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10. Program Update: COVID-19 Emergency Rental Assistance and COVID-19 Emergency Small Business GrantsFile #: 3382 Claremont City Council Agenda Report TO: TARA SCHULTZ, CITY MANAGER FROM: CHRISTOPHER M. PAULSON, ASSISTANT CITY MANAGER DATE: JUNE 23, 2020 SUBJECT: Item No: 10. Reviewed by: City Manager: TS Finance Director: AP PROGRAM UPDATE: COVID-19 EMERGENCY RENTAL ASSISTANCE & COVID-19 EMERGENCY SMALL BUSINESS GRANTS (FUNDING SOURCE: COMMUNITY DEVELOPMENT BLOCK GRANT [CDBG] FUND) RIIMMORY At its May 12, 2020 meeting, the City Council unanimously approved the creation of the COVID-19 Emergency Rental Assistance and the COVID-19 Emergency Small Business Grant Programs. The Rental Assistance Program has $92,759 in CDBG-CV (CDBG funds for COVID-19-related purposes) and $95,583 in 2020-21 CDBG funds, for a total program budget of $188,342. The Small Business Grant Program has $176,368 in reallocated 2019-20 CDBG funds and $106,146 in 2020-21 CDBG funds, for a total of $282,514. The programs were approved on May 12, 2020 and launched six days later on May 18, 2020. Within the first two hours, over 100 Small Business Grant applications were received and over 120 Rental Assistance applications were received in the first two days. This report is intended to provide the City Council with an update on the programs and recommend approval of a modification to the Rental Assistance program. RECOMMENDATION Staff recommends that the City Council: A. Approve the modifications to the Rental Assistance Program, using the HUD FY 2020 Fair Market Rents by Unit Bedrooms to determine rental assistance amounts; and B. Receive and file this program update. CLAREMONT Page 1 of 6 Printed on 6/18/2020 ALTERNATIVES TO RECOMMENDATION In addition to the recommendation, there is the following alternative: • Request more information from staff. FINANCIAL REVIEW The City received a CDBG-CV (CDBG funds for COVID-19-related purposes) allocation of $92,759, to be used to assist those in the community who have been economically impacted by the pandemic. The City Council approved allocating funding towards the COVID-19 rental assistance program in fiscal year 2019-20. Additionally, the City has reallocated unspent 2019-20 and prior fiscal year CDBG funds to the COVID-19 assistance programs, in addition to programming anticipated 2020-21 CDBG funds for COVID-19 assistance. The following chart shows the distribution of COVID-19 assistance funds between the Rental Assistance Program and the Small Business Grant Program: Total COVID-19 Assistance CDBG FY 19-20 CDBG-CV CDBG FY 20-21 PROGRAM TOTAL Residential Rental Assistance Program $ - $92,759.00 $ 95,583.00 $ 188,342.00 Emergency Small Business Grant Program $ 176,368.00 $ - $ 106,146.00 $ 282,514.00 $ 176,368.00 $92,759.00 $ 201,729.00 $ 470,856.00 The staff cost to implement these programs and prepare this report is estimated at $14,321, and is included in the operating budget of the Administrative Services Department. ANALYSIS Following the May 12, 2020 approval of these CDBG and CDBG-CV programs, staff immediately began publicizing the program through program flyers, the City Manager's Weekly e -Newsletter, the City's social media platforms (Facebook, Instagram, Twitter, and Next Door), and a dedicated web page was created on the City's website for each of the programs. In addition, a press release was issued which resulted in The Claremont Courier publishing several informational articles about the program. The City also maintains a database with email addresses from all City of Claremont business licensees, and they were emailed information about the program. Both small business owners as well as residential landlords were encouraged to share the program information with their tenants. The City also provided program information to landlords and property managers who participate in our Crime -Free Multi -Housing Program. Anticipating high demand for these programs, the City established an intake process. Applicants submitted a brief intake form on the respective program's web page, starting at noon on May 18, 2020. Based on the digital timestamp of when the intake form was submitted, the first 20 Small Business Grant applicants and first 100 Rental Assistance applicants would receive the complete program application. By 1:40 p.m. that day, the Small Business Grant Program had received 100 intake forms (for 20 grants), and the intake process was then closed. Similarly, the Rental Assistance Program received approximately 80 applications by the end of the first day, and the intake process was closed two days later when 100 intake forms were received. COVID-19 Emergency Rental Assistance Program CLAREMONT Page 2 of 6 Printed on 6/18/2020 On May 19, 2020, the first 100 Rental Assistance applicants were emailed the application. At the time this report was published on June 18, 2020, there were a total of 123 applicants that have received the application, and sixty applications have been submitted. The remaining sixty-three applicants have determined that they are not eligible based on income, are no longer interested, or have failed to reply to calls and emails from staff. Of the sixty applications, five applicants have been determined to be ineligible, with the remaining fifty-five applicants eligible for rental assistance. Of the fifty-five applicants, the total amount of rental assistance requested for the two months of the program totals $177,552, leaving $10,790 in remaining funding for additional rental assistance applicants. The $177,552 in rental assistance provides two months of rent to the fifty-five applicants, but the number of people living in those homes that will be assisted is 150 Claremont residents. On Thursday, June 25, 2020, the first batch of checks will be mailed to the landlords of the rental assistance recipients, for the first month of rent, in the amount of $88,776. There are nine additional applicants on the wait list, and staff will continue to work through the applicants on the wait list until all funds are expended. Modification to COVID-19 Emergency Rental Assistance Program At the May 12, 2020 City Council meeting, the Rental Assistance Program funding and program guidelines were approved and the program was released on May 19. A few days after the application was released, staff received inquiries from applicants about the amount of allowable rental assistance, with some applicants pointing out that based on their income, they would only be approved for one-third or at most half of the cost of their monthly rent. At that time, staff consulted with MDG Associates (City's CDBG consultants) and staff at Los Angeles County Development Authority (LACDA) about the situation and determined the chart that was used as the basis for establishing assistance amounts was the wrong chart. The original chart was HUD's Maximum Allowable Rent Levels, but that is actually used to determine the maximum amount of rent a tenant would pay a landlord in an inclusionary housing development, and not the amount that can be used for assistance. Instead, MDG Associates and LACDA recommended Claremont use the HUD FY2020 Los Angeles -Long Beach -Glendale, CA HUD Metro Fair Market Rent (FMR) Area FMRs for All Bedroom Sizes, as seen in this chart: FY 2020 Fair Market Rents by Unit Bedrooms 0 Bedrooms 1 Bedroom 2 Bedrooms 3 Bedrooms Bedrooms $1,279 $1,517 $1,956 $2,614 [$2,857 By using the FMR chart, the program is able to assist Claremont residents with amounts that are more in line with their current rent amounts. Of the fifty-five eligible assistance recipients, fifty recipients will be able to receive assistance in the full amount of their rent for two months. The other five applicants, whose rents exceeded the values in the chart above, were informed they would receive the amount in the chart and would be responsible for the balance with their landlord, which ranges from $19 to $445. Staff believes this modification is an improvement to the program and provides greater financial relief to renters and landlords in the community. Additionally, based on Claremont's speed and detail in developing and launching these programs, and the overall quality of the guidelines, LACDA has been using Claremont's program over the last month as a template for other cities in the county to use to CLAREMONT Page 3 of 6 Printed on 6/18/2020 develop their own program. This modification was sent to LACDA and approved, as such, staff recommends that the City Council approve this modification to the Rental Assistance Program. COVID-19 Small Business Grant Program On May 19, 2020, the first 20 Small Business Grant applicants were emailed the application. Due to the program guidelines, businesses that had already received an SBA (Small Business Administration) Loan or PPP (Paycheck Protection Program) or other governmental assistance in 2020 as a result of COVID-19 would not be eligible, as preference would be given to those that have not received any assistance. Of the first 30 businesses that submitted an intake form, ten were eligible for Claremont's program, while the other 20 had already received assistance. Of the 100 total intake forms, about half the businesses have not received assistance. At the time this report was published on June 18, 2020, there were a total of twenty-five businesses that have received the application, and eleven businesses have submitted their applications. Of the eleven businesses that submitted applications, three have submitted the necessary documentation to have their application evaluated and approved for funding. The other eight businesses will be informed of their missing documentation and given time to resubmit. Additionally, the other fourteen businesses that have not yet submitted their application will still have time to submit and receive funding, as any unspent 2019-20 funding can be carried over to 2020-21. The amount requested by the initial three businesses is $33,499, leaving $249,015 available for additional small business grants. On Thursday, June 25, 2020, the first batch of checks will be mailed to business grant recipients and their landlords for the first month of assistance, in the amount of $16,749. Staff will continue to work through the applicants on the waiting list until all funds are expended. Staff will return to the City Council in the near future to provide a final update on the program, amount expended, and number of residents and businesses assisted. RELATIONSHIP TO CITY PLANNING DOCUMENTS Staff has evaluated the agenda item in relationship to the City's strategic and visioning documents and finds the following: Council Priorities - This item addresses the Council Priority: Increase Livability in Our Neighborhoods and Expand Opportunities for Our Businesses. Sustainability Plan - This item complies with the Sustainability Plan's Housing and Economic Sustainability Goal 6.1 ("achieve and maintain a mix of affordable, livable and green housing types throughout the City for people of all socio-economic/cultural/household groups") and Goal 6.2 ("Promote neighborhood identity and conservation of individual neighborhood character," which includes encouragement of proper maintenance of homes). Economic Sustainability Plan - This item relates to the Commercial Development recommendations outlined in the Economic Sustainability Plan. General Plan - This item relates to many General Plan goals, policies, and programs such as: • Encourage the conservation, maintenance, and rehabilitation of the existing housing stock. (Policy 2-1.2) CLAREMONT Page 4 of 6 Printed on 6/18/2020 • Ensure integration and participation of seniors in mainstream community life through accessible social services. (Goal 7-6) • Maintain a strong, diversified economic base. (Goal 3-1) • Pursue a variety of funding approaches, including grants, impact fees, transportation funds, and other programs to fund City programs, services, and capital investments. (Policy 3-6.2) • Enhance and maintain the quality of housing throughout the community (Goal 8-1) • Ensure equal access to housing for all households, consistent with state and federal fair housing laws (Goal 8-5) • Continue to offer the Owner -Occupied Housing Rehabilitation Program for lower- and moderate -income homeowners in need of financial assistance to make necessary home repairs. (Housing Program #1) 2020-21 Budget - This item meets the following Community Development Department Work Plan Goals: • CD -2 Continue implementation of the General Plan • CD -3 Facilitate housing opportunities for individuals at all income levels. Youth and Family Master Plan - This item does not directly relate to the objectives in the Youth and Family Master Plan. CEQA REVIEW This item is not subject to environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and Section 15060(c)(3) (the activity is not a "project" as defined in Section 15378). CEQA Guidelines Section 15378 (b)(4) excludes "[t]he creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment" from its definition of "project." Even if this activity were a "project," it would be exempt from environmental review under CEQA Guidelines Section 15061(b)(3)'s "general rule" that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Here, it can be seen with certainty that there is no possibility that the approval of the annual CDBG budget, as well as the individual programs identified within the budget (i.e., the senior case management services, the rehabilitation of housing, emergency rental assistance, and emergency small business grants) in and of themselves will have a significant effect on the environment. On its own, this action will not result in or lead to a significant physical change in Claremont. PUBLIC NOTICE PROCESS Due to the current health orders related to the COVID-19 pandemic, parts of the City's regular agenda distribution process have been suspended as public review copies cannot be placed CLAREMONT Page 5 of 6 Printed on 6/18/2020 at their regular locations due to facility closures, or limited access. The agenda and this staff report are available on the City's website. If you desire a paper copy, please contact the City Clerk's office. Submitted by: Christopher M. Paulson Assistant City Manager CLAREMONT Page 6 of 6 Printed on 6/18/2020