Subject
title
Approval and Submission to Montgomery County of the City of Rockville Funding Application for Program FY2026/Year 51 Community Development Block Grant
end
Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council approve the proposed funding allocations and authorize the City Manager to transmit the grant application and enter into an agreement with Montgomery County for Program Year 51/FY 2026 of the Community Development Block Grant (CDBG) program.
Discussion
Each year, the City of Rockville receives federal Community Development Block Grant (CDBG) funds through a cooperative agreement with Montgomery County. CDBG funds must be expended for housing and community development capital projects that primarily benefit low- and moderate-income persons or neighborhoods. Rockville is projected to receive $263,000 in CDBG funding for federal Program Year 51/FY 2026.
The city has focused much of its CDBG allocation on housing rehabilitation. For example, for the FY 2026 funding application to the county, the Mayor and Council approved the following projects for funding:
Table 1. Adopted FY 2025/YR 50 CDBG Fund Allocation
|
Agency |
Scope |
Funding Level |
|
Community Reach of Montgomery County (CRM) |
CRM is seeking funding for repair and maintenance of one of its units that serves as permanent supportive housing, Jefferson House. The specific proposed scope of work at Jefferson House includes maintenance and improvement projects to the interior and exterior of the Jefferson House. |
$22,185 |
|
Housing Unlimited (HU) |
HU proposes to include installation of new kitchen cabinetry, countertops, and appliances in the kitchen; upgrade two bathrooms to include walk-in showers, new vanities, and toilets; and painting and flooring throughout the unit. This shared housing assists the mental health recovery of residents. HU purchased the unit in 2023. |
$70,870 |
|
Interfaith Works (IW) |
IW is planning to renovate the IW Women’s Center at Taft Court to improve the physical living conditions and enhance safety. The specific work items include installation of a new shower (for staff); enhance security and safety (installation of 5 floodlights); electrical configuration; replacement of exterior windows; and repaint and restripe parking lot. |
$19,945 |
|
Rockville Housing Enterprises (RHE) |
RHE proposes to replace air conditioning units in twenty-eight (28) multi-family public housing units of the David Scull Courts community and community center (2 HVAC units). The committee recommended partial funding to complete air conditioning unit replacements at 15 of the requested 30 units. |
$75,000 |
|
City of Rockville |
Single-family Rehab Program |
$75,000 |
|
TOTAL |
|
$263,000 |
The chart below shows CDBG allocations for the past seven grant years.
Chart 1. CDBG Allocation by Use - FY 2018 to FY 2025
Source: City of Rockville, HCD, 2024
City of Rockville CDBG Programs
Single-Family/Owner-Occupied Rehabilitation
The city’s single-family/owner-occupied rehabilitation program has assisted many low-income homeowners in addressing repair issues and is intended to correct code deficiencies. Typical repairs include roof replacement, plumbing and electrical upgrades, furnace replacement, and kitchen and bathroom repairs. The program staff prioritizes code deficiencies to address the most serious problems. Typically the program assists five to seven households annually, with a maximum per-unit home repair cost of $25,000.
For eligible homeowners whose household incomes are at 50% of the Area Median Income (AMI) or below, the program provides funding for repairs through a zero-interest and forgivable CDBG loan. The loan is forgiven over a five-year period by reducing the amount owed by 20% annually if the homeowner continues to own the home for five years following the completion of the repair work. The city’s CDBG program also permits households whose incomes are between 50% and 80% of the AMI to receive a low-interest loan (3%/annum) for their home repairs, without a provision for forgiving the loan. No households have taken advantage of this latter part of the program. A lien is recorded against the property for the CDBG loan amount, which is released after five years. Below are the income limits of the program as of May 2024.
Table 2. CDBG Income Limits, May 2024
|
Family Size |
Low (0-50% AMI) |
Moderate (50-80% AMI) |
|
1 |
$54,150 |
$68,500 |
|
2 |
$61,900 |
$78,250 |
|
3 |
$69,650 |
$88,050 |
|
4 |
$77,350 |
$97,800 |
|
5 |
$83,550 |
$105,650 |
|
6 |
$89,750 |
$113,450 |
|
7 |
$95,950 |
$121,300 |
|
8 |
$102,150 |
$129,100 |
Source: U.S. Department of Housing and Urban Development, May 2024
In addition to meeting income limits, homeowners must also meet the following criteria:
• The home must be owner-occupied and be the owner’s sole and principal residence.
• The owner must not be “under water” (i.e., owe more on the home than the home’s assessed value).
• The homeowner’s assets cannot exceed $150,000 (excluding the value of the subject property).
• The applicant must be current on personal and property taxes and homeowner insurance.
• Properties with reverse mortgages, in which a homeowner can access cash in exchange for relinquishing equity in their home, are reviewed on a case-by-case basis.
Multifamily/Shared Home Rehabilitation
The multifamily/shared housing component of the program has provided funding to area nonprofit affordable housing providers. Over the past five years, the city has typically assisted two (2) to four (4) housing providers serving low-income households, including public housing residents or those in permanent and supportive housing programs. Projects undertaken by these grantees have ranged from major kitchen and bathroom repairs to installation of fire and carbon monoxide detectors.
Program Year 51/FY 2026 Application Process
The funding application and public hearing announcement was e-mailed to civic associations, homeowners associations, and community organizations, on July 10, 2024. Public notice announcing the public hearings was published in the Washington Post on August 10 and 17, 2024. As requested by the Mayor and Council in previous years, the city hosted a Housing Providers Forum on July 18 and August 26, 2024, where housing providers were notified of the upcoming funding cycle and provided with information on application submission process and requirements. The application period for external agencies began on July 3, 2024. Applications for funding were initially due to the City of Rockville on October 16, 2024. The application period was extended from October 2 to October 16 to encourage additional applications. The city received four (4) grant applications for projects totaling $336,669 in requested funding. The grant applications are summarized in the table below.
Table 3. Program Year 51/FY 2026 Grant Application Summary
|
Applicant |
Scope |
|
Community Reach of Montgomery County (CRM) |
The proposed project will fund maintenance and improvement projects to the interior and exterior of the Rockland House, which serves homeless women. Rockland House is located in the Twinbrook neighborhood of Rockville. The house was built in 1952 and purchased by Community Reach of Montgomery County in 2013. Since then, repairs have been performed mostly by volunteers. CDBG funding will support installation of a new AC system. |
|
American Legion Post 81 |
The restrooms at the American Legion Post 86 are in need of the bathroom renovations to update the space as well as provide ADA access for the aging community. The plans are to replace the flooring, drop ceiling tile system, install ADA compliant sinks and fixtures, replace the partitions, replace all toilets and urinals, and install ADA grab bars. This post is located in city limits on Viers Mill Road and serves many residents who are veterans. |
|
Habitat for Humanity |
In response to the significant need for affordable homeownership opportunities in Montgomery County, Habitat for Humanity Metro Maryland is planning to develop two affordable homes (a duplex) at 107 Fleet Street. The CDBG funds will provide down payment assistance / gap funding for the homebuyers. Homebuyers will have a household income below 50% -65% AMI. |
|
Rockville Housing Enterprises (RHE) |
RHE proposes to replace old roofs on seventeen multi-family public housing units. The uniqueness of this project is that a majority of RHE's public housing program participants and potential applicants meet the extremely low (30% AMI) and very low (50% AMI) income limits as deemed by HUD. |
Funding Recommendation
As in previous years, a cross-departmental grant review committee was assembled to review the applications and to formulate a recommendation to the Mayor and Council for allocation of the CDBG funding. The committee was comprised of representatives from departments familiar with community needs and other city grants. It included staff from Finance, Housing and Community Development, and Community Engagement (City Manager’s Office).
Applications were evaluated on the project’s impact to low- and moderate-income households; the need for the activity; whether the proposed solution, scope of work, and budget were reasonable and achievable within the grant year; whether the applicant had secured other funding to leverage the amount requested; the applicant’s organizational capacity and experience; and the overall quality of the application. Below is a table summarizing the score of each proposal, assessed by the committee.
Table 4. Applicant Average Score
|
Applicant |
Avg. Score |
|
Community Reach of Montgomery County (CRM) |
83 |
|
Habitat for Humanity |
88 |
|
American Legion Post 81 |
49 |
|
Rockville Housing Enterprises (RHE) |
79 |
Of the four (4) applicants, the grant review committee unanimously voted to fund three (3) of the four (4) of the applicants, of which two (2) are recommended for partial funding. Below is a table summarizing the recommended allocation.
Table 5. Program Year 51/ FY 2026 Funding Allocation Recommendation
|
Applicant |
CDBG Funds Requested |
Recommended Allocation |
|
Community Reach of Montgomery County (CRM) |
$7,769 |
$8,546 |
|
Habitat for Humanity |
$60,000 |
$60,000 |
|
American Legion Post 81 |
$30,000 |
$0 |
|
Rockville Housing Enterprises (RHE) |
$163,900 |
$94,545 |
|
City of Rockville Single-Family Home Repair Program |
$75,000* |
$100,000 |
|
TOTAL |
$336,669 |
$263,000 |
*In previous fiscal years, HCD has allocated *75,000 for the SF Home Repair Program.
Community Reach of Montgomery County
As shown above, the panel’s average score for this application was 83. The Department of Housing and Community Development (HCD) recommends to fully fund Community Reach of Montgomery County’s (CRM) Rockland House (2004 Rockland Ave) at $8,546. This funding amount includes a 10% buffer in the event the recipient goes over budget. The purpose of this would be to make improvements to their ventilation system and to replace the HVAC unit that is over 10 years old. Rockland House is the sister house to Jefferson House. Rockland supports the vulnerable population of women by providing a stable, affordable place to live and access to support services that help residents gain the stability they need. The committee recommended the higher amount due to the rising cost of construction materials and inflation. The committee reviewed the organization’s past performance when receiving funds and found they overall had a good performance record with executing projects that benefited City of Rockville community using CDBG funds.
Habitat for Humanity
The panel’s average score for this application was 88. HCD recommends fully funding Habitat for Humanity at $60,000 for to build two duplexes (107 Fleet Street) in response to the considerable need for affordable homeownership opportunities in the community. The $60,000 would be provided to the homebuyers as a second mortgage, decreasing the gap between the development costs of the homes and the affordable mortgage for the buyers. The $30,0000 mortgages will be 0% interest and without payments; however, they will be repayable if the homes are sold within the first 30 years. Habitat for Humanity is a new applicant to the City of Rockville’s CDBG program. The panel believes that this project would be very beneficial to the residents of Rockville who are first-time homebuyers.
American Legion Post 81
The panel’s average score for this application was 49. HCD does not recommend funding American Legion Post 81 for two reasons: 1) the application scored the lowest average out of all the project and 2) the department is aligning its resources with a renewed focus on housing. Given this recommendation, the department suggests using the remaining funds for the single-family rehabilitation program which aligns with the goals of the department and with statements from Mayor and Council regarding homeownership preservation.
Rockville Housing Enterprises (RHE)
The panel’s average score for this application was 79. The department recommends partial funding in the amount of $94,545 for Rockville Housing Enterprises. RHE proposed the roof replacements of 56 units (out of 76 total units) at David Scull Courts community to ensure the safety and rehabilitation needs for those units. The department estimates that the partial funding will allow of roof replacements on approximately 32 units.
Single-Family Rehabilitation Program
The department recommends allocating $100,000 to the city’s single-family rehabilitation program. The panel recognized the need of affordable, safe housing within the city. HCD staff will continue to work with the Code Enforcement and Community Engagement team to identify homeowners in need to home repairs and/or to address any code violations.
It is important that the city always reserve some level of funding for the single-family rehabilitation program. The city will continue to build the waiting list through additional outreach efforts and by receiving future calls for assistance, throughout the grant year. If the city is unable to spend the allocated funds as programmed, the city and county will determine the best approach to reprogram any remaining funds, as necessary.
Mayor and Council History
This is the second time in this funding cycle that this item has been brought before the Mayor and Council for approval. A public hearing on community needs and priorities took place at the September 9, 2024 Mayor and Council meeting. No comments were received from the public.
Public Notification and Engagement
The funding application and public hearing announcement was e-mailed to civic associations, homeowners associations, and community organizations, on July 10, 2024. Public notice announcing the public hearings was published in the Washington Post on August 10 and 17, 2024. As requested by the Mayor and Council in previous years, the city hosted forums on July 18, 2024 and August 26, 2024 where housing providers were notified of the upcoming funding cycle and provided with information on application submission process and requirements.
Fiscal Impact
The CDBG funds that are proposed to be allocated will come from the federal government via a pass-through agreement with Montgomery County.
The city accounts for all CDBG activity in a separate CDBG fund. The FY 2025 adopted budget appropriated $263,000 and the city anticipates the same amount for FY 2026. The city must spend funds on the specified programs and request reimbursement from the county on presentation of receipts. All CDBG spending is subject to the provisions of OMB A-133 (to be superseded by guidance in the omni-circular) or single audit, as required by the federal government.
Next Steps
The Program Year 51/FY 2026 grant application is due to Montgomery County in December.