financially feasible projects with maximum program benefit. Operating income and replacement reserve levels will be considered. The Loan Committee will consider the distribution of Section 8 Existing Vouchers to a project or the provision of financial relocation assistance in their evaluation of program benefit. Relocation expenses paid to project unit ~~5 4 displacees will be deducted from the per unit maximum assistance levels. VII. FINANCIAL FEASIBILITY The Rental Rehabilitation Program will be financially feasible. Private funds will be available through private lending institutions, with lending services for both program deferred loans and private loans obtained from the Bank of America. VIII. NEIGHBORHOOD PRESERVATION Neighborhood preservation is currently under way in the target neighborhood, using the City of Chula Vista Redevelopment Agency Low and Moderate Income Housing Fund and program income from rehabilitation loans made in the past years using CDBG funds for housing rehabilitation, Block Grant-funded Capital Improvement Projects, and Block Grant-funded social service activities. Additional property improvement under the program will further enhance neighborhood preservation in target areas. IX. SCHEDULE FOR COMMITTING RENTAL REHABILITATION GRANT AMOUNTS Specific projects have not yet been selected for the program, but as the City operates an existing multifamily rehabilitation program using Redevelopment Agency and CDBG program income funds as previously mentioned. Therefore, projects suitable for this program can be easily identified. All staff and mechanisms for processing and approving loans are in place. Our best local estimate is that the average subsidy per unit will be $7500. Therefore, the program would rehabilitate approximately 5 units in 12 months. As it would be most advantageous for the Loan Committee to evaluate a number of project proposals simultaneously, project proposals will be batched for consideration. The total grant amount should be committed by May 31, 1992. . X. NEED FOR RENTAL HOUSING ASSISTANCE Not applicable. XI. NON-DISCRIMINATION AND EQUAL OPPORTUNITY Affirmative marketing and fair housing principles will be pursued by the program. The program will not participate in unit marketing, but property owners will be counseled in affirmative marketing principles and monitored for compliance. ~~-b 5 The city will provide fair housing counseling to owners of assisted units and to perspective tenants. The following steps will be taken: a. written material on Federal Fair Housing Laws will be distributed to owners and tenants. All advertisements or public announcements regarding the program will include the Equal Housing Opportunity logo. b. Each unit assisted through the Rental Rehabilitation Program will be marketed in a manner to affirmatively further fair housing, including but not limited to the following: 1) Listing available units with the Section 8 Existing Marketing Section of the Housing Authority 2) Attempting to fill vacant units with families who are active certificate holders through the Section 8 program, or who are applicants on the waiting list for Section 8 certificates or vouchers. 3) Using the Equal Housing Opportunity logo in any newspaper advertisement or written communication to community groups, organizations, agencies, or other community contacts. Owners will utilize various community contacts to advertise unit availability to those persons in the housing market area least likely to apply for the unit. Applications will be solicited from such individuals. The City will gather and maintain records to demonstrate compliance as follows: a. Copies of all written material regarding vacant units for rent will be kept by the property owner and by the city. Records will be kept of applications received in response to available vacancies. b. The City will periodically review affirmative marketing efforts by owners to ensure compliance with Equal Housing opportunity provisions. When an owner has failed to follow affirmative marketing requirements, appropriate actions, available under program regulations and/or applicable laws, will be taken to enforce conformity. In cases where housing discrimination is established to have occurred, such established housing descrimination J{-? 6 shall be a condition of default on program deferred loans. Owners will be encouraged to comply with provisions of affirmative marketing of the units for no less than seven years after the completion date of rehabilitation of all units in the project. XII. GRANTEE ORGANIZATION STRUCTURE The Rental Rehabilitation Program contact person for the city of Chula vista is: David Gustafson, Assistant Director of Community Development, city of Chula vista 276 Fourth Avenue, Chula Vista, CA 91910. XIII. PUBLIC HOUSING AUTHORITY PARTICIPATION The Housing Authority of the County of San Diego operates the section 8 Existing Vouchers Program for the City of Chula vista. Eligible tenants in rehabilitation units receive preference for section 8 certificates from the Housing Authority. The Authority's section 8 Existing contact person is: Josephine Silva, Chief, Housing Programs, Housing Authority of the County of San Diego, 7917 Ostrow Street, San Diego, CA 92111-3694, at (619) 694-4803. XIV. CERTIFICATIONS The necessary certifications are attached. They were approved by City Council Resolution for FY 1991-1992 on June 18, 1991. xv. RECENT REHABILITATION ACTIVITIES The City offers loans and grants for the rehabilitation of rental units, owner occupied single family dwellings, and mobilehomes. The following chart illustrates the number of units rehabilitated and the amount of funds spent over the past 6 fiscal years. CITY OF CHULA VISTA HOUSING REHABILITATION FISCAL YEARS 1985-1991 FY 1985-86 No. of Single Family Dwellings No. of Mobilehomes Total Funds Spent 27 24 $399,422.00 ~~~ FY 1986-87 No. of Single Family Dwellings 24 No. of Mobilehomes 31 Total Funds Spent $591,129.00 FY 1987-88 No. of Single Family Dwellings 34 No. of Mobilehomes 13 Total Funds Spent $980,508.65 FY 1988-89 No. of Single Family Dwellings 21 No. of Mobilehomes 15 Total Funds Spent $569,346.77 FY 1989-90 No. of Single Family Dwellings 22 No. of Mobilehomes 12 Total Funds Spent $824,520.14 FY 1990-91 No. of single Family Dwellings 14 No. of Mobilehomes 37 Total Funds Spent $501,334.96 tP.! - 7 7 RENTAL REHABILITATION PROGRAM TENANT ASSISTANCE POLICY I. INTENT The Chula vista Rental Rehabilitation Program will seek to minimize the permanent displacement of residential rental tenants as a result of program activities. In cases where permanent displacement of low income families (less than 80% of median income) is unavoidable, financial and technical relocation assistance will be provided to those families. Very low-income families (less than 50% of median income) will not be permanently displaced in favor of non very low-income families. Cost and assistance needs resulting from temporary displacement of tenants during property improvement will be the responsibility of the property owner and will not be paid from program funds. The Rental Rehabilitation Program will be administered so as to not cause the displacement of persons because of their particular race, color, religion, sex, age, handicap, or natural origin. II. DEFINITIONS OF DISPLACEMENT A. Non low-income families moving from a unit undergoing rehabilitation under the program will not be considered displacees under the Tenant Assistance Program: B. Low-income and very low-income families will be considered displacees if their displacement is a direct result of program activity and not an action for cause. C. Examples: of program related displacement include, but are not limited to, unit underutilization, unit overcrowding, housing cost overpayment (family paying more than 30% of monthly gross income for housing expenses), or tenant ineligibility to section 8. Existing rental subsidy assistance as a result of unit rent exceeding section 8 Fair Market Rent. No tenant will be considered displaced if the tenant has been offered a decent, safe, and sanitary dwelling unit in the project at an affordable rent. Qualification as displacees will be solely determined by the City. III. A. Displacees will receive either section 8 rental subsidy assistance, or relocation assistance under the provisions for permanent displacement of the U. S. Uniform Relocation Assistance and Property efl{ -/0 Acquisition Act of 1970, at the option of the city. provisions of the Act include technical assistance, moving allowances, and rental differential payments. Displacees receiving section 8 certificates will also be eligible for technical assistance and moving allowances. B. Technical assistance will include information and counseling to familiarize Displacees with opportunities to select appropriate replacement housing within the full range of available housing, with individual rights under the federal Fair Housing Law, and with methods for searching for suitable replacement housing. C. No displacees will be discriminated against in the provision of information, counseling, referrals, or other relocation services. ,U -II/ ~S -15 APPLICATION FOR 2. DATe aU8WlTTEO Appl'icant Identifier FEDERAL ASSISTANCE 6/21/91 1. lYPl Of' aUBMI.SION: 1. DATE RECEIVED IV STATE Stele Application Identifier 8]P/lcatfon Preapp/fcatlon Construction o Construction .. DATE RECaVED BY FEDERAL AGEHCY Federal Identifier o Non-COnstruction 0 Non-COnstrucllon I. APPLICANT INP'ORMAnON leg" Name: City of Oroanlzl!Itional Unit: Chula Vista Community Development Department Addr.ss (give city, county, stare, .nd zip code): Name and telephone number 01 the person to be contacted on metiers in....olving Fourth Avenue this application (give are. codtJ) 276 Alisa Duffey Rogers Chula Vista, CA 91910 (619) 691-5047 County of San Diego t. ("'PLOVER IDfNnfl'ICAnON HUMBER (EINI: 7. TYPE OF APPllCAP{T: (enter approprilJle letr6r in boK) I!D GEJ - rOO T 4 T9 8 T 811 I A. State H. Independent School Dirt B. County I. Stale Controlled Institution of HiQher LearniOlJ .. TYPe Of' APPLICAOON: C. Municipal J. Private University D. Township K India" Tribe 0 New ~ Continuation o Revision E. Interstate L. Individual 0 0 F. Intermunictpal M. Profit Organization If Rtlviaion, enter Ippropriate 5eUer(s} In oo.(es}: G. Special District N. Other (Specify): A. Incr.... Award 8. Decrease Award C. Increase Duretion O. Deer.a.. Duration Ot..... (._ity), t. NAME OF FEDERAL AGENCY: HUD 10. CATALOQ OP PEDERAL DOMUl1C I 1 I 4 1.12 h 10 11. DESCRIPTIVE TIT\.E OF APPLICANTS PROJECT: ASSIIITAHCII HUMIER: TITlE: Rental Rehabil itati on Program Rental Rehabil itation Program Program objective is to increase the supply 12. .."EAS AJlPECTlO IV PROJECT (cW.., countl.s, slat.s, etc.): of private ma rket rental housing for City of Chula Vista low income tenants and rent assistance, County of San Diego especially for large famil i es. u. '''OPOSED PROJeCT: ,.. CONQRESSIONAL DISTRICTS OP: Slart Oat. Ending Date a. Applicant ~ b. Project 91/10/1 92/10/1 44 44.45 15. ESTIMATI!D PUNDINQ: . 11. IS APPLICATION SUBJECT TO REVIEW BY STATE exECUTIVE ORDER 12372 PROCE$S' .. Fed.ral . .00 a. YES. THIS PREAPPl1CATlON.'APPllCAT1ON WAS MADE AVAILABLE TO niE 37,000 STATE EXECUTIVE ORDER 12372 PROCESS FOR REVIEW ON: b. Applicant . .00 DATE c. Stat. S .00 l.!I b NO. PROGRAM IS NOT COVERED BY E.O. 12372 d. locel . .00 0 OR PROGRAM HAS NOT BEEN SELECTED BY STATE FOR REVIEW e Other . .00 f. Program Incoma . .00 17. IS THE APPLICANT DELINQUENT ON ANY FEDERAL DEBn o TOTAL . .00 DYe. II .Yes.. attach an explllnation. [!j No 37,000 11. TO THE lEST OF MY KNOWLEDGE AND 8ELI~F. ALL DATA IN THIS APPUCATION.'PREAPPlICATION ARE TRUE AND CORRECT, 1l4E DOCUMENT HAS BEEN DULY AUTHORlll!D BV THE QOVERNINQ BODY OF THE APPLICANT AND THE APPLICANT WILL COMPLY WITH TttE ATTACHED ASSURANCES IF THE ASSISTANCE 1$ AWARDED ._ Typed Name of Aulhorized Representlltive lb. Tit.le t T ele)hone number Tim Nader Mayor 619 691-5047 d Signature 0' Authorized Representative e_ Date Sloned ~ - IJ.. "l'revlous""""Emrons"""'NQfUiiI)fe ~tandard ~o'm 424 IAEV -1.88; .......... ...........-.... ...... ---- "'-'- Prescr,bed bv OMS C."c....la. A. I 02 . CERTIFICATIONS The grantee shall certify that: (1) The submission of this Program Description is authorized under State and local law (as applicable). and the grantee possesses the legal authority to carry out the Rental Rehabilitation Program described herein. in accordance with 24 CFR Part 511; (2) The grantee's Rental Rehabilitation Program was developed after consultation with the public and its description of program activities in the "Program Activities" section of this Program Description has been made available to the public, in accordance with Part 511.73(c); (3) ~ (Check if this paragraph is applicable.) The grantee's lower income benefit standard is hereby reduced to 70 percent as provided by 24 CFR 511.10 (a)(2). The discussion of lower income benefit in this Program Description contains a specific explanation of the reasons why this reduced benefit standard is necessary, which explanation complies with 24 CFR 511.10 (a)(2). (4) The grantee will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and a written Tenant Assistance Policy conforming to the requirements of Part 511.14(a)(4) has been adopted; (5) The grantee will conduct and administer its Rental Rehabilitation Program, and, if applicable, ensure that State recipients conduct and administer their Rental Rehabilitation Pro9rams in accordance with the requirements in accordance with Subpart H - Grant Administration; (6) The grantee will comply with the Drug-Free Workplace requirements in accordance with 24 CFR 511.16(f); and (7) Comply with the Certification regarding Lobbying (enclosed). Certifying Officer Date J{-/3 I J ; , , ! PLACE OF PERFORMANCE FOR CERTIFICATION REGARDING DRUG-FREE WORKPLACE REQUIREMENT Name of Grantee: _iit[~J_~Q~~_~is~~________________________ Grant Program Name: _Y~D1~L~~b~~Uj1~u~D_~~o~r~~____________ Grant Number: __~XJ_~~~~_Q~t~______________________________ Date: 6/7/91 The grantee shall insert in the space provided below the site(s) expected to be used for performance of work under the grant covered by the certification: Place of Performance (include street address, city, county, state, zip code for each site); 276 Fourth Avenue. Chula Vista. San Diego County. CA 91910 20 ~~-/Y CERTIFICATION REGARDING LOBBYING The undersigned certifies, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress: or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative, agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions. (3) The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less that $10,000 and not more than $100,000 for each such failure. 21 ~{-~ RESOLUTION NO.~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A RENTAL REHABILITATION PROGRAM DESCRIPTION AND RELATED DOCUMENTS AND AUTHORIZING SUBMITTAL TO THE U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT The City Council of the City of Chula vista does hereby resolve as follows: WHEREAS, the City has been informed by the U. S. Department of Housing and Urban Development (HUD) that funds are available for the implementation of the HUD Rental Rehabilitation Program, which program is aimed at improvement of substandard rental units occupied by lower income families; and, WHEREAS, the formula allocation for the City is $37,000. WHEREAS, the City of Chula vista is desirous of providing assistance for improvement of substandard rental units occupied by lower income families; and, WHEREAS, eligibility and application for the available HUD funds require that a local Rental Rehabilitation Program be designed with public input; and, WHEREAS, a local Rental Rehabilitation Program has been designed and a public hearing has previously been conducted to consider that design; and, WHEREAS, submittal documents, including a narrative Program Description, Certifications, and a Tenant Application Policy have been prepared and attached as Exhibits A, B, and C, respectively, and are incorporated herein as though fully set forth. NOW, THEREFORE, BE IT RESOLVED that the City council of the city of Chula vista hereby approves the Rental Rehabilitation Program description and related documents, authorizes the Mayor to sign said documents as necessary, and authorizes the city Manager to submit said documents to HUD. .R~.. Ip form bt) f-(vJ!{ d Presented by 0L Chrls Salomone Community Development Director