SR-7-C (2)
e
· ~;7o<;
;? t?~ -- ~ crz-
C/ED:CN~:BS:grsrfy8g
Council Me~ting 1/10/89
Santa Monica, California
TO: Mayor and City Council
FROM: city staff
SUBJECT: Recommendation to Hold Community Development Block
Grant Performance Hearing and to Approve the FY1989-90
Community Development Program Funding Rationale
INTRODUCTION
This report presents a funding rationale for the City's FY1989-90
community Development Program for approval by city council. This
rationale will serve as a guide to City staff and the City
Council in soliciting proposals and allocating funds for the
coming year's program. The report further recommends that the
Ci ty Council hold a public hearing on the FY1987-88 community
Development Block Grant-funded portion of the program as required
by the City's local Community Development Block Grant Ordinance.
It also recommends that the city Council direct the city Attorney
to make changes in this ordinance, incorporating proposed changes
to the funding process as described later in this report.
BACKGROUND
Each year the city's Community Development Program allocates up
to approximately $5 million in local and Federal funds for
operating grants to non-profit human service organizations
(Community Service Projects) and support for capital projects
- 1 -
7-C
'AN 1 0 1989
"
e
e
benefiting lower income residents and neighborhoods (Community
and Neighborhood Improvement Projects) ,
In the past several years, the program has grown substantially in
size and scope and is now recognized as a major source of support
for important, ongoing community programs.
Dur ing the current
year, 36 community Service Projects ($2.947 million) and 8
Community and Neighborhood Improvement Projects ($2.399 million)
were approved by the city Council. The breakdown of support for
FY1988-89 is shown in the table below:
I Total COBG General prop A j Re'ltal I !>edevel
I i
fund I Ret>ab Age'lcl
\ ,
Commun~ty & Ne~ghborhood $196,000 $ 67,500
Improvements $2,399,227 $1,989,8]2 $ 145,895 -0-
Commun~ty Servlces $2,947,141 $ 143,802 $2,460,805 $ 342,534 -0- -0-
$5,346,368 $2,1:33,634 $2,606,100 $ 342,534 $196,000 S 67,500
In addition, the 1988-89 program received one-time support from
the McKinney Homeless Assistance Act in the amount of $295,378
and $125,000 in Snyder Development Agreement funds to assist in
the renovation and operation of a new homeless facility for Ocean
Park Community Center.
The Community Development Program has met a number of important
goals since its inception:
(1) it has supported a wide range of
human service, housing and community improvement projects for
residents most in need; (2) it has provided stability to a core
- 2 -
.
e
group of non-prof i t service providers in an era of substantial
decreases in funding from other governmental sources~ and, (3) it
has fostered a number of innovative programs to respond to unmet
needs and gaps in services in Santa Monica.
The funding rationale for FYl9S8-89 set forth a non-competitive
process whereby only programs funded in the prior year were
eligible to reapply. This was the result of a two-year funding
cycle instituted in FYl987-88 which was designed to offer funding
stability to those agencies exhibiting continued effectiveness in
achieved
needed programs. Now approaching the final
two-year cycle, this multi -year approach has
goal of providing agencies with much-needed
the delivery of
months of this
the
stability and time for both agencies and City staff to
concentrate more heavily on longer-term planning and needs
assessment activities.
FYl989-90 will represent "year I" of the next two-year cycle.
Therefore, the funding rationale proposed in this report will
serve as a basis not only for the coming year but for FYl990-9l
as well. Approval of the rationale does not preclUde changes or
additions in the second year if a critical need arises but does
serve as the primary tool for allocating available resources
during the entire cycle.
As a result, city staff, City commissions and interested
community members have seriously considered community needs to
develop a set of priorities to guide the City Council on how best
to allocate the range of funds falling under the Community
- 3 -
e
e
Development Program. The development of community development
priorities is a complex and ambitious planning task, given the
multitude of housing and human service needs in the community and
the limited resources available to meet them. However, through
meetings with City Commissions and other advisory groups, input
from the annual community Needs Forum, and formal planning
studies conducted during the year (this year focusing on youth,
legal services, and information and referral), patterns have
become evident. It is from those patterns that priorities have
been developed. The following section outlines those proposed
priorities in the context of the two program components:
Community Service Projects and community and Neighborhood
Improvement Projects.
DISCUSSION
I. Community service Projects
As communities nationwide enter the final year of this decade, it
is clear that the role of the Federal government in addressing
community service and human service needs has changed
dramatically since the 1960's and 1970's. While the expectation
may continue that it is the Federal obligation to play the major
role in supporting the social needs of its citizens, in the
reality of the 1980's this obligation has decreased
substantially, In response, communities like Santa Monica have
been faced with a new role -- that of a major funder of human
services to those in the community that are most in need.
- 4 -
e
e
In the Fall of 1982, the City Council responded by approving a
policy on Human Services which asserted that the City, as the
closest unit of government to its residents, must play a maj or
role in the delivery of human services.
Much more than a
symbolic gesture, the Council has accordingly allocated resources
to that end, as well as encouraged City-funded agencies to also
increase their ability to raise funds from other sources. The
result has been a high degree of leveraging of City dollars --
currently for every dollar of city funds allocated, three dollars
are contributed from other sources.
The continuing goal of the Community Service Project component is
to support the continuation and strengthening of a comprehensive,
accessible and responsive network of human services in the
community.
Funded categories of service for the current year
include:
Emergency Services,
Independent Living Services,
Citizen Participation, Legal Services, Counseling/Mental Health,
Employment/Childcare, and Health Services.
City of Santa Monica
Community Development Program FY 88-89
Community Service Projects
Total Budget $2.947,141
Independen' L,v'ng Serv'ces S709994 24 ,,-
. gency ServIces 1853 769 29~
'"
l
Cou"sehng/l.4enlOI Heolt" 1292812 9 9't
Employ"'..nl C",ldcore
Services $,)04 097 10 3'?
C 11~~" Dartor,pat.on S411; 0;09 , -l 1 't
- 5 -
e
e
These services have been targeted to a broad range of groups
including seniorsl youth 1 families, adults 1 women, homeless
individuals and residents with disabilities.
SUmmary of rU'ldlng Levels
by Target Population (1988-89)
Seniors/Fro'! 29 7-;
111\les 24 6
\ D.sabled 6 1-=
,
. ~
\,.
~-
;!..
"\
Iher 16 2--::
..'
Homeless 23 5":
FY 1989-90 Level of Funding:
projected revenue sources for
1989-90 community Service Projects include Federal Community
Development Block Grant (CDBG) funds (15% of each year's CDBG
entitlement may be allocated to community services), County
proposition A funds for paratransit services, one-time developer
fees paid to the city to support homeless projects and the city's
General Fund.
The City's CDBG entitlement is expected to be reduced by
approximately 5% overall, which results in an approximate $301000
decrease in CDBG funds available for community service Projects.
proposition A funds are projected to remain relatively stable in
the coming year at approximately $342,000.
Developer fees for
homeless
programs
total
approximately
$175,00
for either
community
Service
projects
or
Community
and Neighborhood
Improvement Projects. These fees are special one-time sources of
- 6 -
e
e
revenue and can not be considered a stable and reliable source of
City income for the long-term support of eligible homeless
projects.
While the total amount of funds to be made available from the
City's General Fund can not be determined until the City's
overall FY1989-90 budget process is underway, this proposed
rationale assumes that, if possible, the total funding base will
be sustained at the current level with a 4% cost of living
increase, consistent with the standard increase to City
departmental budgets. However, it is important to note that
maintaining this support will be tied to the city's ability to
generate revenues which are required to meet these and many other
important funding needs.
Assuming the level of support indicated from the revenue sources
listed above for Community service Projects, there will be
approximately $3.2 million available for FY1989-90 projects.
proposed Community service project Funding Rationale: The City
of Santa Monica is unique in its strong commitment to dedicate
its own resources in support of non-profit services aiming to
improve the quality of life for its residents. city staff
recommends that the allocation of these resources for the next
two years should be guided by the following major key elements:
(1)
Given the
effective
residents
city's long history of providing stability to
ongoing programs that serve those Santa Monica
most in need, funding emphasis will be put on
- 7 -
e
e
continuing to support programs which have a history of
providing quality services within Santa Monica.
(2) The process, however, will be open and competitive in order
to also encourage the development of innovative programs to
respond to new, unmet or emerging needs in the community.
Therefore, the City will invite proposals for new programs
which are creative and innovative in their approach and
design. In particular, the City will encourage programs
which are joint ventures: utilize existing programs as a part
of their service delivery: leverage City funds with other
sources of funding: and target persons who are no or
low-income, minority, disabled or otherwise underserved.
(3) Requests from currently-funded grantees for one-time
expenditures or projects that do not require sustained
funding in future years will also be considered. Priori ty
will be given to those agencies requesting $5,000 or less for
one-time items such as equipment purchases, professional
services or activit~es that will improve the agency's
efficiency, self-sufficiency, or ability to collaborate with
other agencies in the areas of administration, planning,
outreach or service delivery.
(4) Support to neighborhood associations will be considered as a
part of the City's regular budget process and will not be
included in the competitive process for human
service/community service agencies.
Instead, neighborhood
associations will be encouraged to carefully assess their
- 8 -
fa
e
programmatic and staffing needs and channel their requests
through the Santa Monica Neighborhood Support Center,
consistent with Council direction that the support Center
serve as the umbrella agency for city funding of neighborhood
associations. A funding request will then be submitted by
the Neighborhood Support Center to the city as a part of the
City's regular budget review process.
It is important to note that, absent a large infusion of
additional funds for community service Projects, enhanced or new
Community Service projects will necessitate a corresponding
funding reduction in currently-funded programs. Therefore, the
process will be highly competitive and require careful
documentation by applicants of need and program effectiveness.
In looking at the range of service areas and target groups to be
addressed, the community input and staff review process has
yielded the following areas which deserve priority consideration
during the next two-year funding cycle:
(1) Youth services: The City Manager's Committee for Youth has
been meeting for the past six months to evaluate the status
of the youth services network in Santa Monica. Its mandate
is to provide an assessment of the needs of Santa Monica r s
youth and to make recommendations concerning the role of the
Ci ty and other enti ties relative to youth services. The
Committee's report, due for completion in the Spring of 1989,
will set forth a long-term vision of how Santa Monica can
provide a positive and supportive community environment for
- 9 -
e e
youth and families. It will further suggest how the network
of youth services can be strengthened, enhanced and improved.
Given the comprehensiveness of the study and the range of
recommendations to be included in it, it is probable that
recommendations will have to implemented over several years.
It is proposed that recommendations that have budget
implications affecting City Departments and city services be
reviewed as a part of the FY 1989-90 budget process. Given
.
the complexity of implementing recommendations that involve
other entities such as the school district and non-profit
organizations and the expressed desire of other funders to
join efforts in a long-term effort to enhance non-profit
youth services, it is recommended that funding changes
impacting non-profit youth services not be made until Year 2
(FYl990-9l) of this funding cycle.
It is proposed that
renewal grants be given to currently-funded programs in the
coming year based on a renewal application which documents
their continued effectiveness. Applications in Year 2 will
allow for enhanced, new and collaborative programs.
(2) Housing Support Services:
The need to closely link the
housing needs and human service needs of low-income residents
has never been more critical. The lack of affordable housing
for low-income elderly, homeless persons, and residents with
disabilities compounds the efforts of human service providers
to assist these clients. Proposals will be encouraged that
address this joint need, especially proposals that are
- ~O -
e
e
collaborative or coordinated between agencies serving these
groups.
(3) Money Management Services: consistent with the community
Development Program's goal to fund services that allow
residents to live independently in the community, proposals
will be encouraged for services that provide money management
for the frail elderly, homeless persons or residents with
disabilities. Again, collaborative or coordinated proposals
will be encouraged.
(4) Expanded Legal services: Based on the Council-directed legal
services evaluation performed during the current year,
proposals will be encouraged that provide for domestic
relations legal services (domestic violence and abuse, child
support and related services). Currently these services do
not exist for no or low-income residents.
(5) Employment services for Persons with Disabil i ties: Current
City support in this area is limited. Proposals will be
encouraged that focus on job placement and related
activities, including job readiness, resume writing,
interviewing techniques and follow-up services.
Addi tionallY, proposals should clearly indicate their
intentions to educate employers, collaborate with other
agencies and work with the city's Office for the Disabled and
School District's Workability Program.
(6) AIDS outreach, E~ucation, Support Services: Aside from
limited educational activities, the City's support for AIDS
- 11 -
e
e
services has been minimal. However, a need exists for the
City to consider ways to respond to the AIDS crisis,
including support to prevention and intervention efforts,
without duplicating an already extensive network of AIDS
services in Los Angeles.
Because of the limited needs
assessment available to City staff to date, proposals will be
encouraged that clearly document specific needs in Santa
Monica and propose programs accordingly.
Programs may
include the development of education/prevention activities
for targeted populations, outreach efforts to high risk and
underserved populations (e.g., homeless persons); and joint
ventures or collaborations between established AIDS programs
and existing Santa Monica agencies.
In reviewing 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 501(c) (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 applicant 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, AIDS, political affiliation or
beliefs, or sexual preference; and provides assurances that
it will comply with all Federal and local provisions
regarding political and lobbying activity.
o The applicant is a private, non-profit organization located
in or serving Santa Monica or provides a rationale for
expanding services to Santa Monica.
o The applicant has formal approval of its Board of Directors
to submit a proposal for city support.
- 12 -
e
e
Selection criteria
Each eligible project will then be assessed according to the
extent the organization:
o provides effective and responsive services to clients most
in need;
o if a currrent city grantee, meets the specific program
performance standards for FY1988-89;
o addresses a need that is clearly documented;
o provides a high level
appropriate geographic
physical accessibility,
sensitivity;
of access to services including
location and hours of operation,
b i -1 ingual capaci ty , and cultural
o effectively serves minority, low-income, and residents with
disabilities;
o does not duplicate services, rather coordinates and
collaborates with other agencies, resulting in improved
direct services delivery and elimination of unnecessary
service duplications;
o has a procedure
effectiveness and
necessary;
for continually evaluating program
proposes program improvements as
o provides a rn1n1mum of 20% of the total budget for the Santa
Monica program from non-City sources, thus lending to the
financial stability and the ability to sustain itself as
part of the community services network:
o provides a cost-effective budget that is consistent with
the amount of service provided to Santa Monica residents:
o demonstrates fiscal and administrative capacity which
supports and enhances program effectiveness and the ability
to meet program goals;
o exhibits a high level of community support through its
ability to retain a broad-based Board of Directors and to
procure community resources (e.g., fundraising, use of
volunteers, donated services).
Proposals for one-time exp~nses or projects will be
assessed on the extent that:
- 13 -
e
e
o the proposed expenditures are, in fact, non-recurring;
o documentation can be provided to substantiate the amount of
the proposed expenditures;
o the organization has fully explored alternative means of
funding;
o the proposed expenditures will have a documented impact
upon improving the management/administrative capability
and/or service delivery of the agency, or encourage
collaborative efforts among agencies.
II. Community and Neighborhood Improvement (CNI) Projects
Based on national priorities of the Community Development Block
Grant (CDBG) 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. The
Community and Neighborhood Improvement component relies almost
entirely on Federal CDBG funds and a limited amount of Federal
Rental Rehabilitation, Redevelopment Agency funds and the city
General Fund. Additionally, there is a limited amount of funds
paid to the City by developers in support of homeless proj ects
which are available as matching funds for eligible eNI homeless
project activities.
- 14 -
-
e
FY1989-90 Level of Fundinq: Since 1982, the CNI component has
experienced a steady reduction in COBG entitlement funding. The
reductions in recent years have been due primarily to federal
efforts (Gramm-Rudman) to reduce the overall federal budget. The
cuts in funding during this period have been significant
(approximately 32% or $450,000 over the past four years) which
has resulted in a corresponding reduction in the number and scope
of proj ects. The city has attempted to minimize the impact of
the reduction in funding by utilizing unexpended carryover funds
from completed CDBG-funded projects and Redevelopment Agency
repayment of loans from prior years to support current projects.
It is projected that the FY1989-90 CDBG entitlement may be
reduced by as much as 5% (or approximately $48,OOO), again due to
Gramm-Rudman federal budget cuts. This anticipated reduction
follows a decrease of 5.3% ($53,300) experienced last year. In
addition, virtually all prior year COBG funds are programmed to
current projects, thus eliminating an additional revenue source
used in the past. As a consequence, the projected level of CDBG
support for FY89-90 CNI projects is expected to be approximately
$640,000 -- a substantial reduction over prior years.
Additionally, the City has been notified that the Federal Rental
Rehabilitation funds have been reduced by approximately 25% or
$50,000. The projected level of funding for the coming year is
$146,000. The longer-term futures of the CDBG and Rental
Rehabilitation programs are still uncertain. There still are
various unconfirmed proposals for further reductions and
targeting in FY1989-90 and beyond.
- 15 -
.
tit
The proposed funding rationale assumes that contributions from
the General Fund ($145,895) and Redevelopment Agency ($67,500)
will be sustained at current FY198B-B9 levels.
Therefore, with the anticipated 5% reduction in CDBG funds and
the reduction by 25% of Rental Rehabilitation funds, the City
faces a severe problem in maintaining the level of funding for
current programs, let alone considering new proj ects in the
coming year. Obviously, hard decisions will have to be made.
proposed FY1989-90 Funding Rationale: Given the limited amount
of funds available for eN! projects, the following key elements
should guide the funding process in FYl989-90:
(1) 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
housing program and all available housing funds and on the
extent to which currently appropriated funds are being
utilized.
(2) Special consideration will be given to proposals that address
the transitional housing needs of homeless persons.
Proposals are encouraged that include plans to apply for
McKinney Act Transitional Housing funds in conjunction with
its proposal to the City for limited support.
(3) other eligible capital projects will be considered if they
can be shown to meet a clearly identified and critical
community need. However, applicant agencies should be aware
- 16 -
e
e
of the limited funds available and submit proposals that
provide for a high level of matching funds from other
sources.
In making difficult funding decisions, 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 501(c) (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 applicant is in compliance with Title VI of the civil
Rights Act of 1964 and section 504 of the Rehabilitation
Act of 1973, as amended, which bars discrimination in the
hiring of staff, or that persons be denied the benefits of,
or be excluded from the participation in provision of
services on the basis of race, religion, sex, age, national
origin, disabilities, AIDS, political affiliation or
beliefs, or sexual preference; and provides assurances that
it will comply with all Federal and local provisions
regarding political and lobbying activity.
o The applicant is a private, non-profit organization located
in or serving Santa Monica.
o The applicant has formal approval of its Board of Directors
to submit a proposal for City support.
o If the project is to be implemented by an outside agency,
the agency meets the basic eligibility requirements for
grantees listed above.
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 proj ect primarily benefits low and moderate income
persons by ensuring that at least 60% of the population of
the proj ect area benefited by the proj ect are low and
moderate income persons.
o The project meets Federal eligibility definitions for
CDBG-funded projects.
- J.7 -
fa
e
Selection criteria
Each eligible project will then be assessed on the extent to
which:
o the project clearly identifies its Santa Monica target
population and documents community need;
o the project will effectively outreach and serve minority,
low-income and residents with disabilities and other groups
most in need of services:
o the implementing agency is guided by an active. broad-based
Board of Directors with evidence of providing appropriate
leadership to the organization;
o the implementing agency proposes a budget that reflects
cost-effective administrative and project activities;
o the project will result in long-term. benefit to low and
moderate income residents;
o the project provides evidence that the proposed program or
project does not duplicate other programs or projects in
the community;
o the proposed funding structure leverages City funds with
funds from other sources;
o the project shows long-term potential for a cash return on
the COBG investment and does not require ongoing CDBG or
City 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 similar 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 if a currently-funded project, the agency requesting
funding fully justifies additional support based on timely
expenditure of currently appropriated funds;
o for any housing rehabilitation programs, the program
conforms to HUn program performance standards with an
administrative cost cap of 15% of the total funds
requested;
- 18 -
e
e
o for one-time housing acquisition/rehabilitation and
development projects, the total project cost is reasonable
with the subsidy request not exceeding $35,000 per unit, at
least 75% of the existing tenants affirm in writing
interest in participating in the program, and the project
benefits a high percentage of very low and low income
households.
Funding Timeline
Based on Federal and local requirements for the program and
consistent with the City's FY1989-90 budget process, the
following timeline will be used to implement the funding process:
Community Needs Forum
Discussions regarding Funding Rationale with
City commissions
1.2-3-88
12-88
CDBG Performance Hearing by City Council
council Approval of CD Program Funding Rationale
1-10-89
1-10-89
"Requests for Proposals" Available to Public
1-13-89
Workshop on Proposal Preparation
Deadline for Submittal of Proposals
1-25-89
2-29-89
Transmittal of Proposal Summaries to Commissions
3-6-89
Proposed Community Development Plan Available to
Council, commissions and Public
5-1-89
Community Review Period
5-1 to
5-15-89
Transmittal of Supplemental Information
to Council
5-17-89
Council Approval of CD Plan and CDBG statement
of Objectives
5-30-89
This process differs from prior years in the following ways: (1)
it eliminates a nfirst draft" of the Community Development Plan
previously released to the public in mid-April prior to the final
proposed Plan being sent to the City Council; (2) it eliminates
- 19 -
e
e
the administrative hearing held by the City Manager to receive
input on this draft two weeks after its publication: (3) in lieu
of these activities, a two-week community review period on the
proposed Plan is scheduled for the first two weeks in May.
During this time, commissions, the public and applicants will be
invited to review the proposed Plan and submit written comments
to the City staff regarding the recommendations. In addition,
staff will be available to meet with applicants and commissions
to further discuss the Plan. Written comments will be reviewed
and transmitted to the Council with staff comments in mid-May.
This change is proposed because of the lack of involvement by the
public in the administrative review process as well as the lack
of flexibility to change initial recommendations given the
limited funding available. The proposed changes allow for
increased time for proposal review by City staff and commissions
by eliminating the first draft in April, yet still provides for a
community review period and transmittal of that input to Council,
as has been done in prior years,
BUDGETARY/FINANCIAL IMPACT
Recommendations included in this report will have no budgetary or
financial impact on the current year's budget. All
recommendations for specific funding appropriations and
allocations will occur in the context of the FY1989-90 and
FY1990-9l budget processes.
- 20 -
e
e
RECOMMENDATIONS
city staff recommends that the City Council:
(1) hold the
scheduled public hearing to hear public comment on the FY1987-88
Community Development Block Grant Program~
(2) approve the
funding rationale as specified in the staff report and authorize
the City Manager to implement the grant funding process within
the timelines specified; and (3) direct the city Attorney to make
necessary revisions to the City's CDBG Ordinance to correspond
with the funding process included in this staff report.
Prepared by: Barbara stinchfield, Community Development Manager
Rey Espana, CNI Coordinator
Julie Rusk, Human Services Coordinator
Department of Community and Economic Development
- 21 -