STRATEGIC PRIORITY: Government Performance & Financial Management
AGENDA DATE: January 24, 2024
COUNCIL DISTRICT(S): N/A
DEPARTMENT: Budget and Management Services
EXECUTIVE: Jack Ireland
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SUBJECT
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Authorize (1) an extension through September 30, 2024 for Community Development Block Grant (CDBG) Funds in the amount of $503,480 in CDBG funded projects that have not met the City’s twelve-month obligation or twenty-four-month expenditure requirement; (2) preliminary adoption of Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan to use unspent CDBG CARES Act Relief Funds in the amount of $2,023,222 for the Emergency Rental Assistance Program; (3) establish a new fund to separate Community Development Block Grant Disaster Relief Funds previously received to comply with U S Department of Housing and Urban Development rules; and (4) a public hearing to be held on February 28, 2024, to receive comments on the proposed use of funds for Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan - Financing: This action has no cost consideration to the City (see Fiscal Information)
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BACKGROUND
On August 18, 1993, Resolution No. 93-3001 established specific timeframes for the obligation and expenditure of CDBG Funds. Funds are to be obligated within 12 months and expended within 24 months of budget adoption. On March 28, 2007, Resolution No. 07-0992 enhanced the City’s existing expenditure policy with additional benchmarks. Additional time to obligate and expend funds may be granted by City Council.
Timely expenditure of CDBG Funds by entitlement cities continues to be a primary concern of the U.S. Department of Housing and Urban Development (HUD). HUD requires that cities expend CDBG Funds so that, at least 60 days prior to the start of a new program year, the unexpended balance of CDBG Funds should be less than 1.5 times the cities’ CDBG allocation amount for the current year.
For fiscal year (FY) 2023-24, a review of the projects based on the timely expenditure policy (including the benchmarks), identified unspent CDBG Funds remaining in 3 projects recommended for extension for a total of $503,480 and unspent funds remaining in 8 projects recommended for reprogramming for a total of $569,287.
The City Council has authority to extend the use of funds and allow additional time for projects that are not in compliance with the City’s expenditure policy.
Reprogrammed funds from prior year unspent CDBG projects are recommended to be used as a “source of funds” to be included as part of the FY 2024-25 CDBG budget. The City Manager’s recommended FY 2024-25 CDBG budget will be presented to the Community Development Commission (CDC) on March 7, 2024.
Grant amounts for FY 2024-25 are not yet available. Use of prior year unspent CDBG Funds in conjunction with the next CDBG budget will help cover existing program/project budget needs.
• FY 2023-24 (current year) CDBG grant amount = $13,809,603
• FY 2022-23 CDBG grant amount = $14,120,128
• FY 2021-22 CDBG grant amount = $15,086,728
In addition, to ensure the City meets HUD’s expenditure requirement for CDBG-CARES Act Relief (COVID) Funds in a timely manner, staff recommends that unspent CDBG-COVID Funds be included in this reprogramming. The recommendation is to move unspent CDBG-COVID Funds in the amount of $2,023,222 from other categories to the Emergency Rental Assistance Program, as follows:
Recommended use of unspent CDBG-COVID Funds - $2,023,222
• Emergency Rental Assistance Program - $2,023,222
The Emergency Rental Assistance Program provides assistance to residents still recovering from the negative impact of the COVID-19 pandemic and improves services to communities most in need. The amendment will also remove the previously established monthly cap of $1,500 per unit/per month to align with other sources of funding providing similar assistance and consistent with Fair Market Rates approved by HUD.
This item also authorizes a new funds to be established for the CDBG-Disaster Recovery (DR) Funds. The City received CDBG-DR funds in two tranches ($24,433,000 and $15,967,000) for a total of $40,400,000. On April 12, 2023, the City Council approved final adoption of the full amount of $40,400,000 and appropriations were established in Fund CDD1. HUD has informed the City that the two amounts must be accounted of and reported on separately. To ensure properly tracking, a new fund number must be established in the City’s financial system to separate the two amounts.
• From CDD1 - $40,400,000
• To CDD1 - $24,433,000; and CDD2 - $15,967,000 = $40,400,000
The Community Development Commission (CDC) Financial Monitoring/Performance Standards Committee met on December 19, 2023, to review and make recommendations to the City Manager’s proposed extensions and reprogramming of CDBG and CDBG-COVID Funds. Following discussions with staff, one amendment was recommended. The CDC Financial Monitoring/Performance Standards Committee voted to recommend approval to the full CDC.
On January 4, 2024, upon recommendation by the CDC Financial Monitoring/ Performance Standards Committee, the CDC reviewed and approved the proposed extensions and reprogramming of CDBG and CDBG-COVID Funds.
On January 22, 2024, the City Council’s Government Performance and Financial Management (GPFM) Committee was briefed on the need to maintain ongoing compliance with HUD’s timely expenditure policy and the FY 2023-24 CDBG extensions and reprogramming recommendations including the additional CDBG-COVID reprogramming recommendation.
A summary of the proposed Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan will be published in the Dallas Morning News on or about February 7, 2024 to provide an opportunity to submit written comments through February 28, 2024.
Federal regulations require that a public hearing be held on proposed Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan. Holding a virtual public hearing on February 28, 2024, will satisfy the requirements set forth in HUD regulations and the City’s Citizen Participation Plan.
This item authorizes an extension of funds in designated funded projects, preliminary adoption of proposed Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan, establish a new fund number for the CDBG-DR grant, and a public hearing to be held on February 28, 2024.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On August 18, 1993, the City Council authorized establishing specific timeframes for the obligation and expenditure of CDBG Funds by Resolution No. 93-3001.
On March 28, 2007, the City Council authorized enhancing the City’s existing expenditure policy with additional benchmarks by Resolution No. 07-0992.
On April 12, 2023, the City Council authorized final adoption of the 2022 CDBG-DR Budget by Resolution No. 23-0521.
On June 14, 2023, the City Council authorized final adoption of the FY 2023-24 HUD Consolidated Plan Budget by Resolution No. 23-0765.
On January 4, 2024, the Community Development Commission recommended extending and reprogramming CDBG and CDBG-COVID project funds.
The Government Performance and Financial Management Committee was briefed on the need to maintain ongoing compliance with HUD’s timely expenditure policy and proposed Reprogramming Budget No. 1 (Substantial Amendment No. 2) to the FY 2023-24 Action Plan on January 22, 2024.
FISCAL INFORMATION
No cost consideration to the City.
A February 28, 2024 agenda item will include a request to increase and establish appropriations in departments for Reprogramming Budget No. 1 (Substantial Amendment No. 2).
CDBG-COVID - Source of Funds:
Reprogramming Budget No. 1 (Substantial Amendment No. 2)
• Unspent CDBG-COVID Funds - $2,023,222
CDBG-COVID - Use of Funds:
• Emergency Rental Assistance Program - $2,023,222