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RECOMMENDATION Adopt the attached draft resolution (Attachment 1) to approve the allocation of CDBG funds for FY 2008 as listed in the attached Table A to Attachment 1, and to authorize the City Manager to enter into contracts with subrecipients for FY 2008 funding and to take all other necessary actions to carry out the CDBG program for FY 2008. Staffs recommendation reflects the actions of the Housing and Human Services Commissions. Staff also recommends the establishment of a Council/Commission work group and that staff be directed to develop, for Council consideration, a work plan to address overall committee composition, scope of work, and timeline for project completion. FINANCIAL STATEMENT The allocation of federal CDBG funds will not have a direct fiscal impact on the City. If approved by the Council as recommended by the Housing Commission and staff, the City would also commit a total of $72,234 in City Lower Income Housing Funds for FY 2008 to supplement several housing services. This level of funding is consistent with supplements that have been approved in prior years. BACKGROUND In 2006, the City conducted a process for allocating Community Development Block Grant (CDBG) funds. At that time, the City's Housing Commission and Human Services Commission recommended funding priorities for capital/ rehabilitation and public services funding. The City Council approved an overall funding allocation for FY 2007-08 in April 2007. The City was recently notified by HUD that its funding allocation for FY 2008 (08-09) will be $274,681, a 3.9% decrease over the FY 2007 allocation ($285,394) and consistent with nationwide trends. In accordance with HUD guidelines, only 15% of the revenue received ($41,202) can be used for public services projects. Of the remaining amount, $178,543 is available for capital projects and $54,936 is available to the City for grant administration. Due to the significant administrative requirement of this grant, the City has historically used the administrative allocation to offset staff costs. Because the trend for CDBG funding continues to decrease, it may be appropriate for the Council address whether the General Fund should support this activity, rather than CDBG funding. We have not contemplated the use of General Fund dollars for this purpose in the coming fiscal year (2008/2009), however, this is clearly a policy issue that the Council/Commission working group should address for the 2009/2010 grant cycle and fiscal year. Planning for the FY 2008 CDBG program included the issuance of a public request for proposals and, in collaboration with the City of Livermore, two public workshops (one in Pleasanton and one in Livermore) that provided information on several funding programs for local nonprofit agencies, with particular emphasis on the CDBG program (including the distribution of applications. Approximately 50 agencies and/or individuals Page 2 of 15