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JAN 1 3 1987
C/ED:CNS:BS:sd
Council Meeting 1/13/87
Santa Monica, California
TO:
Mayor and city council
FROM:
city staff
SUBJECT: Recommendation to Hold Public Hearing on
Assessment of Community Block Grant Program and
to Approve Funding Rationale for the
1987-88 Community Development Program
INTRODUCTION
This report recommends that the city Council hold the required
PUblic Hearing to assess the Community Development Block Grant
Program and further presents a proposed funding rationale for the
City's 1987-88 Community Development Program. It summarizes the
background of the program; proposes a funding rationale for the
two components of the program:
Community service Projects
(operating grants to social and community service organizations)
and Community and Neighborhood Improvement Projects (capital
projects that provide substantial benefit to lower income
res idents); and presents al ternati ve funding mechanisms and a
timeline for the 1987-88 process.
BACKGROUND
History of the community Development program
The Community Development Program represents an integration of
previously separate grant programs of the city including the
Community Development Block Grant (CDBG) program and the city's
social service grant program originally funded with Federal
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7-0
JAN 1 '3 lSB1
General Revenue sharing funds. This integration was achieved in
1983-84 and has proven to be an effective "umbrella" for City
funds allocated to a broad range of community development
activities.
In the past several years, the program has grown substantially in
size and scope and is now recognized as a major financial
contributor to the non-profit network in Santa Monica.
During
the current year, 40 Community Service Projects ($2.592 million)
and 8 Community and Neighborhood Improvement Projects ($l.152
million) were approved by the City council as a part of the
1986-87 Community Development Program. The breakdown of support
for the current year is shown in the table below.
GENERAL PROP.
TOTAL C:lBG GRS Fli:\n A
cmmc:nTY & !':EIGHB.
IMPROVE~]EKTS 1,15L913 l,eC6,0::'8 -0- 145,895 -0-
C OHNmn ':'Y SERVICES 2,592,364 ::'25,913 129,B37 2,005,403 331,211
3,744,277 1,131,931 129,837 2,151,298 331,211
The Community Development Program has met a number of important
goals: (1) it has supported a wide range of important human
services,
housing
and community improvement projects for
residents in need; (2) it has provided stability to a core group
of non-profit service providers in an era of increasing funding
uncertainty through increased support from City funds; and (3) it
has fostered a number of innovative programs to respond to gaps
in services. During the years of substantial Federal and local
funding, the program generally responded to the need for new
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programs by adding them to the "roster" of services that received
funding each year.
However, the 1986-87 fiscal year did not provide for this
flexibility. Federal funding for the program diminished
substantially, with 75% of General Revenue Sharing funds being
eliminated and a 15% decrease in community Development Block
Grant funds. In response, the funding rationale for the 1986-87
program emphasized sustaining currently-funded programs that
continued to prove their effectiveness in meeting community
needs. To meet this goal, city General Fund support was
increased to mitigate these cuts. The impact on approved
grantees was a second year of fiscal stability at a time when the
Federal, state and local funding picture was in flux.
The Funding Review Process
Each year's process begins with assessment activities conducted
by city staff, City Commissions such as the Social Services
Commission, Housing Commission and Commission on Older Americans,
and community residents through structured workshops and forums.
In the 1986-87 Community Development Plan, a number of study
areas were identified for review by these groups. They included:
youth services, services to the disabled, paratransit services,
community hotlines, legal services and affordable housing.
During the year, services in these areas have been inventoried,
issues researched and input received from community residents at
a Community Needs Forum, entitled lilt's Time To Plan, II held in
November of 1986.
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An additional activity for citizen comment occurs at a pUblic
hearing before the Council as required in Ordinance 1261 which
established polices and procedures for the CDBG program. This
hearing is intended to allow citizens to comment on specific
CDBG-funded programs and their effectiveness in Fiscal Year
1985-86 and is scheduled to coincide with council review of the
funding rationale for Fiscal Year 1987-88.
The purpose of the funding rationale is to set a basic direction
for the coming year's funding allocation process and to serve as
a guide for Ci ty staff, city commis s ions and city Council in
making difficult funding decisions. Once the rationale is
approved, "Requests for Proposals" are issued, and proposals are
received and reviewed through a series of activities involving
Ci ty staff, commissions and interested residents. Final
recommendations are proposed in a Community Development Plan
which is approved by the City Council each May.
DISCUSSION
1987-88 Funding Rationale
The funding rationale for Fiscal Year 1987-88 must not only
address the realities of decreased Federal funding but also the
need to reassess the funding mix and funding priorities after two
years of relative stability for currently-funded programs. with
increased reI iance on the ci ty 's General Fund, the community
service component must effectively compete with other city
priorities for funding and, to do 50, agencies must clearly
demonstrate the effectiveness of their programs in meeting
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current critical needs of Santa Monica's residents. For
Community and Neighborhood Improvement Projects, which continue
to rely primarily on decreased CDBG funds, it is becoming
increasingly difficult to sustain the housing and revitalization
projects that have been assured funding in the past.
In response, the funding rationale for Fiscal Year 1987-88
proposes a competitive process to ensure that the City has the
flexibility to allocate its funds, at whatever level, to the most
needed and effective services. While at first qlance it may
appear imprudent to propose a competi ti ve process in 1 ight of
funding uncertainty, in reality it is especially important, with
limited funds, to ensure that the most cost-effective and
non-duplicative services are being supported.
Because of the different requirements and functions of the the
Communi ty Service proj ects and the Community and Neighborhood
Improvement Projects, separate sections are devoted to each
component.
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Community service Projects
With the final elimination of the General Revenue sharing Program
on October I, 1986, the funding base for Community Service
Projects shifts to primary dependence on the General Fund with
additional support from COBG Public Service Funds (15% of each
year' s entitlement), and Propos i tion A funds for para transi t
services. COBG Public Service funds and Proposition A funds
should remain relatively stable in the coming year. However, the
total amount of funds to be made available from the City' General
Fund can not be determined unti 1 the City's overall fiscal
situation is assessed as a part of the fiscal year 1987-88 budget
process. The rationale assumes that, if possible, the total
funding base will be sustained at the current level. However, it
is important to note that maintaining this support will be tied
to the City's ability to generate additional general revenues
during the coming year which are required to meet these and many
other funding needs. Given this uncertainty, yet with the
commitment to support important and needed services, the
following guidelines are proposed.
(1) Funding decisions will be based on the premise that the City
should provide financial support, in concert with other
funding entities, to a broad range of critical services and
target groups. The following matrix will be used to ensure
that a continuum of services are available in the community.
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TAP GET AREAS
TARGET GROLJ?S
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COUNSELING AND ADVOCAC'l
INDEPENOENT LIVING SERVICES
m;ALTH CAll!: SERVICES
LEGAL SERVICES
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CRIME PREVn,'TION
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(2) The process will be open and competitive and not restricted
to currently-funded programs or grantees. While allowing new
applicants to propose services, this process is not intended
to raise expectations for a wide range of new programs.
Rather, it is intended to ensure that available resources are
allocated to the most effective services that meet the most
pressing needs.
(3) Funding decisions will be based an agency's ability to
demonstrate that the proposed program meets a critical need
in Santa Monica and that the proposed agency is the most
appropriate and effective entity to operate the program.
(4) Funds should be allocated to programs where city funding is
critical to the success of the operation and where
alternative sources of funding are not available.
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(5) Funding decisions should ensure services to those most in
need -- individuals who (a) lack an adequate income, b)
experience language or cultural barriers, (c) are physically
vulnerable, or (d) lack the informal or family support
necessary to provide for basic human survival needs.
(6) In the aggregate, funding decisions should ensure that city
funds are used cost effectively and do not promote
duplication of services. Therefore improvements to service
delivery areas that are currently fragmented or duplicative
will be strongly encouraged by giving special consideration
to programs that are collaborative in nature and are proposed
through joint or coordinated proposals.
(7) Priority for any service enhancements will be given to those
programs that comprehensively plan for the needs of those
they intend to serve, provide a high level of financial and
in-kind resources from non-City sources, and provide a plan
to serve as a catalyst for increased leadership and growth in
these underserved areas. It is important to note, however,
that if service enhancements are made, this will necessitate
corresponding reductions in currently funded programs.
(8) Ongoing assessment activities indicate that certain service
areas are in particular need of coordination or enhancement.
Special consideration will be given to innovative proposals
that:
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o provide for the effective coordination and possible future
consolidation of youth counseling services, especially
on-site counseling programs at Santa Monica's schools.
o provide for a continuum of services for Santa Monica's
low-income and minority youth, emphasizing programs that
provide positive and preventative activities.
o propose coordinated and enhanced services to disabled
residents of Santa Monica, emphasizing programs that enable
individuals to live independently.
o provide for improved t1information and assistance" services
to those residents that experience the most difficulty in
learning about and using available social services.
(9) In reviewing individual proposals, the following minimum
eligibility requirements and selection criteria will be used:
Minimum Eligibility Requirements
o The applicant has non-profit, tax-exempt status under
Section 50l(e) (3) of the Internal Revenue Service Code or
section 2370l(d) of the California State Franchise Tax Code
at the time of application.
o The grantee is in compliance with the civil Rights Act of
1964 and the Rehabilitation Act of 1973, as amended, which
bars discrimination in the hiring of staff or provision of
services on the basis of race, religion, sex, age, national
origin, disabilities, or sexual preference; and provides
assurances that it will comply with all Federal and local
provisions regarding political and lobbying activity.
o The grantee is a private, non-profit organization located
in or serving citizens of Santa Monica.
o The grantee has formal approval of its Board of Directors
to submit a proposal for City support.
Selection Criteria
Each eligible project will then be assessed according to the
extent to which:
o The organization clearly identifies its target population
in Santa Monica and fully documents the need for proposed
services.
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o The service is appropriate for the target population to be
served.
o Appropriate access to services is provided in terms of
geographic location, hours of operation, convenience to
clients, physical accessibility, bilingual capability and
cultural sensitivity.
o The organization effectively serves individuals most in
need of these services including minority, low-income and
disabled residents.
o The organization shows strong evidence of interagency
cooperation and sharing of resources with other community
groups and agencies in order to maximize resources.
o The organization provides evidence that the proposed
program does not duplicate other services in the community.
If a number of similar programs exist, the organization
fully justifies the existence of independent programs
instead of one consolidated service.
o The organization exhibits a history of effectiveness and
success in the delivery of the proposed services to the
community.
o The program is supported by qualified administrative and
program staff to ensure consistent and effective delivery
of services to those in need.
o The organization is guided by an active, broad-based Board
of Directors with evidence of providing appropriate
leadership to the organization.
o The program shows community support through its ability to
procure community resources (e. g . , community fundraising,
use of volunteers, donated services) .
o The organization has maximized opportunities for funding
from a range of non-City sources to make up a minimum of
20% of its projected budget, thus lending to its financial
stability and the ability to sustain itself as a part of
the community services network.
o If a new service, the organization provides a high level of
matching funds for the proposed service from non-City
sources, exceeding the 20% minimum.
o The level of funding requested is consistent with the level
of service provided to Santa Monica residents and city
funding is critical to the success of the program.
o The organization proposes a budget that reflects
cost-effective administrative and program activities.
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Community and Neighborhood Improvement Projects
Based on national priorities of the Community Development Block
Grant program, this component prioritizes the use of available
funds for housing projects and other community development
activities that benefit lower income residents and lower income
neighborhoods. In the past, this component has provided core
funding for the City's affordable housing efforts, has supported
the acquisition and rehabilitation of facilities for social and
community services, and has enhanced lower income neighborhoods
through revitalization activities. Unlike the Community service
component, it is more targeted in scope and supports a small
number of more capital-intensive projects.
Fiscal Year 1986-87 represented a difficult year for this
component as a result of a 15% decrease in the City's CDBG
entitlement. Due to reprogrammed funds from prior years,
however, the City was able to sustain all currently funded
projects, although some were at reduced levels. While it is
projected that the Fiscal Year 1987-86 entitlement will not be
further decreased over the current year, virtually all prior year
funds are programmed to current proj ects . Therefore, it is
projected that there will be approximately $200,000 less for this
component in the coming year. Obviously, hard decisions will
have to be made. Correspondingly, the following key elements
should guide the funding process for Community and Neighborhood
Improvement Projects.
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(l) Funding decisions will be based on the premise that highest
priority should continue to be given to provide critical
support to the City's affordable housing program. However,
these decisions should be made in the context of the total
hOlls ing program, combining CDBG funds with other sources,
whenever possible, in order to develop a consistent funding
strategy.
(2) Based on assessment activities throughout the year, special
consideration will be given to proposals that address the
housing needs of very-low income, as well as lower or
moderate income, persons and families in Santa Monica.
(3) other eligible capital projects will be considered if they
can be shown to meet a clearly identified and critical
community need.
Special consideration may be given to
eligible projects that would benefit disabled residents
through the removal of architectural barriers in social
service facilities.
(4) In making difficult funding decisions, the following minimum
eligibility requirements and selection criteria will be used:
Minimum Eligibility Requirements
o If the project is to be implemented by an outside agency,
the agency meets the basic eligibility requirements for
grantees detailed on page 9 of this report.
o The project primarily benefits low and moderate
persons by ensuring that at least 75% of its
beneficiaries are of low or moderate income; or,
income
direct
o The project primarily benefits low and moderate income
persons by ensuring that at least 51% of the population of
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the project area benefited by the project are low and
moderate income persons.
o The project meets Federal eligibility definitions for
CDBG-funded projects.
Selection criteria
Each eligible project will then be assessed on the extent to
which:
o The proj ect will result in long-term benefit to low and
moderate income residents.
o The project provides evidence that the proposed program or
proj ect does not dupl ica te other programs or proj ects in
the community.
o The proposed funding structure leverages City funds with
non-City funds.
o The project shows long-term potential for a cash return on
the CDBG investment and does not require ongoing CDBG or
government support for maintenance.
o If the project is to be implemented by an outside
organization, the proposal includes documentation of
current administrative capacity to implement community
development projects and to sustain the project operations
throughout the life of the project, as well as experience
with similiar government-assisted programs.
o The implementing agency presents a program that includes
both administrative procedures and a viable implementation
plan for timely execution of the project.
o For any housing rehabilitation programs, the program
conforms to HUD program performance standards with an
administrative cost cap of l5% of the total funds
requested.
o For one-time housing acquisition/rehabilitation projects,
the total project cost is reasonable with the subsidy
request not exceeding 33% of the total development cost or
$35,000 per unit, whichever is less; at least 75% of the
existing tenants affirm in writing interest in
participating in the program; the project benefits a high
percentage of very low and low income households.
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Funding Mechanisms
Given the wide range of projects and organizations funded by the
Community Development Program, it is appropriate to utilize
alternative funding mechanisms to channel funds in the most
appropriate way. Agencies awarded funding may be
well-established with a solid track record of providing services.
other agencies may be recently created in order to respond to
emergency needs or grass-roots issues. Funding may be of a
one-time nature for a capital project and not require operating
funds or funding may require a commitment to sustain funding for
a period of time. In response to this diversity, it is proposed
that the following range of mechanisms be used for Fiscal Year
1987-88.
(1) one-time Capital Support: The most straightforward funding
mechanism for the program is a one-time capital grant for a
project that does not require operating funds for its
support.
(2) Renewable Operating Grants: Grantee operating Agreements
have been the traditional mechanism used for non-profit
agencies receiving operating funds from the city. Under a
Standard Grantee Agreement, the agency is awarded a grant
amount and agrees to perform a range of activities within a
specified budget. It is proposed that this be continued with
the option to include a renewal clause for specific programs.
In an attempt to ensure stable, core funding for those
agencies that have a proven record in providing needed
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services, the standard grantee agreement may be modified to
include a provision that the organization be prioritized for
renewed Fiscal Year 1988-89 funding subject to availability
of funds and grantee performance as documented in a renewal
application.
It is important to note that this does not result in a
guarantee of two year funding for the agency but does
prioritize specific agencies for funding in the second year.
This mechanism may be appropriate for effective, proven
agencies or for new programs that require time for start-up
and evaluation. It does, however, result in limited
competi tion in the second year, depending on the number of
grantees eligible for and receiving renewal funding.
This mechanism, used successfully by a number of cities,
acknowledges that: (1) community needs most often remain
stable over a period of two years; (2) major changes to the
"roster" of funded agencies rarely occur on an annual basis;
and (3) a two-year period of stability for effective agencies
will allow them additional time to concentrate on service
delivery and enhancing revenues from other sources.
(3) Contingency Contracts: For those agencies whose mission is
to meet critical community needs, yet are experiencing
difficulty in developing the leadership, administrative or
programmatic capability to meet those needs, funding may be
provided through a "contingency contract" which provides
specific conditions that must be met in the coming year. If
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not met, funding will not be considered in the next year.
This contract may be used where other incentives for
improvement have not been successful but there is evidence
that the organization may be able to improve in the time
period negotiated. This is especially useful when there is
currently only one agency available to provide a very needed
service and, absent that agency, a gap in the provision of
that service would occur.
(3) Performance-Based Contracts: At times, it may be appropriate
to tie the actual amount of funds awarded to the actual
l1units of service" provided. A "cost per unit of service It is
negotiated and funds are disbursed based on actual
performance, not to exceed a total amount approved by the
City Council. While it is appropriate in only very specific
circumstances, it may prove useful with large agencies,
serving a wide range of clients and geographical areas, to
ensure that Santa Monica funds are targeted appropriately.
(4) Funding Set-Asides: Ideally, a clearly stated funding
rationale and "Request for Proposalslt will result in a range
of competitive proposals to meet stated needs and selection
criteria. However, in the event that proposals do not
adequately address a stated need or do not propose the
appropria te program des ign, funds may be set aside until
such time as an appropriate program design can be developed
and implementing agency identified. This is especially
useful in instances where services are not being provided in
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a critical area, and funding should remain targeted to that
area and not obligated elsewhere.
Funding Timeline
Based on Federal and local requirements for the program and
consistent with the City's Fiscal Year 1987-88 budget process,
the following timeline will be used to implement the funding
process.
Community Needs Forum -- "It's
Time to Plan"
November 13, 1986
council Approval of CD Program Funding
Rationale
January 13, 1987
"Requests for Proposalsll Available to
the Public
January 16, 1987
Workshop on Proposal Preparation
Deadline for Submittal of Proposals
January 30, 1987
February 27, 1987
Applicant Presentations to city staff
and city Commissions
March lO through
April 18, 1987
Community Development Plan Draft
Available to Council, Public and
City commissions
April 24, 1987
Administrative Hearing on Community
Development Plan Draft
May 7, 1987
Transmittal of Proposed Community
Development Plan to council
May 11, 1987
Budget Hearings and council Approval
of Community Development Plan and
CDBG statement of Objectives
May 26, 1987
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BUDGET/FINANCIAL IMPACT
Recommendations included in this report will have no budget or
financial
impact
on
the
current
year's
budget.
All
recommendations
for
specific
funding
appropriations
and
allocations will occur in the context of the Fiscal Year 1987-88
budget process.
RECOMMENDATIONS
city staff recommends that the City council (1) hold the
scheduled public hearing; (2) approve the funding rationale and
funding mechanisms as specified in this staff report; and (3)
authorize the City Manager to implement the grant funding process
within the timelines specified.
Prepared by: Barbara Stinchfield, Community Development Manager
Department of Community and Economic Development
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CITY OF SANTA MONICA
SOCIAL SER VICES COldldISSION
-
an' HALL, 1685 MALV STREET. SASH MOA7CA, CALIFOR}",7A 90401-3295
TO:
Mayor and City Council
FROM:
social Services Commission
SUBJECT:
Community Development Grant Rationale FY87-88
For the past few months the Social Services Commission has been
involved in discussions with staff concerning the Community
Development Grant Rationale for FY87-88. We have had the
opportunity to review and discuss the proposed CD grant rationale
at a special meeting of the commission held January 9, 1987.
Each of the questions that the commission members had were
satisfactorily addressed by staff and therefore, the Social
Services Commission adopted the following action:
A motion was introduced by Commissioner Dutton, second by
Commissioner Gewertz to (1) support the FY87-88 community
Development Grant rationale, and in particular endorse the
proposed actions which include:
a. renewable operating grants for selected grantees,
b. open-competitive process for interested organizations, and
c. increased cost-effectiveness of agency's program delivery
and (2) to incorporate the Social Services comments where
appropriate in the development of the Request for Proposal (RFP).
A voice vote was taken.
Ayes: 6
Noes: 0
The motion passed
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