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.

On June 22, 2020 the City Council discussed possible uses of the CDBG-CV funds and directed the City Manager to pursue: a) utilizing two-thirds of the CDBG-CV funds to provide rental assistance to households impacted by the COVID-19 pandemic; and, b) utilize one-third of the CDBG-CV funds to provide rental assistance to businesses impacted by the COVID-19 pandemic.

The State of Nevada also decided to provide state-wide rental assistance to households financially impacted by the COVID-19 pandemic. On July 20, 2020, the State of Nevada launched the CARES Housing Assistance Program, which is being administered by the Nevada Housing Division in coordination with the Reno Housing Authority (RHA), Clark County Social Services, and the Nevada Rural Housing Authority. The State of Nevada is providing $30 million to support the CARES Housing Assistance Program. Of this amount, $5,000,000 is earmarked for Washoe County, including residents of the cities of Sparks and Reno, and will be disbursed by RHA in accordance with the terms of an agreement between RHA and the Nevada Housing Division of the Nevada Department of Business and Industry.

As provided for in a separate agenda item, City staff has also proposed the City Council approve a second contract with RHA to administer and disburse up to $2,000,000 of CARES Act funding to provide rental assistance to eligible Sparks households impacted by the COVID-19 pandemic.

City staff initiated discussions with the Reno Housing Authority (RHA) about administering and disbursing the CDBG-CV funds on behalf of the City. RHA responded that the agency is willing, and has the capacity, to administer the funds. City staff have, however, found it challenging to identify an appropriate entity interested in, and with the requisite technical capacity, to administer a business assistance program using CDBG-CV funds. This is due, substantively, to the relatively small amount of funds under consideration (i.e., one third of $402,633 equals $134,077) and HUD’s record-keeping and reporting requirements for sub-recipients.

Accordingly, staff proposes that the City Council approve a Grant Program Contract with RHA for a not-to-exceed amount of $402,633, the full amount of CDBD-CV funding awarded to the City of Sparks.

Pursuant to the terms of the Grant Program Contract (refer to Exhibit 1), RHA will provide rental assistance funds as grants to eligible Sparks tenants. The funds do not have to be paid back. Funds will be awarded on a first-come, first serve basis to eligible applicants and will be paid directly to landlords on behalf of tenants. Assistance is available to Sparks residents who have experienced a reduction or loss of income due to COVID-19. Assistance is provided for up to three (3) months of rent, including past due rent, payable to an eligible household’s landlord by RHA, acting on behalf of the City of Sparks. 

In order to be eligible for funds, applicants:

+  Must be a tenant in Sparks with a current, active lease in which back rent is owed;

+  Must be able to demonstrate financial hardship due to COVID-19 (loss of employment, reduction in work hours, and/or reduction in wages);

+  Must have a gross annual household income that is at or below 80% of Area Median Income as determined by the United States Department of Housing and Urban Development;

+  May not live in public housing or be receiving other government rental assistance (ESG, Section 8/Housing Choice Vouchers, etc.);

+  May not have household liquid financial resources in excess of $3,000; and

+  May not be in the process of being evicted for a reason other than non-payment of rent.

The City will provide RHA funds on a reimbursement basis in an amount not to exceed $402,633 to provide rental assistance to eligible residential tenants residing within the corporate boundary of the City of Sparks. All funds must be expended on, or prior to, December 30, 2020. However, the City may terminate the Grant Program Contract if RHA fails to expend fifty percent of the funding by November 16, 2020. Up to ten percent ($40,263) of the funds may be used for program delivery costs. RHA will provide the City with reports, including client data, within 30 days of October 30 and December 30, 2020.

As noted in the Background section, City staff has also proposed the City Council approve a second contract with RHA to administer and disburse up to $2,000,000 of CARES Act funding the City is receiving from the State of Nevada to provide rental assistance to eligible Sparks households impacted by the COVID-19 pandemic. The primary differences between the two programs are: a) the CDBG-CV funds may be used to assist households with an income of up to 80 percent of Area Median Income (AMI) while the CARES Act funds from the State can assist households with an income of 120 percent of AMI; b) assistance is limited to a period of three months for the CDBG-CV program; the CARES Act program allows up to nine months of assistance to a household; c) the CDBG-CV regulations include additional restrictions on participation by households receiving other government assistance, including those living in public housing; d) for the CDBG-CV funds, RHA must document in its project records that it has conducted a duplication of benefits analysis; and, e) RHA will receive CDBG-CV funds on a reimbursement basis whereas the City can advance CARES Act funds to RHA.

The City Council’s alternatives include the following:

1. Approve the proposed Grant Program Contract for the administration of CDBG-CV funds between the City of Sparks and the Reno Housing Authority.
2. Modify the terms of the proposed Grant Program Contract, including the contract amount of $402,633, subject to agreement by the Reno Housing Authority.
3. Reject the proposed Grant Program Contract and provide direction to the City Manager.

I move to approve the Grant Program Contract (AC-5683) between the City of Sparks and the Reno Housing Authority, in an amount not to exceed $402,633 of Community Development Block Grant funds allocated to the City of Sparks through the Corona Virus Aid, Relief and Economic Security Act (CARES Act), to provide residential rental assistance to tenants residing within the corporate limits of the City of Sparks.