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Page 2 of 5 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />years. Until 2011, the City generally received close to $500,000 per year in HOME funds. Since then, the <br />annual grant amount has been inconsistent. Over the past three years the grant has decreased from <br />$351,000 to $244,000. HOME funds primarily have been used for new construction of affordable housing <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 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 few organizations that meet the CHDO requirements in San Mateo County. HUD <br />requirements include that the CHDO must serve a specific geographic area and have one-third of their <br />board members represent the low-income community. It is difficult to line up Redwood City projects with <br />the limited CHDOs at any given time. <br />Most important, as of August 2024, HOME funds are subject to the Build America, Buy American (BABA) <br />Act, which requires a Buy American Preference on construction-related materials for any project receiving <br />federal funds where the total project costs exceed $250,000. This means projects that receive the City’s <br />Program Year (PY) 2024 HOME funds and subsequent HOME funds are subject to BABA, adding costs to <br />the project. For example, the 1304 Middlefield Project (94 affordable rental units) declined the City’s PY <br />2024 HOME funds due to the BABA requirements. The BABA requirements would have imposed <br />administrative burdens and cost increases to the project that exceeded the value of the PY 2024 HOME <br />contribution ($182,756). The 1304 Middlefield Project will still be receiving the HOME funds awarded in <br />February 2024 by the City Council as these funds are from prior program years and therefore not subject <br />to BABA. As it becomes more challenging to find HOME-eligible projects, the City runs the risk of having <br />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. In August 2024, the City Council <br />authorized staff to submit a Notice of Intent to Participate in the San Mateo County Consortium to the <br />County starting program year 2026 (July 1, 2026 to June 30, 2027). <br />The County and cities of South San Francisco and San Mateo have executed a HOME Consortium <br />Cooperation Agreement dated June 21, 2005, as amended by the First Amendment1 dated July 21, 2015 <br />attached as Attachment B (Cooperation Agreement). <br />1 The first amendment to the Consortium Cooperation Agreement was to add the City of San Mateo <br />6.D. - Page 2 of 30 <br />23