HC 3-14-24 Supplemental ReportHousing Commission Meeting
March 14, 2024
Supplemental Report
Item 3
Fiscal Year (FY) 2024-25 Community Development Block Grant (CDBG) Program and Below Market Rate Affordable Housing Fund (BMR AHF) funding allocations
Redline Staff Report
HOUSING COMMISSION STAFF REPORT
Meeting: March 14, 2024
Subject
Fiscal Year (FY) 2024-25 Community Development Block Grant (CDBG) Program and Below
Market Rate Affordable Housing Fund (BMR AHF) funding allocations.
Recommended Action
1. Consider the FY 2024-25 CDBG and BMR AHF funding applications and make
recommendations to City Council for final approval.
Reason for Recommendation
An annual Notice of Funding Availability (NOFA) and Request for Proposals (RFP) (Attachment
A) was issued on November 06, 2023, inviting applicants to apply for eligible capital housing
projects (one-year funding cycle) for the upcoming FY 2024-25. The NOFA/RFP deadline ended
on February 06, 2024. Housing Commission reviews CDBG and BMR AHF applications and
makes funding recommendations to the City Council. BMR AHF funding amounts for FY 2024-
25 are subject to City Council approval. CDBG funding amounts will be reduced or increased
proportionately based on final HUD allocations. On May 11, 2017, the Housing Commission
adopted Resolution 17-02 (CDBG Contingency Plan, Attachment B), in the event that the City
receives more or less CDBG funding from the United States Department of Housing and Urban
Development (HUD).
CDBG Funding
HUD annually allocates CDBG funding to local jurisdictions for community development
activities. Cupertino is one of nine entitlement jurisdictions within Santa Clara County.
Jurisdictions typically must have a population of 50,000 or more to qualify as an “entitlement
jurisdiction” that receives grant funding directly from HUD. Entitlement grants are largely
allocated on a formula basis based on several objective measures of community needs including
the extent of poverty, population, housing overcrowding, age of housing, and extent of
population growth lag in relationship to other metropolitan areas. This is Cupertino’s twentieth
year as an entitlement jurisdiction receiving a CDBG grant directly from HUD.
In March 2021, HUD’s Office of Environment and Energy (OEE) conducted monitoring of the
City’s CDBG program in order to assess performance and compliance with applicable Federal
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requirements. During the monitoring, OEE found that in 2018 the City had obligated and
expended CDBG funds on a project prior to the completion of the Environmental Review (ER),
which is a violation of regulatory requirements. As a result of this finding, OEE prescribed that
the City would be penalized by $176,201 towards a future CDBG entitlement allocation. On
March 8, 2024, HUD notified the City that this penalty would be applied to its FY 2024-25 CDBG
allocation. Due to this penalty, the City anticipates receiving approximately $182,709 $358,910 in
FY 2024-25 CDBG entitlement funding.
Program income in the amount of $7,944 will be received and allocated from existing CDBG loan
payoffs. HUD regulations implement maximum percentages that may be allocated to CDBG
administration and public services. Of the total estimated funding, a maximum of 20% may be
used for administrative costs to cover salary and benefits of staff who operate the CDBG program,
a maximum of 15% may be used for public services, and the remaining 65% may be used for
capital housing projects. As noted earlier, CDBG funding amounts will be reduced or increased
proportionately for FY 2024-25 based on final HUD allocations and City Council approval.
FY 2024-25 CDBG Budget (est.)
Entitlement Amount (EN) $182,709.00
358,910.00
Program Income (FY 2024-25) $7,944.00
Unexpended Funds (FY 2022-23) $27,781.35
Sub-Total $218,434.35
394,635.35
Program Administration (20% EN) $38,130.60
73,370.80
Public Service (15% EN) $28,597.95
55,028.10
Capital/Housing Projects (65% EN + Unexpended
Funds)
$151,705.80
266,236.45
Total $218,434.35
394,635.35
HUD regulations require that eligible activities selected for funding must benefit very low and
low-income households, eliminate a blighted area, or address an urgent (emergency) community
need, and must also meet a national objective. In addition, only certain types of eligible activities
qualify under the CDBG regulations. Some examples of eligible activities are improvements to
public facilities, funding public services, housing rehabilitation, and economic development.
2024-25 CDBG Program Administration Funds
An estimated total of $38,130.60 $73,370.80 will be used for CDBG program administration. The
City will use these funds for administrative costs to cover salary and benefits of staff who operate
the CDBG program.
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2024-25 CDBG Capital Housing Project Funds (One-Year Funding Cycle)
An estimated total of $151,705.80 $266,236.45 is available to be used for eligible CDBG capital
housing projects. This consists of anticipated FY 2024-25 funding and unexpended funding from
prior years. City staff conducted extensive outreach and the NOFA/RFP was sent to over 200
contacts in the affordable housing community. In addition, staff provided technical assistance to
affordable housing developers and non-profits. The City received two applications in this
category totaling $362,237.00. Funding recommendations are listed in the table below.
1 CDBG Capital Housing Projects
FY 2024-25 Application
Summary
Funds
Available
Funding
Requests
Funding
Recommendations
FY 2023-24
Funding
Allocations
a
Rebuilding Together Silicon
Valley- Homeowner Repair
and Rehabilitation Program
$96,237.00 $96,237.00 $92,536.00
b
City of Cupertino – Senior
Center Cooling System
Improvements
$266,000.00 $55,468.80
$169,999.45 $367,951.38
Sub-Total $151,705.80
$266,236.45 $362,237.00 $151,705.80
$266,236.45 $460,487.38
2023-24 BMR AHF Capital Housing Project Funds (One-Year Funding Cycle)
The City estimates up to $4,250,000 will be available to fund eligible BMR AHF capital housing
projects for FY 2024-25 after accounting for administrative and other expenses. Over the course
of the year, staff met with multiple developers and non-profits to provide technical assistance in
order to generate affordable housing. The City did not receive any eligible applications for FY
2024-25 BMR AHF Capital Housing Projects due to barriers such as the high cost of land and lack
of adequate funding available to leverage the development of affordable housing. Staff will
continue to provide outreach and technical assistance to interested affordable housing developers
and non-profits throughout the year.
Sustainability Impact
FY 2024-25 grant funding recommendations will not result in a sustainability impact.
Fiscal Impact
CDBG programs and projects are funded by HUD grant funds. BMR AHF projects are funded by
housing mitigation fees collected from residential and non-residential development projects.
Budget allocations for approved funding allocations will be included for City Council’s approval
as part of the proposed and final budget.
California Environmental Quality Act
FY 2024-25 grant funding recommendations are not a project subject to the California
Environmental Quality Act (CEQA).
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Prepared by: Alec Vybiral, Senior Housing Coordinator
Reviewed by: Luke Connolly, Asst. Director of Community
Development
Approved for Submission by: Benjamin Fu, Director of Community
Development
Attachments:
A – FY 2024-25 NOFA/RFP
B – Housing Commission Resolution 17-02 (CDBG Contingency Plan)
C – FY 2024-25 CDBG and BMR AHF Funding Application Summary