The City of Sparks was awarded $402,633 in supplemental Community Development Block Grant (CDBG-CV) funding authorized in the Corona Virus Aid, Relief and Economic Security Act (CARES Act). CDBG-CV grant funds may be used to cover or reimburse costs to prevent, prepare for, and respond to the novel corona virus (COVID-19). The City may utilize these funds during the current federal fiscal year (2019) and/or carry them over to federal fiscal year 2020, which begins on October 1, 2020, by submitting and receiving approval of a “Substantial Amendment” to the City’s approved 2019 Annual Action Plan from the United States Department of Housing and Urban Development (HUD).

Per HUD’s regulations, eligible activities for CDBG-CV are as follows:

1. Buildings and improvements, including public facilities

a. Acquisition, construction, reconstruction, or installation of public works, facilities, and site or other improvements.

b. Rehabilitation of buildings and improvements (including interim assistance).

2. Assistance to businesses

a. Provision of assistance to private, for-profit entities, when appropriate to carry out an economic development project.

b. Provision of assistance to small businesses and microenterprises.

3. Provision of new or quantifiably increased public services.

a. Public services include those for people experiencing homelessness or elderly people, and services related to employment, crime prevention, childcare, health, drug abuse, education, fair housing counseling, and energy conservation. CDBG funds may be used to pay for labor, supplies, and material as well as to operate and/or maintain the portion of a facility in which the public service is located. This includes the lease of a facility, equipment, and other property needed for the public service.

b. Following enactment of the CARES Act, the public services cap (normally 15% for Sparks) is not applicable to CDBG-CV grants or for FY 2019 and 2020 CDBG grant funds used for COVID-19 efforts.

4. Rental assistance. CDBG entitlement program regulations allow jurisdictions to spend CDBG for rental assistance or utility assistance to households for up to three months. 

5. Planning, capacity building, and technical assistance to gather data and develop non-project specific emergency infectious disease response plans.

CDBG-funded activities must benefit low and moderate income persons or meet the CDBG urgent need national objective criteria.

As stated in the Background section, CDBG-CV funding may be used to cover or reimburse costs to prevent, prepare for, and respond to the novel corona virus (COVID-19). City staff has identified four types of eligible activities for consideration by the City Council:

1.  Public service activities, including past and future costs for activities related to the COVID-19 pandemic, such as expenses the City of Sparks is incurring (in conjunction with the City of Reno and Washoe County) to isolate COVID-19 positive or COVID-19 positive suspected individuals and to shelter homeless persons based on social distancing guidelines issued by the Centers for Disease Control and Prevention (CDC) and Washoe County Health District. These may include group living facilities (e.g., the Well Care housing) to isolate COVID-19 positive and socially-distanced emergency shelters for persons that are homeless (e.g., temporary shelter at the Reno Events Center). Another possibility is the provision of services to enable income-qualified households facing pandemic-related income disruptions to retain their rental housing.

2.  Buildings and improvements, including public facilities, to isolate COVID-19 positive or COVID-19 positive suspected individuals and to shelter homeless persons based on social distancing guidelines. This could include, for example, improving an alternative facility to supplement the Community Assistance Center after shelter operations cease at the Reno Events Center or to provide temporary housing (e.g., Edison trailers).

3.  Emergency rental housing assistance for up to three months to low- and moderate-income households who have been financially impacted by the COVID-19 pandemic and the “closing” of the economy. Should the Council desire to provide such assistance, staff recommends that the Council direct staff to identify an appropriate and willing third-party agency to receive and distribute rental assistance funds.

4.  Provide grants or loans to businesses to create jobs related to products or services needed to respond to the pandemic (e.g., manufacturing medical supplies) or retain jobs held by low and moderate income persons that would otherwise be lost due to social distancing requirements. Should the Council desire to provide business assistance, staff recommends the Council direct staff to identify an appropriate and willing third-party agency to receive and distribute the funds.

Considering the amount of CDBG-CV funding available to the City relative to the potentially high demand for rental housing assistance or grants or loans to businesses, and taking into account HUD’s record-keeping and reporting requirements for sub-recipients, staff advises against allocating CDBG-funding for those activities.

Staff therefore recommends the City Council direct the City Manager to conduct a 5-day public comment period (as permitted by the CARES Act) and then submit to HUD, a Substantial Amendment to the City’s approved 2019 Annual Action Plan that allocates the $402,633 of CDBG-CV funds as follows: (a) up to $302,633 for public service activities; and, (b), up to $100,000 for buildings and facilities.

1. Direct the City Manager to submit to HUD, a Substantial Amendment to the City’s approved 2019 Annual Action Plan that allocates $402,633 of CDBG-CV funds, as recommended by staff.
2. Direct the City Manager to submit to HUD, a Substantial Amendment to the City’s approved 2019 Annual Action Plan that allocates $402,633 of CDBG-CV funds in a different manner, including for rental housing assistance and/or to provide grants or loans to businesses. 

I move to direct the City Manager to submit to HUD, a Substantial Amendment to the City’s approved 2019 Annual Action Plan that allocates the $402,633 of CDBG-CV funds, as recommended by staff.