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BACKGROUND At the meeting of May 18, 2010, the City Council approved the allocation of funds through the City's new Housing and Human Services Grant (HHSG) program. The overall funding allocation included $200,000 that was allocated to Tri- Valley REACH (formerly HOUSE, Inc.) to facilitate the purchase of a residential property in Pleasanton to provide housing for adults with developmental disabilities. The Council's approval was consistent with a recommendation made by the Housing Commission on March 18. Following the Housing Commission's favorable recommendation in March, REACH learned of an available property that met all of the criteria that are important to the population served by the agency (e.g., three bedrooms; one -story; close to transportation and services, favorable price, etc.). The agency put in an offer and started escrow with the Council's final approval of the HHSG grant funds as a contingency. The sale of the property was finalized and escrow closed shortly after the City Council's final approval in late May. DISCUSSION As discussed in the May 18 HHSG agenda report, the HOME funds allocated toward the REACH project were part of prior years' allocations that resulted from existing funding agreements with the County and had not yet been committed to specific projects. However, because the Council's May 18 approval was technically for the 2010 -11 HHSG program year (FY11), the Finance Department has expressed concern that the City's auditor might interpret the expenditure of HOME funds prior to July 1, 2010, as having occurred outside the year in which the funds were budgeted. Although the funds were technically part of prior funding agreements with Alameda County, the FY10 (2009 -10) Budget did not include the $200,000 expenditure because the specific funding allocation was not approved until May 18. In order to rectify this situation, staff is recommending that the Council approve an amendment to the FY10 Budget to reflect the allocation of $200,000 in federal HOME funds to REACH. This action is consistent with the approval of HHSG funds at the May 18 meeting but will correct the existing discrepancy between the fiscal year of the expenditure and the fiscal year of the Council's recent HHSG allocation. The remainder of the HHSG funding allocations will be reflected in the FY11 Budget per the normal procedure. Submitted by: Fiscal Review: Approve by: Steven Bocian Emily Wagner Nel on Fialho Assistant City Manager Director of Finance City Manager Page 2 of 2