MEMORANDUM TO HOUSING AND HUMAN SERVICES COMMISSION
SUBJECT
Title
Evaluations and Funding Recommendations for FY 2015-16 Human Services Grants and CDBG/HOME Capital Project Loans
Report
BACKGROUND
The City received 22 proposals for human services funding in response to the Request for Proposals (RFP) issued in January 2015 and two capital project proposals. A list of the proposals is provided in Attachment 1, and the proposals are available online at HUDPrograms.inSunnyvale.com. The staff scoring committee, consisting of several Housing and Finance staff, evaluated the proposals based on the requirements and evaluation criteria in Council Policies 5.1.3: Human Services, as well as the unmet and priority needs described in the City's 2010-2015 Consolidated Plan, and using the scoring system provided in the RFPs.
Priority Needs for Human Services
The Commission and Council confirmed in October and November 2014 that the list of priority needs in the 2010 Consolidated Plan continues to be valid, therefore the human services proposals had to describe how they address one or more of these priority needs:
A. Basic needs (such as food, shelter, transportation, health & mental health care, employment assistance/training, child care, etc.).
B. After school or intervention programs to provide youth with positive alternatives to drugs, violence, and/or gangs (i.e., recreational, mentoring, educational, and career-building activities).
C. Mental health, addiction and substance abuse counseling, particularly for youth and those exiting institutions.
D. Other specialized supportive services as may be requested by the community, such as foreclosure assistance, legal assistance for seniors and others, and other specialized human services, such as those currently supported by the City, or those that may address a new or unmet priority need.
In addition, programs proposed for funding must verify that the funds will be used to serve primarily lower-income clients (51% or more).
Eligible Capital Projects
CDBG capital project proposals may include housing rehabilitation, economic development activities, public facilities and/or infrastructure improvements, site acquisition, commercial building rehabilitation, and several other rather obscure types of projects listed in the CDBG statutes. Any of the project types must show clear evidence that they will "primarily benefit" low income residents. This means at least 51% of the users of the facility to be assisted, or beneficiaries of the activity (loan recipient, occupants of housing to be improved, job training program participants etc.) must be documented to be lower income. HOME capital projects may only include activities related to lower-income housing, such as: new construction, rehabilitation, and/or acquisition of housing or housing sites, or tenant-based rental assistance.
Available CDBG and HOME Funds for FY 2015-16
The City will receive an entitlement grant of $989,453 in CDBG funds and a HOME grant of $281,021 for FY 2015-16. In addition, staff estimates that approximately $445,000 in CDBG program income and $567,000 in HOME program income will be received by the end of the current fiscal year. Program income consists of loan payments on prior CDBG or HOME loans, as well as interest accrued in the fund.
Estimated Funds Available for FY 2015-16 |
CDBG |
HOME |
Entitlement Grant |
$989,453 |
$281,021 |
FY 14-15 Program Income (PI) (HOME PI includes some prior years' PI) |
$445,000 |
$567,000 |
Total Grant + PI |
$1,434,453 |
$848,021 |
Change from Prior Year |
Entitlement Grant |
-3% |
-9% |
Program Income |
+23% |
-62% |
Total |
+ 4% |
-53% |
Funds Available for Human Services (15% of CDBG grant + PI) |
$215,150 |
$0 |
Funds Available for Capital Projects * |
$895,000 |
$550,000 |
* "Funds available for capital projects" does not include activities programmed outside of the RFP process, such as the Home Improvement Program, TBRA and program administration.
CDBG regulations limit public services funding to no more than 15% of the City's FY 2015-16 CDBG grant, plus 15% of CDBG program income received in the current fiscal year (FY 2014-15). Based on this formula, staff estimates that approximately $215,000 will be available for public services for next year.
Supplemental General Funds for Human Services
For a number of years Council has augmented the CDBG public services funding with general funds, referred to as the "supplemental general funds" for human services. In November 2014, Council set a tentative funding threshold of $115,000 in supplemental General Funds for next year. This amount, established so that staff and the Commission will have a general idea of approximately how much funding will be available, which will be confirmed or modified by Council during the final budget hearings in June. If it stays the same, a total of $330,000 in CDBG and General Funds will be available next year for human services grants. This amount is 10% more than what was available for human services last year, due to an increase in program income and the increase in supplemental General Funds from $100,000 to $115,000.
Change to Human Services CDBG Application Process
During the October and November priority needs hearings, the Commission and Council also approved a change to the human services grant program that was incorporated into the human services RFP. The change was an increase in the minimum CDBG human services grant amount from $10,000 to $25,000, due to the high level of reporting and administrative burden required for use of CDBG funds. The minimum grant amount for human services grants funded by the General Fund remained the same, at $10,000, since the General Fund-funded grants do not incur such a high administrative burden. There was no change to the maximum grant amount of 25% of the total funds available, which includes CDBG and General funds.
For practical reasons, this change required applicants to indicate in their proposals which funding source they were applying for, so that staff could verify that their requested funding amount met the applicable minimum grant amount, and also to ensure that applicants for CDBG funds were fully aware of the CDBG administrative requirements and were willing to accept the funds with these requirements. Applicants were informed of this change during the technical workshop offered to help applicants prepare their applications.
As a result of this change, proposals are now competing in two separate funding pools as opposed to one large pool consisting of both funding sources. This has made it somewhat easier to allocate the funds, since each funding source now has a smaller applicant pool.
DISCUSSION
Human Services Proposals
The staff scoring committee spent nearly three weeks reviewing all of the proposals, including discussing strengths and weaknesses and reviewing the accounting information provided. The committee met three times with additional Housing staff to discuss the proposals, eligibility and completeness requirements, scoring, and possible funding scenarios. 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 on Attachments 2 and 3.
Of the 22 human services proposals received, eight proposals requested a total of $342,122 in CDBG funding, which exceeds the CDBG amount available by nearly 60%. The remaining proposals requested a total of $241,033 in General funds, which exceeds the GF amount by 210%. One of the CDBG proposals (fair housing services), is eligible for funding with CDBG administrative funds, therefore staff recommended funding it from that source, as was done in the last two years, so that the human services funds can be maximized for the other proposals.
Ultimately staff developed two options for each funding pool (CDBG and GF), Scenario A and Scenario B, as shown in Attachments 2 through 5, as explained further below, based on the committee's recommendations.
Scenario A
The concept behind Scenario A, illustrated in Attachments 2 and 3, was to allocate the available funds in such a way that rewarded the higher-scoring proposals with a higher percentage of their request (up to the maximum of what the applicant requested), and the rest with the minimum amount, until funds ran out. Under Scenario A, all but one of the CDBG proposals and all but four of the GF proposals could be funded in the amounts shown. The benefit of this scenario is that it rewards proposers and programs that have demonstrated strong performance and compliance capabilities, and provides an incentive for applicants to put more effort into improving the quality of their proposals in the future. This is an approach used by many foundations and other funding entities to continually improve the quality of proposals submitted and, ideally, the effectiveness of the programs funded.
CDBG Group
As shown on Attachment 2, for the CDBG group under Scenario A, only $15,000 remained to be allocated to the last proposal to be recommended for funding (Senior Nutrition Program). While this amount is below the new CDBG minimum grant amount of $25,000, it is more than the Senior Nutrition Program received in the last two years, which was also funded in full or part with CDBG, therefore staff felt that it would be better to provide them with at least an amount comparable to their prior year grant, rather than spreading the remaining $15,000 among one or more of the higher-scoring proposals.
Although staff recognizes that Project Sentinel provides a very valuable and popular service to the community, under Scenario A, there were not enough CDBG funds to fund this proposal, based on its ranking. However, for the last two years Council has approved a budget supplement for City General Funds for this program through the budget supplement process (not the Human Services Grant program). This could be a possible funding source for this program again this year, if Council determines that adequate General Funds are available during the budget supplement hearing, or the Commission could consider Scenario B for the CDBG group, which funds all the CDBG proposals to some extent (see below).
General Fund (GF) Group
For the GF group, Scenario A (Attachment 3) resulted in four proposals not being funded, with higher than minimum amounts recommended for three of the higher-scoring proposals: Meals on Wheels, Friends for Youth Mentoring Program, and Family and Children's Services Youth Counseling, and the remainder receiving the minimum grant amount in ranked order, until funding ran out.
Scenario B
The concept behind Scenario B, illustrated in Attachments 4 and 5, was to fund as many of the eligible, complete proposals received, in ranked order by score, with the minimum grant amount for each funding pool, and if any funds were left over, to award them to the one or two top scoring proposals.
Under Scenario B, all of the CDBG proposals could be funded at the minimum level, with $40,000 left over after granting all the proposals. This remainder amount was allocated to the top two proposals. Scenario B results in a significant reduction in funding to the top-scoring proposal as compared to Scenario A and compared to that program's prior year grant, as illustrated in Attachment 4.
Among the GF applicants, Scenario B resulted in all but three of the GF proposals being funded, with only $5,000 left over, which was then allocated to the top-scoring proposal. This scenario results in somewhat lower grants to some of the top-scoring proposals, and a significant reduction from prior-year funding to one of the programs, but it does allow for one additional GF proposal to be funded, compared to Scenario A.
Complete details of each scenario are provided in Attachments 2 through 5. For context, staff has provided some detail on human services grantee accomplishments in the most recent complete prior year for which data is available, in Attachment 6. Staff recommends Scenario A for both funding groups, as it provides more of an incentive for applicants to improve their proposals and program effectiveness, by rewarding those who scored highest with a higher percentage of what they requested, and increases program efficiency by not spreading the funding so thin that its impact is diluted.
Capital Project Proposals
Two capital project proposals were received, as listed at the bottom of Attachment 1. One proposal was for CDBG funds for an economic development activity, and the other requested CDBG and HOME funds for rehabilitation of an affordable senior housing complex. The proposals are available online at HUDPrograms.inSunnyvale.com.
Sufficient funds are available for both of these proposals at or near the amounts requested. Staff recommends funding both projects as shown below:
Applicant |
Proposal |
Funding Type |
Amount Requested |
Recommended Award |
Sunnyvale Community Services |
WorkFirst Sunnyvale |
CDBG |
$395,000 |
$395,000 |
MidPen Housing Corp. |
Crescent Terrace Rehabilitation |
CDBG and HOME |
$1,270,000 |
$1,050,000 |
Total |
$1,665,000 |
$1,445,000 |
Process for Final Approval
Staff will include the Commission's CDBG and HOME funding recommendations in the draft FY 2015-16 Action Plan, which will be considered by the Commission at its regular meeting in April. At that time the Commission will have an additional opportunity to make minor changes to the funding recommendations if needed, such as if new information becomes available regarding CDBG or HOME program income amounts. The Commission's recommendations for GF human services awards will not be included in the Action Plan, which only covers HUD funds, but will be included in the same report to Council. Council will consider all of the funding recommendations and make a final decision at its regular meeting on May 5, 2015. Public hearings will be held prior to any Commission or Council action on these items at each meeting. Awards will not become final until after Council adopts the final 2015-16 budget and HUD approves the City's 2015 Action Plan.
ALTERNATIVES
1. Recommend funding the human services proposals according to Scenario A for both groups (CDBG and GF), as shown in the staff recommendation in Attachments 2 and 4.
2. Recommend funding the human services proposals according to Scenario B for both groups (CDBG and GF), as shown in Attachments 3 and 5.
3. Recommend another funding scenario, which may be a combination of Scenarios A for one group and B for the other group, or may be a slight variation of Alternative 1 or 2 (i.e., shifting funds between proposals within the same group and scenario).
4. Recommend funding the capital project proposals in the amounts recommended by staff as shown in the table above.
5. Recommend funding the capital project proposals in a different amount than shown above, subject to funding availability, and/or recommend not funding one or both proposals.
RECOMMENDATION
Recommendation
Staff recommends Alternatives 1 and 4, for the reasons explained in the Discussion section above. However, the Commission may recommend Alternative 2 or 3 instead of Alternative 1 for the human services proposals, or Alternative 5 instead of Alternative 4, for the capital project proposals. If Alternative 3 is desired, the Commission should specify which recommended awards should be modified, and by what amount.
Staff
Prepared by: Katrina L. Ardina, Housing Programs Analyst
Reviewed by: Suzanne Isé, Housing Officer
Approved by: Hanson Hom, Director, Community Development Department
ATTACHMENTS
1. List of Proposals
2. Scenario A, CDBG Group
3. Scenario A, General Fund Group
4. Scenario B, CDBG Group
5. Scenario B, General Fund Group
6. Grantee Accomplishments, FY 13-14