REPORT TO HOUSING AND HUMAN SERVICES COMMISSION
SUBJECT
Title
Evaluations and Funding Recommendations for FY 2025/26 & FY 2026/27 Community Development Block Grant Funds
Report
REPORT IN BRIEF
Every two years, the City of Sunnyvale conducts a Request for Proposals (RFP) for its Community Development Block Grant (CDBG) and HOME federal funds, as well as the General Fund Human Services funding supplement. These funds are awarded to local nonprofit organizations providing key services that meet critical City needs identified in the City’s five year federal Consolidated Plan. Through the RFP process, city staff have developed recommendations for funding for the 2025-2026 and 2026-2027 grant cycles to present to the Housing and Human Services Commission for consideration.
BACKGROUND
Sunnyvale receives an annual allocation of Community Development Block Grant (CDBG) and Home Investment Partnership Program (HOME) funds from the U.S. Department of Housing and Urban Development (HUD) to be used for community development programs and local housing strategies designed to increase opportunities for low and very low-income residents.
CDBG Eligible Projects
The City operates its CDBG Human Services funding on a two year cycle and CDBG Capital Projects on a one year cycle. Since FY 2025/26 will be the first year of the City’s CDBG funding cycle, both CDBG capital projects and human services are being considered under this RFP. In addition to the CDBG Human Services funds, the City also supplements an additional $200,000, (historically $135,000,) annually from the General Fund to further support human service grantees. All human service grantees funded through CDBG and General Funds are awarded two-year contracts contingent on available funding and performance. Should CDBG funding increase or decrease, all human service grants would be adjusted proportionately.
Each year, CDBG capital project proposals may include housing rehabilitation projects, economic development activities, public facilities and/or infrastructure, acquisition of land for CDBG-eligible projects, commercial building rehabilitation, and several other miscellaneous types of projects listed in the CDBG statutes. Each of the project types must show clear evidence that they will “primarily benefit” low-income residents; this means at least 51% of the beneficiaries of the activity must be lower-income.
Additionally, $150,000 of remaining CDBG-CV funding received in 2020 for COVID-19 relief was made available during this funding round for one time projects able to expend the funding by June 2026.
HOME Eligible Projects
Since 2022, HOME funds are now committed solely to the City’s Tenant Based Rental Assistance (TBRA) program in two-year funding contracts. The TBRA program assists income eligible households by providing rental assistance. FY 2025/26 will be the second year of the City’s HOME funding cycle, so the TBRA program will automatically enter year two of their contract. Therefore, with this RFP, no HOME funding was made available.
Final grant recommendations will be used to prepare the 2025-26 Annual Action Plan, which will be considered with the 2025-2030 Consolidated Plan by the HHSC on April 16, 2025.
EXISTING POLICY
2020-2025 HUD Consolidated Plan:
• Goal A - Assist in the creation, improvement, and preservation of affordable housing for lower-income and special needs households.
• Goal B - Alleviation of Homelessness
• Goal C - Support provision of essential human services, particularly for special needs populations.
• Goal D - Expanding Economic Opportunities
Council Policy 5.1.3 Human Services (from Purpose Statement)
The City shall make its best efforts to provide supplemental human services, which include but are not limited to emergency services, senior services, disabled services, family services, and youth services.
Sunnyvale Housing Element
Goal H-5: Equal Housing Opportunities and Special Needs
Promote equal housing opportunities for all residents, including Sunnyvale’s special needs populations, so that residents can reside in the housing of their choice.
Policy H-5.13: Housing and Services to Address Homelessness
Participate in the County Collaborative on Affordable Housing and Homeless Issues to support its efforts to prevent and end homelessness. Facilitate and sponsor the provision of permanent supportive housing for homeless people. Support local service providers that offer facilities and support services to homeless individuals and families, and persons at risk of homelessness.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a "project" with the meaning of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines section 15378(b)(4) in that is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
DISCUSSION
Available Funding for Fiscal Year 2025/26
As of March 2025, the City has not been notified of its formal 2025/26 entitlement allocation; therefore, staff will utilize the standard practice of using the previous year allocation as an estimate of funds available for the coming year, given that recent annual entitlement grants are generally consistent. Sunnyvale plans to receive an estimated CDBG funding allocation from the U.S. Department of Housing and Urban Development (HUD) in the amount of $1,043,000 and HOME funds in the amount of approximately $350,000.
In addition to the FY 2025/26 allocation, staff estimates that approximately $240,000 in CDBG program income (loan repayments) will be available during the fiscal year to supplement CDBG entitlement funds. For FY 2025/26, staff will continue to prioritize that CDBG program income be deposited into the City’s Revolving Loan Fund (RLF) as it is nearly depleted. .
The available CDBG funds are split into the following categories:
1. CDBG Public Services (Human Services)
CDBG regulations limit public services funding to no more than 15% of the City’s FY 2025/26 CDBG entitlement grant. Grants awarded from this pool of funding have a minimum grant of $25,000.
2. CDBG Administration
CDBG regulations limit administrative costs to no more than 20% of the City’s FY 2025/26 CDBG entitlement grant. The City uses a portion of administrative costs to fund Fair Housing services.
3. CDBG Rehabilitation Grants and Loans
The City manages programs providing rehabilitation loans and grants. The grants are funded by CDBG entitlement grants, and the loans and activity delivery admin are funded by a Revolving Loan Fund that is sustainably funded by the loan repayments.
4. CDBG Capital Projects
The remainder of CDBG funds, and any prior year unencumbered or leftover funds, are then allocated to capital projects, which may include activities such as: housing rehabilitation, economic development activities, public facilities and infrastructure improvement, site acquisition, and others. All project types must primarily benefit low-income residents.
Supplemental General Funds for Human Services
During the Priority Needs Hearing, the City Council preliminarily allocated $200,000 for supplemental General Funds for each of the next two fiscal year’s human services grants; confirmation of funding will occur by Council during the final budget hearing in late June.
|
ESTIMATED Funds Available for FY2025/26 |
CDBG |
|
Entitlement Grant |
$1,043,000 |
|
Prior Year Fund Balances Available to Commit |
$102,000 |
|
Program Income (PI) |
$240,000 |
|
Total Budget Allocation Estimates |
$1,385,000 |
|
Administration (Maximum 20% of CDBG grant) |
$ 208,600 |
|
Public Services Grants (Maximum 15% of grant) |
$156,450 |
|
Revolving Loan Fund (Rehab Loans) |
$100,000 |
|
Revolving Loan Fund Administration |
$140,000 |
|
Funds Available for Capital Projects |
$779,950 |
In response to the RFPs issued in December 2024, the City received two proposals for CDBG capital projects, four proposals for CDBG public services, five proposals for General Fund public services, and received one proposal for CDBG-CV public services.
FY 2025/26 FUNDING PROPOSALS
Staff Scoring Committee
The staff scoring committee met to discuss the proposals, eligibility, completeness requirements, scoring, and possible funding scenarios based on the requirements and evaluation criteria located in the RFP. In addition, the staff scoring committee, when reviewing proposals, referred to the priority needs described in the City's 2020-2025 Consolidated Plan. Each member of the committee independently scored each proposal, and their scores for each proposal were averaged. Staff then ranked the proposals by average score, as shown in Attachment 2.
CDBG Capital Project Proposals
For FY 2025/26, two capital project proposals were received as shown in Attachment 2. Both are being recommended for funding, however due to the limited amount of funding, staff is recommending them both at a lower funding amount than requested.
1. Sunnyvale Community Services (SCS) - WorkFirst Sunnyvale (WFS)
Sunnyvale Community Services has requested $513,534 for their WorkFirst Sunnyvale program for FY 2025/26. The WFS program has been CDBG funded for over ten years and is a job-training and placement program that serves the City’s unhoused population. The program proposes to engage up to 60 unhoused individuals who would receive ongoing supportive services (i.e., benefits counseling, housing search, food security, etc.), coupled with job-training and placement opportunities through WFS’s Job Squad Program and Weekly Success Meetings. Out of the 60 participants engaged each year, about 15 participants will be placed in employment opportunities. Staff recommends this proposal for funding at $469,950 due to the estimated funding available, as shown in Attachment 2.
2. Upwards Care Inc - Boost
Upwards has requested $264,000 for their Upwards BOOST Program, an economic development program that offers personalized business and technical support for small, micro-enterprise daycare providers to grow and optimize their business. Over twelve months, BOOST coaches the daycare providers, equipping them with digital tools and professional guidance to build sustainable operations and proposes to serve 33 low-to-moderate households with this program. The cost to support each microenterprise is $8,000, so staff recommends funding this proposal, decreasing the scale by increments of $8,000. Staff recommends funding this proposal for $160,000 which would serve 20 microenterprises, as shown in Attachment 2.
CDBG Human Services Proposals
The City received five total applications for CDBG Public Services funding (Attachment 2 to this report). Staff recommends funding four applications for a total of $156,450 using human services CDBG funding and one application using CDBG Administration funds (Project Sentinel Fair Housing services). Grant minimums are $25,000. Each application was strong, meets a critical community priority need, and meets all other eligibility requirements. Funding offered will be for two-year periods, as is the same for all human services programs with the exception of CDBG-CV funds.
General Fund (GF) Human Services Supplement Recommendations
Five applications were received for FY 2025/26 General Fund Human Services grants, as seen in Attachment 3. Available funding for FY 2025/26 and FY 2026/27 is tentatively set at $200,000, with total application requests at $194,000. Most of the programs that applied for this funding were ongoing programs, though we saw a new applicant this year who is being recommended for funding. Traditionally, grant maximums are $24,999 however due to the excess funding available, grantees were all offered $40,000 with all but one accepting the higher maximum grant amount.
CDBG-CV (Covid-19) Recommendations
One application was received for CDBG-CV grants, seen in Attachment 3. Available funding is set at $150,000, with the proposal applying for the entire amount. Sunnyvale Community Services’ Food Assistance Program has been funded by CDBG for several years, including during the Covid-19 pandemic. SCS increased food services during this time due to increased demand and continues to see this as on ongoing need due to the lasting economic impact of COVID-19, which has disproportionally impacted low-income households. The program clearly responds to the effects of COVID-19, and prepares for a similar pandemic by enabling resilience. Staff recommends funding the program for the entire $150,000. This funding will be reflected in the 2020 Annual Action Plan as that was the year the funds were released and all CV funding is reflected in that document.
NEXT STEPS
Staff will include the Housing and Human Services Commission (HHSC) funding recommendations in the draft 2025 Action Plan and 2025-2030 Consolidated Plan, which will be considered by the HHSC at its next meeting on April 15, 2025. The 2025 Action Plan and 2025-2030 Consolidated Plan will then be reviewed by the Council on May 6, 2025, before being submitted to HUD no later than May 15, 2025. The Commission’s recommendations for General Fund human services will be considered by the Council at the Budget Hearing in May 2025. Awards will not become final until after Council adopts the final FY 2025/26 budget and HUD approves the City’s 2025 Action Plan.
FISCAL IMPACT
The recommended funding allocations will include $194,000 of General Funds. The recommended funding allocations will make use of HUD CDBG and CDBG-CV grant funds and related Program Income for key areas consistent with the grant program regulations. Expenditure of these federal funds is necessary to meet timeliness requirements in place by HUD.
PUBLIC CONTACT
Public contact was made by posting the meeting agenda on the City's official-notice bulletin board at City Hall. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Fund the CDBG capital projects and human services proposals, and the CDBG CV proposal in the amounts shown in Attachments 2 to this report, and the General Fund human services proposals shown in Attachment 3 to this report.
2. Fund one or more of the proposals with a different amount(s) than those recommended by staff under Alternative 2 and 3, not to exceed the total amount of funding estimated to be available for each type of proposal and/or funding source.
RECOMMENDATION
Recommendation
Alternative 1: Recommend funding the CDBG capital projects and human services proposals, and the CDBG CV proposal in the amounts shown in Attachment 2 to the report, and the General Fund human services proposals shown in Attachment 3 to the report.
JUSTIFICATION FOR RECOMMENDATION
Staff believes each application has strong merit, serves the Sunnyvale community well, meets a critical community priority need, and each program has adequate design and management to make an impact on our community. Therefore, each program justifies receiving the full amount requested to the limit funding is available.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X__ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Matthew Hazel, Housing Programs Analyst
Reviewed by: Amanda Sztoltz, Homeless Services Manager
Approved by: Jenny Carloni, Housing Officer
ATTACHMENTS
1. List of Grant Proposals Received
2. CDBG Draft Funding Recommendations
3. General Fund Human Services Draft Funding Recommendations
4. CDBG and General Fund Project Proposals