S TATE O F A R I ZO NA ONE YEAR ACTION PLAN FISCAL YEAR 2010/2011 MAY 14, 2010 TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................................... 1 Citizen Participation ............................................................................................................................... 1 Priority Objectives and Outcomes ......................................................................................................... 1 Resources and Programs ....................................................................................................................... 2 Evaluation of Past Performance ............................................................................................................ 3 INTRODUCTION ..................................................................................................................... 4 Background ........................................................................................................................................... 4 Available Resources ............................................................................................................................... 4 PRIORITY OBJECTIVES........................................................................................................... 5 Housing Priorities ................................................................................................................................. 5 Homeless Priorities ............................................................................................................................... 6 Special Needs Priorities......................................................................................................................... 6 Community Development Priorities...................................................................................................... 6 RESOURCES .......................................................................................................................... 6 METHOD OF DISTRIBUTION ................................................................................................... 7 CDBG Method of Distribution .............................................................................................................. 7 HOME Method of Distribution ........................................................................................................... 13 ESG Method of Distribution ................................................................................................................ 16 HOPWA ................................................................................................................................................ 18 Geographic Distribution of Funds ....................................................................................................... 18 REMOVAL OF BARRIERS TO AFFORDABLE HOUSING .......................................................... 19 FOSTER AND MAINTAIN AFFORDABLE HOUSING ................................................................ 20 INSTITUTIONAL STRUCTURE ............................................................................................... 20 Plan Implementation ............................................................................................................................ 20 Gaps in the Delivery System ................................................................................................................. 21 Gaps in Public Housing ....................................................................................................................... 21 Arizona Department of Housing – FY 2010 Action Plan • May 2010 i TABLE OF CONTENTS ANTI-POVERTY STRATEGY .................................................................................................. 22 LEAD-BASED PAINT HAZARD REDUCTION .......................................................................... 22 MONITORING PLAN............................................................................................................. 23 CDBG Program .................................................................................................................................... 23 HOME Program .................................................................................................................................. 23 Emergency Shelter Grant (ESG) Monitoring Plan .............................................................................. 24 Housing Opportunities for Persons with AIDS (HOPWA)................................................................. 25 APPENDIX A – PUBLIC COMMENT AND RESPONSE .......................................................... A-1 ii Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN EXECUTIVE SUMMARY The FY 2010 Action Plan is a one-year plan to address the low-income housing and community development needs in the State of Arizona, with a special focus on serving the small cities and rural areas of the state. It is the first year Action Plan in the implementation of the five-year Consolidated Plan for fiscal years 2010 to 2014. This Action Plan consolidates the planning, application, and funding requirements for several programs funded by the U.S. Department of Housing and Urban Development: Community Development Block Grant (CDBG); HOME Investment Partnerships Program (HOME); Emergency Shelter Grant (ESG); and Housing Opportunities for Persons with AIDS (HOPWA). Both the Consolidated Plan and the Action Plan are implemented by the Arizona Department of Housing (ADOH). The federal and state-funded housing and community development projects and programs described within the Action Plan are administered and implemented by ADOH, the Arizona Department of Economic Security, units of local or regional government, or non-profit agencies. CITIZEN PARTICIPATION ADOH staff encouraged citizen participation throughout the development of the Consolidated Plan and Action Plan. This included consulting local organizations, holding public meetings in four areas of the state, and encouraging public comment during the public review period. Using research and input from the public, ADOH staff formulated the objectives and outcomes that are briefly described below. PRIORITY OBJECTIVES AND OUTCOMES The State’s priorities for the 2010 funding year include the following: • • Increase the supply and improve the condition of existing housing and to support the affordability and sustainability of safe, sanitary, and decent housing for purchase and rent by low-income households while also furthering fair housing choice opportunities. ƒ Outcome – Provide funding toward the creation of 1,000 new rental units. ƒ Outcome – Continue to ensure ADOH-funded rental units meet Housing Quality Standards (HQS) through continuous monitoring and compliance. ƒ Outcome – Provide rental assistance funds to approximately 9,000 qualified households throughout the state. ƒ Outcome – Assist in the rehabilitation of approximately 50 owner-occupied housing units and 300 affordable rental units during fiscal year 2010-2011. Ensure a variety of public facilities and services are available to meet the housing, human development, and supportive service needs of low-income persons and priority populations. Improve infrastructure and physical environments through revitalization efforts to promote a sustainable community. ƒ Outcome – Fund and support local supportive facilities to deliver housing, development and other services to a minimum of 2,500 low-income persons and priority populations throughout the state. Arizona Department of Housing – FY 2010 Action Plan • May 2010 1 FY 2010 ACTION PLAN • ƒ Outcome – Provide funding assistance to a minimum of five infrastructure/public facility improvement projects including water systems, roads/streets and flood drainage that will foster sustainable communities and positively affect an estimated 75,000 Arizona residents. ƒ Outcome – Support agencies, facilities and programs that will deliver supportive services to approximately 12,000 non-homeless special needs persons during the fiscal year 2010-2011. Part of the projected 12,000 special needs persons assisted include 150 people who will receive assistance as a result of utilizing HOPWA funding. Continue coordination of services and collaboration to help people move from homelessness to permanent housing and maintain independent living. ƒ Outcome – Begin one new project designed to increase the number of units, beds, or services available for Arizona’s homeless population.Outcome – Produce housing units and support services that will benefit approximately 11,000 homeless persons during the first year of the consolidated planning period. ƒ Outcome – Provide emergency assistance for rent, utilities, mortgage, etc. to a minimum of 25 households to help them avoid homelessness. RESOURCES AND PROGRAMS In 2010, the State anticipates receiving about $23 million in federal funding for the CDBG, HOME, ESG, and HOPWA programs. Detailed information on each program is shown below. Community Development Block Grant: $13,252,771 ADOH plans to set aside two percent ($265,055) of the gross allocation, plus $100,000 (for a total of $365,055) for costs associated with the administration of the program. ADOH will also set aside one percent of the total allocation ($132,528) for providing technical assistance. Ten percent of the total grant award ($1,325,277) will be set aside for Colonias applications. The remaining funds in the amount of $11,429,911 will be used as program funding to provide decent housing, suitable living environments, and economic opportunities in the small cities, towns, and rural areas of Arizona. Fifteen percent (or $1,714,487) of the program funding may be allocated through a competitive State Special Projects application round. The Consolidated Plan describes the method of distribution used for the regional allocation process: eighty‐five percent (or $9,715,424) of the program funding will be distributed through the Rural Council of Governments method of distributions: 2 • NACOG: $2,205,176 • WACOG: $2,843,424 • CAAG: $2,373,791 • SEAGO: $2,293,033 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN HOME Investment Partnerships Program: $8,779,843 The State will use 90 percent (or $7,901,859) of its HOME allocation for program funding to increase the availability/accessibility and affordability of decent housing and provide suitable living environments for low‐income households. Ten percent (or $877,984) of the grant funds will be for ADOH’s administrative costs. Emergency Shelter Grant: $894,638 The State will utilize this grant to increase the availability/accessibility of suitable living environments and decent housing by providing a wide range of supportive services to homeless persons or directed to the prevention of homelessness. Housing Opportunities for Persons with AIDS: $219,282 ADOH will utilize $197,354 of this grant to increase the availability/accessibility and affordability of suitable living environments and decent housing through organizations that provide planning for housing needs, education, and access to essential community resources. Three percent or $6,578 will be retained by ADOH to cover administrative‐related expenses of the program; grantees will be allowed to utilize seven percent of the grant money (up to $15,350) in total for grantee administration costs. EVALUATION OF PAST PERFORMANCE Annually, the Arizona Department of Housing submits a Consolidated Annual Performance and Evaluation Report (CAPER), which provides HUD with an update on progress towards meeting goals outlined in the Consolidated Plan and more specifically the Annual Action Plans. In the most recently available CAPER (FY 2008-2009), ADOH committed over $240 million to affordable housing and community development efforts from its HUD allocations, State Housing Trust Funds, and Low‐Income Housing Tax Credit programs. In its efforts to provide decent housing, sustainable living environments and expand economic opportunities, ADOH used CDGB, HOME, HOPWA, and State Housing Trust Funds to invest in activities that helped to retain affordable housing stock, increased the availability of permanent housing that is affordable to low and moderate income individuals and provided supportive housing that includes structural features and services for persons with special needs. ADOH invested in activities that increase the availability of foreclosure counseling to all Arizonans while providing education on fair housing in compliance with the Fair Housing Act. It also provided technical assistance and support to encourage planning that incorporates economic development and smart growth initiatives. Over the 2008-2009 fiscal year, ADOH met its planning goals toward providing and maintaining decent affordable housing and sustainable living environments. ADOH spent tens of millions of dollars toward creating sustainable homeownership through its Homes for Arizonans (down payment and closing cost assistance) program, leveraging American Dream Down payment Initiative (ADDI) and HOME funds in combination with the State’s Housing Trust Fund and Neighborhood Stabilization Program (NSP) program. Furthermore, the Arizona Housing Finance Authority (AzHFA) utilized Mortgage Revenue Bonds and Mortgage Credit Certificates providing low‐interest mortgage financing to stimulate and encourage homeownership in rural markets. In creating new affordable rental units, HOME funds, in combination with State Housing Trust Funds were used to invest in new projects and single family home units in order to increase the accessibility and availability of permanent housing that is affordable to low‐and‐moderate income individuals. In addition, ADOH directed CDBG funds toward revitalization activities that improved the safety and livability of deteriorating neighborhoods. Arizona Department of Housing – FY 2010 Action Plan • May 2010 3 FY 2010 ACTION PLAN The Arizona Department of Housing serves as the lead agency for the homeless and community planning Continuum of Care process for the thirteen rural counties in the state. On an annual basis, the agency applies for competitive funding to HUD for projects and programs that are identified as priority needs through the Continuum process. ADOH then acts as the administering agency for the grants that are passed through to the participating sub‐recipients. Over the years, ADOH has secured millions of dollars in funding for transitional and permanent housing programs. Overall, ADOH actively aims for and efficiently implements the activities and strategies described in the Consolidated Plan and Action Plans and continues to make a positive impact on identified needs within the State of Arizona.. INTRODUCTION The U.S. Department of Housing and Urban Development (HUD) requires all government entities receiving federal low-income housing and community development funds to prepare an Annual Action Plan. This Fiscal Year 2010 Action Plan outlines funding priorities, the method of distributing funds, and a discussion of how activities will meet the community needs identified in the 2010-2014 Consolidated Plan. BACKGROUND Arizona faces some significant challenges in the next fiscal year. Unemployment rates remain high, hovering near 10 percent, and the heyday of the construction industry leading the state’s economy is past. In early 2010, Arizona ranked second in the with its foreclosure rate. The state has suffered historic budget and service reductions. Population growth has slowed significantly from the rates seen in the early 2000s, but the consequences of rapid population growth are increasing in prominence in terms of the need for jobs, affordable housing choices, and demands for human services. Throughout this Action Plan, ADOH will demonstrate its commitment to assess current market conditions and address the housing challenges that resulted from being one of the fastest growing states in the nation. Investment allocation decisions will focus on activities that service the needs of the lowest income groups and in particular close funding gaps and support activities in rural areas that have limited funding opportunities when feasible; support projects where the need for funds and the demand for the project design is demonstrated; support projects identified as high priorities in the Consolidated Plan; and invest in areas in decline and those with a disproportionate concentration of low‐income and minority populations. AVAILABLE RESOURCES The State of Arizona receives Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME), and Housing Opportunities for Persons with AIDS (HOPWA), and Emergency Shelter Grant (ESG) funds. The CDBG program provides funding to communities for a variety of activities that address urgent community development conditions that threaten the health or welfare of the community, benefit lowincome persons, or prevent or eliminate slums or blighted areas in the community. The HOME program provides grants to States and local governments to fund local programs that support the construction of rental or ownership housing, or provide homeownership or rental assistance to lowincome persons. 4 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN HOPWA funds provide housing and supportive services support for person with HIV/AIDS. These funds may go toward acquisition, rehabilitation, or new construction of housing units and may also fund rental assistance, facility operations, short-term homelessness prevention, medical and mental health services, chemical dependency treatment, nutritional services, case management, and other supportive services. ESG funds support basic shelter and supportive services for homeless persons in the form of operation costs for shelter facilities, short-term homeless prevention to persons at risk of losing housing due to eviction, foreclosure or utility shut-offs. ESG funds can be used for rehabilitation or remodeling of building to be a new shelter, operations and maintenance of the facility, essential supportive services, homeless prevention, and grant administration. In addition to these funding sources, the State makes available several other federal, state, and local resources in support of housing and community development activities. Descriptions of these activities can be found in the Consolidated Plan. Other funding sources include: • State Housing Trust Fund; • Supportive Housing Program; • Shelter Plus Care Program; • Low-Income Housing Tax Credits; • Private activity bonds; and • Mortgage Credit Certificate Program. PRIORITY OBJECTIVES The 2010-2014 Consolidated Plan included several priorities for activities over the five-year period. These priorities were divided into housing, homeless, special needs, and community development. Each activity funded will meet one or more of the identified priorities. HOUSING PRIORITIES • Expand the supply of affordable rental housing for very low-income and extremely low-income households. When possible, emphasize projects that assist families, seniors, and persons with disabilities. • Preserve and improve the long-term life of existing affordable rental and owner-occupied housing stock. • Expand homeownership opportunities for low-income homebuyers in areas of the state where median home prices are beyond the reach of low-income households. • Ensure that all households in the state have adequate access to fair housing resources. Arizona Department of Housing – FY 2010 Action Plan • May 2010 5 FY 2010 ACTION PLAN HOMELESS PRIORITIES • Encourage a range of services to help people move from homelessness to permanent housing and maintain independent living. • Increase the number of transitional and permanent supportive housing units for the homeless and chronically homeless. • Offer services and funding to help prevent people from becoming homeless and breaking the cycle of chronic homelessness. SPECIAL NEEDS PRIORITIES • Increase and preserve the supply of affordable housing available to the elderly, disabled, and large families. • Improve housing accessibility and safety (existing and new). COMMUNITY DEVELOPMENT PRIORITIES • Improve infrastructure and physical environments to promote sustainable and accessible communities. • Ensure a variety of public facilities are available to meet the recreational, human development, and service needs of low-income households and priority populations. • Encourage job training and employment opportunities. RESOURCES In FY2010, ADOH will allocate the four primary HUD funded programs as discussed below: Community Development Block Grant: $13,252,771 ADOH plans to set aside two percent ($265,055) of the gross allocation, plus $100,000 (for a total of $365,055) for costs associated with the administration of the program. ADOH will also set aside one percent of the total allocation ($132,528) for providing technical assistance. And finally, ten percent of the total grant award ($1,325,277) will be set aside for Colonias applications. The remaining funds in the amount of $11,429,911 will be used as program funding to provide decent housing, suitable living environments, and economic opportunities in the small cities, towns, and rural areas of Arizona. Fifteen percent (or $1,714,487) of the program funding may be allocated through a competitive State Special Projects application round. The Consolidated Plan describes the method of distribution used for the regional allocation process: eighty‐five percent (or $9,715,424) of the program funding will be distributed through the Rural Council of Governments method of distributions: • 6 NACOG: $2,205,176 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN • WACOG: $2,843,424 • CAAG: $2,373,791 • SEAGO: $2,293,033 HOME Investment Partnerships Program: $8,779,843 The State will use 90 percent (or $7,901,859) of its HOME allocation for program funding to increase the availability/accessibility and affordability of decent housing and provide suitable living environments for low‐income households. Ten percent (or $877,984) of the grant funds will be for ADOH’s administrative costs. Emergency Shelter Grant: $894,638 The State will utilize this grant to increase the availability/accessibility of suitable living environments and decent housing by providing a wide range of supportive services to homeless persons or directed to the prevention of homelessness. Housing Opportunities for Persons with AIDS: $219,282 ADOH will utilize $197,354 of this grant to increase the availability/accessibility and affordability of suitable living environments and decent housing through organizations that provide planning for housing needs, education, and access to essential community resources. Three percent or $6,578 will be retained by ADOH to cover administrative‐related expenses of the program; grantees will be allowed to utilize seven percent of the grant money (up to $15,350) in total for grantee administration costs. METHOD OF DISTRIBUTION This section describes the methods of distribution and geographic allocation of resources for CDBG, HOME, ESG, and HOPWA. The allocation of ADOH investments is as follows: CDBG METHOD OF DISTRIBUTION The State expects to receive $13,252,771 in new CDBG resources in 2010. CDBG Eligible Applicants The state CDBG program is available to eligible units of local government, including cities, towns, and counties in rural areas. For purposes of this program, rural areas are those located outside of entitlement jurisdictions (those that receive CDBG funds directly from HUD). Entitlement jurisdictions in Arizona include all of Maricopa and Pima Counties, the cities of Flagstaff, Prescott, and Yuma. CDBG Eligible Activities Eligible activities are generally found in Section 105 of the HUD Act of 1974, as amended, and at 24 CFR Part 570.482, as amended. CDBG funds can be used for a wide range of activities of which ADOH plans to utilize no less than 70 percent of the CDBG funds for activities that directly benefit persons of low- and moderate-income and no more than 30 percent toward addressing community blight or other urgent need activities. Those Activities listed in Appendix K (Table K-4) of the FY2010-2014 Consolidated Plan that Arizona Department of Housing – FY 2010 Action Plan • May 2010 7 FY 2010 ACTION PLAN have received a priority ranking of high or medium are eligible for funding under this Action Plan. Those activities generally fall under the following main funding categories: • Housing (both owner-occupied and rental rehabilitation); • Public improvements (such as water, wastewater, or street improvements); • Public facilities (such as, homeless/domestic violence facilities or senior centers); • Public services (such as public safety or health care services); and • Planning studies. Method of Distribution The total amount of CDBG funds available to the State in program year 2010 is anticipated to be $13,252,771, which shall be utilized as described below: ADOH Administration This figure includes one percent ($132,528) set aside for technical assistance and two percent ($265,055) plus $100,000 set aside allowable for administration. (This amount does not include the required two percent administration match.) ADOH will provide the two percent required match in non-federal matching funds from two sources. These include “hard” match funds, i.e. state funds used to pay salaries and other operating expenses of the CDBG program and “in-kind” or “soft” match funds which represent staff time devoted to the CDBG program by individuals whose salaries are paid from non-federal sources. These personnel include those located in the Information Technology Division, Personnel, Procurement, Customer Liaison, the Assistant Deputy Director/Programs and Assistant Deputy Director/Operations. Soft match is tracked by employees on their time sheets. CDBG Colonias Set Aside According to Section 916 of the Cranston-Gonzalez Act of 1990, a “colonia” is any identifiable community that: 1) Is located within 150 miles of the border between the United States and Mexico, except within any standard metropolitan statistical area that has a population exceeding 1,000,000; and 2) Is designated by the state or county in which it is located as colonia; 3) Is determined to be a colonia on the basis of objective criteria, including the lack of potable water supply, lack of adequate sewage systems, and lack of decent, safe, and sanitary housing; and 4) Was in existence and generally recognized as a colonia before the enactment of the National Affordable Housing Act of 1990. HUD mandates the state expend at least 10 percent of its CDBG project allocation in the areas designated as colonias. The colonias allocation is $1,325,277. Colonias funding will be distributed through a competitive application process. ADOH will issue a funding notice once every two years to solicit projects located in colonias. All cities, towns, counties and tribal reservations that contain either geographically defined neighborhoods or unincorporated communities designated as colonias and that are eligible to receive CDBG 8 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN funding thru ADOH are eligible to apply for these funds. An application for colonias funds will not affect a jurisdiction’s eligibility for other CDBG funding. Water/sewer infrastructure and housing activities will be considered eligible colonias set aside projects for areas determined to be Colonia-eligible. CDBG Regional Account Eighty-five (85) percent of the remaining amount of CDBG funds after allocations to administration, technical assistance, and the Colonias Set Aside will be distributed into the Regional Account (RA). These funds will be used for housing projects or projects that address a high- or medium-priority community development need. Primary activities include housing rehabilitation, public facilities, public services and public improvement activities, and economic development. The RA is first divided into four sub-accounts, one for each of the non-metropolitan Council of Governments (COG) areas: CAAG, NACOG, SEAGO, and WACOG. To determine the amount of CDBG funding allocated to each COG’s sub account, the state uses a formula based on population and persons in poverty. The COG sub-accounts are determined by 1) multiplying the percentage of the total population of each COG by 30 percent; 2) multiplying the percentage of the total poverty population of COG by 70 percent; and 3) adding the products of the two. Regional Account allocations are as follows: • NACOG: $2,205,176 • WACOG: $2,843,424 • CAAG: $2,373,791 • SEAGO: $2,293,033 Each non-metropolitan Council of Government (COG) region must create a regionally approved Method of Distribution (MOD) and submit it to ADOH for review. The MOD contains a multi-year schedule indicating how CDBG allocations are to be distributed such that all eligible communities within each respective COG region will receive funding. The multi-year schedule must include the funding years that each community in the region will receive funds and estimate the amount to be available. This will allow each community to plan its CDBG projects in advance. Deviations from rotation schedules whereby communities trade allocations is allowed but must be accomplished prior to submittal of the final MOD. Each COG must submit its MOD to ADOH within 45 days of the Information Bulletin published by ADOH (announcing the COGs’ allocation by CDBG region) along with documentation that the MOD has been approved by formal action of the Regional Council. ADOH has the final authority to approve or deny each MOD. After the MOD is determined, local governments must complete applications for funding and route them through the COG to ADOH. The COG reviews each application for completeness, priority project selection, and assists the community with rectifying any application deficiencies. The COGs have no discretion to reject applications and must forward all applications to the state. Only those communities identified as eligible to receive funding in the current year MOD may submit an application, so no comparative analysis is necessary. Each COG will establish its own application procedures (letters of intent, etc.) and submission deadline for the compilation of applications to be forwarded to ADOH. Arizona Department of Housing – FY 2010 Action Plan • May 2010 9 FY 2010 ACTION PLAN All applications for the Regional Account are due to ADOH by 4:00 P.M. on the following dates. • NACOG and SEAGO – June 1, 2010 • WACOG and CAAG – July 1, 2010 ADOH will attempt to review and make final award determinations for each application submitted within 90 days of receipt of all outstanding application issues. At the time of application each CDBG application amount must equal the allocation amount of the community then the highest priority project will be funded. Actual award of CDBG funds is contingent upon an application that is eligible, meets all application review thresholds, and is a state priority project. CDBG State Special Projects Account Fifteen (15) percent of the remaining amount of CDBG funds after allocations to administration, technical assistance, and the Colonias Set Aside will be distributed into the State Special Projects Account (SSP). All communities eligible to receive funding from the state CDBG program are eligible to apply for SSP funding. Each community is encouraged to submit one application. No more than two applications are allowed from the same community and they must be listed in priority. All first priority applications will be reviewed first with subsequent priority applications reviewed if sufficient funding is available, thereby allowing each community a chance to be funded. Any eligible CDBG activity listed in Appendix K (Table K-4) of the FY2010-2014 Consolidated Plan that have received a priority ranking of high or medium may be undertaken with SSP funds. The only difference is that the SSP is competitive and all applications must demonstrate the project is ready to implement immediately. . Applications submitted must propose all activities pursuant to 24 CFR 570 that are ready to begin implementation immediately with environmental review requirements completed, Release of Funds issued, land control secured, planning, design, and permitting complete, and all other related upfront issues resolved. A Notification of Funds Availability (NOFA) will be released and will include the application form and applicable deadlines. The 2010 funding for SSP grants is anticipated to be $1,714,487. Projects will be selected for SSP funding through a competitive process in which applications are scored by a rating and ranking system that includes project need, per capita benefit, effectiveness, cost reasonableness, project readiness, leveraged funds, past performance, capacity, and potential for direct/indirect benefits stemming from the project. The highest scoring applications for projects meeting a high priority need as established in Appendix K (Table K-4) of the FY2010-2014 Consolidated Plan will be awarded prior to awarding projects of lesser priority. Scored applications will be kept on file for one year and the next highest scoring applications will be funded if sufficient additional funding becomes available through recapture or deobligated CDBG funds. Other CDBG Policies CDBG Regional Account Recipient Community Responsibility While CDBG money is scheduled to be provided to all eligible recipient regional account communities according to the above method of distribution, an actual award of CDBG funds is contingent upon passing the threshold and completeness review. Applicants must propose projects that are financially viable, necessary and feasible, ready to start, conform to compliance standards and result in benefit. Projects must adhere to contracted timeliness parameters. Projects must comply with the priorities communicated through 10 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN this annual action plan. Benefit to low-income persons, preventing or eliminating slum or blight, or meeting other urgent community needs must be measurable by the end of the approved contract timeframe. Though the State does not define minimum and maximum investments, outcomes of activities must clearly demonstrate program results at the HUD national level. Back-up applications will not be accepted. Applications reflective of the citizen participation process may be submitted only at the time of funding for that program year. ADOH will strive to make available technical assistance and support, both through its partners in the COGs and through its staff. Further, through its preaward assessment process, ADOH will strive to negotiate and resolve any outstanding issues that may be material to an award of funds decision. If issues material to the decision cannot be resolved, the recipient community will receive a Notice of Appealable Agency Action. It is the responsibility of each recipient community to submit a CDBG application with a request of funding equal to or less than the amount of the projected allocation in the MOD. Activity Beneficiaries CDBG activities may serve beneficiaries residing in areas adjacent to non-entitlement area jurisdictions. ADOH allocates CDBG funds to projects and programs that benefit residents of non-entitlement areas. A non-entitlement area is defined as an area which is not a metropolitan city or part of an urban county. In Arizona, this primarily means the communities located outside of the Phoenix and Tucson MSAs. Many of these communities are adjacent to entitlement areas and Indian reservations. In reviewing a non-entitlement area unit of local government’s application for state CDBG funding, ADOH must determine that the applicant has identified the community development and housing needs of its nonentitlement area residents, and has demonstrated that the proposed activity will meet those needs. ADOH recognizes that CDBG activities that address the community development and housing needs of nonentitlement area residents may also benefit the residents of entitlement communities or residents of Indian reservations. In some cases, the most feasible or practical location for an eligible CDBG activity (such as for reasons of public transportation accessibility, maximizing accessibility to the greatest number of nonentitlement area beneficiaries, operational cost effectiveness, land/building availability, or engineering considerations) may be located on tribal land or in an entitlement community. Therefore, the State offers the following clarification to the current CDBG funds allocation process: • ADOH will review applications and allocate funding for CDBG activities consistent with the priorities, objectives, and the method of distribution as described in its 2010-2014 Consolidated Plan (and as updated in its Action Plans). • ADOH can allocate funds only to units of local government of non-entitlement areas. • If a proposed activity will be initiated, conducted, operated, constructed/rehabilitated, repaired, replaced, or in any manner located in an entitlement area or on tribal lands, the application made by the non-entitlement area unit of local government must demonstrate benefit to residents of the nonentitlement area. Such documentation may include primary research, such as citizen/community surveys and market studies, which demonstrates that the activity will meet the needs of the residents of the non-entitlement area. • If a proposed activity will be initiated, conducted, operated, constructed/rehabilitated, repaired, replaced, or in any manner located in an entitlement area or on tribal lands, the non-entitlement unit Arizona Department of Housing – FY 2010 Action Plan • May 2010 11 FY 2010 ACTION PLAN of local government must demonstrate that no other alternative will provide greater benefit to the residents of the non-entitlement area. • Financial participation must be in proportion to the share of expected benefits residents will receive. Additionally, evidence of affirmative outreach to non-entitlement area residents must be demonstrated in the marketing and communication plans. Administration Expenses Administrative expenses must directly relate to project activities. CDBG funds may be used to pay reasonable program administration costs related to the planning and execution of eligible activities funded in whole or in part by CDBG. Activities eligible under this category include citizen participation costs, fair housing activities, staff and overhead costs for project delivery, and grant administration. A maximum of 18 percent of the aggregate total of all activities for which funding is requested can be charged to general administration and to eligible planning activities. If a community is implementing multiple activities, ADOH will enter into individual contracts for each activity; and each of the contracts will contain the general administration funds appropriate for and specific to that activity. ADOH encourages all communities to apply for a reasonable and appropriate amount of administrative funding based on the activity type. ADOH also encourages communities to estimate a sufficient dollar amount for TAAP fees to allow the flexibility of increasing the level of assistance from the COG for both compiling the application and administering the project. Administrative funding will be awarded through the application and pre-award assessment process. Communities must submit annual audits whether or not they received CDBG funds during the past year. This assists ADOH in determining whether technical assistance and guidance should be offered to the community, aiding it to implement a compliant CDBG project and avoiding future audit concerns. Administration funds may be used by local governments and sub‐recipients to pay for the proportionate share of an annual audit attributable to the expenditure of CDBG funds as documented by a written cost allocation plan. CDBG Redistribution of Funds If a community that is scheduled to receive funding chooses not to participate, or does not submit a viable and compliant application to ADOH, the allocation for that community will be returned to the SSP. If the funding amounts scheduled for a community exceeds funding requests included in the application, the balance will be redistributed to the SSP fund. ADOH will re-distribute any recaptured funds or de-obligated funds. These funds will be distributed as follows: 12 • Recapture is the action of removing funds from a contract due to one of the following two types of circumstances: 1) Recapture for non-compliance whereby ADOH determines that CDBG funds will be not used in compliance with the contract between ADOH and the recipient or in compliance with federal regulations; and 2) Recapture for non-performance whereby recipient fails to perform according to the performance criteria outlined in the contract scope of work, the contract schedule, and/or the performance criteria outlined in the text of the contract with ADOH. • Recaptured funds will return to ADOH to be redistributed through the SSP account to the applicant next in line for funding. Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN This language must be included in all MODs submitted to ADOH. De-obligated Funds De-obligation is the action or removing funds from a contract due to one of the following: 1) the scope of work is completed using less CDBG funds than anticipated and leaving an unexpended balance; 2) the original allocation was a loan and the loan was paid back; 3) an activity was changed or cancelled (for reasons other than performance) resulting in excess funding; and 4) program income is received that is not programmed for use. De-obligated funds may be rolled into an existing or new contract of the same funding year from which the funds will be de-obligated if they can be put under contract within 60 days and used quickly. The community must have a positive performance record to be granted this approval. If the above is not possible, the funds will return to ADOH to be redistributed through the SSP account to the applicant next in line for funding. CDBG Urgent Needs Grant Applications When proposing an activity that meets the urgent need national objective, the applicant must document that it has no other financial resources available to meet the need. Additionally, all activities that propose to meet the urgent need national objective must meet community development needs that: 1) have a particular urgency; 2) pose a serious, immediate threat to the health or welfare of the community; and 3) and are of recent origin. 2010 CDBG Projected Goals In conjunction with state priorities, ADOH proposes to fund approximately fourteen (14) projects associated with housing rehabilitation activities, eight (8) public improvement projects, seven (7) public facilities, and eight (8) public services. HOME METHOD OF DISTRIBUTION The State expects to receive $8,779,843 in new 2010 HOME resources. Method of Distribution The HOME method of distribution will be available statewide. ADOH makes available HOME funds through an application process. NOFAs are distributed throughout the year and include information describing the specific activities and amount of funding available for the activities for rental and homeownership housing development, including CHDO activities. Applicants will be received throughout the funding year and must meet threshold and underwriting criteria. Specific guidance is available in the State Housing Fund Summary and Application Guide. Applicants that meet threshold, scoring, and underwriting guidelines will advance to a funding committee decision for final review and recommendation. The funding committee is comprised of ADOH staff, risk assessment officers, administrators, deputy director and director. This document is updated on an annual basis and available on the ADOH website. The actual geographic distribution of resources will be based in the number of applications received. ADOH will not hold funding availability or make concessions with regard to program threshold or underwriting in order to guarantee funding activities in geographic regions. HOME loans will be provided as grants and loans. Arizona Department of Housing – FY 2010 Action Plan • May 2010 13 FY 2010 ACTION PLAN CHDO Method of Distribution The HOME Community Housing Development Organization (CHDO) funds are distributed through an application process and must meet the HOME CHDO regulations. ADOH will ensure an equitable geographic distribution of funds, to the extent possible. CHDO funding will be provided as grants and loans. HOME Geographic Funding Objectives ADOH anticipates approximate allocations of funding to each region, shown below. The actual geographic distribution of resources will be based on the number and quality of applications received. ADOH will not hold funding available or make any concessions with regard to program thresholds or underwriting in order to guarantee the funding of activities within a specific geographic region. • Statewide CHDO set-aside: $1,316,976 • Metro Area (Maricopa and Pima Counties): $1,497,402 • CAAG Region (Gila and Pinal Counties): $1,281,354 • NACOG Region (Apache, Coconino, Navajo and Yavapai Counties): $1,726,985 • SEAGO Region (Cochise, Graham, Greenlee and Santa Cruz): $733,297 • WACOG Region (La Paz, Mohave and Yuma Counties): $1,345,845 HOME Activity Funding Objectives ADOH will concentrate funding on two activities: • Rental housing, including CHDO set-aside: $5,901,859 • Owner-occupied housing rehabilitation: $2,000,000 HOME Application Process The State will make available owner-occupied housing rehabilitation funds through a competitive application process. Notification of funds availability for HOME funds will be announced. The majority, if not all, of the HOME funds set-aside for rental development are expected to be utilized as gap financing in projects that are successful in securing a competitive Low-Income Housing Tax Credit (LIHTC) allocation. Any remaining funds may be made available through a competitive process. If CHDO funds remain available, a NOFA strictly for CHDO projects may be released. Only applications that meet completeness requirements and minimum thresholds are considered for funding. Minimum completeness requirements include, but are not limited to, an ERR determination letter and satisfactory compliance history. The minimum thresholds for HOME applications program include, but are not limited to, responsiveness and readiness to proceed. Applications that meet minimum thresholds are underwritten based on the following criteria as relevant to the proposed activity: 1) market need/demand; 2) management/capacity; 3) budget/financial analysis; and 4) program design. Once it is determined that an application meets minimum underwriting standards, the application and underwriting results are forwarded to an ADOH funding panel for review. The funding 14 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN review panel is comprised of senior ADOH staff members. Actual funding determinations are ultimately made at the sole discretion of the ADOH Director. ADOH will not utilize HOME resources for tenant-based rental assistance or for homeownership assistance in the form of down payment/closing cost or equity contributions. Other HOME Policies Forms of Investment and Leveraging Funds HOME investment funds will be delivered to receiving applicants as grants and loans. No other forms of investment will be utilized for HOME funds. With the HOME-funded rental development program, the applicant must directly invest a minimum dollar amount into the total project funding pool. Furthermore, for those HOME-funded programs that are designed as gap-financing products, the applicant most first obtain primary financing investments typically through a mortgage or construction loan provided by a banking/lending institution. These types of leveraged investment requirements allow limited HOME dollars to spread across the maximum number of projects/units. HOME Match The HOME program match liability is 25 percent (statutory requirement) of actual project expenditures during the program year, approximately $2.2 million in 2010. The State currently has sufficient match that was carried over from previous years to meet its 2010 matching requirements. As needed, the State will supplement this with match funding from various sources. HOME Resale and Recapture Provisions As outlined 24 CFR 92.254 of the HOME rule, there are provisions of resale or recapture. ADOH has chosen to use the recapture provision for HOME and/or matching funds to assist eligible homebuyers. For homeownership programs, ADOH assistance shall be in the form of non-interest bearing, deferred payment loan secured by a deed of trust naming the state of Arizona as beneficiary. The assistance is forgiven upon completion of the affordability compliance period which is detailed in legal instruments associated with each homebuyer loan. If the housing does not continue to be the principal residence of the homeowner for the duration of the affordability period, the assistance will be repaid in its entirety from the net sale proceeds. If the net sale proceeds are not sufficient to recapture the full amount of assistance plus enable the homeowner to recover the amount of their downpayment, ADOH will share the net proceeds. The net proceeds are the sales price minus loan repayment amount (other than ADOH funds) and closing costs. ADOH will permit the homeowner to recover the homeowner’s initial downpayment before recapturing ADOH assistance. The amount of ADOH assistance that is subject to recapture is based on the amount of assistance that enabled the homeowner to purchase the dwelling unit. This includes any assistance that reduced the purchase price from a fair market value to an affordable price, but excludes the amount between the cost of producing the unit and the market value of the property (i.e. the development subsidy). In the case of foreclosure or transfer in lieu of foreclosure, the lender is allowed to take the property without the affordability restrictions. As stipulated in the HOME regulations, ADOH will repay the HOME account if the assisted housing fails to meet the affordability requirements for the full affordability period without regard to the term of any loan or mortgage or the transfer of ownership, even in the event of foreclosure, transfer in lieu of foreclosure, or assignment to HUD. Arizona Department of Housing – FY 2010 Action Plan • May 2010 15 FY 2010 ACTION PLAN HOME Security Instruments Recapture restrictions shall be executed through one or more of the following instruments, depending on the type of first-mortgage instrument: 1) A due-on-sale provision inserted by a private mortgage lender with loan pre-payment penalties covering the amount of recapture as determined above. At the time of property transfer, pre-payment proceeds less processing costs due the state of Arizona shall be paid by the first mortgage lender. Due-on-sale provisions shall be executed through written agreements between the lender and the state of Arizona, and shall be accepted by the borrower at the time of first-mortgage loan origination; 2) land use restriction agreements and/or deed restrictions filed against the property acquired by the assisted homebuyer; and 3) Deed of Trust and Promissory Notes consistent with the non-interest HOME-financed loan filed on the property acquired by the assisted homebuyer. Affirmatively Marketing, Fair Housing, and Minority Outreach (HOME Investments) ADOH is committed to making every effort to ensure that HOME investments conform to affirmative marketing practices. ADOH has partnered with Socialserve.com for providing information on HOME and other federally-funded rental units. Socialserve.com is available in both English and Spanish and contains the equal housing opportunity logo on each webpage. Any publications produced by ADOH providing information on HOME-assisted rental units also are available in multiple languages and include the equal housing opportunity logo. Through continuous compliance monitoring, ADOH ensures those properties that receive HOME investment funds are meeting the affirmative marketing and fair housing requirements. The monitoring inspections look for and verify that the HOME-assisted complexes have the equal housing opportunity logo clearly visible in the main office and are utilizing advertisements that include the equal housing opportunity logo or statement. In addition to being placed in general audience media sources, advertisement need to be advertised through a minority media outlet including newspapers, radio or television to actively market to minority populations. Complexes should have brochures and/or leaflets with unit information on site in the leasing office and distributed in various locations throughout the community. In addition to reaching the general public and large numbers of minority populations, recipients of HOME funds need to perform specific outreach efforts to those who would benefit from the assisted units but may not know how to apply. ADOH monitors HOME recipients’ marketing efforts to key community places including: local community organizations, places of worship, social service centers, employment centers, medical service centers and fair housing groups/advocate agencies. If any area of affirmative marketing is not being performed, ADOH compliance staff works with management and/or ownership on working toward meeting all requirements as to be in good standing when it comes to affirmative marketing, fair housing and minority outreach. Minority Business Outreach ADOH requires all grantees to comply with procurement and labor standards requirements, including outreach to minority- and women-owned businesses. ADOH staff is available to provide technical assistance to any jurisdiction needing help identifying minority- or women-owned businesses. The state also sets goals for minority- and women-owned business participation in construction and professional services and regularly compiles data on firms used by local jurisdictions to determine whether further outreach efforts ae needed. ESG METHOD OF DISTRIBUTION The State expects to receive $894,638 in new 2010 ESG resources. 16 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN Method of Distribution Administration The Arizona Department of Economic Security (DES) takes five percent of the grant award for administrative costs. Shelter Improvements and Operations The DES will award contracts every five years through a competitive request for proposal (RFP) process. Proposals will be reviewed by a panel comprised of internal staff and external members. Proposals will be assessed using the rating system published in each RFP. The rating system may include service methodology, experience and expertise, cost, and other factors deemed relevant. Homelessness Prevention ESG prevention funding will be allocated through contracts with community action agencies that are designated by law to receive all DES funding non‐competitively. The funding will be allocated to the community action agencies providing services in rural counties. The allocation formula distributes 90 percent of the funds based on percentage of persons at or below 125 percent of poverty level and distributes 10 percent of the funds based on unemployment rates. Ending Chronic Homelessness ADOH will continue to ESG and other available funds to support permanent supportive housing beds and facilities for the chronically homeless. Parts of these efforts include providing transitional and self-sufficiency services needed to help pull individuals out of the cycle of chronic homelessness. ADOH will maintain a cohesive and effective Homeless Management Information System (HMIS) that will foster efficient outreach and services. Other Periodically, funds will be distributed through intergovernmental agreements with local governments for prevention and transitional housing services. By these means, the broadest coverage is ensured throughout the state. Other ESG Policies ESG Match ESG funds require a 100 percent match. Federal regulations allow the first $100,000 expenditure of ESG to be unmatched. The total minimum match that will be provided for the ESG grant is $794,638. Matching funds are provided in a variety of ways ranging from in-kind salary matches to volunteer labor. Selected applicants least apt to be able to provide match will have their match requirement reduced by a negotiated amount. A total of $100,000 of match will be waived as allowed by federal regulations. ESG Contract Renewals Updated budgets, certifications, and descriptions of activities to be funded by ESG will be submitted to the DES for the renewal period. The updated information submitted will be reviewed and approved, where necessary to assure compliance with ESG requirements. Renewal contracts with governmental entities and nonprofit organizations will begin July 1. Arizona Department of Housing – FY 2010 Action Plan • May 2010 17 FY 2010 ACTION PLAN ESG Geographic Funding Objectives The following funding strategies apply: 1) continue funding at current levels for shelter services, case management and outreach in the counties of Maricopa, Pima County, Yavapai, and Yuma; 2) funding of eviction prevention services up to the maximum 30 percent of the allocation in the rural counties of Pinal, Coconino, Gila, Graham, and Yuma; and 3) funding of staff costs in shelter facilities is not planned. HOPWA The HOPWA allocation for 2010 is $219,282. Administration A total of 10 percent of the grant award will be used for administration. Three percent will be used by ADOH and seven percent will be used by project sponsors. Program Activities The remaining 90 percent of the grant award will be spent on direct service provision. ADOH will contract with nonprofit organizations to administer the HOPWA program within the thirteen rural counties. Contracts with nonprofits will be reviewed periodically, with additional proposals solicited as necessary. Project sponsors are selected by ADOH after extensive outreach efforts to local governmental entities, nonprofits, and grassroots organizations. In 2010, ADOH will contract with Mohave County Community and Economic Development (MCCED) and Northland Cares to administer the HOPWA program within six of the thirteen rural counties. Mohave County Community and Economic Development (MCCED) serves Mohave County. Northland Cares, a non-profit organization serves Apache, Coconino, Gila, Navajo, and Yavapai counties. Outcomes In the 2010 fiscal year, approximately 150 people are anticipated to be served using available HOPWA funds. Most of the funding will be spent for housing subsidies. GEOGRAPHIC DISTRIBUTION OF FUNDS The ADOH disseminates funding across the state to many agencies under each of the program categories. Therefore, geographic distribution of activities is widely varied, but program funds are targeted for lowincome persons and/or take place in or near a low-income area. The location of an activity largely depends on the type of activity. As a function of its planning processes, the Arizona Department of Housing routinely considers economic and statistical data in its analysis. Arizona’s areas of highest minority household concentration lie along Arizona’s border with Mexico and on Arizona’s 22 Indian reservations. ADOH invests statewide, through its State Housing Trust Fund, and its low-income housing tax credit allocations. ADOH, however, directs the investment of its formula programs in the non-entitled areas of the state-those communities that do not receive a direct allocation from HUD. State priorities for formula program allocations are determined through analysis of census data, American Community Survey data, and from other state and national resources. Arizona is one of the four states with communities that meet the definition of colonias. HUD and the United States Department of Agriculture (USDA) define colonias as non-metropolitan, unincorporated neighborhoods and incorporated communities within 150 miles of the US-Mexico border in California, 18 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN Arizona, New Mexico, and Texas that lack sewer, water or decent housing – or a combination of all three. Most of cities and towns in Arizona that are designated as colonias have the capacity to manage the needs of their communities, and thus participate as units of general local government through the method of distribution described in earlier sections. ADOH makes all of its programs available to eligible low- and moderate-income residents regardless of sex, race, religious background, or disability. As a result, all programs will be available to residents statewide through local governmental and non-profit organizations. REMOVAL OF BARRIERS TO AFFORDABLE HOUSING The primary barrier to affordable housing development remains the gap between housing costs and incomes. Over the past few years, Arizona has suffered a major downturn of the economy, especially for its principal industries – tourism and construction. At the same time the financial crisis, compounded by double-digit rates of unemployment, has contributed to Arizona experiencing the second highest rate of foreclosures in the country. Even with the loss of as much as 50 percent of housing values since 2008, the lack of sufficient incomes of the workforce available to purchase homes or rent apartments is a substantial barrier to the production of new affordable housing. Simply, there is little market incentive for investors to risk producing new housing until the employment picture improves in the state. These complexities and challenges were noted in the ADOH’s 2010-2014 Consolidated Plan. Other barriers to affordable housing include: • Limited availability of land and access to natural resources (such as water sources); • Tight credit environment; • Regulatory barriers and public policies; • Lack of knowledge of fair housing laws; and • Barriers on reservations/tribal lands. ADOH is committed to removing or reducing barriers to affordable housing whenever possible. The Arizona Housing Commission has recommended the following policies and actions to address barriers; ADOH has taken action on some and continues to examine the feasibility of others. • Provide professional education and technical assistance to local governments to address barriers to housing affordability. ADOH now maintains a Technical Assistance Unit with three full-time staff who travel throughout the state to provide technical assistance upon request or as targeted according to need. One of these individuals specializes in tribal housing concerns. • Undertake a comprehensive and systematic review of zoning and subdivision ordinances, building codes and related development control ordinances, and administrative procedures to identify and remove excessive, duplicative, or unnecessary barriers to housing affordability. ADOH’s Community and Government Relations Administrator continues to monitor relevant local and state actions. • Review agency administrative procedures to identify and remove unnecessary barriers to housing affordability. As the state’s affordable housing policy leader, ADOH routinely and systematically evaluates the impacts of processes and decisions to ensure barriers are broken down, not created. Arizona Department of Housing – FY 2010 Action Plan • May 2010 19 FY 2010 ACTION PLAN • Identify and disseminate innovative solutions to housing affordability barriers used successfully by other states, including the promotion of alternative building materials and methods, land banking, and planning and zoning reservations for affordable development. FOSTER AND MAINTAIN AFFORDABLE HOUSING ADOH will continue to foster and maintain affordable housing throughout Arizona through multiple programs designed to provide low- and moderate income-households with affordable and sustainable rental and ownership opportunities. Through such programs as the Owner Occupied Rehabilitation Program, the Homes for Arizonans program, and the MRB and MCC products, ADOH will provide the community with funding sources to maintain existing housing and create new homeowners throughout the state. Through funding sources such as CDBG, HOME, and LIHTC, development of new housing and increasing longevity of existing affordable rental units will continue through the next fiscal year and beyond. Fostering and maintaining affordable housing for priority populations will be one of the leading responsibilities of the Arizona Department of Housing. INSTITUTIONAL STRUCTURE PLAN IMPLEMENTATION ADOH is a department of Arizona state government. ADOH is headed by a Governor-appointed director who oversees all activities of the agency, including the provisions of this plan. The activities prescribed in the plan are implemented primarily by partners, including local governmental entities (towns, cities, counties), public housing authorities, non-profit and for profit entities, and tribal entities. Awards of state and federal grants and loans are awarded based on the ability of an entity to demonstrate the capacity to undertake eligible activities through a written proposal process. ADOH works in conjunction with the four COGs to develop a plan for the targeting and distribution of CDBG funds throughout the state. Non-Profit Agencies ADOH provides funding to non-profit agencies located in Arizona that serve low-income households. These non-profits provide assistance for affordable low-income housing and special needs and homeless populations. Private Sector The private sector is an important collaborator in the services and programs associated with the federal grants for housing and community development. The private sector brings additional resources and expertise that can be used to supplement existing services or fill gaps in the system. Lenders, affordable housing developers, business and economic development organizations, and private service providers offer a variety of assistance to residents such as health care, small business assistance, home loan programs, and assisted housing, among others. Tribal Communities The State of Arizona has 22 federally recognized tribes located within the conformed boundaries of the state. The tribes within Arizona are vastly different from one another and are recognized as self-governing entities that regulate laws under their respective tribal jurisdictions. Tribes in Arizona vary in size from the largest federally recognized tribe, Navajo Nation, which is located in four states that include Arizona, Utah, New 20 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN Mexico, and Colorado, and totals 16 million acres and 280,000 in population. The smallest tribe in Arizona is the Tonto Apache, located in Payson with a current land base of 75 acres and a population of 122. Within Arizona, 16 tribes currently receive a formula-driven grant known as the Indian Housing Block Grant for development and maintenance of existing housing. The formula-driven grant was enacted in 1996 and is based on various factors that include population, poverty, current assisted stock, and overcrowding conditions. These funds are received on an annual basis by the tribe or tribal-designated housing entity and can be used for a number of activities. Arizona Public Housing Authority ADOH operates the Arizona Public Housing Authority (PHA). Information derived from operating the PHA provides an accurate and recent view of public housing needs and trends for which planning efforts can be designed to address. The responsibilities entail administering a Housing Choice Voucher program for Yavapai County. The Housing Choice Voucher program provides rental subsidy payments for approximately 89 very low-income households. The Arizona PHA also has a competitively-awarded contract to operate the Section 8 project-based program throughout the state, which entails administering approximately 111 HUDsubsidized rental properties. Through this program, participating properties are subsidized, allowing very lowincome tenants to pay only 30 percent of their incomes toward rent. Coordination ADOH is committed to continuing its participation and coordination with federal, state, regional, and local agencies, as well as with the private and non-profit sector, to serve the needs of low-income individuals and families in the community. GAPS IN THE DELIVERY SYSTEM The effectiveness of implementing activities by contracting with outside agencies is dependent upon the capacity of the agencies conducting the activities and the expertise of ADOH staff in administering the contracts. Each contract is assigned a Program Specialist to oversee the progress and distribute funding. The Program Specialist is the primary point of contact for the implementing agency. Gaps in delivery exist most often at the implementation level. ADOH staff works collaboratively with local contracting organization to remove gaps in the delivery system of provision of services and successful completion of projects. GAPS IN PUBLIC HOUSING While ADOH and the Arizona Public Housing Authority (PHA) do not own or manage any public housing, the PHA has monitoring and compliance oversight of approximately 114 federally-financed properties (through a competitively awarded contract from HUD) and 124 Housing Choice Vouchers (formerly known as Section 8). The Housing Choice Voucher program administered by the agency is an extremely small program and one that requires in-kind contributions from the State to administer. ADOH encourages partnerships with local public housing authorities by making all of its resources available for them to access. ADOH will continue to encourage public housing authorities to develop new alternatives to public housing, as well as to preserve and modernize rental housing stock. In recent years, many public housing authorities have been increasingly successful in utilizing ADOH-administered housing tax credit resources for the expansion and preservation of housing stock. Arizona Department of Housing – FY 2010 Action Plan • May 2010 21 FY 2010 ACTION PLAN ANTI-POVERTY STRATEGY ADOH has an anti-poverty strategy that is based on revitalizing the state of Arizona’s existing housing stock to provide safe and decent places to live, and supporting community organizations and local agencies that provide various services that promote income and housing stability. ADOH’s approach for reducing the number of poverty level families includes: (a) addressing the needs engendered by poverty; (b) increasing the supply and availability of decent, safe, and affordable housing necessary for low income families; and (c) increasing the effectiveness of existing programs through better collaboration and increased efficiency of implementation. While ADOH is focused on the provision of affordable housing and needed community development programs and projects, especially in rural areas of Arizona, ADOH works with and encourages job retention, training, and creation through programs of other state agencies, such as the Department of Commerce, and local jurisdictions. Further, recognizing the symbiotic relationship between affordable housing and human, social, and supportive services, ADOH has established – and continues to strengthen – partnerships with the Arizona Department of Economic Security, the Community Services Administration, the Family Assistance Administration, the Aging and Adult Administration, the Arizona Early Intervention Program, the Arizona Department of Health Services, the Arizona Health Care Cost Containment System, the Arizona Department of Veteran’s Affairs, and the Governor’s Office for Children, Youth, and Families. LEAD-BASED PAINT HAZARD REDUCTION ADOH has adopted long-term goals to promote affordable housing and community development. These goals, as applied to lead-based paint hazards, become ADOH’s lead-based paint strategy. Arizona’s strategy objectives are: • Collaborate with local cities and counties to reduce housing-related lead-based paint hazards, especially for low-income families and children. • Review its residential rehabilitation guidelines to include a risk assessment for lead-based paint being part of every home inspection. • ADOH will refer families with children to Arizona Department of Health Services, Office of Environmental, for blood testing if lead-based paint is found in units proposed for rehabilitation. • The Arizona Department of Health Services maintains the lead exposure registry for Arizona. The program develops lead poisoning prevention programs, investigates cases with elevated blood lead levels, and conducts educational outreach activities. In recent years, ADOH has undertaken a wide range of activities to address the problem of lead-based paint in the housing stock. The Arizona Lead Poisoning Screening Coalition and the Arizona Department of Health Services recommends screening children six years of age and younger according to the Childhood Lead Poisoning Targeted Screening Plan. These steps will hopefully prove important in assuring the longterm health and stability of lower-income children who are living in substandard housing. In FY2010, ADOH plans to fund lead-based paint hazard reduction primarily through housing rehabilitation programs for owners and renters. 22 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN MONITORING PLAN The state of Arizona has developed a monitoring system to ensure that the activities carried out in furtherance of the Plan are done so in a timely manner in accordance with the federal monitoring requirements of 24 CFR 570.501(V) and 24 CFR 85.40 and all other applicable laws, regulations, policies, and sound management and accounting practices. The objectives of the monitoring plan are described in more detail in the 2010-2014 Consolidated Plan. CDBG PROGRAM ADOH staff conducts desk monitoring during all phases of each project based on a combination of a risk analysis and random sampling. Documented desk monitoring includes a detailed application review of national objectives, eligible activities, cost reasonableness, anti-speculation, citizen and public participation and certifications; requests for payment; environmental review; procurement and contracting; acquisition; construction bids/contracts; labor standards including weekly payrolls and employee interviews; Section 3; housing rehabilitation guidelines; homeownership assistance guidelines; and, sub-recipient agreements, closeout reports, and audits. Grantees are notified, in writing regarding result of the review, compliance and/or due dates for corrective steps. Recipients have a contract set-up meeting with staff to go over the expectations and requirements of the contract. Repeat recipients who have demonstrated good capacity for project delivery and expenditure may not require a contract set up meeting. Throughout the contract period, staff is available to meet with the recipients as necessary. In addition to desk review of documentation such as progress reports, procurement procedures, Environmental Review Records etc., staff typically schedules at least one site visit for each recipient on an annual basis. However, for some CDBG projects it is unnecessary to perform more than one on-site monitoring due to the scope of the project ( i.e. purchase of fire equipment or public service activities such as staffing salaries for a domestic violence shelter, etc.). Staff will also conduct an on-site monitoring visit as part of a contract close-out. The on-site visit consists of a one- or two-day visit to the recipient agency to review records, inspect the project’s progress in completing required activities, and meet with staff responsible for the project. On-site monitoring visits include the following components: entrance/exit conferences, documentation/file review, and viewing of the project (as applicable). Within 30 days of an on-site monitoring visit, staff will provide written monitoring comments to the recipient in the form of a follow-up letter. The letter includes, at a minimum, the date of review and those present during the review, results of the monitoring (satisfactory performance, concern, or finding), a statement describing the basis for each conclusion, instructions on what the recipient must do to address any area of concern or finding, and a deadline by which the recipient must respond. In extreme cases of noncompliance, staff must determine that an additional on-site monitoring visit is necessary before an issue can be adequately resolved. HOME PROGRAM ADOH staff conducts desk reviews and on-site monitoring of recipients of HOME funds to assure compliance with applicable laws, regulations, and policies that govern the program. During 2010, recipients will submit bi-monthly reports regarding the program/project progress, as well as federally-mandated reporting information such as matching contributions, contracts let to minority and women owned businesses, and statistics on any relocations. As part of on-going technical assistance to recipients, staff is available to meet with recipients as necessary. Recipients who have not previously contracted with the ADOH for funding or who are engaging in a new Arizona Department of Housing – FY 2010 Action Plan • May 2010 23 FY 2010 ACTION PLAN activity may be required to attend a pre-contract meeting. Staff also makes themselves available for additional meetings and technical assistance visits as necessary throughout the open contract period. In addition to reviewing bi-monthly reports, staff schedules at least one-site visit for each recipient of HOME dollars on an annual basis. Since most HOME contracts are typically open from a period of 12 months to two years, most contracts will receive at least two monitoring visits – one of which is scheduled when the project or program is near completion. Each monitoring visit generally involves a one-to-two day visit to the recipient agency to review records, inspect the program/project’s progress in completing required activities, and to meet with staff responsible for the HOME funded program/project. On-site monitoring visits shall include the following components: entrance/exit conferences, documentation/file review, and viewing of the project (as applicable). Within 30 days of an on-site monitoring visit, staff will provide written monitoring comments to the recipient in the form of a follow-up letter. The letter shall, at a minimum, include date of review and those present during the review, results of the monitoring (satisfactory performance, concern, or finding), a statement describing the basis for each conclusion, instructions on what the recipient must do to address any area of concern or finding, and a deadline by which the recipient must respond. In extreme cases of non-compliance, staff shall determine that an additional on-site monitoring visit is necessary before an issue can be adequately resolved. Staff will work with recipients to the greatest extent possible to come to a satisfactory resolution in areas where recipients are in non-compliance or when on-site monitoring visits have resulted in findings. Deadlines are set and recipients are expected to bring their program/project into compliance. ADOH exhaust all possible avenues to bring a recipient’s contract into compliance, but the matter may be determined by the Department to be an “unresolved issue” or “out of compliance.” Any recipient with an “unresolved” or “out of compliance” issue may be barred from further funding from the State Housing Fund program (HOME and/or Housing Trust Funds). A recipient who has been barred from future funding due to “unresolved” or “out of compliance” issues may appeal the decision in one of two ways: 1) by resolving the issue to the ADOH’s satisfaction, or 2) providing a detailed plan of action in the area(s) of concern that describes the procedures to recipient put into place to alleviate any future possibility of non-compliance. ADOH, in its sole discretion, may reject such plans of action if it is deemed insufficient in alleviating the Department’s concerns about future performance and compliance. EMERGENCY SHELTER GRANT (ESG) MONITORING PLAN The Department of Economic Security (DES) will review contracts and validate for environmental clearance prior to providing approval and expenditure and reimbursement of ESG funds. For new ESG agencies contracting with the Office of Community Partnerships and Innovative Practices, an on-site visit will be conducted after the contract is awarded. ESG resources and program reports and monitored quarterly. Quarterly program reports attached to fiscal claims for reimbursement are designed to capture client data, average number of bed nights, activities, fiscal expenditures billed and types, and sources of match. A formal desk review will be completed annually and a written report prepared with findings and recommendations identified for corrective actions, if necessary. At least every three years, each ESG provider will receive a monitoring site visit and a written report prepared with findings and recommendations for corrective actions, if necessary. Completion of corrective actions with specific timelines for completion are required and verified by DES. 24 Arizona Department of Housing – FY 2010 Action Plan • May 2010 FY 2010 ACTION PLAN HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS (HOPWA) ADOH contracts and monitors for compliance with annual performance relative to HOPWA requirements. On-site visits are conducted following contract award and program reports are required on an annual basis. Program reports are designed to capture client data, activities, and fiscal expenditures billed. At least twice a year each HOPWA grantee receives a monitoring visit and a written report with finding and corrective actions, if necessary. This visit also provides an opportunity for on-site programmatic technical assistance. Completion of corrective actions with specific timelines for completion are required and verified by the Department. Arizona Department of Housing – FY 2010 Action Plan • May 2010 25 APPENDIX A – PUBLIC COMMENT AND RESPONSE One public comment was received related to the Action Plan. The comment was submitted anonymously, and is summarized below. Comment: The Colonias pot of funding is not clear. Response: The funding available for Colonias has been clarified. The 15 percent of funding for Colonias will be set aside prior to determining the Regional Account and State Special Projects allocations. Arizona Department of Housing – FY 2010 Action Plan • May 2010 A-1