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Page 2 of 4 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />and acquisition and rehabilitation of existing apartments. Typically, two to three years’ worth of HOME <br />grants are pooled together, and then leveraged with other local funds to make these past projects <br />feasible. <br />However, HUD has several regulations aimed at spending the funds in an expeditious manner. For <br />example, funds must be committed (i.e., under contract) within 24 months and the project must be <br />completed in four years. Some of these deadlines were waived due to the COVID-19 pandemic but those <br />waivers expire at the end of 2025. Moving forward it will be challenging to pool multiple years’ worth of <br />funding. <br />Additionally, HUD requires that 15% of each year’s grant be dedicated to a project carried out by a <br />Community Housing Development Organization (CHDO). These funds also must be committed within 24 <br />months. There are only a couple of organizations that meet the CHDO requirements in San Mateo County. <br />HUD requirements include that the CHDO must serve a specific geographic area and have one-third of <br />their board members represent the low-income community. It is difficult to line up Redwood City projects <br />with the limited CHDOs at any given time. <br />Most important, beginning in August 2024, HOME funds will be subject to the Build America, Buy <br />American (BABA) Act, which requires a Buy American Preference on construction-related materials for <br />any project receiving federal funds where the total project costs exceed $250,000. This means projects <br />that receive the City’s Program Year (PY) 2024 HOME funds and subsequent HOME funds are subject to <br />BABA, adding costs to the project. For example, the 1304 Middlefield Project (94 affordable rental units) <br />declined the City’s PY 2024 HOME funds due to the BABA requirements. The BABA requirements would <br />have imposed administrative burdens and cost increases to the project that exceeded the value of the PY <br />2024 HOME contribution ($182,756). The 1304 Middlefield Project will still be receiving the HOME funds <br />awarded in February 2024 by the City Council as these funds are from prior program years and therefore <br />not subject to BABA. As it becomes more challenging to find HOME-eligible projects, the City runs the risk <br />of having to return HOME funds to HUD. <br />ANALYSIS <br />Given the reasons outlined above, staff recommends that Redwood City join the HOME Consortium along <br />with the County of San Mateo, South San Francisco, and San Mateo, and possibly Daly City. <br />Process for Joining the HOME Consortium <br />HUD must approve an amendment to the existing Consortium Cooperation Agreement (Agreement) to <br />add Redwood City to the San Mateo County HOME Consortium. The Agreement establishes that the <br />County is the lead agency in administering the program and that the cities agree to uphold and follow the <br />HUD regulations. It does not include any specific commitment to award funds for projects located within <br />the boundaries of the member cities. However, Redwood City will be offered a seat on the Housing and <br />Community Development Committee, which advises County staff on the distribution of HOME funds as <br />well as other County funds such as the Affordable Housing Fund (including Measure K funds) and County <br />Community Development Block Grant (CDBG) funds. <br />Consolidating the administration of these funds with the County will greatly reduce Redwood City staff <br />6.L. - Page 2 of 5 <br />453