Resolution Number 07-05-15-04RESOLUTION NO. 07-05-15-,04
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, ADOPTING A LOCAL PLAN ("PROGRAM
INCOME REUSE PLAN") FOR THE REUSE OF PROGRAM INCOME
DERIVED FROM THE REPAYMENT OF STATE OF CALIFORNIA
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
WHEREAS, the City of San Juan Capistrano (the "City"), 32400 Paseo Adelanto,
San Juan Capistrano, California 92675, was awarded $1 million in Community
Development Block Grant ("CDBG") funds (grant number 04-STBG-1927) over a two-
year period from the State of California Housing and Community Development
Department; and,
WHEREAS, these CDBG grant funds will be used to assist in developing and
constructing an affordable housing ownership project at the terminus of Calle Rolando;
and,
WHEREAS, the City of San Juan Capistrano has been awarded previous CDBG
funds that were used for owner -occupied housing rehabilitation loans; and,
WHEREAS, the City will continue to receive CDBG program income as a result
of future repayments of the owner -occupied housing rehabilitation loans; and,
WHEREAS, the City adopted a Program Income Reuse Plan on September 20,
2005 to establish guidelines on the policies and procedures for the administration and
utilization of program income received by the City;
WHEREAS, the State of California Department of Housing and Community
Development requires the City to conduct a public hearing to receive citizen input to
modify the Program Income Reuse Plan to allow for the transfer of program income
from a Revolving Loan Account ("RLA") to an open CDBG grant;
WHEREAS, the City proposes to modify the Program Income Reuse Plan to
transfer up to $24,200 from the Owner -Occupied Housing Rehabilitation RLA to open
grant 04-STBG-1927 (Habitat for Humanity of Orange County, Inc.) to pay for
engineering costs to correct a recordation error made in 1975 for the irrevocable offer to
dedicate Calle Rolando for street purposes.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San
Juan Capistrano does hereby make the following findings:
1. The proposed Plan is consistent with the policies and objectives of
' the San Juan Capistrano General Plan; and,
Page 1 of 2 May 15, 2007
2. The proposed Plan is consistent with the policies and objectives of
the San Juan Capistrano Housing Element; and,
3. The proposed Plan is consistent with the State of California
Housing and Community Development Community Development Block Grant Program.
BE IT FURTHER RESOLVED, that the City Council of the City of San Juan
Capistrano does hereby adopt the Program Income Reuse Plan, attached hereto as
Exhibit A.
PASSED, APPROVED, AND ADOPTED this 15th day of May, 2007.
M ALLEVATO, MAYOR
ATTEST• /
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, MARGARET R. MONAHAN, appointed City Clerk of the City of San Juan Capistrano, do
hereby certify that the foregoing Resolution No. 07-05-15-04 was duly adopted by the City
Council of the City of San Juan Capistrano at a Regular meeting thereof, held the 15"' day
of May 2007, by the following vote:
AYES: COUNCIL MEMBERS: Nielsen, Uso, Hribar, Soto and Mayor Allevato
NOES � CIL MEMBER: None
ABS NT' zC UNCIL MEMBER: None
MARQXRWIf`R. MON /�iP�N, City Clerk
Page 2 of 2 May 15, 2007
PROGRAM INCOME REUSE PLAN
City of San Juan Capistrano
May 15, 2007
Modification to Reuse Plan Governing Program Income from CDBG-Assisted
Activities
The purpose of plan is to establish guidelines on the policies and procedures for the
administration and utilization of program income received as a result of activities funded
under the State Community Development Block Grant Program.
Need for Plan Governing Reuse of Program Income. This Reuse Plan is intended to
satisfy the requirements specified in Federal statute and regulation at Section 104 0) of
the Housing and Community Development Act ("the Act"), as amended in 1992 and 24
CFR 570.489 (e) (3). These statutory and regulatory sections permit a unit of local
government to retain program income for CDBG-eligible community development
activities. Under federal guidelines adopted by the State of California's CDBG program,
local governments are permitted to retain program income so long as the local
government has received advance approval from the state of a local plan that will
govern the expenditure of the program income. This plan has been developed to meet
that requirement.
' Program Income Defined. Program Income is defined in federal regulation at 24 CFR
570.489 (e) which specify that program income is the gross income received by the
jurisdiction that has been directly generated from the use of CDBG funds. (For those
program income -generating activities that are only partially funded with CDBG funds,
such income is prorated to reflect the actual percentage of CDBG participation).
Examples of program income include: payments of principal and interest on housing
rehabilitation or business loans made using CDBG funds; interest earned on program
income pending its disposition, and interest earned on funds that have been placed in a
revolving loan account; net proceeds from the disposition by sale or long-term lease of
real property purchased or improved with CDBG funds; income (net of costs that are
incidental to the generation of the income) from the use or rental of real property that
has been acquired, constructed or improved with CDBG funds and that is owned (in
whole or in part) by the participating jurisdiction or subrecipient.
If the total amount of income generated from the use of CDBG funds (and retained by
the City) during a single program year (July 1 through June 30) is less than $25,000,
then these funds shall not be deemed to be program income and shall not be subject to
these polices and procedures. However, Quarterly and Annual Program Income
Reports must be submitted regardless of whether the $25,000 threshold is reached or
not.
Portfolio Management Costs. Costs of managing the portfolio of CDBG and HOME -
funded loans may be charged to PI under general administration or activity delivery
within the allowable limits set by HCD.
Page 1 of 4 EXHIBIT A
General Administration (GA) Cost Limitation. Up to eighteen percent (18%) of the --
total program income expended on all activities during a single program year may be
used for CDBG general administration expenses.
Reuses of Program Income. Program income must be: a) disbursed for an activity
funded under an open grant prior to drawing down additional Federal funds; b)
forwarded to the State of California, Department of Housing and Community
Development (Department); or c) distributed to one or more Revolving Loan Accounts
according to this Program Income Reuse Plan after adoption of the plan by the City
jurisdiction and approval by the Department. The Reuse Plan shall be adopted by the
local governing body only after compliance with the City's citizen participation process
as specified in Federal Regulations at 24 CFR 570.486, Local Government
Requirements.
The City reserves the option of utilizing program income to fund/augment a CDBG
funded activity included in a grant agreement. In order to exercise this option the City
must first follow the citizen participation process, hold a public hearing, obtain a
governing body resolution, and obtain approval from the State CDBG Program.
Planning Activities. The City reserves the option of utilizing program income, within
the 18 percent general administration annual cap, to fund planning for CDBG-eligible
activities. Such planning activities may include: cash match for a State CDBG Planning
and Technical Assistance Grant; environmental reviews or other studies necessary for
CDBG-eligible projects or programs; or application preparation for CDBG or other
grants/loans to supplement funding for CDBG-eligible activities. The costs of such
planning activities may be charged to an RLA if the planning is for the same activity as
the RLA. Otherwise, PI may only be expended on planning activities in conjunction with
an open CDBG Planning and Technical Assistance grant.
Distribution for Reuse of Program Income.
Transfer of Funds from the Housing Rehabilitation Revolving Loan Account to
Fund/augment an Open CDBG Grant (04-STBG-1927). The City commits up to
$24,200 to open CDBG grant 04-STBG-1927 to pay for unanticipated engineering costs
to correct an error to the legal description made in 1976 for the irrevocable offer to
dedicate Calle Rolando for street purposes. These funds are to be transferred from the
Housing Rehabilitation RLA.
The City's program income that has not been committed to open grant activities will be
distributed, as follows:
One revolving loan account (RLA) is established to utilize the program income.
The allocation to the RLA is as follows:
a) One hundred percent (100 percent) of all program income will be deposited
into the Housing Rehabilitation Revolving Loan Account.
Page 2 of 4 EXHIBIT A
Funds shall not be transferred to an open grant activity without conducting a properly
' noticed CDBG Citizen Participation public hearing. However, the transfer of program
income to grant -funded activities during the program year in the aggregate amount of
$5,000 or less will not be subject to the citizen participation requirement to hold a
properly noticed public hearing.
Reporting and Federal Overlay Compliance.
The City shall comply with all State CDBG reporting requirements, including submittal of
a single annual Grantee Performance Report that reports on all of the City's RLAs, and
the required Quarterly and Annual Program Income Reports, which shows combined PI
receipts and actual PI expenditures for all RLAs and grants on one report (see chapter
10 of the CDBG Grant Management Manual for due dates). The City shall ensure that
the use of program income under this Reuse Plan complies with all CDBG program
requirements, including citizen participation, environmental review, equal opportunity,
Section 3 employment, lead-based paint, labor standards, acquisition and relocation,
procurement, property management, and maintenance of adequate accounting and
recordkeeping systems. To ensure ongoing compliance with CDBG requirements, the
City shall utilize the latest available State CDBG Program Grant Management Manual
for guidance on compliance procedures and polices. The City shall obtain the
Department's written approval before proceeding with any PI -funded activity.
Maximum Funds in Revolving Loan Accounts.
Program Income received by the RLA during the program year (July 1 through June 30)
shall be substantially expended by the end of the program year (June 30). At any given
time, the funding balance for the RLA should not exceed the typical cost of a single RLA
project, plus reasonable administration costs (up to 18 percent of total expended costs).
For example, if your average Housing Rehabilitation PI loan cost (including AD and GA)
is $58,000, the balance of your Housing Rehabilitation RLA should not typically exceed
this amount.
Revising this plan. The City Council has the authority to amend this document with a
properly noticed City Council meeting and approval by the State Department of Housing
and Community Development (HCD).
Revolving Loan Accounts. The purposes and allowed uses of funds under the City's
RLA is as follows:
Housing Rehabilitation Revolving Loan Account.
This fund will be principally used for the purpose of making loans to rehabilitate
residential units occupied by households which have an annual income which is
80 percent (80 percent) or less of the county's median income. At least 51
' percent of the funds expended for the activity funded under this RLA during the
program year shall be used on revolving activities (i.e., loans).
Page 3 of 4 EXHIBIT A
No more than 0 percent of the program income funds actually expended during
the program year under this RLA shall be expended for housing rehabilitation
grants. No more than 19 percent of the funds expended from this RLA shall be
used for activity delivery costs. No more than eighteen percent of the total
amount of PI expended annually may be expended for general administrative
costs related to this RLA activity. In any event, the total expended for non -
revolving activities (grants, activity delivery costs, and general administration)
shall not exceed 49 percent of the total funds actually expended during the
program year (July 1 thru June 30).
The review and funding of requests for CDBG loan or grant assistance under this
RLA shall be conducted under the Owner -Occupied Housing Rehabilitation
Program Guidelines that have been adopted by the City Council (Attachment A).
All assistance provided for activities under this RLA shall be made for activities
that are located within the City's jurisdiction.
If the activities funded under the RLA are for the same activities as those funded
under an open State CDBG grant agreement, then the funds available in this
RLA shall be expended only in those areas of the City that are not included in the
open grant. If the activities funded under the Revolving Loan Account are for the
same activities as those funded under an open State CDBG grant agreement,
then the program income funds will be drawn down prior to drawing down any
grant activity funds.
Page 4 of 4 EXHIBIT A