SAN IPSE CAPITAL OF SILICON VALLEY

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1 CITY OF 2 SAN IPSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL COUNCIL AGENDA: 9/15/15 ITEM: ^ ^ Memorandum FROM: Jacky Morales-Ferrand SUBJECT: SEE BELOW DATE: Approved Date f/z/'s' SUBJECT: PUBLIC HEARING ON THE FY CONSOLIDATED ANNUAL PERFORMANCE EVALUATION REPORT (CAPER) AND APPROVAL OF THE DOCUMENT RECOMMENDATION Hold a public hearing on the FY Consolidated Annual Performance Evaluation Report and approve the document for submittal to the U.S. Department of Housing and Urban Development by the September 30, 2015 deadline. OUTCOME Approval of the CAPER will ensure compliance with the U.S. Department of Housing and Urban Development's (HUD) reporting requirements and enable the City to continue qualifying for much needed federal funds for housing and community development programs. BACKGROUND As the tenth largest city in the country, San Jose receives federal funds directly from HUD as an entitlement community. Administered by the City's Department of Housing, the funds are vital in helping the Department to meet its mission to strengthen and revitalize San Jose's communities through housing and neighborhood investments. In order to qualify for these funds and the use of other federal housing and community development programs, HUD requires that the City complete the following three documents: 1. A Five-Year Consolidated Plan (Five-Year Plan), which documents the City's housing needs and its strategies for meeting those needs during a five year period. The City Council approved the FY Consolidated Plan in May 2015.

2 Page 2 2. Annual Action Plans (Annual Plan), which details the investment strategy in each of the five years within a Consolidated Plan cycle in order to meet identified priorities. The City Council approved the current FY Annual Action Plan in May 2015 for the first year of the cycle. 3. Consolidated Annual Performance and Evaluation Reports (CAPER), which summarize the City's progress in meeting the objectives of its respective Annual Plans. The draft FY CAPER is available on the Elousing Department's website at the following location - www, sani oseca. gov/c APER. Each of the three documents includes information on the City's use of federal funds, including the Community Development Block Grant (CDBG), ElOME Program, Emergency Solutions Grant (ESG), and Housing Opportunities for People with AIDS (HOPWA). The September 15, 2015 Council meeting provides an opportunity for public input on the plan and for the City Council to consider approval of the CAPER. If approved, staff will submit the final report including any public comments to HUD by the September 30, 2015 deadline. ANALYSIS Operating Context This Consolidated Plan cycle proved a challenging one. Whereas the first half of the cycle was marked by economic weakness from the recession that began in 2008, the latter half was marked by economic recovery, slowly at first, then with significant strength by Silicon Valley has experienced a high rate of job growth, yet this growth has been characterized by increases in high- and low-wage earners, with few middle-income jobs being produced. This has created an increasingly bifurcated economy, with growing concerns about income inequality, the lack of affordable housing, and the displacement of lower-income households from their communities due to market forces. Additionally, responding to homelessness is a key policy priority. The economic recession contributed to the increase in homelessness during this Consolidated Plan cycle. However, because the economic rebound has been unequal, it is has not yet played a significant part in getting the most vulnerable back on their feet. Finally, the strong economy has pushed housing rental housing costs to record heights, and the homeownership prices back to pre-recession levels. The employment and housing challenges over this five-year cycle have impacted not only individuals, families, and households, but also neighborhoods, especially in lower-income areas. Issues such as blight and safety have been priorities in these communities, as well as the desire for investment in infrastructure and services to increase the health and resilience of these neighborhoods.

3 Page 3 During this five-year cycle, federal resources for housing and community development have declined significantly. As a result, the need for strategic, high-impact investments in the City's lower-income communities in order to maximize scarce federal funding has become even more important. Highlights of Major Accomplishments This FY CAPER summarizes the progress towards goals articulated in San Jose's FY Consolidated Plan and FY Annual Action Plan through investments that the City has made to its sub-grantees this past year. In FY , the Housing Department received $12,200,000 in federal housing and community development funds. Despite the downturn in the economy and limited funding, the City utilized its federal funds and leveraged scarce local and State dollars in order to make targeted and strategic investments towards meeting the housing, services, and community development priorities of its residents. The City accomplished many noteworthy achievements in FY through its investment of federal resources, including: The City provided 188 chronically homeless clients, including those with severe mental illness, access to temporary housing subsidies and case management services through a Tenant-Based Rental Assistance (TBRA) Program funded by HOME, Housing Opportunities for People with AIDS (HOPWA) and HOPWA Special Programs of National Significance programs. The HOPWA and HOPWA PSH programs provided assistance to 149 chronically homeless individuals with Aids of which 95% were able to retain permanent housing. Additionally, 39 homeless individuals received assistance through the HOME funded program. Several of the homeless individuals assisted through the HOME TBRA program were previously living in encampments. In addition to providing housing resources the individuals received other coordinated service such as case management through other partner organizations. Over the five-year period from , the City assisted 915 homeless clients under the same program, far exceeding its five-year target of 285 clients. The City provided vital services assistance (outreach, housing placement and case management services) to an additional 1,278 homeless individuals, youth and families including victims of domestic violence in FY Through CDBG and Emergency - Solutions Grant (ESG) programs, several agencies provided a variety of services to the homeless individuals including outreach and shelter services, case management, and assistance with permanent housing. Of the 1,278 individuals served through these programs, over 58% of the combined total participated in intensive case management resulting in approximately 72% of participants attaining and maintaining permanent housing for at least six months. Over the five year period from , the City assisted 12,958 residents obtain these vital services. Since FY , the City has invested in kindergarten readiness, literacy skills, afterschool tutoring, and parent workshops in three place-based neighborhoods. In FY the City's investment served 963 students and parents. Both parent and student participants indicated that the students were more prepared for school and displayed increased confidence

4 Page 4 in their reading and literacy skills. Additionally, these neighborhoods developed sufficient expertise and financial capacity to sustain these programs without future CDBG funding. These investments have increased the social capital and economic resilience of students, families, and communities by developing core skills necessary to participate in the workforces and to create an educated and engaged citizenry. Since over 4,100 students and parents were assisted through this funding. The City helped finance the completion of 390 new affordable apartments affordable to extremely low-income, very low-income and low-income families in FY During FY , the City made Commitments to construct over 1,100 affordable homes which constituted almost nine times the Five-Year goal that was set during an economic recession. The City also assisted in the completion of over 1,360 affordable homes during the same time period. Using Community Development Block Grant (CDBG) to leverage additional resources through the State's CalHome program and the Federal Emergency Management Agency (FEMA) funds, the City provided housing rehabilitation assistance to 312 lower-income households including 168 seniors and special needs households in FY In spite of the reductions in City staff and funding resources over the five year period, the combined programs assisted 2,092 residents with rehabilitation services during the 5 year performance period, exceeding the original goal of 1,150 by over 940 residents assisted. The City provided enhanced code-enforcement services within 1,799 households and businesses to help eliminate blight and strengthen neighborhoods with the help of funds from the CDBG program. The result of Code Enforcement efforts was the correction of 4,681 violations. 85% of blight violations were corrected within 60 days and 70% of substandard housing violations verified by inspectors were corrected within 120 days. Over the five year period of , the City provided over 37,500 households and businesses with codeenforcement services. This five-year total exceeded the five-year goal of 26,610 by 10,900 households and businesses assisted. These and other accomplishments - including fair housing activities and monitoring and compliance - that further the City's housing and community development goals are detailed in the CAPER (See attachment A). It is important to note that the City is required to allocate approximately $2,000,000 annually ($2,159,737 in FY ) to repay the federal government for Section 108 loans made to the City's former Redevelopment Agency for various private development projects. When the loans were executed, CDBG funds were identified as the collateral funding source for this repayment obligation. Until another source of funding is identified, CDBG will continue to be the source of this annual repayment through This represents approximately 25% of the City's annual CDBG allocation.

5 Page 5 EVALUATION AND FOLLOW-UP Upon City Council approval, the CAPER will be submitted to HUD by the September 30, 2015 due date. The draft and final CAPER documents will be posted on the San Jose Housing Department's website at: PUBLIC OUTREACH HUD requires that jurisdictions hold one public hearing and a 15-day public review period to receive public comments on the draft CAPER. The document's public review and comment period runs from August 24, 2015 through September 10, The City will also hold two public hearings on the document: one at the September 10, 2015 Housing and Community Development Advisory Commission meeting, and another at the September 15, 2015 City Council meeting. This memorandum will be posted to the City Council agenda website for that meeting. A public notice regarding the aforementioned public review and comment period was published in the San Jose Mercury News, La Oferta, Vietnam Daily News, The World Journal (Chinese), and the Philippine News on August 20, Because the public review period ends after the submittal of this Memorandum, a Supplemental Memorandum documenting any comments received during the review period will be sent to the City Council prior to its September 15, 2015 meeting. COORDINATION The preparation of this memorandum was coordinated with the City Attorney's Office. COST SUMMARY/IMPLICATIONS Without an approved CAPER, the City of San Jose will not qualify for future HUD funding including CDBG, HOME, HOPWA, and ESG programs that are essential for supporting vital housing and community development investments. COMMISSION RECOMMENDATION This item will be heard before the Housing and Community Development Commission meeting on September 10, 2015 at 5:45 p.m. Input from the Commission and the public will be included in the Supplemental Memorandum containing the public outreach results.

6 Page 6 CEOA Not a Project, File No.PP (a) Annual Report. /s/ JACKY MORALES-FERRAND Interim Director, Housing For questions, please contact Jacky Morales-Ferrand, Interim Housing Director at (408)