Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: JUNE 17, 2003

SUBJECT: EXPENDITURE PLAN FOR THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM

RECOMMENDATIONS

  1. Approve an expenditure plan for Community Development Block Grant funds.
  2. Authorize staff to request a proposal from GeoSyntec Consultants for a ground water investigation in the Abalone Cove project area.
  3. Establish a new joint project with the Abalone Cove Landslide Abatement District to develop three dewatering wells in the Abalone Cove project area.
  4. Request staff to investigate the potential sale of excess Community Development Block Grant Funds.

BACKGROUND

The CDBG Program is a federally funded, County administered grant program under which the City receives annual funding for eligible projects of the City’s choosing. The program guidelines are rigid, and the eligibility requirements are difficult to meet. A flowchart and other exhibits outlining the eligibility requirements are attached.

Under CDBG guidelines the City is limited in the amount of time that CDBG funds are allowed to accumulate. In the past the Los Angeles Community Development Commission (CDC) – the agency that administers the program for the federal government – has not been rigid in the enforcement of this guideline. Recently, however, the CDC has made it clear that given the amount of time over which the City has accumulated funds for the Alta Mira Canyon project, if construction is not underway by March 2004, funds in excess of 150% of our annual allocation will be recaptured and given to agencies with eligible construction ready projects. The City’s annual allocation of CDBG funds is approximately $ 240,000. Under such a scenario as much as $600,000 of our CDBG funds could be recaptured.

At the City Council meeting of May 20, 2003, the Alta Mira Canyon project was deleted due to a funding shortfall for the project and because the necessary rights-of-way to construct the project have not been acquired. Given the impending deadline to spend

the funds accumulated for the Alta Mira Canyon project, staff was directed to identify alternate projects that may be funded under the Community Development Block Grant (CDBG) Program. In addition, as part of the effort to complete projects prior to the March 2004 deadline, Council awarded an engineering contract for preliminary engineering services for the design of an elevator at City Hall.

CDBG Allocation in Rancho Palos Verdes

The City receives an annual CDBG allocation of approximately $240,000. Historically, the City allocated the funds as follows:

CDBG Administration $ 20,000

REACH Program $ 36,000

Home Improvement Program $100,000

Capital Projects $ 84,000

The public service cap (which is a percentage of the annual allocation) for the REACH program is limited to 15%.

Timely Use of CDBG Funds

The CDBG Program requires the funds to be expended on a timely basis, with no more than 150% of the current year allocation unexpended by March 31. The draw down goal includes the current year’s CDBG monies and CDBG funds remaining from prior years. No more than 50% of an annual allocation, should be accumulated in order to meet the draw down policy by the following March 31 deadline. Therefore, based on an annual allocation of $240,000, no more than $120,000 can be accumulated for a total balance of $360,000 of unexpended funds in any one fiscal year.

DISCUSSION

Based on discussions between the City Council and staff, the following options have been reviewed and a list of eligible projects has been developed for the Expenditure Plan of CDBG funds.

Item

Cost

Analysis

Eligible Project

Expend.

Plan

Construction of Restrooms at Del Cerro Park and Ocean Front Estates

$200,000

  • Project sites are not located within the eligible target area.
  • New construction of restrooms does not meet CDBG eligibility of ADA accessibility to existing restroom facilities.
  • CDBG funds totaling $400,000 may be sold to another City to obtain $200,000 in unrestricted City general funds.

No

No

Access Ramp to the Community Room

$ 15,000

  • Funds are available under the CDBG approved Citywide ADA Project.
  • Plans and specifications should be completed by September 2003 for CDC approval.
  • CDC approval of bid document should be completed by October 2003. Bidding processes are subject to CDC requirements
  • Award contract by November 2003.
  • Complete construction by March 2004.

Yes

Yes

Access to Picnic Facilities at City Parks

$ 82,000

  • Funds are available under the CDBG approved Citywide ADA Project.
  • Plans, specifications, bid documents, and bidding processes are subject to CDC requirements.
  • Plans and specifications should be completed by September 2003.
  • CDC approval of bid document should be completed by October 2003.
  • Award contract by November 2003.
  • Complete construction by March 2004.

Yes

Yes

City Council Chambers at Point Vicente Interpretive Center

To Be Determined

  • Buildings or portions thereof, used for general conduct of government are ineligible for CDBG funding.
  • Exception is allowed for ADA accessibility for the disabled.
  • When CDBG funds are used in conjunction with non-CDBG funds, i.e., RDA, general funds, etc., the entire construction project becomes subject to federal Davis-Bacon prevailing wages.

No

No

Elevator for City Hall

$280,000

  • CDBG eligibility obtained in FY 2000 based on ADA accessibility.
  • Design and engineering must be completed.
  • Plans, specifications, bid documents, and bidding processes are subject to CDC requirements.
  • Plans and specifications should be completed by September 2003.
  • CDC approval of bid document should be completed by October 2003.
  • Award contract by February 2004.

Yes

Yes

Engineering Study of Ground Water/Abalone Cove Project Area

$ 15,000

  • Located within eligible target area.
  • Project will require CDBG review and approval-90 day process to be completed by September 2003.
  • Award of contract for engineering study is subject to CDC requirements.

Yes

Yes

Construction of Dewatering Wells/Abalone Cove Project Area

$ 75,000

  • Located within eligible target area.
  • Project will require CDBG review and approval-90 day process to be completed by September 2003.
  • Design and engineering contract must be awarded.
  • Plans and specifications should be completed by September 2003.

  • CDC approval of bid document and bid processes should be completed by Octtober 2003.
  • Design and engineering must be completed.
  • Plans, specifications, bid documents, and bidding processes are subject to CDC requirements.
  • Award contract by February 2004.

Yes

Yes

Senior Center Facility

To Be Determined

  • Eligible project, however there are no current plans for a Senior Center.
  • Project planning, development and construction would not be completed by March 2004.

Yes

No

Playground Equipment

To Be Determined

  • Parks must be located within the target area and address the mitigation requirements identified for the target area.
  • Project development for a new project and construction would not be completed by March 2004.

Yes

No

Portuguese Bend Road Rehabilitation

To Be Determined

  • Project is located within eligible target area.
  • Project scope consists of slurry sealing and road maintenance, which is not CDBG eligible.
  • An eligible CDBG road improvement project may include road reconstruction, storm drains, curb and gutter work, and the installation of streetlights or signs.
  • Project development for a new project and construction would not be completed by March 2004.

Yes

No

Abalone Cove Sewer System Generator/ Telemetry System

To Be Determined

  • Located within eligible target area.
  • Possible capital project for FY 04-05.

Yes

No

The approved allocation of CDBG funds for the current fiscal year 02-03 and next fiscal year 03-04 are:

Item

FY 02 – 03

FY 03 - 04

Total

Administration

$ 25,000

$ 20,000

$ 45,000

Reach Program

$39,000

$ 34,000

$ 73,000

Home Improvement Program

$135,000

$ 100,000

$ 235,000

Home Improvement Program-carrryover

$92,000

 

$92,000

Alta Mira Canyon Channel

 

$ 700,000

$ 700,000

Engineering for City Hall elevator

 

$ 55,000

$ 55,000

Unnamed ADA Project

 

$ 225,000

$ 225,000

Programmed ADA projects Citywide

$ 25,000

$ 72,000

$ 97,000

       

Total Funds Available – FY 02-03/03-04

   

$ 1,522,000

Sale of Block Grant Funds

It is clear that the City will not be able to spend adequate CDBG funds in time to meet program guidelines. The most appropriate solution would be for the city to sell a portion of its CDBG funds to generate unrestricted general funds for ineligible CDBG projects such as the restrooms at Del Cerro and Ocean Front Estates. Several cities have indicated that they wish to purchase CDBG funds. Staff estimates that CDBG funds can be sold at 50 – 60˘ per $1.

Calculation of CDBG Funds Eligible for Sale

After determining the eligibility of CDBG projects and the feasibility to complete these projects presented in the above Expenditure Plan by the March 2004 deadline, the recommended allocations of CDBG funds for fiscal years 2002-03 and 2003-04 are listed as Planned Expenditures in the table below. Deducting these planned expenditures from the Total Funds Available for FY 02-03/03-04 leaves a balance of $610,000 that is eligible for sale.

Item

Amount

Total Funds Available – FY 02-03/03-04

$ 1,522,000

Planned Expenditures:

 

Administration

$ 45,000

Reach Program

$ 73,000

Home Improvement Program

$327,000

Various non elevator ADA projects: Access Ramps $15,000

Picnic Facilities $82,000

$ 97,000

Elevator – Engineering

$ 55,000

Elevator – Construction

$ 225,000

Engineering – Groundwater study

$ 15,000

Installation of dewatering wells

$ 75,000

Funds available less planned and proposed expenditures

$ 610,000

Note: The maximum amount of CDBG funds that the City may accumulate is 150% of our annual allocation of $240,000 or $360,000.

CONCLUSIONS

Adopting the staff recommendations will implement only those projects that will expend CDBG funds by March 31, 2004. The balance of funds will be sold to another City in exchange for General Funds that are unrestricted. This would provide flexibility in funding projects without having to meet the target area and federal eligibility criteria.

Adopting the staff recommendations will result in staff evaluating how much CDBG funds can be sold, and to make inquires about potential buyers. Staff will gather this information and bring the matter back to the City Council for further action.

FISCAL IMPACT

The recommended actions will result in the expenditure of funds for projects that can be completed by March 31, 2004. The expenditure of funds for the dewatering well construction, and the engineering study will require additional City Council action prior to the expenditure of any funds.

It is estimated that adoption of the recommended actions, and the construction of an elevator will result in the need to sell approximately $610,000 worth of CDBG funds. If these funds were sold for 55˘ per dollar it would generate approximately $ 335,000 of General Fund monies. If the construction of the elevator does not take place an additional $280,000 worth of CDBG funds would need to be sold, and would bring an additional $154,000 in General Fund monies.

Submitted by,

Dean E. Allison

Director of Public Works

Reviewed by,

Les Evans, City Manager

Attachments:

Exhibit A – Flowchart of CDBG eligibility

Exhibit B – Category 1 eligible projects

Exhibit C – Category 2 and Category 3 eligible projects