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    17.    
City Council Regular
Meeting Date: 10/28/2020  

SUBJECT:
COMMUNITY DEVELOPMENT BLOCK GRANT CORONAVIRUS FUNDS
RECOMMENDATION:
Provide direction on the allocation of Community Development Block Grant Coronavirus (CDBG-CV) funds. 
BACKGROUND/ANALYSIS:
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed in to law to respond to the growing effects of COVID-19.  The CARES Act made available $5 billion in Community Development Block Grant Coronavirus (CDBG-CV) funds.  Of this amount, the Department of Housing and Urban Development (HUD) allocated $2 billion based on the fiscal year 2019-2020 Community Development Block Grant (CDBG) formula as part of the first round of fund allocations; the City of Chino Hills' allocation was $245,261.  The second round of allocations were awarded to the States.  The third round of allocations were to be allocated to states and local governments at the discretion of the HUD Secretary on a rolling basis.  On September 11, 2020, the third round of funds were allocated.  The City of Chino Hills' allocation was $413,747.   The cumulative amount for all allocation rounds is $659,008. 

On June 23, 2020, City Council approved a Substantial Amendment to the 2019-2020 Community Development Block Grant Annual Action Plan to allocate funds to a Microenterprise Business Grant Program.  The program made available grants in the amount of $2,500 to very small businesses with five or fewer employees who demonstrated financial need or negative impact as a result of COVID-19.   On September 22, 2020, City Council approved an increase in the grant amount from $2,500 to $5,000 and opened a second cycle of application submittals.  As of October 22, 2020, 21 Microenterprise Business Grant applications have been approved.
 
Allocation of the additional CDBG-CV funds in the amount of $413,747 requires another Substantial Amendment to the City's 2019-2020 Annual Action Plan.  Therefore, staff is asking for direction from City Council on how to allocate the funds.  Funds must be used to prevent, prepare for, and respond to the coronavirus (COVID-19) pandemic.  In accordance with HUD guidance, the use of funds should prioritize the unique needs of low- and moderate-income persons.  Below are two proposed programs for City Council's consideration.   

Small Business Grant Program

As stated above, the City has implemented a Microenterprise Business Grant Program for very small businesses with five or fewer employees that have been negatively affected by the COVID-19 pandemic.  It was City Council's direction to expand the business grant program for businesses with more than five employees.  HUD guidelines allow for an economic development business grant program, which requires that businesses create or retain permanent employment for persons of low- and moderate-income for a period of 2 years.  

If this program is funded, staff would need direction from City Council on the following:  
  1. The maximum number of employees a business may have to be eligible.  Based on data collected by HDL, the City's business license administrator, there are 405 businesses that have less than 100 employees.  A further breakdown of businesses provided by a Dun & Bradstreet report shows that there are an estimated 234 businesses with 1-10 employees, 13 businesses with 11-20 employees, and 4 businesses with  21-35 employees.
  2. The grant amount available to businesses. There are a several ways this can be done: (a) a flat grant amount for every applicant, (b) a tiered system where by the greater the number of employees the greater amount of the grant.  For example, businesses with 0 - 5 employees are eligible for a $5,000 grant; business with 5 - 10 employees would be eligible for a $7,500 grant, or (c) a system based on the number of permanent low- to moderate-income employees the business pledges to create or retain.  For example, businesses would be eligible to receive up to $5,000 for each low- to moderate-income employee they pledge to create or retain, with a maximum of $10,000 per business. 
Staff recommends that a grant program be implemented for businesses that have up to 35 employees that would provide grants in the amount of $5,000 for each low- to moderate-income employee the businesses pledges to retain or create with a maximum of $10,000 per business. Staff is recommending that $250,000 be allocated to this program.  

Senior Meal Delivery Program

Staff has been researching various meal delivery programs to determine which would be the best option.  Meal programs, whether delivery or not, have seen an exponential increase in demand since the COVID-19 pandemic.  Organizations have had to not only adapt to the increase in demand, but make modifications to their programs to address health protocols. Due to the complexities of implementing  this type of program, staff is unable to present City Council with a comprehensive and viable program at this time.  Some of the issues that still need to be addressed include: 
  1. Can this program be managed by City staff or can we partner with a third party?
  2. How will the delivery of the meals be managed? 
  3. How will the screening of participants be managed? 
  4. How to handle dietary restrictions? 
  5. Is there a need in our community?
Currently, there are a total of 179 Chino Hills seniors that are already participating in some type of meal delivery program that is either provided by the County or by a non-profit agency.  Staff is working towards bringing forward a comprehensive program for City Council's consideration at the next council meeting.  

Available Funding

If the City Council elects to allocate $250,000 to the Small Business Grant Program, there is an additional $163,747 still available to be allocated.  City Council may allocate these funds to the Microenterprise Business Grant Program, allocate all the funds to the Small Business Grant Program, or defer allocating the funds in anticipation of a future new program, such as the Senior Meal Delivery Program.
 
   
ENVIRONMENTAL (CEQA) REVIEW:
This proposed action is exempt from review under the California Environmental Quality Act (California Public Resources Code§§ 21000, et seq.; "CEQA") and CEQA regulations (14 California Code Regulations §§15000,  et. seq.) because it does not involve any commitment  to a specific project which could result in a potentially significant physical impact on the environment; and constitutes an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. Accordingly, this action does not constitute a "project" that requires environmental review (see specifically 14 CCR§ 15378(b) (4-5)).
FISCAL IMPACT:
Funding for the Community Development Block Grant is provided by HUD.  There is no impact on the General Fund with this item. 

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