On February 1, 2021, Mayor Lawson received a letter from the Nevada Governor’s Office of Economic Development (GOED) notifying the City of Sparks it had been awarded Community Development Block Grant funds from the federal Corona Virus Aid, Relief and Economic Security Act (CDBG-CV) in the amount of $309,367 to prevent, prepare for, and respond to the COVID-19 virus. The City Council may accept or “opt out” (i.e., decline) this award of grant funds.

 

CDBG-CV funding must be used to support activities for the prevention of, preparation for, and response to the Coronavirus. If the City Council accepts the CDBG-CV funds from GOED, it may draw the funds during fiscal year 2022, which begins on July 1, 2021. Prior to drawing the funds, the City must submit, and receive GOED's approval of, an application specifying projects or activities for use of the CDBG-CV funds. The City must expend at least eighty percent (80%) of the funds by August of 2023.

 

CBDG-CV funds are administered federally by the United States Department of Housing and Urban Development (HUD). Pursuant to HUD’s regulations, the following activities are eligible CDBG-CV expenditures:

1. Buildings and improvements, including public facilities 

a. Acquisition, construction, reconstruction, or installation of public works, facilities, and sites 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 who are elderly, and services related to employment, crime prevention, childcare, health, drug abuse, education, fair housing counseling, and energy conservation. CDBG-CV funds may be used to pay for labor, supplies, and materials 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. 

4. Rental assistance. CDBG entitlement program regulations allow jurisdictions to spend CDBG-CV funds for rental assistance or utility assistance to households for up to six months. 

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

 

In addition to the requirement that CDBG-CV funds be used for prevention of, preparation for, and response to the Coronavirus, CDBG-funded activities must benefit low- and moderate-income persons.

In 2020, the City of Sparks allocated both CDBG-CV funds it received directly from HUD as an entitlement grantee and CARES Act funding from the State of Nevada to provide rental assistance to households within the corporate limits of the City of Sparks. To disburse aid to eligible households, the City contracted with the Reno Housing Authority (RHA) and provided $402,622 of CDBG-CV funding (all such funds the City was allocated by HUD) and $2,000,000 of CARES Act monies. RHA expended all of the CDBG-CV funds and $1,268,176 of the CARES Act funds prior to the December 30, 2020 deadline to do so. When RHA returned the unspent CARES Act funds to the City, it had a backlog of potential clients who were unable to complete the application review process prior to the deadline. 

 

As outlined in the Background section above, there are numerous other possibilities for use of the CDBG-CV funds from GOED, but City staff have conferred with RHA Executive Director Amy Jones about resuming the provision of rental assistance to additional low- and moderate-income Sparks households. Ms. Jones informed City staff that RHA is retaining the organizational capacity to administer rental assistance because RHA will be administering a rental assistance program throughout Washoe County for the State of Nevada beginning in approximately March. RHA remains interested in again administering CDBG-CV funds for the City of Sparks as Ms. Jones believes there will still be a community need in the second half of 2021 for rental assistance. Further evidence of such need is provided by a study published by the Federal Reserve Bank of Philadelphia estimating that as of December of 2020, there were over 15 thousand renter households in Nevada with members who have lost jobs in the pandemic, and that these households have amassed $81 million in rental arrears (Table 6, Household Rental Debt During COVID-19, Reed and Divringi, Federal Reserve Bank of Philadelphia, October 2020). 

 

Staff therefore recommends that the City Council approve the Grant Agreement with GOED to accept the grant of CDBG-CV funds and, in addition, direct the City Manager to seek GOED approval to use the funding to provide rental assistance to Sparks residents. If the City Council accepts the CDBG-CV funds, City staff will undertake the steps outlined in the “CDBG-CV Grant Cycle Timeline” attached to the Grant Agreement. These include holding public meetings to solicit comment on the proposed use of the funds, submitting the proposed project or activity to GOED for review, executing a Sub-Recipient agreement with GOED, and conducting the requisite environmental review. Once GOED grants its approval, the City can contract with RHA to administer rental assistance funds.