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HomeMy WebLinkAbout02/10/95 BAKERSFIELD MEMORANDUM February 10, 1995 TO' HONORABLE MAYOR AND CITY COUN~~ FROM: ALAN TANDY, CITY MANAGER SUBJECT' GENERAL INFORMATION 1. I received a visit from Layton-Belling this week. They are the firm which is taking over the management of the East Hills Mall. They seem like very good business people who are going to first attempt to stabilize the existing tenants and then attempt to analyze the market and fill vacant spots with different kinds of businesses. I was very impressed by how studious they seem to be. 2. The labor negotiations with the Police Department start soon. As it gets underway we'll, of course, come to the Council for update and guidance. 3. We will work on an ordinance relative to the new law on liquor permits which delegates that authority to the Planning Department with a check with the Police Department wherever possible. I'm assuming from casual comments I heard from different Councilmembers that the decision making on liquor permits is not something you want to get into on a regular basis. 4. Bids came in and were opened on the Calloway Bridge~ They were extremely favorable and below the estimated project costs .... With our street demands, however, we will have no problem ident!.fying alternative projects. The Coffee Bridge, of course, runs the risk of exceeding budget due to the environmental issues which will still impact construction even if we have gotten out of liability. 5. I am planning to take half of Thursday and all of Friday off next week. During my absence, John Stinson will be in charge. 6. The bids on the priYatization of the landscaping in the two test areas came in below our separately sealed quotes. We are intending to have that on your next agenda for award. This is one where you may get employee or union complaints about how we put our cost estimate together. Had the bids been lower on the sealed cost from the City side, you would have received private sector complaints, so I suspect HONORABLE MAYOB AND CITY COUNCIL January 19, 1995 Page -2- there is no circumstance under which you would have gone without some second-guessing. 7. The County sent us the new ordinance on booking fees. A copy of that is enclosed. 8. There are responses to Council inquiries enclosed on drinking in a business parking lot on Bernard Street and the naming of Horseshoe Courts at Beach Park. Also enclosed is information on the number and type commercial properties in the Silvercreek/Brimhall/Seven Oaks Assessment District. 9. Employment statistics showing a positive trend are enclosed along with some documents for elected officials on tax-exempt financing and internal financial controls. 10. Enclosed is material concerning the Bakersfield Consolidated Plan 2000. AT.rg Enclosures cc: Department Heads Trudy Slater Carol Williams SCOTT JONES ~O. SEPH E.' DREW' ~,~to~ of ~d~t & ~i~a~ce CCJUI~'IzY ADMINISTRATIVE OFFICER ::: ~:~:' WILLIAM C. DOUGHS MARY WEDDELL . ;~ ~' ~ Employee Re~tiom Officer Assistant Cou~t~y Administrative Olfic~r February2,1995 Alan Tandy, City Manager City of Bakersfield 1501 Truxtun Avenue Bakersfield, CA 93301 JAIL BOOKING FEES Dear l~r~..~y: Attached for your information and review is a proposed revised iOrdinance for jail booking fees. Our office has attempted to revise the ordinance in such a manner as to clearly delineate the responsibilities for administration of the booking fee calculation/approval process and has institut_ed_ _cleadlines requiring that the ~fee~ be _ad_opted'prior to July 1st of each'year~. These deadlines .are ._also intended to allow affected agencies adequate'notice of the proposed fee for each up_-coming fiscal year fOr budget planning pUrposes We intend to submit a revised ordinance to the Board of Supervisors for final approval in late February. ! would appreciate receiving any comments on this proposed ordinance by February 10, 1995. Please contact Fred Plane in my office with your questions or comments. Sincerely, i~._~ Administrative Officer JED:FP:dr\bkfeeltr.cty 1115 Truxtun Avenue, 5th Floor . BAKERSFIELD, CALIFORNIA 93301 FAX 325-3979 -- Chapter 4.34 JAIL BOOKING AND PROCESSING' FEES Sections: 4.34.010. Purpose. 4.34.020 Findings. 4.34.030 Definitions. 4.34.040 Fee Levied 4.34.050 Calculation .of ~fee amounL 4.34.060 ' .Billing Procedure. 4.34.010 -~ Purpose. This chapter is enacted for the purpose of implementing Section 29550 of the 'California Government Code, enacted by Chapter 466, Statutes of 1990, in order to recover the costs incurred by the county related to the booking and other processing of persons arrested by an employee of certain agencies where the arrested person is brought to a county jail facility for-booking. (Ord. G-5458 § 2 (part), 1991) 4.34.020 Findings. The Board of Supervisors finds that unless the county is reimbursed for such booking and other processing costs, it will be required to fund these costs from revenue that would otherwise fund both county-wide and unincorporated area services for which the County is responsible. Since these designated public agencies are the direct beneficiariesof these booking and other processing services that would be financed from the county-general fund absent ~a booking and processing fee, it is.more equitable for such services to be funded by a fee imposed on the direct beneficiaries of such services rather than by reductions in county services. (Ord. G-5458 § 2 (part), 1991) 4.34.030 Definitions. As used in this chapter, the following words or phrases are defined as set out in this section: A. "Designated agencies" meansthose public agencies upon which the county may impose a boOking and processing fee pursuant to Government Code Section 29550, except those agencies which separately contract with the County of Kern for jail services or which otherwise Compensate the County for its jail booking and processing services through' contract.' Agencies which provide a reciprocal benefit to the county, as determined by the board of-supervisors, through making jail facilities available for use by'. the sheriffs department may also be exempt from the fee imposed by this chaPter. B. "Booking and other processing costs" shall mean all county administrative costs, including applicable overhead costs as permitted by Federal Circular A-87 standards, necessary or appropriate for the reception and detention of arrested persons as county jail facilities from the time that the arrested person is initially presented to fadlity staff until the person .is either keleased from custody or assigned Permanent housing within .the fadlity.. Reimbursement costs reflected 'in the jail booking and processing fee shall 'indude~ but are not iimited to: initial reception, search for weapons/contraband, .fingerprinting, 'photOgraphy, criminal records screening, arrest records processing, data entry, personal property accounting and storage, clothing issuance, medical treatment, counseling, security and prisoner escort and release processing. (Ord F-5458 § 2 (part);. 1991) 4.34.040 Fee levied. A. There is hereby levied bY the County of Kern a booking and processing fee on designated .Public agencies for' all booking and processing costs incurred by .the county with .respect to each person arrested by an employee of such designated agencies and brought to a county jail facility. B. Notwithstanding the provisions of subsection (A) of this section, the fee shall not be .levied on designated public agencies 'for booking and processing costs incurred by the county regarding arrests made with respect to the following: 1. Arrests made on bench warrants and arrest warrants issued for complaints filed by any agency otherthan the arresting agency. The fee will be ch~arged for arrest warrants if the arresting agency is the same agency that originally filed the Complaint for which the warrant was 'issued; 2. Arrests .for driving under the influence (DUI)and for public intoxication which are handled through the detoxification process rather than the regular jail booking process .as persons confined in the county jail for detoxification.are only processed through the initial stages of booking (search for weapons/contraband and collection, 'inventory, and storage of personal property); 3. Persons remanded to the custody of the sheriff by any court; 4. Persons arrested on warrants for probation violations, or for probation violations .upon specific request of any Kern County law enforcement agency; 5. Persons arrested for parole violations only; '6. Persons arrested for escaping fi:om any: county jail, city jail or state prisons facility; 7. - Persons held temporarily in county jail 'facilities-as a courtesy to other law e~orcement agencies while being transported to other facilities, without being booked; 8. Multiagency arrests,-such as may occur in connection With a joint task fOrce of local, state and federal law enforcement agencies; 9. Persons wh° present themselves fOr booking at county jail facilities, unescorted by any law enforcement agency; 10. Juvenile arrests. (Ord. G-5458 § 2 (part), 1991) 4.34.050 Calculation of fee amount. A. The amount of the jail booking and processing fee levied pursuant to Section 4.34.040 shall be established by the Board of Supervisors on an annual basis and shall be based on the cost incurred for '"oooking and processing~'.acti:vities as defined in Section 4.34.030. Said fee shall be established only after conducting a public hearing to ,consider the matter, . B Costs included-in determining the fee amount shall include both direct and indirect costs. Direct costs will be based on total estimated costs for the fiscal year for which the fee Will apply. Indirect costs will be computed based on the standards set forth in Federal 'Circular A-87. C. The fee amount.will be determined by dividing the total direct and' indirect costs' applicable 'to' 'boOking and processing" activities by the 'total number of persons boOked into the county jail during the previous calendar year. The resulting "unit cost" per booking will determine the fee amount to be applied to each chargeable booking. D. The Sheriff shall be responsible for the computation of the booking fee and shall submit the computations to the County Auditor-Controller for verification prior to February 15th of each year. After verification of the booking fee computations by the Auditor-Controller, the Sheriff shall submit a report to the Board of Supervisors detailing the proPosed booking fee and shall request that the board of supervisors schedule a )ublic hearing for Consideration of the matter, to be conducted prior to' April 30th of each year. E. The booking and processing fee shall be adjusted July 1st of each fiscal year,' and shall be applied to all billable bookings occurring during that fiscal year. The sheriff shall be responsible ior notifying affected local agencies of the adjusted booking and processing fee. F. The jail booking and processing fee applicable to fiscal year 1994-95 shall be eighty-eight dollars and twenty-two cents ($88.22) for each chargeable booking and shall apply to all billable bookings occurring on or after July 1, 1994. G. In lieu of a fee amount to be charged for each billable booking, any affected agency may separately negotiate an agreement with the County of Kern providing for the payment of a fixed annual sum or other alternative means of compensation. (Ord. G-6036 § 2, 1993; Ord. G-5866 § 2, 1992; Ord. G-5602 §§ 2-4, 1991; Ord. G-5458 § 2 (part), 1991) 4.34.060 Billing procedure. A. The Sheriffs department shall bill all agencies subject to the jail booking and. processing fee on a quarterly basis. Invoices indicating the number of billable bookings during the preceding quarter, and the total amount due will be mailed by the sheriff to each affected agency on a quarterly basis. B. Payments to the county for the jail booking and processing charge will be due and payable within thirty (30) days of the date of receipt of the quarterly invoice from the Sheriff's department. C. Such payments will. be made directly to the Sheriff. The Sheriff shall be responsible for following-up on all jail booking and processing fees Which are chargeable under this chapter, and~which are not paid by the specified date. (Ord. G-5458 § 2 (part), 1991) - 0 February 6, 1995 MEMORANDUM Honorable Mayor Price and Counci~l~Member Smith TO S. E. Brummer, Chief of Police ~ FROM~ SUBJECT Response to Inquiry of Council Member Pat Smith Please refer to the attached memorandum for details about your inquiry, and the legality of subjects drinking in a business parking lot at 3760 Bernard Street. SEB/vrf attachments: 1. Memorandum ,,Council Member Complaint" dated 2/1/95 Copy to: Alan Tandy, City Manager Verne Jung, Business Manager PD 6~ MEMORANDUM February 1, 1995 TO S.E. BRUMMER, CHIEF OF POLICE FROM TIM TAYLOR, SERGEANT, SPECIAL PROJECTS SUBJECT COUNCIL MEMBER COMPLAINT On January 26, 1995, John Stinson called your office to address a complaint he had received from Councilwoman Pat Smith. The complaint pertained to subjects drinking in the parking lot of the SONY Food Mart located at 3760 Bernard St. I have researched the situation and there is no enforcement action available to the department. The subjects are drinking on private property, therefore the municipal code does not-apply. I called ABC and spoke to Investigator Bob Freet who checked the SONY Food Mart's liquor license. He found no restriction to prevent on- premise consumption of alcohol.~Freet said he'll tell the owners to stop allowing this activity and I'll have the district car monitor the business. Tim Ta~ r, Sergeant Special Projects MEMO RANDUM TO: ALAN TANDY, CITY MANAGER ~/ FROM: LEE ANDERSEN, COMMUNITY SERVICES MANAGER SUBJECT: NAMING OF HORSESHOE cOURTS AT BEACH PARK (COUNCIL REFERRAL #14311) DATE: FEBRUARY 2, 1995 At the Council meeting of December 14, 1995 correspondence from Gerald Patterson, representing the Bakersfield Shoe Crew, a local horseshoe club, requesting the Horseshoe Courts at Beach Park be named "Bill Carroll Courts", was referred by the Mayor to the Citizens Community Service Advisory Committee .for review and recommendation. The Citizen Committee met on January 10, 1995 to discuss this issue. The current Sign policy does not restrict the naming of parks or park facilities after individuals. During discussion the Committee was somewhat divided on setting a precedent on the naming of facilities. Several members suggested having a member of the Club provide additional background information. Also, it was suggested that it may be more appropriate for the Mayor to provide a resolution or proclamation to Mr Carroll. Based on a majority vote of the Committee suggesting a proclamation/resolution be presented to Mr. Carroll, it is Staff's recommendation to provide this information to the Mayor for his comments and action. I would appreciate your suggestions before proceeding with this matter. cc: Frank Fabbri, Parks Superintendent File: name-hs ASs. Marian Shaw Public Works City of Bakersfield 1501 Tru,x'mn Avcau~ ~flold, Ca 93301 Re;City of ]hke~fieid Assessment District No, 94-3 (Sliver Creek/Brirnhali North/Seven Oaks) Commercial Properties D~r Marian: As we discussed e~ller today, I am providing a summary of the Commercial properties included in the ~,-3 Assessment District and tho proposed improvement projects benefiting these properties ' Silver Ctenk- Panama Lane and Harris Road Improvement Costs will be assessed to all propeflias within Silver Creek on a per acre baals. A.D. 82-1 payoff amounts will be transferred to the new District es originally messed to each property. Ashe Conmurcialr Property ('18.00 a=es) Gosford Commercial Property ('16.02 acres) Seven Oaks* Buena Vista Road Improvement Costs will bo assassad to all propertie~ within Sewn Oaks on a per acre bni~. A.D. 82-! payoff amounts will be transferred to the new District as originally a~essed to ~ property. Stockdale Highway Commerdnl ('68.75 acres) Please let me know if ! can provide any additional Information. RespactfxJHy, : Martln-Mclntosh RCE 48142, r~g. ~x. 6-~>06 cc. Rogor Mclnto~ ~ Whitsker, Caatl$ & Cooke Home~, Inc, 2001 WHEELAN GOURT · BAKERSFIELD, CA · 805/834-4814 · FAX 805/~4-0972 ~' Unemployment Statistics-Kern County 1994 Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Kern County 17 16.6 15.7 14.6 11.8 13.5 13.8 12.6 13.1 13.1 13.3 12 Arvin 35.5 34.9 33.4 31.5 26.5 29.7 30.2 28 28.9 28.8 29.3 26.8 Bakersfield 12.7 12.4 11.7 10.9 8.7 10 10.3 9.3 9.7 9.7 9.9 8.8 California City 15.6 15.2 14.4 13.4 10.8 12.4 12.7 11.5 12 12 12.2 10.9 Delano 37.4 36.8 35.3 33.3 28.1 31.4 31.9 29.7 30.6 30.6 31 28.4 Maricopa 9.6 9.3 8.8 8.1 6.5 7.5 7.7 6.9 7.2 7.2 7.4 6.6 McFarland 42.5 41.8 40.2 38.2 32.5 36.1 36.7 34.3 35.2 36.2 35.7 32.9 Ridgecrest 9.3 9.1 8.5 7.9 6.3 7.3 7.4 6.7 7 7 7.1 6.4 Shafter 22.2 21.8 20.7 19.3 15.7 18 18.3 16.8 17.4 17.4 17.7 16 Taft 10.8 10.6 10 9.2 7.4 8.5 8.7 7.9 8.2 8.2 8.4 7.5 Tehachapi 14.6 14.2 13.4 12.5 10 11.5 11.8 10.7 11.1 11.1 11.3 10.2 Wasco 29.4 28.8 27.5 25.8 21.4 24.2 24.6 22.7 23.5 23.4 23.8 21.6 California 10.5 9.8 8.9 9.1 8.1 8.7 9.3 8.6 8.2 7.4 7.5 7 ~ource: Employment Development Department 4ote: Current month preliminary, past'months revised All unemployment rates are based on urounded data. Data are not seasonally adjusted. Attachment Elected Official's Guide to INTERNAL CONTROLS AND FRAUD PREVENTION IBY Stephen J. Gauthier Government Finance Officers Association Copyright 1994 by the Government Finance Officers Association of the United States and Canada 180 North Michigan Avenue Suite 800 Chicago, IL 60601 ISBN 0-89125-192-8 LOC no. 94-72956 All rights reserved CONTENTS [ v Foreword [ I INTRODUCTION Purpose of internal controls Elements of the internal control structure 6 THE CONTROL ENVIRONMENT Essential features of the control environment Importance of management involvement Organizational structure Personnel policies and practices Monitoring operations and investigating discrepancies Governing-body oversight of management Role of audit committees 14 ACCOUNTING SYSTEMS Essential features of an effective accounting system Judging the effectiveness of accounting systems 16 CONTROL POLICIES AND PROCEDURES Nature of control policies and procedures Types of control policies and procedures Proper authorization of transactions Segregating incompatible duties How to ensure the segregation of incompatible duties Designing and maintaining records and ! documentation i Controlling access to assets and records , Comparing accounting data to underlying '[ data Importance of "follow up" Avoiding excessive controls Importance of an accounting policies and procedures manual How to make an accounting policies and I procedures manual effective 29 EVALUATING INTERNAL CONTROLS Importance of evaluating controls Responsibility for evaluating controls How internal controls are evaluated Nature of control cycles Nature of a vulnerability assessment Types of risk Documenting controls Identifying key controls Testing key controls Handling identified control weaknesses 39 FRAUD: CAUSES, COST AND PREVENTION Primary cause of fraud Importance of eliminating fraud Preventing fraud Bonding 43 COMMON TYPEs OF FRAUD Kiting Lapping Bid rigging Pilfering Travel-claim fraud Disposal fraud Double payments False claims Payroll fraud Charge-off fraud Petty cash fraud Healthcare beneficiary fraud 57 HOW MANAGEMENT CAN DETECT FRAUD Detecting fraud Importance of "professional skepticism" What to do when fraud is uncovered iu FOREWORD Elected officials have a special duty to the public to ensure that a government's resources are prop- erly managed. Good management requires the maintenance of sound internal controls. Internal controls are needed to protect a govern- ment's assets against the danger of loss or mis- use. Internal controls also are necessary to ensure that all transactions are properly author- ized, and that the data contained in financial re- ports are reliable. Even the best designed internal controls cannot be effective without the active involvement of management. Only elected officials and govern-~ ing bodies can ensure that internal controls re- main a top management priority. The purpose of this publication is to provide elected officials with clear and practical answers to the most commonly asked questions about in- ternal controls and fraud prevention. It is hoped that this guide will help elected officials play a more active role in overseeing their own govern- ment's internal controls. The GFOA wishes to thank Stephen J. Gauthier, the Director of the GFOA's Technical Services Center, for writing this publication. The GFOA also wishes to thank the members of the commit- tee that reviewed this publication: Frederick Clarke, Deputy City Controller, City of Houston, Texas; Harriet Commons, Assistant Finance Di- rector, City of Freemont, California; Dennis Dy- cus, Director, Tennessee Division of Municipal Audit; Patrick Hardiman, Partner, Deloitte & Touche; Arthur Hayes, Director, Tennessee Divi- sion of State Audit; Glen McKay, Assistant Direc- tor, Tennessee Division of State Audit; and Robert Stout, Deputy Commissioner of Finance, Westchester County, New York. We hope that this booklet, along with others in GFOA's "Elected Officials" series, will provide useful guidance to elected officials seeking to improve the financial management of their governments. Jeffrey L. Esser ExecUtive Director November 1994 vi INTRODUCTION Decisions can be no better than the information upon which they are based. Therefore, it is essen- tial that the data used by elected officials and other financial decision makers be reliable. Like- wise, elected officials and government financial managers have a responsibility to citizens to pro- tect a government's assets against the danger of loss or misuse and to ensure that all transac- tions are properly authorized. The term "inter- nal controls" is commonly used to describe the various practical means used to achieve these two goals. The purpose of this booklet is to explain how in- ternal controls work and the special role they play in helping to protect assets and prevent fraud. The booklet begins with a discussion of the nature and purpose of internal controls. This initial discussion is followed by an examination of the principal elements of an internal control system. The techniques used in assessing the adequacy of internal controls are then consid- ered. There follows an examination of the causes of fraud, the cost of fraud, and how fraud can be prevented. Finally, the booklet closes with a re- view of some of the types of fraud most com- monly encountered in the public sector, as well as practical advice on how management can im- prove its chances of detecting fraud. Throughout the booklet, a question-and-answer format has been used to highlight key concepts and to pro- vide easy access to specific topics of interest. Elected officials have a key role to play in ensur- ing that their governments establish and main- tain effective internal controls. Specifically, elected officials must make sound control poli- cies and procedures a priority item on manage- ment's agenda by taking an active interest in the 1 adequacy of controls. It is the goal of this publica- tion to provide elected officials with the basic in- formation they need to fill this important role. 2 AN ELECTED OFFICIAL'S GUIDE What is the purpose of internal controls It is the duty of government financial managers to be good stewards of the resources committed to their care. Good stewardship requires that as- sets be properly safeguarded, managed and ac- counted for. -Safeguarding. At the most basic level, govern- ment financial managers have a duty to protect a government's assets against the danger of loss or misuse and to ensure that all transactions are properly authorized. Losses can occur for a variety of reasons besides fraud, including the following: · Failure to properly maintain fixed assets, thereby shortening their useful life; · Failure to avoid duplicative purchasing (e.g., ordering assets in one department when the same or similar assets lie idle or underused in another); · Failure to maintain adequate cost accounting systems to ensure that grantors reimburse the government for all appropriate costs related to grants; · Failure to invest available cash to best advan-' tage; · Failure to avoid investments with an unaccept- able degree of risk; and · Failure to take. advantage of all applicable dis- counts on purchases. ~Managemen~. Citizens entrust resources to their government for the specific purpose of pro- viding services. Therefore, it is not enough sim- TO INTERNAL CONTROLS 3 ply to ensure that assets are safeguarded; they also must be used efficiently and effectively to achieve their intended purpose. Government fi- nancial managers have a duty to establish poli- cies to ensure the efficient and effective management of a government's resources. They also have a duty to establish procedures to en- sure that these policies and other management directives are consistently followed in practice. In addition, management's use of a government's resources is often severely limited by legal or contractual restrictions (e.g., appropriated budg- ets, grant agreements). Accordingly, government finance managers must establish procedures to ensure and document that the government is complying with applicable legal requirements. Accountability. Government financial managers have a duty to report on their stewardship of public resources. Consequently, they must estab- lish accounting systems that provide reliable data for inclusion in financial reports. For this purpose, it is not enough that an accounting sys- tem properly manipulates data; the underlying data must themselves be reliable. Computer pro- gramers sometimes have referred to this latter consideration as the "GIGO" principle (i.e., "gar- bage in/garbage out"). It is the purpose of internal controls to enable government financial managers to meet all of these stewardship responsibilities. 4 AN ELECTED OFFICIAL'S GUIDE What are the essential elements of an effective internal control structure ? It is important not to confuse the broad concept of internal control with specific internal control procedures. An effective internal control struc- ture must encompass all three of the following elements: · Control environment. Accounting systems and control procedures do not operate in a vac- uum. To be effective, they must be viewed by employees as an essential and integral part of the process of providing services to citizens; · Accounting system. The accounting system must be properly designed and maintained to meet the government's information needs, in- cluding the periodic preparation of both inter- nal and external financial reports; and · Control policies and procedures. Specific con- trol policies and procedures must be in place to ensure the integrity of the data in the ac- counting system and to ensure that assets are protected against loss and misuse. All three of these elements of a sound internal control structure are discussed in more detail in the sections that follow. TO INTERNAL CONTROLS 5 THE CONTROL ENVIRONMENT What are the essential features of an effective control environment? An effective internal control environment will ex- hibit the following characteristics: · Management is aware of the importance of in- ternal controls and communicates this impor- tance to employees at all levels; · The government has a rational and well-de- fined organizational structure that clearly as- signs responsibility and accountability to individual employees; · Sound personnel policies and practices are in place; * Management actively monitors operations and investigates discrepancies between actual per- formance and anticipated results; and · The governing body oversees management on a continuing basis (e.g., an audit committee). Such a control environment greatly enhances the potential effectiveness of the accounting sys- tem and of control policies and procedures. 6 AN ELECTED OFFICIAL'S GUIDE Why is management involvement essential to the control environment? Internal controls require an ongoing investment of time, effort and money. Only management can provide these resources. Therefore, management involvement is essential if internal controls are to function effectively. Active management support for internal controls is also necessary for another reason. It is easy for employees to get the false impression that control procedures are nothing but "red tape" that is getting in the way of doing their "real" job, especially if they are not made aware of the underlying objectives of the control procedures they are called upon to perform. Consequently, even the best-designed internal control structure has a tendency to break down with the passage of time. Only management can resist this natu- ral breakdown of the internal control structure. Effective management involvement in internal controls requires that management do all of the following on a continuing basis: · Set the tone. Management must set the tone for the entire operation. If management at- taches importance to internal controls, so will employees; · Educate employees. Management must en- sure that employees at all levels understand the purpose and importance of the control pro- cedures they are called upon to perform; and · Provide resources. Management must provide the resources necessary to ensure that the con- trol structure is properly designed and main- tained (e.g., establishment of an internal audit function). TO INTERNAL CONTROLS 7 In the private sector, the importance of active management involvement in the internal control structure is reflected in the Foreign Corrupt Practices Act, which makes management legally responsible for establishing and maintaining an adequate internal control structure. Similarly, in the public sector, the federal government, as well as several state and local governments, have passed "financial integrity legislation" that makes management directly responsible for peri- odically reviewing and assessing the adequacy of their internal control structure. Moreover, the Committee of Sponsoring Organizations (COSO) of the Treadway Commission~ has recommended that management be required to issue periodic reports on the adequacy of the internal control structure. 1The original Treadway Commission's full title was the National Commission on Fraudulent Financial Reporting. The COSO comprises representatives of the American Institute of Certified Public Accountants, the American Accounting Association, the Institute of Internal Auditors, the Institute of Management Accountants and the Financial Executives Institute. 8 AN ELECTED OFFICIAL'S GUIDE Why is a rational and well-defined organizational structure essential to the control environment? If internal controls are to be effective, individual employees must be assigned specific powers and responsibilities for which they are held account- able. For example, it must be made clear which employees may authorize which types of trans- actions. This assignment of authority and respon- sibility must be clearly communicated and documented. When the logic of an organizational structure is unclear, or when the organizational structure is not well defined, lines of authority and account- ability easily become blurred, or may even disap- pear entirely. Such a structural breakdown can lead to situations where "everyone is responsi- ble" but "no one is responsible." In such cases, it is often difficult or impossible to monitor ac- countability and to ensure that transactions are properly authorized. Moreover, a poor organiza- tional structure greatly facilitates the circumven- tion of controls, and may even invite such circumvention. TO INTERNAL CONTROLS 9 How can sound personnel policies and practices help to imp/ove the control environment? Dishonest or unqualified personnel cannot be ex- pected to perform control procedures effectively. Therefore, it is essential that governments strive to hire only qualified and honest individuals for sensitive positions in the government's internal control structure. Well-designed job descriptions and appropriate job qualifications can help to en- sure that employees are competent for their as- signed tasks. Similarly, thorough background and reference checks can help to decrease the likelihood of hiring dishonest individuals for sen- sitive positions. In addition, management should ensure that employees' performance is peri- odically evaluated and documented, and that ap- propriate corrective action is taken, as needed. Also, management should ensure that employ- ees' skills remain up to date by providing con- tinuing training and education. It should be noted that job disaffection is often cited as a major factor contributing to employee. fraud. If management's personnel policies and practices are seen as "fair" byemployees, the likelihood of job disaffection should decrease. 10 AN ELECTED OFFICIAL'S GUIDE Why is it essential that management actively monitor operations and investigate discrepancies between actual performance and anticipated results? It is not practical or profitable for management to attempt to independently review each and every transaction. Accordingly, management must be alert to "red flags" that could indicate potential problems. One such "red flag" is any unusual discrepancy between actual perform- ance and anticipated results. For example, a ma- jor budget overrun in the "supplies" category could be an indication of pilfering. Likewise, an unexplained decline in user fees could signal that not all such fees are being properly collected and recorded. Management's monitoring of discrepancies is more than just a tool for detecting irregularities. Monitoring also helps to prevent irregularities from occurring in the first place. Employees are less likely to commit irregularities if they know that discrepancies that may be indicative of fraud will be actively sought out by management and rigorously investigated. TO INTERNAL CONTROLS 11 Why is it essential that the governing body maintain oversight of management on a continuing basis? While it is management's responsibility to estab- ?1 lish and maintain an adequate internal contro! structure, only the governing body is in a posi- tion to ensure that management fulfills this obli- gation. Moreover, because top management is in a position to override whatever controls it estab-. lishes, the governing body must compensate for this potential control weakness by serving as a fi- hal, higher level of accountability. In practice, governing bodies often establish audit commit- tees for this purpose. 12 AN ELECTED OFFICIAL'S GUIDE What is the role of the audit committee ? The role of the audit committee is to maintain management's accountability to the governing body. The audit committee achieves this goal by: · Selecting the independent auditor for the gov- ernment's financial statement audit; · Monitoring the progress of the financial state- ment audit; · Evaluating the results of the financial state- ment audit; · Ensuring that control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectively remedied; · Serving as a direct communications link be- tween the governing board and the inde- pendent auditor; and · Monitoring the adequacy of the government's internal control structure on an ongoing basis, especially the internal audit function. To ~NT~RNAL CONTROLS 13 ACCO UNTING SYSTEMS What are the essential features of a good acCoUnting system ? A good accounting system should do all of the fol- lowing; · It should assemble information on all finance- related transactions and events; · It:should analyze all of the data collected (i.e., determine how a given transaction or event af- fects recorded assets and liabilities); · It Should classify data in accordance with the government's chart of accounts; · It should record data in the appropriate books of account (e.g., journals, ledgers); · It should report data to management (i.e., in- ternal financial reporting) and to outside par- ties (Le., external financial reporting) in an appropriate format and in a timely manner; and · It should maintain accountability for all of the government's assets. 14 AN ELECTED OFFICIAL'S GUIDE How should the effectiveness of an accounting system be judged? An accounting system may be considered to be ef- fective if it meets all of the following criteria: · Existence or occurrence. All of the assets and liabilities recorded in the accounting system actually exist, and all of the reported transac- tions and events really occurred; · Completeness. None of the government's as- sets or liabilities has been omitted from the ac- counting system, nor has any relevant transaction or event been excluded; · Rights and obligations. All of the assets and liabilities recorded in the accounting sys~m are, in fact, assets and liabilities of the govern- ment (e.g., a rented copier in the custody of the government should not be reported as an asset of the government); · Allocation. The effects of transactions and events are recorded in the appropriate ac- counting period (e.g., liabilities are reported in the period in which they are incurred); and · Presentation and disclosure. The accounting system collects all of the data needed to pre- sent and disclose assets, liabilities, transac- tions and events in general purpose external financial reports in conformity with generally accepted accounting principles as established by the Governmental Accounting Standards Board. To ~NT~N~ CONTROLS 15 CONTROL POLICIES AND PROCEDURES What are control policies and procedures ? Specific policies and procedures are needed to en- sure an effective control environment and an ef- fective accounting system. These control policies and procedures are the third "element" of a gov- ernment's overall internal control structure. Although control policies and procedures are a distinct "element" of the internal control struc- ture, they do not exist or function separately from other control structure elements. Rather, they operate as integral components of the con- trol environment and the accounting system. 16 AN ELECTED OFFICIAL'S GUIDE What types of control policies and procedures should a government implement? A government's control policies and procedures should be adequate to ensure that: · All transactions are properly authorized; · Incompatible duties are segregated (i.e., no employee should be in a position to commit an irregularity and then conceal it); · Accounting records and documentation are properly designed and maintained; · Access to both assets and records is controlled; and · Accounting data are periodically compared with the underlying items they represent. i To ~NTrRNAL CONTROLS 17 How can a government ensure that transactions are properly authorized? A government's written policies and procedures should clearly state which individuals have the authority to authorize each different type of transaction (e.g., Who may authorize the "write off" of a delinquent receivable? Who may ap- prove a purchase order?). Furthermore, authori- zation should be obtained in advance and in writing. Finally, documentation of the authoriza- tion (including the date) should be maintained for later inspection. 18 AN ELECTED OFFICIAL'S GUIDE What is the segregation of incompatible duties ? Simply put, the segregation of incompatible du- ties means that no employee should be in a posi- tion to both commit an irregularity and conceal it. To take an example from everyday life, in movie theaters it is common practice to have one individual sell tickets and another collect them. Otherwise, the individual in charge of re- ceiving admissions could do either or both of the following: · Collect the price of admission and allow en- trance to the theater without actually issuing a ticket. In that case, the ticket seller would be able to pocket the price of admission unde- tected (i.e., because the money remitted to management would still equal the number of tickets issued); or · Allow entrance to the theater without collect- ing the price of admission. By separating the ticket-selling and ticket-Col- lecting functions, neither of the above situations could occur, because individuals without tickets could not enter the theater. Of course, the segregation of incompatible duties could be circumvented through collusion (e.g., the ticket seller and the ticket collector in the Previous example could decide to cooperate and "split the take"). In practice, however, it is often difficult for dishonest employees to gain the coop- eration of their colleagues for fraudulent activi- ties (e.g., honesty, fear of punishment). Therefore, the segregation of incompatible duties is still useful, despite the risk of collusion, be- cause it places a significant hurdle in the path of those who might otherwise be tempted to com- mit an irregularity. TO INTERNAL CONTROLS 19 How can governments ensure that there is a proper segregation of incompatible duties? Ideally, no single individual should be able to 1) authorize a transaction, 2) record the transac- tion in the books of account and 3) ensure cus- tody of the asset resulting from the transaction. In practice, duties can be segregated by depart- ment, or by individuals within a department (which is often the case for smaller govern- ments). For example, the segregation of incom- patible duties could be integrated into the policies and procedures governing the purchase of supplies as follows: · The purchasing department is responsible for issuing a purchase order to the vendor (i.e., authorization); · The receiving department is responsible for verifying that the ordered goods have been re- ceived (i.e., custody); and · The accounting department is responsible for preparing a check request and recording the transaction in the books of account after re- viewing both the purchase order and the re- ceiving report (i.e., recording). The cost of internal controls should never exceed their expected benefit. Accordingly, it may not be practical in some instances to segregate incom- patible duties (e.g., a single employee at a branch office). In that case, management may wish to institute a mandatory vacation policy (e.g., two consecutive weeks) or a policy requir- ing the periodic rotation of duties among employ- eeS. The idea behind such policies is to have other individuals perform an employee's duties for a while to see if there is any noticeable change (e.g., a marked increase in cash receipts). 20 AN ELECTED OFFICIAL'S GUIDE Such a change could be an indication of prior irregularities. Analytical review may also be useful in situ- ations where it is not practical to segregate in- compatible duties. "Analytical review" involves using both financial and nonfinancial factors to evaluate the reasonableness of data (e.g., Are the amounts of food purchased for a school lunch pro- gram consistent with the number of students served?). TO INTERNAL CONTROLS 21 HoW can governments ensure that records and documentation are properly designed and maintained? Documents should be designed to ensure that a government's accounting records are complete. Accordingly, key documents (e.g., invoices, pur- chase Orders, checks, receiving reports) should be sequentially numbered. Spoiled documents should be voided and retained. Documents sent outside the government (e.g., purchase orders, re- ceipts) should be designed to produce automatic duplicates (e.g., carbon copies) for the govern- ment's records. Documentation should be dis- carded only in accordance with legal requirements governing records retention (e.g., state law, grant agreements). Employee work re- cords (e.g., time sheets) should contain the detail needed to support the allocation of employee time to specific cost centers. The computer room should be environmentally secure (e.g., proper temperature and humidity). Computer records should be backed up daily, and the backup tape should be kept in a secure location offsite. A government should make ar- rangements to ensure that it would be able to continue functioning in the aftermath of a disas- ter affecting the computer system (i.e., a disaster recovery plan). Periodic reviews and testing are necessary to ensure that a government's policies and proce- dures on documentation are followed. Internal auditors commonly perform such tests on behalf of management. 22 AN ELECTED OFFICIAL'S GUIDE How can a government control access to its assets and records ? A government should maintain physical security over its assets. Sensitive items should be kept in a locked storage room at all times when not in use. "Walk-away" items (e.g., calculators, tools) should be assigned to specific employees or checked out by employees as needed. Controlling access to records is at least as impor- tant as controlling access to assets. Hardcopy re- cords (e.g., purchase orders, invoices) should be accessible only to authorized employees. Check- out cards should be required if records are to be removed temporarily. Specific individuals should be assigned responsibility for the custody of spe- cific records. It is best if confidential records are kept separate from less sensitive material. Most governments retain significant portions of their accounting records on computer. Access to the computer room should be restricted to authorized individuals. An individual's access to the computer system should be limited to that in- dividual's specific information needs (e.g., a re- ceivables clerk should not have access to payables records). Passwords should be changed periodically (no less than once a month) and kept secret. Obvious passwords (e.g., "password," name) should be avoided. TO INTERNAL CONTROLS 23 How can a government compare its accounting data with the underlying data they represent? Governments should routinely reconcile the cash balance reported in their bank statement with the cash balance recorded in their books of ac- count. Differences between the two should be rec- onciled and documented. Similarly, governments should take an annual inventory of their fixed as- sets and supplies to ensure that all recorded items are, in fact, in the government's custody. Other accounts can be checked in a similar man- ner (e.g., confirmation of receivables and pay- ables balances, petty cash counts). 24 AN ELECTED OFFICIAL'S GUIDE Why is "follow up" essential to the effectiveness of control policies and procedures ? A smoke alarm is not designed to put out a fire; however, it is intended to alert those who can. Much the same can be said of most control poli- cies and procedures. Of themselves, these con- trols cannot eliminate errors and irregularities, but they can alert management to their presence so that timely and effective corrective action can be taken. Unfortunately, it is not at all uncommon for er- rors and irregularities to continue unabated long after the first indications of their presence have been detected and reported. The blame in such cases does not lie with the controls themselves, but rather with management's failure to follow up on the "red flags" they raise. Management must ensure that there is prompt follow up on all indications of potential errors or irregularities. Each such instance should be re- solved and documented, and corrective action taken, if needed. In resolving discrepancies iden- tiffed by the accounting system, management should maintain a healthy skepticism. For exam- pie, all explanations of discrepancies should be corroborated by supporting evidence. TO INTERNAL CONTROLS 25 When do control policies and procedures become excessive? Control policies and procedures are a means, not an end in themselves. Accordingly, the costs asso- ciated with control policies and procedures should never outweigh their likely benefits. Unfortunately, it is easy to fall into the trap of believing that "more is better" in the matter of controls. In fact, redundant controls can actually be harmful to a government. Besides causing a government to incur unnecessary costs, redun- dant controls often encourage circumvention by employees and can cause employees to dismiss controls in general as being no more than "red tape." The danger of excessive controls is particularly acute for governments converting from a manual accounting system to a computerized system. Governments in such situations may be tempted to simply superimpose a second set of controls on top of the controls already in place, when what is really needed is an entirely new, inte- grated set of controls. 26 AN ELECTED OFFICIAL'S GUIDE Why is an accounting policies and procedures manual important for the ~effective functioning of control policies and procedures ? Designing and instituting effective control poli- cies and procedures is only a first step. The greater challenge is to ensure that such controls continue, to function as designed. Proper docu- · mentation is essential in meeting this ongoing challenge. An accounting policies and procedures manual clearly outlines the specific authority and respon- sibility of individual employees, thus providing the essential foundation needed' for establishing employee accountability. It also serves as a refer- ence tool for employees seeking guidance on the proper handling of less frequently encountered transactions and situations. In addition, an ac- counting policies and procedures manual less- ens the threat to continuity posed by employee turn°ver. TO INTERNAL CONTROLS 27 What conditions are essential if an accounting pOlicies and procedures manual is to be effective ? To be effective, an accounting policies and proce- dures manual must be complete, up-to-date, and available. Completeness requires that an ac- counting policies and procedures manual state which employees are responsible for performing which functions in which manner. Being up-to- date requires that an accounting policies and pro- cedures manual be periodically revised to reflect policy changes, as well as to provide timely guid- ance on emerging issues facing management and employees (e.g., accounting procedures applica- ble to a new grant program). Finally, the account- ing policies and procedures manual must be disseminated widely enough to be easily avail- able to all of the employees who will need it. Also, it is important that an accounting policies and procedures manual do more than simply de- scribe the appropriate handling of transactions and events. The accounting policies and proce- dures manual should also clearly communicate the design and objectives of the government's in- ternal control structure. Employees are more likely to perform control procedures faithfully if they are aware of their purpose and importance. Finally, an effective policies and procedures man- ual must have the support of high-level manage- ment. Therefore, such a manual should be formally approved by top officials. 28 AN ELECTED OFFICIAL'S GUIDE EVA L UATIN G INTERNAL CONTROLS Why is it important to evaluate internal controls ? As noted previously, internal control procedures require continuous effort and attention, and so are easily prone to break down. Only an ongoing evaluation of internal control procedures can pro- vide assurance that controls are continuing to op- erate effectively. TO INTERNAL CONTROLS 29 Who is responsible for evaluating internal controls ? Management is primarily responsible for main- taining an effective internal control structure. Consequently, it is management's responsibility to evaluate the effectiveness of internal controls on an ongoing basis. Management often relies upon the work of internal auditors to meet this obligation..Ideally, however, management also should be directly involved in the process of evaluating controls. Such direct involvement by management is mandatory in jurisdictions that have laws patterned on the Federal Manager's Financial Integrity Act of 1982. In addition, the independent auditor is required to obtain an understanding of the government's internal control environment as part of the audit of the financial statements. The focus of the inde- pendent auditor's work, however, is on the fair presentation of the financial statements, not the effectiveness of internal controls in and of them- selves. Consequently, the independent auditor's assessment of internal controls is no substitute for management's ongoing review and evaluation. 30 AN ELECTED OFFICIAL'S GUIDE How are internal controls evaluated? There are several steps involved in evaluating the effectiveness of control policies and procedures: · Identification of control cycles; · Performance of a vulnerability assessment; · Documentation of controls; · Identification of key controls; and · Testing of key controls. To ~NTERNAL CONTROLS 31 What are control cycles ? It is useful to group related control procedures together for purposes of evaluating the effective- ness of internal controls. Such groupings of re- lated control procedures are commonly referred to as "control cycles." The number and types of control cycles are a matter of professional judgment and vary from government to government. The following, how- ever, are examples of commonly used control cycles: · Revenue cycle. Transactions involving the in- flow of resources to the government (e.g., bill- ings, receivables, cash receipts); · Expenditure cycle. Transactions involving the outflow of resources from the government (e.g., purchasing and payroll); · Treasury cycle. The management of resources held by the government (e.g., investing, fixed. asset management); and · Reporting cycle. The accumulation and report- ing of accounting data (e.g., periodic prepara- tion of grantor reports). As just noted, control cycles can themselves be subdivided into accounting applications (e.g., bill- ings, investing). Moreover, both control cycles and accounting applications can be further subdi- vided by function (e.g., sanitation), activity (e.g., sewage collection and disposal) or subactiv- ity/program (e.g., sanitary sewer construction). For example, management could choose to focus its attention on control procedures in the expen- diture cycle over purchasing for sanitary sewer construction. 32 AN ELECTED OFFICIAL'S GUIDE What is a vulnerability assessment? In a hospital emergency room, the treatment of patients is prioritized based upon need. The same approach also applies to the evaluation of internal controls. Individual control cycles and accounting applications can be prioritized based upon their perceived vulnerability to errors and irregularities. The systematic process used to es- tablish priorities based upon risk is known as a "vulnerability assessment." To ~NTrRNAL CONTROLS 33 What types of risk are considered in the process of performing a vulnerability assessment? Many different factors can make one control cy- cle or accounting application riskier than an- other. For example, the general control environment may be less favorable in one case than in another? Likewise, certain factors make some control cycles and accounting applications inherently riskier than others. The following are examples of some specific factors that may indi- cate a higher than ordinary level of inherent risk: · High volumes of cash transactions; · Transactions involving individuals outside the government (e.g., benefit payments); · Implementation of new programs; · Recent computer hardware/software conver- sions; · Complex program requirements; · Financial stress, or · Rapid downsizing of operations. 2See page 6 for the earlier question on ~What are the essential £eatures of an effective control environment?" 34 AN ELECTED OFFICIAL'S GUIDE How and why are controls documented? Controls procedures are documented so their de- sign can be studied and evaluated. In practice, a variety of techniques are used to docUment con- trol procedures. Some use specially designed checklists for this purpose, similar to the inter- nal control questionnaires used by the inde- pendent auditor. Others prepare detailed memoranda describing ali of the specific control procedures in a given control cycle or accounting application. Still others prepare detailed flow- charts of control procedures. Whichever method or methods are employed,.it is critical that the documentation clearly disclose 1) who is to per- form each procedure and 2) how each procedure is to be documented. There are several sources of information that typically are used as a basis for documenting con- trol procedures. First, there is the accounting policies and procedures manual. Next, there are interviews with individuals responsible for per- forming control procedures. Finally, there should be a "walk-through" for each type of transaction (e.g., the processing of a purchase order) to pro- vide some preliminary assurance that the proce- dures described in the documentation are actually in place. To NTERNAL CONTROLS 35 How are key controls identified? Once the design of control procedures has been documented, the documentation should be used as a tool for identifying key controls. Typically, identifying key controls involves a two-step process: · Identifying errors or irregularities that could occur in a given control cycle or accounting ap- plication, and · Using the documentation of control procedures to determine what controls are in place to avoid such potential errors and irregularities. For example, the payroll cycle is subject to a vari- ety of risks (e.g., payment of fictitious employ- ees, payment to employees for time not actually worked, failure to properly allocate employee time to the appropriate cost center, payment of unauthorized overtime). Accordingly, the docu- mentation of the payroll cycle could be studied to determine what controls are in place to avoid these risks (e.g., separation of the personnel and accounting functions, supervisor-approved timesheets with appropriate salary distribution information, overtime authorization forms). Once the key controls are identified, it should next be determined whether they are properly designed (i.e., Would the procedures achieve their intended objectives if performed as de- signed?). If not, testing of the controls would serve no purpose. If, however, the control proce- dures are well designed, the next step would be to determine if the controls are actually function- ing as designed in practice. 36 AN ELECTED OFFICIAL'S GUIDE How are key control procedures tested? It is not enough that internal control procedures be well designed; they must also be placed and maintained in operation if they are to be effec- tive. The purpose of testing control procedures is to verify that documented control policies and procedures have, in fact, been placed in opera- tion and are continuing to function as designed. Typically, it is not practical to test all transac- tions of a given type (e.g., purchase orders). stead, a representative sample ordinarily is selected for testing. The results of the tests are then treated as being indicative of the effective- ness of control procedures for all transactions of the same type. To avoid the danger of conscious or unconscious bias, all items in a sample should be selected randomly (i.e., all items should have an equal chance of being selected). In addition to sampling, those evaluating control procedures will wish to test items that they be- lieve are particularly sensitive based on their judgment and experience. For example, they may decide to test all transactions of a given type exceeding a certain dollar threshold, or certain types of transactions that have a his- tory of being particularly vulnerable to errors or irregularities. NrSRNAL CONrSOLS 37 How should control weaknesses be handled once they have been identified? If testing discloses that a control procedure is not, in fact, working as designed, the following factors should be considered: · Is there a compensating control procedure that is achieving the same goal as the control procedure that is not working properly? If so, the weak control may be redundant and its usefulness should be reevaluated; · Do the costs of the weak control procedure out- weigh the benefits? If so, a more economical control procedure may be needed. · If the answer to both of the previous questions is negative, then action needs to be taken to eliminate the control weakness. In all of these cases, there is a need for immedi- ate and decisive remedial action on the part of management. Unfortunately, all too often such weaknesses are allowed to remain unresolved indefinitely. Of course, those evaluating internal controls should always remain alert to possible ways to further improve the effectiveness and efficiency of those controls that are, in fact, working as designed. 38 AN ELECTED OFFICIAL'S GUIDE FRAUD: CAUSES, COST, AND PREVENTION What is the primary cause of fraud? Fear of detection and punishment is a powerful deterrent to fraud. If this fear is removed and the temptation is sufficiently great, even other- wise honest individuals may be lured into com- mitting dishonest acts. For those lacking in basic honesty, or those under intense financial pres- sure, the combination of temptation and opportu- nity is likely to be particularly potent. A reasonable fear of detection and punishment is the logical product of an effective internal con- trol structure. Conversely, weak internal con- trols both permit and invite irregularities by reducing or removing this fear. Accordingly, it is no exaggeration to speak of weak internal con- trols as being the primary factor contributing to fraud. Jo ~N~ERNAL CONTROLS 39 Why is it essential to eliminate fraud? One of the primary responsibilities of manage- ment is to protect a government's assets against the risk of loss or misuse. Accordingly, it is essen- tial that all reasonable steps be taken to elimi- nate fraud. Moreover, the costs of fraud go well beyond the immediate value of the lost assets. Other important costs associated with fraud in- clude the following: · Loss of public confidence in government. It has become increasingly common for citizens to voice skepticism about government at all levels. Instances of fraud only serve to accentu- ate the public's lack of trust in public institu- tions. Loss of reputation of the innocent. The suspi- cion and distrust created by the discovery of fraud often cast a shadow upon individuals in the same department who are not connected with the fraud. · Punishment of the perpetrator Fraud is a seri- ous matter. Even small-scale fraud destroys the trust that is essential to the employer-em- ployee relationship. Therefore, employees com- mitting fraud are likely to be terminated, and their future employment prospects may be dim, regardless of the amount stolen. Indeed, the persona] consequences of relatively minor frauds can sometimes be tragic (e.g., divorce, suicide). 40 AN ELECTED OFFICIAL'S GUIDE What is the single most important step that can be taken to prevent fraud? The single most important step that can be taken to prevent fraud is for management to establish and maintain an effective internal con- trol structure. Furthermore, management's com- mitment to internal controls must, in turn, be supported by the government's elected officials. To ~NT~RNAL CONTROLS 41 What are the merits of "bonding"? Governments often require that employees in sensitive positions be "bonded." A bond is a con- tract with an insurance company to compensate the government for losses that may be sustained as a result of fraudulent actions committed by employees. One of the potential advantages of bonding is the background check that is performed on pro- spective employees. Such background checks can be helpful in identifying a dishonest job appli- cant, or may discourage such applicants from ap- plying altogether. Another advantage of bonding is that it provides some financial security against losses that may result from fraud com- mitted by employees. Also, bond companies' repu- tation for aggressively pursuing legal remedies against perpetrators of irregularities can be a powerful disincentive to fraud. Despite its benefits, bonding is no substitute for an effective internal control structure. Bonding companies only reimburse proven losses, and the same weak controls that permit fraud typically make it difficult to prove the amount of the losses sustained. Therefore, to be effective, bond- ing must be integrated into the government's overall internal control structure. 42 AN ELECTED OFFICIAL'S GUIDE COMMON TYPES OF FRAUD What is "kiting?" Many frauds start out as "borrowing" schemes. That is to say, individuals misappropriate assets that they hope to replace before they are missed. In the interim, the individual "borrowing" the money must find a way to hide the fact that it is missing. "Kiting" is a classic scheme for hiding the absence of "borrowed" funds. In ordinary circumstances, the cash balance re- ported in the accounting records typically will be different from the cash balance reported in the monthly Bank statement. For example, a govern- ment's balance per the bank's records will include uncashed checks. Similarly, a government's bal- ance per the bank's records will not include de- posits sent by the government, but not yet received and credited by the bank (i.e., "depOsits in transit"). Kiting schemes take advantage of this disparity by treating "borrowed funds" as de- posits in transit, thus explaining their absence from the bank balance. Kiting is not uncommon, although it ought to be rare giVen the ease .with which it can be detected and prevented. All that is necessary is to insist that the government's accounting records be rec- onciled to the bank statement monthly by an in- dividual who does not have access to cash (i.e., segregation of duties between custody and re- cord-keeping). The rotation of duties may also be helpful, as the absence of the "borrowed" funds will soon become evident to the person succeed- ing the individual doing the kiting. To NTeRNAL CONTROLS 43 What is lapping? Lapping is a classic '%orrowing" 'scheme, built on the premise of "robbing Peter to pay Paul." Some- one with access to receivables records will bor- row one customer's payment and replace it later with another customer's payment. Assume, for example, that Customer A pays $100 due to the government. The lapper will take this $100 and wait for the arrival of a similar payment from an- other customer (e.g., $100 from Customer B). This latter payment will then be credited to the previous customer's account. The same process is then repeated indefinitely with subsequent customers. The net result is a floating loan of $100. If the delay in crediting an account hap- pens to be noticed by a customer, it may be blamed on '%ureaucracy" or on a "computer error." The best way to avoid lapping is to ensure an adequate segregation of duties between cash re- ceipting and record keeping for accounts receiv- able. The optimal method to detect lapping is to compare the details of daily deposit slips with the postings made that same day to individual receivables accounts. Lapping also will some- times result in a disparity between the balance for accounts receivable in the general ]edger and the total of individual receivables accounts in the subsidiary ledger. Accordingly, these two amounts should be reconciled periodically. Fi- nally, daily receipts typically include both cash and checks. Lappers ordinarily rely heavily on the cash portion of deposits because it is easier to get the precise amounts needed. Accordingly, deposit slips that reflect an inordinately low amount of cash may indicate the presence of lapping. 44 AN ELECTED OFFICIAL'S GUIDE What is bid rigging? Governments often use a competitive bidding process to ensure that they pay the lowest possi- ble price for the goods and services they need. The term "bid rigging~' is used to describe a num- ber of fraudulent practices that are designed to subvert this process. Competing firms, for exam- pie, may arrange to "take turns" placing the low bid on government contracts. Or firms may agree to share individual contracts by taking on unsuccessful "competitors" as subcontractors. Other types of bid rigging involve collusion with government officials. For example, an individual bidder may be informed by someone inside the government that a given contract specification will be eliminated subsequent to the award of the contract. In that case, the bidder can gain an unfair advantage over competitors by making an extremely low estimate of the cost of that par- ticular specification (knowing that performance will not be required at that price), resulting in an overall lower bid. Change orders to contracts (i.e., contract amendments subsequent to the award of the contract) can be used in this same way by unscrupulous government officials. Dis- honest government employees also can slant specifications to favor a specific firm. In all of these cases, kickbacks from contractors may pro- vide the incentive needed for collusion. There is no easy way to prevent bid rigging. As a rule, however, the difficulty of bid rigging in- creases as more firms participate in the bid proc- ess. Therefore, governments should aggressively seek to foster competition by identifying the broadest possible range of qualified bidders. Two steps may be helpful in detecting potential bid rigging. First, the government should follow !~ TO INTERNAL CONTROLS 45 up on any complaints received from unsuccessful bidders. Second, the need for change orders or the dropping of a contract specification sub- sequent to the contract award date should be rig- orously investigated. 46 AN ELECTED OFFICIAL'S GUIDE What is pilfering ? Pilfering is the petty theft of supplies and simi- lar items of small monetary value. Because the cost of controls should not exceed their benefits, a certain amount of pilfering is inevitable. On the other hand, it is easy to underestimate the cost of pilfering, especially in larger organizations. The best method of detecting pilfering is to com- pare actual purchases of supplies with a reason- able estimate of the government's needs. If purchases are significantly in excess of esti- mated need, steps should be taken to establish employee accountability (e.g., locked storage · cabinets maintained by a designated individual with supply requisition forms). To ~NTERNAL CONTROLS 47 What is travel-claim fraud? A number of government employees are required to travel as part of their job. In such cases, the government reimburses employees for reason- able costs associated with such travel (e.g., gas, mileage, meals, lodging). Unfortunately, some employees abuse the reimbursement process by seeking reimbursement for expenses that they have not actually incurred. The best way to reduce travel-claim fraud is to review documentation carefully before payment is made. In particular, attention should be paid to meals and mileage. For example, employees frequently attempt to charge for meals that were, in fact, provided as part of a conference or seminar. Similarly, employees often inflate mile- age on travel claims. The best way to detect such mileage inflation is to compare the trip in ques- tion with a similar trip (e.g., last year's inspec- tion tour at the same site). 48 AN ELECTED OFFICIAL'S GUIDE What is disposal fraud? Governments routinely dispose of surplus equip- ment and supplies. Sometimes an employee will be aware of a way to profit from such disposals of which the government itself is unaware. For example, a number of years ago an employee charged with "junking" thousands of old X-rays from an abandoned tuberculosis asylum sold them instead to a silver reprocessor for a profit, which the employee kept. The government alone, however, is entitled to any profits made on the disposal of its surplus property. The best way to prevent disposal fraud is to have sound control policies and procedures for the dis- posal of assets. In particular, these policies should prevent government employees from ever directly taking possession of government assets, even in the absence of a secondary market (i.e., an employee should not be allowed to take an as- set home even if it is on its way to the junk yard). To NTrRNAL CONTROLS 49 What are double payments ? Normally, internal control procedures require proof that a good or service has been received before payment can be made. Accordingly, it is often easier for a dishonest individual to charge twice for a real good or service than to attempt to bill the government for fictitious goods or services. The best way to avoid double payments is to in- sist on original documentation to support all pay- ments (both invoices and receiving reports). A similar good or service might be required un- der two separate contracts with the same ven- dor. In that case a single good or service could be charged fraudulently to both contracts. Accord- ingly, contracts with the same vendor should be examined for similar items. If there are similar items in 'two separate contracts, then it should be determined that performance has occurred un- der both contracts. An employee could seek reimbursement for a sin- gle bill from both petty cash and the regular re- imbursement process. Accordingly, receipts submitted to petty cash should be checked against similar items submitted to the regular reimbursement process. 50 AN ELECTED OFFICIAL'S GUIDE What are false claims ? Sometimes governments are charged for goods or services they did not, in fact, receive. Or gov- ernments may be charged for goods or services of a higher quality than they received. The best way to prevent false claims is to insist on independent documentation of the receipt of acceptable goods or services before payment is made to vendors. In the case of professional serv- ices or construction, it is important that this veri- fication be made by individuals with the skills necessary to judge satisfactory conformance with contractual provisions. To ~NTERNAL CONTROLS 51 What is payroll fraud? Individuals should only be paid for time worked. Sometimes, however, governments are fraudu- lently induced into paying salaries or wages to fictitious employees. The best way to avoid payroll fraud is the segre- gation of duties. That is to say, the same individ- ual should not be able to both add or delete employees (i.e., authorization) and approve pay- roll (i.e., custody of assets). In practical terms, this segregation of duties is often accomplished by separating these two functions between the personnel and accounting departments. One method used to detect fictitious employees is to hold surprise "payroll payouts" from time to time. In a payroll payout, the accounting depart- ment or internal auditors deliver checks directly to employees. Management also should be alert to one particu- lar variant of payroll fraud. Rather than add fic- titious employees to the payroll, supervisors sometimes delay processing termination papers on employees and then keep their checks for one or two pay periods after they have left employ- ment. One way to avoid this type of fraud is for the personnel department to insist on final inter- views on the last day of employment for all ter- minating employees. Management also should be alert to attempts to artificially raise retiring employees' pension benefits. Pension benefits frequently are calcu- lated using employees' average salary during their final years of service (or highest paid years of service). If overtime is included as part of sal- ary for purposes of the pension benefit calcula- tion, there may be a strong incentive to 52 AN ELECTED OFFICIAL'S GUIDE artificially inflate the amount of overtime put in by retiring employees, thereby increasing future Pension benefit payments. Accordingly, manage- ment should have policies in place to ensure that employees are not assigned a larger than ordi- nary amount of overtime in their final years of service before retirement. TO INTERNAL CONTROLS 53 What is charge-off fraud? Just like businesses, governments are not al- ways able to collect all of the receivables due to them. After collection efforts are exhausted, a government will "write off' bad receivables. In charge-off fraud, someone with access to both cash and receivables records will keep the final collection on a receivable and then write it off as uncollectible. The best way to avoid charge-off fraud is to seg- regate receivables collections (i.e., custody of as- sets) from receivables record keeping. A useful method to detect charge-off fraud is to accom- · pany each write-off with a final letter demand- ing payment. If an individual has, in fact, paid the amount due, the individual will most likely complain to the government and thereby alert management of the charge-off fraud. 54 AN ELECTED OFFICIAL'S GUIDE What is petty cash fraud? Normally special imprest funds (commonly known as "petty cash" funds) are used to reim- burse employees promptly for small expenses. Petty cash is subject to a number of different types of fraud. The most common type of petty cash fraud is for the custodian to "borrow funds." The best way to avoid this type of fraud is to hold surprise cash counts to verify that the sum of receipts and cash on hand actually equals the book balance of the fund. Sometimes custodians of petty cash funds will at- tempt to hide "borrowings" by providing adding machine tapes that purport to show the total of the receipts contained in the fund. Indeed, an amount will appear on the tape for each of the petty cash receipts; however, the custodian actu- ally will have removed the first item on the tape (an entry for the amount of the "borrowing"). As a result, the total on the adding machine tape will be greater than the individual items visible on the tape. To avoid this type of fraud, adding machine tapes sometimes routinely print the number of transactions included next to the sum. All the same, the best policy is for those reim- bursing petty cash accounts to perform their own addition of receipts. TO ~NTERNAL CONTROLS 55 What is healthcare beneficiary fraud? One of the most valuable and costly benefits pro- vided to employees is healthcare. Typically, em- ployees have the option of having family members covered under their health insurance plan. Sometimes, employees abUse this benefit by falsely claiming ineligible individuals as "fam- ily'' members for insurance purposes. The best way to avoid healthcare beneficiary fraud is to insist that all changes in the names of beneficiaries on insurance records (e.g., births, divorce, marriage) be properly documented. In particular, care should be taken to ensure that boyfriends and girlfriends are not fraudulently added to insurance records as "spouses" follow- ing a divorce. Likewise, there should be current documentation on record to support the reten- tion of older children in a healthcare plan be- cause of their claimed status as full-time students. 56 AN ELECTED OFFICIAL'S GUIDE HO W MANAGEMENT CAN DETECT FRAUD How can management detect fraud? Of course, the best way to detect fraud is for management to follow up diligently on all "red flags" raised by its system of internal controls. In addition, the following techniques are often useful in detecting fraud: · Analytical review. Management should as- sess the reasonableness of numbers reported in the accounting records by comparing them with related nonfinancial data and estimates. For example, what quantity of supplies would a government of a certain size reasonably be expected to purchase in a given period? Why are user fees below budgeted estimates? Unan- ticipated results should be investigated thor- oughly by management. · Unusual transactions. When a good internal control structure is in place, fraud must be ac- complished by circumventing controls. There- fore, particular attention should be paid to any transactions that have required "special handling." Such special handling is often re- flected in adjusting journal entries made to balance the accounts at year end. Accordingly, it is very important that management rigor- ously verify the justification for all adjusting journal entries. · Unusual documentation. Often small details of documents may be powerful indicators of fraud (e.g., checks to vendors that are cashed rather than deposited, invoices with the same date as the underlying purchase order, in- voices for goods not ordinarily provided by a given type of vendor, erasures). Accordingly, documents should be carefully examined and unusual details investigated. At the same time, it should be remembered that most real- To ~NTrRNAL CONTROLS 57 life documentation is somewhat "the worse for wear" because it will have been handled by a number of individuals. Therefore, unusually "clean" documentation may itself be an indica- tion that a given transaction is fraudulent. Finally, management must not close its ears to informants and gossip. Unfortunately, it is all too easy to discount information simply because the motives of those who offer it are not pure (e.g., disgruntled subordinates, jealous cowork- ers, angry former spouses). In fact, some of the best information on fraud often comes from just such "disreputable" sources. 58 AN ELECTED OFFICIAL'S GUIDE Why is it important that management maintain an attitude of professional skepticism ? The occurrence of fraud is often indicated by the presence of one or more "red flags." It is manage- ment's duty to follow up on these red flags to de- termine whether fraud has, in fact, taken place. Unfortunately, management is often less than rigorous in following up on indications of poten- tial fraud. In particular, management is often easily led into accepting unsupported employee explanations of discrepancies revealed by inter- nal controls. Management follow-up can only be effective if management maintains an attitude of profes- sional skepticism. Professional skepticism does not mean distrusting employees. Rather, it means that management will insist, simply as a matter of good business practice, that all explanations of discrepancies be supported by evidence. It should be noted that management has not been alone in sometimes being gullible regarding unsupported employee assertions. The standards governing independent audits of the financial statements now require that auditors verify em- ployee explanations.3 3Statement on Auditing Standards No. 56, Analytical Proce- dures. To ~NT~RNAL CO~VTROLS 59 What should management do when it believes it may have uncovered fraud? It is vital that management's investigation of fraud not be conducted in such a way as to jeop- ardize the eventual prosecution of the implicated individual(s). Accordingly, management should seek professional legal advice as soon as it be- lieves it may have uncovered a possible fraud. Likewise, management should be sure to inform all appropriate third parties (e.g., district attor- ney, auditor general, audit committee) as re- quired by law. 60 AN ELECTED OFFICIAL'S GUIDE Other titles in GFOA's series of booklets for elected officials include: An Elected Official's Guide to Auditing (by Stephen J. Gauthier) An Elected Official's Guide to Debt Issuance (by J. B. Kurish and Patricia Tigue) An Elected Official's Guide to Fund Balance (by Stephen J. Gauthier) An Elected Official's Guide to Government Finance (by Girard Miller) Quantity discounts apply to purchases of six or more copies of any title. To order, call or write to: Government Finance Officers Association of the United States and Canada 180 N. Michigan Ave., Suite 800 Chicago, IL 60601 Phone: 312/977-9700 Fax: 312/977-4806 "'Public'Finance Network About the Public Finance Network Formed' in 1988, the PUBLIC FINANCE NETWORK'is a coalition of 44 organizations united to preserve state and local government use of tax_ exemPt finance. Members of the NETWORK represent virtually all segments of local and state governments. For information about the NETWORK and financing issues, contact any of its members, listed in Appendix B, or call or write: PUBLIC FINANCE NETWORK 1750 K Street, N.W., Suite 650 Washington, D.C. 20006 202/429-2750~ .11 TAX-EXEMPT FINANCING A Primer Spring 1994 Public Finance Network .TABLE OF CONTENTS Page INTRODUCTION ........ ~ ........................................... ~ ................................................................. i QUESTIONS AND ANSWERS CHAPTER l: Fundamentals of Tax-Exempt Financing ................................... , ..................... 1 CHAPTER 2: Constitutional and Policy Issues ............................................... ~. ..................... 7 CHAPTER 3: Congressional Actions and their Effects .............................. ~ ..... , ................... 10 CHAPTER 4: Responses to Criticisms of Tax-Exempt Financing ....................................... 17 APPENDICES Pc Chronology of Federal Laws Affecting Tax-Exempt Financing .................................. 21 B: Who's Who in the Public Finance Network ......................................... ~ ....................... 29 INTRODUCTION Tax-Exempt Financing, A Primer provides those unfamiliar with this financing method with a basic understanding of the issue. The Primer is divided into two parts: a series of questions and answers on tax-exempt financing, followed by a summary of federal legislation related to tax- exempt bonds in Appendix A. The questions and answers are organized in four sections: I Fundamentals of Tax-Exempt Financing--provides basic background and definitions essential to an understanding of tax-exempt financing; I Constitutional and Policy Issues~describes the effects of the Supreme Court's 1988 decision on tax-exempt financing and outlines the public policy issues to which Congress should be sensitive in deciding the future of tax-exempt financing; I Congressional Actions and Their Effects~highlights major changes in tax-exempt bond law, particularly those contained in the 1986 Tax Reform Act, the impact those changes have had on issuers of tax-exempt municipal bonds, and suggests changes to better enable state and local governments to meet their financing needs; and I Responses to Criticisms of Tax-Exempt Financing--provides answers to some of the arguments against the use of tax-exempt bonds. This Primer was prepared by staff of the American Public Powe, r Association (APPA) and the Government Finance Officers Association (GFOA) for the Public Finance Network (PFN). The PFN is a coalition of 44 organizations interested in preserving the tax-exempt status of state and local government.bonds.. A list of the members of the PFN and contact names is included in Appendix B. The principal author is Ruth M. Wallick of GFOA. Others who assisted in its preparation are Lori Pickford and Sue Miller of APPA, Amy Dunbar of the National Association of Bond Lawyers, and Catherine L. Spain of GFOA. Chapter I FUNDAMENTALS OF TAX-EXEMPT FINANCING What is tax-exempt financing? Tax-exempt financing is used by state and local governments to raise capital to finance public capital imProvements and other projects, including infrastructure facilities that are vitally important to sustained economic growth. State and local governments have three means of financing these projeCts: pay-as-you-go financing, intergovernmental revenues such as grants, and borrowing. Borrowing, or debt financing, is accomplished by issuing bonds to pay for specific projects or services. A bond is a debt instrument bearing a stated rate of interest that matures on a certain date, at which time a fixed sum of money plus interest is payable to the bondholder. Unlike corporate debt issues, the interest received bY holders of state and local government bonds (also called municipal bonds) is exempt from federal income taxes and may also be exempt from state and local income taxes. Consequently, investors will accept a lower interest rate on tax-exempt issues, which reflects their reduced tax burden. This lower rate reduces borrowing costs for state and local governments by approximately 25 percent. What types of tax-exempt bonds are issued by state and local governments? There are two general categories of tax-exempt bonds: general obligation bonds and revenue bonds. General obligation bonds are backed by the "full faith and credit" of the state or local government that issues the bonds. This means the general taxing power of the jurisdiction is pledged to guarantee repayment of the debt. Revenue bonds are issued for a specific prOject, such as an electric generating plant, and are paid for from the revenues received from the project. Because they are not backed by the "full faith and credit" of the issuer, revenue bonds generally pay a slightly higher interest rate than general obligation bonds to reflect the fact they are backed by a particular stream of revenue. Who may issue tax-exemPt bOnds? At the present time, tax-exempt bonds may be issued by a state or local government or by special units of government such as authorities, commissions, or districts as 1 well as by not-for-profit organizations such as hospitals and colleges. These entities are createdin accordance with state law and are authorized by the state to issue debt. ~, What do tax-exempt bonds finance? In 1992, $274.93 billion worth of municipal bonds were issued, of which $235~0 billion, or 85 percent, were' l°ng-term bOnds and $39.9 billion were short-term bonds. Of the more than $235 billion of long-term bonds, 50 percent were new issuances and 50 percent represented refundings of previouSly issued bonds to take advantage of the lower interest rates. The following table lists the categories for Which these long-term bonds were issued. The figures were compiled from data contained in The Bond Buyer 1993 Yearbook. LONG-TERM TAX-EXEMPT BOND USES (Billions of Dollars) 1992 CATEGORY ' AMOUNT a ORROWED PERCENT OF TOTAL EducatiOn $39.8 17 Utilities 27.3 .12 Transportation 25.9 11 Health Care 23.3 · 10 ". Electric Power 16.5 7 " .Housin~ 14.9 6 Public Facilities ' ' 9.1 " 4 Environmental Facilities 8.6 4 Industrial Development 8.5 3 Other 61.1 26 [ s. :o I oo% Who benefits frOm tax-exempt bonds? All citizens benefit from tax-exempt bonds. Tax-exempt bonds are Used to raise capital to meet the long-term needs of America's state and local governments. More specifically, tax-exempt bonds are issued by states and localities to build schools, .. roads, bridges, airports, public poWer facilities, sewers, hospitals, fire stations, mass transit, facilities, colleges and universities and most public facilities that citizens rely on regularly. 2 Chapter 1 Although the primary beneficiaries of a particular bond issuance are the citizens of the issuing community, the whole is equal to the sum of its parts, and the nation as a whole has a vital interest in maintaining adequate public facilities to support a dynamic economy. The national interest is well served by keeping state and local government borrowing costs low, thereby providing an incentive for public investment in infrastructUre and other facilities. Who purchases tax-exempt bonds? Most tax-exempt bonds are purchased by individuals. At the end of 1992, of the more than $1 trillion of municipal debt outstanding, .nearly 75 percent was held by individuals through household, mutual fund or money market fund purchases. This figure represents a significant shift in the make-up of holders of tax-exempt bonds. Historically, commercial banks purchased the largest TAX-EXEMPT BOND HOLDERS proportion of these bonds. In 100% [] Commercial banks 1975, for example, banks / ~ 80% .:.-.-.-.-.-.-.-.-.-. +:-:8% .:-:-:- outstanding municipal debt while 30 percent was held by 4O% individuals. Tax law .changes over the years have resulted ~ 2o% in changes in the demand for o% tax-exempt bonds. By 1985, 1975 1985 1992 for e~ample, .individual holdings had grown to 50 percent and bank holdings had dropped to 31 percent. The 1986 Tax' Reform Act brought about the sharpest change in demand for tax-exempt bonds. By the end of 1992, banks held only 8 percent of the outstanding tax-exempt debt. The reasons for this shift in demand from institutional to indiVidual purchasers as well as the effect the change has had on the municipal bond market are discussed in Chapter 3. HoW are tax-exempt bonds categorized? State and local tax-exempt bonds are divided into two major categories: governmental bonds and private-activity bonds. These categories have been incorporated in the federal income tax code in order to reduce the volume of tax- exempt bonds. Fundamentals of Tax-Exempt Financing 3 What is a "governmental" bond? Generally, bonds issued to finance facilities that are owned,· controlled and/or operated by a state or. local government are categorized as governmental bonds. Governmental bonds are used to finance the construction of public facilities, such as schools, roads, water, and sewer sYstems, gas and electric power facilities, firehouses and Other government-owned capital projects. Governmental bonds are also issued to finance the renovation and expansion of these facilities. There is no specific definition of a governmental bond in the tax code. Rather, it is the definition of a private-activity bond and the apl~lication of the two private business-use tests that determine whether a bond is governmental or private activity. What is a ',private-activity" bond? Aprivate.activity bond is any bond of which more than 10 percent of the proceeds is to be used in a trade or business.of a person or persons other than a governmental unit · (except for not-for-profit.tax-exempt organizations), and which is to be directly or indirectly repaid from, or secured by, revenues from a private trade or business. If a bond "fails" these two tests (that is, the private use and repayment or security amount is 10 percent or less), it is a governmental bond and the interest on the bond is tax exempt. If a bond "meets" these two tests (private use and repayment or security amount is over 10 percent), itis a private-activity bond and interest on the bond is taxable. Is .the interest on all private-activity bonds taxable? No. The federal tax code provides certain exceptions that permit interest on bonds issued for Certain "exempt facilities" to be tax-exempt even though the bonds "meet" the trade or business use and security interest tests. These facilities include airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage disposal facilities, solid waste disposal facilities, facilities for the local furnishing of el6ctricity or gas, local district heating or cooling facilities, certain hazardous waste disposal facilities, certain high-speed intercity rail facilities, and certain residential rental projects. Various conditions and limitations apply to the use of tax-exempt bonds for each of these exempt facilities. The tax code contains an additional group of programs for which private-activity bonds may be issued on a tax-exempt basis, provided the programs are "qualified" by meeting specific conditions and limitations spelled out in the code for 'each of the 4 · Chapter I programs.. These are the mortgage revenue bond, veterans' mortgage bond, small- issue industrial .development bond, student loan bond, 'redevelopment bond, and §501(c)(3) [not-for-profit] organization bond programs. It should be pointed out here that two of these programs--the mortgage revenue bond and small-issUe industrial development bond programs--have typically carried sunset dates, but the Omnibus Budget.Reconciliation Act of 1993 extended these programs on a Permanent basis. Are bonds"for governmentally owned and operated faCilities classified as private- activity bonds? Yes, some bonds issued to finance governmentally owned and operated facilities are categorized as private-activity bonds. They include bonds for governmentally owned airports, docks and wharves, and mass commuting facilities. The operation of the facilities usually utilizes ieases, management contracts and other arrangements with the private sector, resulting in more than 10 percent of the bond proceeds being used by a private business, and the payments from these businesses such as airlines are pledged to repay the bonds. These facilities are ,exempt facilities" under the federal tax code. Are governmental bonds and tax-exempt private-activity bonds treated differently?. Yes. Tax-exempt private-activity bonds 'are ~subject to the following tax code provisions that do not apply to governmental bonds: I Storewide volume cap. This is a ceiling On the aggregate amount of tax- exempt private-activity bonds that,may be issUed in a state in any given year.,: The ceiling is the greater of $50 per capita or $150 million. These numbers · · have not changed since 1987. Exceptions to the volume cap are exempt facility bonds for airports, docks and wharVes, and government-owned solid waste facilities, as well as bonds for veterans' mortgages, §501(c)(3) organizations, bonds for governmentally owned high speed rail facilities, and 75 percent of bonds for privately owned high speed rail facilities. All other tax-exempt private-activity bond programs must compete with each other for volume cap allocations. ! Alternative minimum tax (AMT). Interest earned on tax-exempt private- activity bonds must be included in an individual's calculation of the AMT. Corporations must also include such interest in their AMT calculation. While interest on governmental bonds is not taxed to the individual, corporations Fu#damentals of Tax-Exempt Financing 5 must include all tax-exempt bond interest in their adjUsted current earnings (ACE), which is another so-called preference item~that is included in the AMT calculation. ! Limitations on advance refundings. Since 1986, in general, taX:exempt private-activity bonds may not be advance refunded, and governmental bonds may be advance refUnded once. An advance refunding is the refunding of an outstanding issue of bonds prior tO the date on which the bonds become due or are callable. I Other restrictions and requirements. A number of other restrictions and' requirements cont'aiiaed·in the tax Code apply to tax-exempt private-activity · bonds. TheY include: who may hold such bonds (no substantial User or related persOn), maturity of bond (may not exceed 120 percent of economic life of facility), restriction on use for land acquisition (no more than 25 percent of proceeds), a prohibition on use of proceeds t° acquire existing Property, public approval requirements, and a limitation on use of proceeds to pay bond issuance costs (no more than 2 percent). Mortgage revenue 'bonds, student loan bonds and §501(c)(3) organization bonds are exempted from some of these requirements. Who controls the issuance of municipal bonds? State governments place controls on the use of tax-exemPt financing, b0t mainly it is the federal government that regulates tax-exempt financing. ~The federal income tax code in §§141 through 150 specifies the rules for determining if a bond may be used on a tax~exempt basis and ·severely restricts the issuance procedures and in some cases the volume of debt sold .annually in each state. Local government statutes or policies also affect debt issuance: 6 .Chapter I Chapter 2 CONSTITUTIONAL AND POLICY ISSUES Does the U.S. COnstitution prevent Congress from taxing the interest on tax-exempt municipal bonds? No. On April 20, 1988, the U.S. Supreme Court ruled that the federal government may tax the interest paid on state and local bonds. The 7-to-1 decision in South Carolina v. Baker overturned an 1895 precedent in the Pollock v. Farmer's Loan & Trust Co. case, which had been the foundation for the doctrine of intergovernmental tax immunity. That doctrine held that the federal government does not tax the states, and the states do not tax the federal government. In deciding that the Constitution does not guarantee tax immunity for interest on state and local bonds, the Court declared that state and local governments "must find their protection from congressional regulation through the national "[l]f Congress may tax the interest on political process." Justice Sandra state and local bonds it may strike at the Day O'Connor issued a strong dissent, arguing "if Congress may very heart of state and local government tax the interest on state and local activities .... " bonds it may strike at the very --Justice Sandra Day O'Connor heart of state and local government activities .... The Court has failed to enforce the Constitutional safeguards of state autonomy and self-sufficiency that may be found in the Tenth Amendment...as well as the principles of federalism implicit in the Constitution." How did the 1988 Supreme Court ruling affect tax-exempt financing? The decision had no immediate consequence on the status of outstanding tax-exempt , bonds. However, it opened the door for increased restrictions by Congress. In the aftermath of the South Carolina decision, House Ways and Means Committee Chairman Dan Rostenkowski stated that the decision "merely reaffirmed the congressional position since 1968. In short, Congress felt--and the Supreme Court has affirmed--that Congress has the power to impose reasonable restrictions on tax- exempt bonds. Case closed." 7 Do state and local governments tax interest earned on federal securities? No.'State and local governments are prohibited by federal statute (31 U.S.C. §3124(a)) from.taxing .the interest earned on federal securities, This statute has its foundation in Article VI, Clause 2 (the "Supremacy Clause") of the U.S. Constitution, which' states that the laws of the United States shall be the supreme law of the landl the constitution or laws of any state to the contrary notwithstanding. The prohibition of §3124(a) extends not only to the borrowing of the U.S. Treasury Department and federal agencies for governmental purposes, but also to debt issued by government- sPonsored enterprises such as the Federal Home Loan Banks, the Student Loan Marketing Association (Sallie Mae), and debt issued by the Resolution Trust Corporation to bail out failing savings and loan institutions. Do state and local governments tax interest earned on municipal bonds? State and local government taxation of interest earned on municipal bonds varies .· among the 50 states. Some states tax such interest on all municipal bonds, including their own and their localities' bonds. Other states exempt interest earned on all municipal bonds regardless of who the issuer, is, A number of states exempt interest earned on their own and their localities' bonds but subject interest earned on other states' and localities' bonds to income tax. The ability of a local government to tax interest earned on municipal bonds is subject to its own state's laws and the way its income tax is structured. · Why should Congress continue to support tax-exempt financing? Tax-exempt bonds are the mechanism through which state and local governments raise capital to finance a wide range of essential public projects. It is not~in the national interest to let federal taxation reduce the financial power of state and local governments to meet their needs. In addition, changes in intergovernmental relations over the past several years have affected the ability of state and local governments to finance their needs. Their financing needs are increasing, not decreasing. ·Among the reasons for this increase are drastic reduction or elimination of federal assistance of various kinds, including categorical gr~ants and general revenue sharing, and _ increasing federal mandates (legislative or regulatory requirements imposed by the federal government upon states and localities), particularly environmental mandates. 8 Chapter 2 Another reason why Congress should continue PUBLIC SPENDING ON INFRASTRUCTURE to support tax-exempt .financing is the national Percent of~~ 2.6% in 1985 infrastructure crisis the GNP 3.6% in 1960 nation faces. According to the Rebuild America :::::::::::::::::::::::::::::::::::::::::::::::::::: 7% in 1984 Percent of ,.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: Coalition, total public Total Outlay spending on in frastructu re dropped from 3.6 percent of 0% 10% 20% the .gross national product in 1960 to 2.6 percent in 1985. The relative share of public works spending at all levels of government declined from nearly 20 percent of total expenditures in 1950 to less than seven percent in 1984. The federal share of infrastructure spending has declined from 41 percent in 1981 to 34.5 percent in 1986. Since much of the cost of building and renovating the nation's public infrastructure will be borne by state and local governments, continued use of tax-exempt financing will be vital if they are to meet these needs in an efficient and economic manner. Constitutional and Policy Issues 9 Chapter 3 CONGRESSIONAL ACTIONS. AND THEIR EFFECTS How has tax-exempt financing been affected by legislative changes? Congress modified tax-exempt bond laws six times during the 1980s--in 1980, 1982, 1984, 1986, 1987, and 1989--with the 1986 Tax Reform Act containing the most · substantial changes: A major, objective of. many .of these legislative changes has been to reduce the benefits of tax exemption. Thus, many types of activities are no longer eligible for tax-exempt financing, while others are eligible but are subject to limitations such as the statewide volume caps. Other changes in the law limit the demand for tax-exempt.bonds by removing incentives previously available to major purchasers. Finally, sound financial management has been made more'difficult and ~ expensive because of rules such as the arbitrage rebate requirement, the limitations on advance refundings and' the tests used to distinguish governmental and private- activity bonds. These provisions, are discussed in. greater detail in subsequent .' questions in this chapter. Also, Appendix Acontains an outline summary of major .legislation since 1968 relating to tax-exempt bonds.. What were the major forces pushing for changes to tax-exempt bond laws? ~ A reduction in the use of tax exemption.to benefit private parties has been a major reason for limiting the use of tax-exempt financing. Curtailment of abusive practices also has been a motivating factor, for example, bonds-issued solely for the purpose of earning.arbitrage, from the investment .of bond proceeds. Another motivating factor has been a perceived need to reduce the volume of tax- exempt bond issuances. The tax-exempt bond market expanded dramatically .during the 1970s and early 1980s, 'particularly bonds to finance private activities. According to the staff of the Joint Committee on Taxation, between 1975 and 1985, the volume of long-term tax-exempt obligations for private activities (including tax-exempt IDBs, student loan bonds, mortgage revenue bonds, and bonds for use by certain nonprofit charitable organizations), increased from $8.9 billion to $116.4 billion. Congress and the executive branch viewed this expansion as a misallocation of capital. Finally, restrictions on tax-exempt financing have been driven by the mounting federal budget deficits. They have forced Congress to look at every potential revenue source (including reductions in "tax expenditures" as 'tax exemption, is characterized) in order to raise funds. As deficit reduction targets became more difficult to meet, the pressure to curtail tax-exempt financing grew stronger. What has been the impact of th~se legislative changes? Congressional changes to tax-exempt bond laws provided one desired result. According to testimony of David M. Thompson of the Public Securities Association (PSA) before the U.S. House Committee on Ways and Means in March 1990, tax- exempt bond volume fell from a record level of $216 billion in 1985 to $102 billion in 1987. Volume has grown since then as TAX-EXEMPT BOND VOLUME state and local govern- (Billions of Dollars) ments have issued new (includes $117.2 in debt refunding) debt for infrastructure- $250~a related projects. In $200 $150 1992, for example, $100 lo~ng-term issuance $50 totaled $235 billion. $0 I 1985 1987 1992 However, almost half of that total ($117.2 billion) represented refundings of outstanding debt as issuers took advantage of lower interest rates to achieve debt service savings. ~ Another effect of the 1986 Tax [ TIOt-£X£11fPTBONBIIOgB£R$/'I§~2 i Reform Act has been a significant ' shift in the demand for tax-exempt [ 17% 8% I bonds. BefOre 1986, commercial I I 7~ I ' banks were the biggest investors in tax-exempt bonds. Because the. 1986 Act made it unprofitable for I I"C°mmerc~t []Individuals I~lOther II banks to buy most municipal bonds, IIBan~ II the proportion of mUnicipal bonds owned by banks has fallen dramatically. The result has been that the municipal bond market has become much .more dependent on individual investors. This 1 The Bond Buyer 1993 Yearbook. Congressional Actions and their Effects. 11 overdependence on a single market sector results in a more volatile market for~ state and local government issuers. ' For issuers, changes to tax-exempt bond laws have made the issuance .of bondg significantly more' costly and more complex. The arbitrage rebate requirement, for example; has increased issuance costs and represented' a waste of financial and intellectual resources of state and local governments. In 1992, the Internal Revenue Service collected $290.99 million in arbitrage rebates from 1,761 bond issues. This is money' that could have been spent on new infrastructure or to reduce the costs of the projects the bonds financed. Nor does the rebate figure include the millions state and local governments spend to track expenditures and investments of bond proceeds, doing rebate calculations and taking other steps to comply with the requirements. Are changes needed to current tax-exempt bond laws? Yes. If state and local governments are to meet their increased financing needs and bear their share of the costs of rebuilding the nation's public infrastructure, current tax laTM restrictions on tax-exempt financing need to be eliminated ...restrictions are not'only burdensome and . or eased. These restriCtions are not 'only burdensome and . onerous, but they add to th..e costs of providing onerous, but they add to the costs pUb/ic faci/it/es. of providing public facilities. What changes are needed? T~he final report of the Anthony Commission on Public Finance, entitled Preserving the FederalzState-Local Partnership: The Role of Tax-Exempt Financing, provides an excellent summary of recommended changes. Among the major proposhls contained in that report and offered by others are: (1) chafiges in arbitrage restrictions;. (2) restoration of the bank interest deduction; (3) repeal of the Alternative Minimum Tax (AMT) on tax-exempt intereSt; (4) new rules distinguishing governmental bonds and private-acfix;itY bondS; (5) modifications to statewide volume caps; (6) aut, hority for more advance refundings; and (7) reclassification of tax-exempt (§501(c)(3)) organization bonds as "public purpose" where, bond proceeds provide facilities used exclusively in charitable activities for a public benefit. The remainder of this chapter will explain iri,detail these recommended changes. 12 Chapter 3 What is arbitrage? "Unspent municipal bond proceeds are often invested in' higher-yielding securities i until the monies are needed for the facilities being financed by the bonds. This is particularly true for bonds-issued for infrastructure facilities that take months or even years-to build. The earnings on these investments that exceed the municipal bond yield are called arbitrage. Current federal law limits the amount of arbitrage that can be earned and requires that arbitrage earnings be rebated to the federal government. This is an onerous requirement because it imposes complex bookkeeping and other compliance costs on issuers--even if a rebate is not owed--and because it prevents issuers from generating additional funds that could be used to reduce the costs of bond-financed projects. What is the bank interest deduction? Historically, banks have been major purchasers of municipal bonds. Prior to 1986, banks were 'permitted to deduct all or a major portion of the interest costs they incurred to invest in municipal bonds. The 1986 Tax Reform Act eliminated this deduction except for the bonds of certain very small issuers. An exception to the law permits banks to deduct ................................................. 80 percent of the costs of MUNICIPAL BONDS IN BANK PORTFOLIOS purchasing and carrying (Billions of Dollars) bonds of issuers that do not issue more than $10 million 1992 of bonds annually. The $10 million figure' has not 1986~ $203.4 I I I I I ~ been changed since 1986. $0.0 $50.0 $100.0 $150.0 $200.0 The result has been a very ........................ substantial reduction in bank demand, down from $203.4 billion of municipals in bank portfolios in 1986 to $98.9 in October, 1992. Other tax law changes are also discouraging another historical group of investors, property and casualty insurance companies, from investing in municipal bonds. This has resulted in greater volatility and less liquidity in the municipal market and higher borrowing costs for issuers. congressional Actions and their Effects 13 Why are banks and other corporations important,purchasers of municipal bonds? Stability in the municipal bond market is essential to its efficient operation. Restoration of the pre- 1986 bank interest deduction level would restore bank demand and provide some stability by bringing this group of institutional investors back into the municipal b6nd market. An added benefit for banks would be to provide an inducement for them to invest .in less risky investments than those that have contributed to the financial difficulties of banking institutions. Benefits to cOmmunities; p _articularly smaller communities, would be investment by local banks in their own ~ communities and the ability of issuers to seli bonds through private placements with banks, thus lowering their borrowing costs. How does the federal government tax interest on tax-exempt bonds? Interest on tax-exempt bonds is subject to the individual and corporate alternative minimum tax (AMT). These taxes were designed to ensure that taxpayers could not avoid paying income taxes entirely. The 1986 Tax Reform Act provisions subjecting tax-~exempt interest to the AMT haVe contributed both to increased costs for issuers (bonds subject to the AMT pay roughlY 25 more basis points in interest than'bonds not Subject to the AMT) and to a reduced demand for municipal bonds by some investors. Purchasers of municipal bonds already pay an indirect tax by earning a lower rate of return because of the tax-exempt Status of the interest on the investments. Repeal of the AMT on municipal bonds would result in lower borrowing costs for issuers and help restore demand for those bonds by investors who fear they may~ be subject to the AMT. Also, municipal bonds are purchased with after-tax monies; they are not a tax shelter.. - Why are new rules for categorizing bonds needed? Bonds for certain governmental facilities are inappropriately categorized as private- activity bonds. This categorization impedes the financing of these Projects because of the requiremems and limitations that apply to private-activity bonds. It also'inhibits · financing of facilities for which appropriate private use could materially assist in the efficient provision of public services. , Chapter 3 Changes should also be made to the present rules that arbitrarily limit the amount of private use of a facility (the 10 percent limit) without taking into account whether or not the facility is fulfilling 'a public purpose. Such changes, would lead [C]hanges would lead to more efficient and less to more efficient and less costly costly provision of public-purpose facilities and provision of public-purpose facilities and permit more .public- perm/t more public-private partnersh/ps in toe private partnerships in the building bu/Id/n~7 and operation oI such fac~lit~es. and operation of such facilities. Such changes could have a significant effect on the role of state and local governments in meeting the nation's infrastructure needs. What changes should be made to the statewide volume caps? Current law imposes a unified volume cap restricting the dollar amount of bonds of particular types that can be issued annually in each state to the greater of $50 per capita or $150 million. These amounts were set in 1986, to become applicable in 1988 " and subsequent years. In addition, if the private-use 'portion of a governmental bond exceeds $15 million, the excess over $15 million is subject to the volume cap even though the private,use portion of the bond does not exceed the 10 percent private use and security tests. The administrative requirements of complying with the volume cap provisions are costly and burdensome to states. Recommended changes to the tax laws regarding' the volume cap are: (1) remove the.private-use portion ofgovernmental bonds subject to the volume Cap; (2) increase volume cap amounts to keep pace with increased costs of providing facilities and services eligible for tax-exempt financing; (3)eliminate certain bonds from the volume cap; and (4) index the volume cap for inflation. What are advance refundings? An advance refunding occurs when issuers refinance outstanding bonds before the original bonds mature or are callable. In effect, issuers sell new bonds to "retire" or buy back Outstanding bonds. Borrowers advance refund their outstanding debt when long-term interest rates drop, thus reducing their borrowing costs and freeing up resources for new projects. Since 1986, in general, private-activity bonds may not be advance refunded, and governmental bonds may be advance refunded once. The low ' COngressional Actions and their Effects 15 interest rates of 1992.and 1993 have brought proposals for easing restrictions on · ...adVance refundings so. state and local governments can lower the costs of their borrowing, just as many homeowners are reducing their mortgage payments. What tax-law changes have been suggested for §501(c)(3) organization bonds? Not-for-profit organizations engaged in charitable activities for public benefit and exempt from income taxation under §501(c)(3) of the Internal Revenue Code are permitted to issue tax-exempt bonds used exclusively for facilities that benefit the public. Examples are hospitals, nursing homes and facilities for the elderly. Under the Tax Reform Act of 1986, taX-exempt bonds of §501(c)(3) organizations are treated as "private-aCtivity bonds." While they are exempt from some of the more onerous provisions affecting private-activity bonds, including the stateWide volume cap, the prohibition against adx;ance refUndings and the alternative minimum tax, they are .. subject to other provisions that unnecessarily restrict the use of bond proceeds to finance facilities that would otherwise have to be provided by governmental entities. The 1986 Act placed'a further restriction on tax-exempt bonds for facilities other than hospitals. While not subject to the statewide volume caps, §501(c)(3) Organizations may not have more than $150 million of "non-hospital bonds" outstanding at any one time.' This discriminates against multi-facility health organizations and fails to recognize the increasing importance of health care provided in other than acute-care hospital beds. 16 Chapter 3 Chapter 4 RESPONSES TO CRITICISMS OF TAX-EXEMPT FINANCING Given the seriousness of the federal budget deficit, how can the tax exemption for state and local government bonds be justified? Of course, the costs of reducing and eventually eliminating the federal deficit must be borne by all taxpayers. Removal of tax exemption for state and local government bonds, however, would significantly increase the costs of providing Public facilitiesl particularly infrastructure facilities, most of which are built, maintained and operated by state and local governments and financed with tax-exempt bonds. Loss of tax exemption would unfairly push those costs on to state and local taxpayers who are, after all, federal taxpayers as well. No member of Congress or the executive branch has called for elimination of tax- exempt financing by state and local governments. Debate has focused instead on appropriate uses for tax-exempt financing. The tax code provisions for which changes are proposed in the preceding chapter were enacted primarily to eliminate the use of tax-exempt financing for the benefit of private interests and curb practices deemed abusive. Isn't tax-exempt financing just another subsidy for a special interest? State and local governments are not a "special interest group.~' The bonds of state and local governments are tax-exempt because they finance facilities vested with a public interest that are designed to serve the needs of the entire community rather than a narrowly defined private interest. Municipal bonds are also tax-exempt because of the historical and traditional reciprocal tax immunity between the federal government and the state and local levels of government. Despite the fact that the Supreme Court has declared that immunity of state and local government bond interest from federal taxation is not constitutionally protected, it is sound public policy to keep the cost of providing public facilities as low as possible. The ability to sell debt with interest exempt from federal income taxes: reduces the interest for borrowed funds by approximately 25 percent. This system has worked well for over 100 years and has benefited all the nation's taxpayers. Are tax-exempt bonds an inefficient subsidy?. Decisions about the' provision of public facilities and services are best and most efficiently made at the state and local levels. In 1976 President Carter proposed 'a direct federal subsidy to state and local finance that was known as the "taxable bond option." Under this proposal, state and loCal government bonds would be issued as taxable bonds and a federal subsidy would be paid to the issuer to make up the difference in interest rate. The proposal was widely criticized and was rejected by Congress. In speaking against the proposal, Rep. Dan Rostenkowski (D-IL), a member of the House Ways and Means Committee, warned that "cities that lose control of their finances lose control of their destiny." Aren't wealthy individuals and corPorations the primary beneficiaries of tax-exempt bonds? The primary beneficiaries of tax-exempt financing are not investors but the citizens of our states and 'localities who enjoy the benefits of schools, parks, roads, water and ' - sewer 'systems and other facilities made affordable because of tax-exempt financing. Tax exemption is not the same as a tax preference that permits taxpayers to shelter in'ome from taxation.' Investors do not use tax-exempt bonds to 'avoid their tax liability. They invest after-tax dollars in a municipal bond and pay an implicit tax because they accept a loWer rate of interest than they wo:uld earn on a taxable investment of si.milar quality and maturity. ~ The Tax' Reform Act of 1986 closed many of the loopholes that were used by individuals and corporations to avoid taxation and it imPosed the Alternative. Minimum~Tax (AMT) t° ensure that no taxpayer could avoid significant tax liability by Using exclusions, deductions and' credits: A 1985report by Citizens f0r Tax Justice that revealed that a number of major corporations had paid little or no federal income tak found that .the.key sources of tax avoidance were accelerated depreciation, the investment tax credit, tax preferences for specific 'industries, and the completed cQntract method of accounting. Tax-exempt interest was not identified as a cause of the problem. 2 2 See Corporate Freeloaders--Four Years of Continuing Legalized Tax Avoidance by America's Largest Corporations~ !981-1984, Washington, D.C., 1985. 18 Chapter 4 Similarly, an analysis by the Federal Reserve Board in 1986 found that six tax- preferred investments outranked municipal bonds in the assets of high-income familles. Municipal bonds represented only five percent of the total assets held by these investors. 3 Who owns municipal bonds? The largest proportion of state and local government debt is held by individuals, as household, mutual fund or money market fund investors. At the end of the third quarter of 1992 these individuals held 75 per- INDIVIDUALS REPORTING TAX-EXEMPT cent of the outstanding INTEREST INCOME FOR 1991 debt. They have diverse economic backgrounds. According to Treasury 30% Department preliminary 1991 income tax data, a 48% large portion (nearly 80 lalncome under InCOme over .percent) of individuals $50,000 $100,000 $100,000 reporting tax-exempt Income = Adjusted Gross Income (AGO interest income had adjusted gross incomes (AGIs) under $100,000, INDIVIDUAL EARNINGS FROM TAX-EXEMPT and of that number, INTEREST IN 1991 more than half (48 53% percent) had AGIs under $50,000. ~ 24% As would be expected, 23% and consistent with [lalncorne under I~ Incorne $50, O00- Ilncorne over ~ · trends in holdings of I $50,000 $I00,000 $100,000 1 other financial assets, Income = Adjusted Gross Income (AGI) individuals in higher income brackets (AGIs over $100,000) earned a significantly larger portion of tax2 exempt interest (53 percent) than did individuals in lower income brackets. 3 "Financial Characteristics of High-Income Families," Federal Reserve Bulletin, March, 1986. ReSPonses.tO.Criticisms of Tax-Exempt Financing 19 Individuals with AGIs between $50,000 and $99,999 earned 23 percent of tax-exempt interest, while 24'percent of tax-exempt interest was earned by individuals with AGIs under $50,000. Chapter 4 AppendixA CHRONOLOGY OF FEDERAL LAWS AFFECTING TAX-EXEMPT FINANCING Over the past several years, Congress has made a number of changes to tax-exempt~ bond laws. The following summary outlines some of the major provisions of federal tax law since 1968 as they relate to tax-exempt financing. Revenue and Expenditure Control Act of 1968 (Public Law 90-364) This legislation established that the interest income from Industrial Development, Bonds (IDBs) is taxable, and defined IDBs according to a two-part test. Any bond that met a private use test and a security interest test was defined as taxable. The private use test was satisfied if all or a major portion of the bond proceeds were to be used in a trade or business of a non-exempt person (that is, neither a government unit nor a charitable §501(c)(3) organization). The security interest test was satisfied if all or a major portion of the debt service was to be secured by property used in or payments derived from a trade or business of a non-exempt person. The threshold level for both tests was set at 25 percent. (Later, as part of the 1986 Tax Reform Act, the allowable private use was reduced to 10 percent or, for public power, the lesser of 10 percent or $15 million.) The 1968 legislation also provided a long list of exceptions, termed "exempt purpose IDBs," for projects that were deemed to serve a worthwhile public purpose and thus should be eligible for tax exemption. Such exceptions included: I air and water pollution control facilities; I sewage or solid waste disposal facilities; I f~cilities for local furnishing of electric energy, gas or water; and I airports, docks and wharves. This legislation' also restricted the use of IDBs to small issues of not more than $1 million, which was raised to $5 million in subsequent legislation. Tax Reform Act of 1969 (Public Law 91'-172) · This legislation denied the tax exemption for any municipal bond issuance defined as an ~"arbitrage bond." An arbitrage bOnd is an issuance in which all or a major portion (subsequently defined as 85 percent) of the proceeds are used directly or indirectly to purchase securities producing a materially higher yield. Exceptions were provided for temporarily investing the proceeds (With "temporary period" later defined as three years) and for a reasonably re_quired reserve or replacement fund. Revenue Adjustment Act of.1975 (Public Law 94-164) A new exception was added by this law to the list of exempt-purpose IDBs, allowing tax-exempt financing for dams furnishing water for irrigation with a subordinate use fOr generating electricity. The exception was allowed only if substantially all stored water was available for release for irrigation purposes. Tax Reform Act of 1976 (Public Law 94455) This law added a new tax-exempt purpose: qualified scholarship funding bonds. ReVenue Act of 1978 (Public Law 95-600) · This Act further liberalized eligibility for tax eXemption by allowing more private projects to qualify under "local furnishing" of electricity. It also increased the limits on'small-issue IDBs from $5 million to $10 million. Crude Oil Windfall Profits Tax of 1980 (pUblic Law 96-223) Electricity-generating or alcohol-producing solid Waste' disposal facilities were made eligible for tax-exempt financing by this Act, and hydroelectric and Other renewable energy generating facilities were also added to the list of eligible facilities. Mortgage Subsidy Bond Tax Act of 1980 (Public Law 96-499) This legislation eliminated tax-exempt mortgage bonds as of January 1, 1984 (later :· extended), and also made such bonds subject to an annual state volume cap (the first time such a limitation was imposed) and to arbitrage and advance refunding restrictions. 22 ,4PPendix ,4 Economic Recovery Tax Act of 1981 (Public Law 97-34) This law added certain mass-commuting vehicles and certain volunteer fire departments to the list of eligible facilities, and provided a safe harbor for the leasing of mass-commuting vehicles. Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248) In a provision that was unsuccessfully challenged in South Carolina v. Baker, this Act required that bonds be issued in registered form in order to remain tax exempt. The Act also imposed an' information reporting requirement on certain types of bonds called "private-activity bonds," including IDBs,. student loan bonds, and §501(c)(3) bonds. The law also added local district heating and cooling facilities to the list of eligible purposes, and set a sunset date of December 31, 1987, for the small-issue IDB program. In addition, the legislation reduced the interest deduction for financial institutions from 100 percent to 85 percent of the costs to purchase and carry tax- exempt obligations. Social Security Amendments of 1983 (Public Law 98-21) This Act required Social Security recipients to include interest earned on tax-exempt bonds in gross income for purposes of determining the taxation of Social Security benefits. Deficit Reduction Act of 1984 (Public Law 98-369) This Act imposed a statewide volume cap on'private-activity bonds of the greater of $150 per capita (reduced to $100 after 1986) or $200 million. There were exceptions for certain "qualified public facilities,'" including multifamily housing and publicly owned airports, docks, wharves, mass-commuting facilities and convention or trade show facilities, but the Act repealed authority for advance ,refunding for qualified public facilities. The Act also eliminated the tax exemption, of interest on bonds in cases where more than five percent of the proceeds of such bonds were to benefit a . non-exempt purpose. Tax exemption was also denied for bonds issued to finance "sky boxes" in sports arenas, airplanes, health club facilities, gambling facilities or liquor stores. Additional restrictions were placed on veterans' mortgage bonds, and the bank deduction of the costs of purchasing and carrying tax-exempt bonds was lowered from 85 to 80 percent. The Act also restricted tax-exempt entity leasing and arbitrage Chronology of Federal Laws Affecting Tax-Exempt Financing 23 earnings for student loan bonds, made changes to the small-issue IDB program, and extended the sunset date of the program through 1988 for manufactUring facilities. Tax Reform Act of 1986 (Public Law 99-514) The Tax Reform Act of 1986 rewrote the Internal Revenue Code of 1954, resulting in the following changes tO taX-eXempt bond laW: I Defined "private-activity bonds" to include IDBs as well as student loan bonds, mortgage revenue bonds and §501(c)(3) organization bonds; ! Subjected income of individuals and corporations that is preferentially treated under the tax code, including income from private-activity bonds issued after August 7, 1986 (excluding §501(c)(3) organization bonds), to an Alternative · Minimum Tax (AMT), resulting in a new class of bonds that may be only partially tax exempt. Also subjected all tax-exempt interest earned by corporations to the AMT Under the adjusted net book income calculation (changed in 1989 to the adjusted current earnings (ACE) calculation); I Required reb'ate of "excess" arbitrage earnings to the federal government, with' exemPtion for small issuers (governmental units with taxing authority that issue less than $5 million of bonds annually) or if proceeds are spent' Within six months of issuance; I Added hazardous waste disposal facilities as a new category of,exempt-facility bonds; .- I Denied tax-exempt status to private-activity bonds for sports facilities, convention or trade' show facilities, Parking facilities (unless functionally related tO other exempt facilities), air or water pollution control facilities, alcoh0i ': ' and steam generation facilities, qualified hydroelectric generating facilities, and' privately owned airports, docks, wharves and mass-commuting facilities; !Prohibited ~advance refunding for private-activity bonds (§501(c)(3) · -organization, bonds excepted),, and limited governmental obligations issued ~,. .~ after 1985 to one advance refunding; · ":~ ILowered ~ the private use and security interest~tests from 25 percent to 10 pbrcent,~ and added 'a special private use restriction on "output facilities" (for generation, transmission and distribution of~electricity or gas) of the lesser Of 10 percent br $15 million; 24 APPendix A I Imposed a limit of the lesser of 5 percent or $5 million on loans to nongovernmental persons or for private business purposes unrelated to the governmental use of the financing; ! Limited bond issuance costs for private-activity bonds to 2 percent of proceeds; I Reduced the statewide volume cap on private-activity bonds to the greater of $50 per capita or $150 million effective in 1988, and subjected the excess over $15 million of private use portion of governmental bonds to the volume cap; I Required all individual income tax returns filed after December 31, 1987, to report tax-exempt interest income; I RePealed the bank interest deduction for costs of purchasing and carrying tax- exempt bonds except for issuances of governmental units and §501(c)(3) organizations that issue less than $10 million of bonds annually; I Required property and casualty insurance companies to reduce deductions for loss reserves by 15-Percent of the company's tax-exempt interest income from bonds acquired after August 7, 1986. Supedund Amendments' and Reauthorization Act of 1986 (Public Law 99-571) This Act increased the corporate alternative minimum tax (AMT) on all tax-exempt interest income. Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203) This legislation defined bonds used bY cities to acquire nongovernmental gas and electric utility output property as "private activity" bonds if the city does not already ~perate a municipal utility. Exceptions were allowed for qualified annexations no greater than 10 percent (per annexation) of the geographic service area Or output capacity of the public power system. Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647) This Act made a number of technical changes to the arbitrage rebate requirement and other tax-exempt bond provisions of the tax law, and extended the mortgage revenue bond program one year, through December 31, 1989, with tighter targeting provisions. It also authorized the use of tax-exempt private-activity bonds for certain high speed rail facilities and required that only 25 percent of the financing would be Chronology of Federal Laws Affecting Tax-Exempt Financing 25 subject to the statewide volume cap. A new savings program was instituted under this 3,ct that permitted taxpayers below a certain income level tO exclude from taxable income interest incOme on UiS. savings bonds (Series EE Bonds) if the bonds are used to help pay education expenses of the taxpayers, their spouses, or their children. These bonds carry a superior yield and compete with the market for state and local government bonds.. OmnibuS-Budget Reconciliation Act of 1989 (Public Law 101-239) This Act contained changes to the arbitrage rebate requirement, use of hedge bonds, and the alternative minimum tax (AMT). Specifically, .relief from the arbitrage rebate requirement was provided for issuers of govern~mental bonds, qUalified §501(c)(3) bonds, and private-activity bonds for governmentally owned facilities if at least 75 percent of net proceeds are to be used · ' for cOnstruction and 95 percent of the funds are spent according to a spending schedule Over a 24-month period. Issuers using this rebate relief provision may elect a financial penalty in lieu of rebate if the spending schedule is not met. In addition, new requirements were imposed on the ability of state and local governments to sell bonds as a hedge against future increases in interest rates (so- called "hedge bonds'i). The Act also provided that 75 percent of bonds issued to finance high speed intercity rail facilities (but not rolling stock) would not be subject to-the' statewide volume cap. Finally, the mortgage revenue bond and small-issue IDB programs were extended for nine months. Omnibus Budget Reconciliation Act of 1990 (PubliC Law 101-508) This Act extended the mortgage revenue bond and small-issue IDB programs through December 31, 1991. Tax Extension Act of 1991 (pUblic Law 102-227) This Act extended the~mortgage revenue bond and small-issue IDB programs for six months, through June 30, 1992. 26 Appendix A Energy Policy Act of 1992 (Public Law 102-486) ~This Act contained three provisionS that affect tax-exempt financing. The Act removed restrictions on investments of nuclear decommissioning funds (previously restricted to U.S. Treasury securities, bank deposits, and tax-exempt state and local government securities) and lowered the funds' 34 percent tax rate to 22 percent in 1994 and 20 percent in 1996. The removal of restrictions on investments also removed an incentive for the funds to purchase state and local government bonds. Tax-exempt financing is permitted for local furnishing of electricity, previously limited to certain contiguous areas, to facilities that have been ordered by the Federal Energy Regulatory Commission to provide transmission ("wheeling") services to other parties that generate electricity without violating the Internal Revenue Code's local furnishing exception if no tax-exempt bond financing is provided for the non- local furnishing activities. The Act also authorized a new type of exempt-facility bond for environmental enhancement of hydroelectric generation facilities that is not subject to the statewide volume cap, provided 80'percent of the net proceeds of each bond is used to finance property for the promotion of fisheries or other wildlife resources. Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66) This law contained several provisions that affect tax-exempt financing and the market for tax-exempt bonds.. It extended the mortgage revenue and small-issue industrial development bond programs permanently, retroactive to June 30, 1992, when they expired..-~, It authorized the designation of nine.empowerment zones and 95 enterprise communities in economically distressed urban and rural areas. A new category of exempt-facility bonds could be used in the zones and enterprise communities to buy land, buildings and equipment. '~ It extended the exemption from volume cap allocation to 100 percent of bonds for governmentally owned high speed intercity rail facilities (not including rolling stock). Chronology of Federal Laws Affecting Tax-Exempt Financing 27 This law also changed market discount rules so that market discount earned on tax- exempt bonds purchased after April 30, 1993, would be treated as ordinary income rather than capital gain as under previous law. Since ordinary income tax rates for many investors are higher than the capital 'gains rate, this change could have a t~egative impact on the demand for state and local government bonds. 28 Appendix Appendix B WHO'S WHO IN THE'PUBLIC FINANCE NETWORK The PUBLIC FINANCE NETWORK is a coalition of 44 organizations with an interest in tax-exempt' bonds. It was formed in 1988 and worlc~ to preserve the tax-exempt status of state and lOcal govern'ment'bonds.' The NETWORK identifies national policies that Support' local and state governments' ability to finance public needs in the public interest and informs policymakers about legislative and regulatory proposals that make it more difficult and more expensive for state and local gOvernments to use tax-exempt bonds. The NETWORK works to heighten public and congressional awareness about public financing. Information about the NETWORK and financing issues is available by calling any of the individuals listed below. Airports Council International-North America ................................. Rob Wigington, 202/293-8500 American Association of Port Authorities ............................................ Jean Godwin, 703/684-5700 American Association of School Administrators ........................ : ....... Bruce Hunter, 703/875-0738 American Association of State Colleges and Universities ...... : .............................................................. James Appleberry, 202/293-7070 American Planning Association George Marcou, 202/872-0611 American Public Gas Association ......................................................... Robert Cave, 703/352-3890 ** American Public Power Association ......................................... : .... Lori Pickford, 202/467-2954 American Public Transit Association .................................................... Amy Coggin, 202/898-4000 American Public Works Association ................................................. Charles Byrley, 202/393-2792 American Society for Public Administration .............................. Sheila McCormick, 202/393-7878 Association of Local Housing Finance Agencies ................................ John Murphy, 202/857-1197 Association of Metropolitan.Sewerage Agencies ...................................... Ken Kirk, 202/833-2672 Association of Metropolitan Water Agencies ............................. Diane Van De Hei, 202/331-2820 Association of School Business Officials International .................................................................................... Don Tharpe, 703/478-0405 Council of Development Finance Agencies .............................................. Guy Land, 202/682-3?64 Council of Infrastructure Financing Authorities...i ........................... James N. Smith, 202/85?-06?0 Council of State Community Development Agencies ............................. John Sidor, 202/393-6435 Council of State Governments ................................................................. Abe Frank, 202/624-5460 Education Finance Council ..................................................................... Bill Hansen, 202/466-8621 ** Government Finance Officers Association ...................................... Cathy Spain, 202/429-2?50 International Bridge, Tunnel and Turnpike Association ..................... Neil Schuster, 202/659-4620 International City/County.Management Association ......... ' ................... Mar~ Grover, 202/~62-$6 73 International Institute of Municipal Clerks ..................................... : ..... John Devine, $]8/795-6]$$ Municipal Treasurers' Association ......... : ........ .: .................................. Stacey Crane, 202/833-1017 ** National Association of Counties ........ : ............................................ Ralph T~bor, 202/393-6226 National Association.of Development Organizations .......... i .............. Scott Whipple, 202/62,4-7806 National Association of Elementary School Principals ........................ ,... £d Keller, 705/684-$$45 National Association of Higher Educational Facilities AUthorities. ......................................................... Theodore A. Holmes, $]8/475-3050 National Association of Housing and Redevelopment Officials ................................................................ Michae! Nail, 202/429-2960 National Association of Independent Colleges and Universities .......................................................................... :... Matt l-l~ill, 202/$47-75~2 National Association of Regional Councils ......................................... Janet O~k!e2, 202/457-0710 National Association of State Auditors, Comptrollers and Treasurers ......................................... ~ ................ Helen~ Sims; 202/624-$45] National Association of State Budget Officers ...... : ......... , .................... Smcy Mazer, 202/624-$$82, ** National Association of State Treasurers ...................................... .. Milton Wells, 202/624-8595 National Association of State Universities and Land Grant Colleges/Associationof American UniVersities ........... $1~ron Cranford; 202/466-$030 National Association of Towns and Townships .................................... To~ l-I~licki, 202/737-$200 National Conference of State Legislatures .................................. Chri~ ~'erm~n, 202/624-8670 National Council of Health Facilities Finance Authorities .................................................... i ..................... Liz Robbin$, 202/544-6093 National Council of State Housing Agencies .., .......................... Barbara Thompson, 202/624-??]0 ** National League of Cities ............................................... . ....... ~ .... Frank Shafroth, 202/626-3000 ** .National School Boards Association ....................... : .................... Laurie Westley, 703/838-6703 Public Housing Authorities Directors AsSOciation ....... :..~ ........ , ..... .: ....... Susan J, roe, 202/429-55?5 ** U.S. Conference of Mayors .................................................... Edward A. $Omer$, 202/293-7330 Water Environment Federation. ......................................................... Steve Bagwell, 703/684-2416 ** Steering COmmittee Member 30 Appendix Public Finance Network Airports Council International--North America American Association of Port Authorities American Association of School Administrators American Association of State Colleges and Universities American Planning Association American Public Gas Association American Public Power Association American Public Transit Association American Public Works Association American Society for Public Administration Association of Local Housing Finance Agencies Association of Metropolitan Sewerage Agencies Association of Metropolitan Water Agencies Association of School Business Officials International Council of Development Finance Agencies Council of Infrastructure Financing Authorities Council of State Community Development Agencies Council of State Governments Education Finance Council Government Finance Officers Association International Bridge, Tunnel and Turnpike Association International City/County Management Association International Institute of Municipal Clerks MuniciPal Treasurers' Association National Association of Counties National Association of Development Organizations National Association of Elementary School Principals National Association of Higher Educational Facilities Authorities National Association of Housing and Redevelopment Officials National Association of Independent Colleges and Universities National Association of Regional Councils National Association of State Auditors, Comptrollers and Treasurers National Association of State Budget Officers National Association of State Treasurers National Association of State Universities and Land Grant Colleges/Association of American Universities National Association of Towns and Townships National Conference of State Legislatures National Council of Health Facilities Finance Authorities National Council of State Housing Agencies National League of Cities National School Boards Association Public Housing Authorities Directors Association U.S. Conference of Mayors ,,_~r~_ Water Environment Federation BAKERSFIE L-D Economic and Community Development Department MEMORANDUM February 3, 1995 TO: Alan Tandy City Manager FROM: George Gonzale~.,x/N_j Community Dev~ment Coordinator SUBJECT: Update on Con~lated Planning Process Staff has developed a working copy of the five year strategy for the Bakersfield Consolidated Plan 2000 which is attached. We have met with the Consolidated Plan 2000 task force to discuss and review the working copy document. In addition, as a means to further our citizen participation efforts we are conducting 3 "focus" group workshops on Friday (February 10). Over 100 non-profit groups and interested persons have been invited to attend one or all three of the following workshops at the Convention Center (Potato room): 1. 10:30 A.M. - Focus on Public Improvements (Infrastructure)/Economic Development 2. 1:30 P.M. - Focus on Housing/Homelessness/Special Needs 3. 3:00 P.M. - Focus on Public Facilities/Public Services (RSVP is due by February 9) Feel flee to contact me if you have any questions. FEB 3 1995 FEBRUARY 2, 1995 Working Copy Draft Housing and Community Development Five Year Strategic Plan Bakersfield Consolidated Plan 2000 Building Communities: Together City of Bakersfield Department of Economic and Community Development Working Copy Table of Contents - Bakersfield Consolidated Plan 2000 Cover Sheets (to be completed later) Page # Cover Letter(s) SF-424 Federal Form/Certifications Acknowledgements Table of Contents (partial - rest to be completed later) List of Tables (to be completed later) Executive Summary (partial rest to be completed later) I. Coordinating & Managing the Process (to be completed later) II. Citizen Participation .......................................... II-1 Executive Summary Only (rest to be completed later) III. Housing & Community Development Needs ......................... III-1 (executive summaries only - rest to be completed later) Executive Summary - Housing Needs Executive Summary - Community Development (Non-Housing) Needs IV. Housing and Community Development 5 Year Strategic Plan - Draft Priorities IV-1 Partial (to be completed later) Housing Homelessness Special Needs Community Development (Non-Housing) Needs V. Action Plan: One Year Use of Funds (to be completed later) Exhibits - Consolidated Plan & CHAS Tables Consolidated Plan # 1 - Homeless Populations & SubpOpulations # 2 - Priority Needs # 3 - Proposed Projects (to be completed later) CHAS #IA - Population & Household Data #lB - Market & Inventory Conditions #lC - Housing Assistance Needs of Low/Moderate Income Households #1E - Non-Homeless Special Needs Populations Appendices/Maps (partial - rest to be completed later) EXECUTIVE SUMMARY (Partial- Rest to be completed later) Executive Summary City of Bakersfield Consolidated Plan 2000 The Consoliated Plan 2000 is a new consolidated planning process that replaces all current Federal Community Planning and Development (CPD) planning and application requirements with a single submission. Beginning in 1995, this strategic Plan will satisfy the minimum statutory requirements for four CPD formula programs which are administered by the Federal Department of Housing and Urban Development (HUD): Community Development Block Grants (CDBG), HOME Investment Partnerships (HOME), Emergency Shelter Grants (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). In addition, in order for other affordable housing providers to access 17 differenct federal programs, the city will be required to certify to HUD that they have an approved consolidated plan. Major components of the Plan include: 1) housing and market socioeconomic data; 2) housing and community needs assessment; 3) demographic maps; 4) housing and community development resources; 5) housing and community development strategies and priorities; 6) an action plan (one year use of funds); and 7) public participation and coordination. HUD's revised submission guidelines emphasize broad citizen participation and community partnerships to bring about a unified vision for housing and community development actions that will primarily benefit residents from low and moderate income families. Consolidating submission requirements require coordinating all elements of community and housing development such as housing, homelessness, economic development, infrastructure, public facilities, and public services. The city's vision for the Consolidated Plan 2000 is to become a more attractive, safe, family- oriented Bakersfield by unifying the city, enhancing economic prosperity, improving cultural, recreational, health, housing, and educational opportunities with the involvement of all city residents. The city's mission for this Plan is: to provide decent housing by assisting Iow- income residents to obtain affordable housing; provide a suitable living environment by improving the safety and livability of neighborhoods; and expand economic opportunities by creating jobs accessible to low-income persons. I. COORDINATING AND MANAGING THE PROCESS (To be completed later) H. CITIZEN PARTICIPATION EXECUTIVE SUMMARY ONLY (Partial - Rest to be completed later) EXECUTIVE SUMMARY CITIZEN PARTICIPATION PROCESS FOR THE CONSOLIDATED PLAN 2000 Following are the major components of the City's citizen participation process for the Consolidated Plan: 1. Provide for and encourage citizen participation primarily from moderate, low income and extremely loTM income groups. 2. Afford adequate, and timely notification to local meetings and forums. 3. Provide access to relevant information by way of translation and disability accessibility. 4. Make available technical assistance to lower income groups who request assistance in developing applications for housing and community development funds. 5. Hold at least two public hearings at convenient times to obtain views of citizens, agencies, and interested persons. 6. Publish a summary of the Consolidated Plan and notify the public where the plan can be reviewed for possible comment. 7. Encourage the receipt of public comments. A strategy was developed to meet the major components listed above. The part of the strategy implemented to date involved the development and use of a survey instrument, public information forums, providing information at meetings organized be non City groups, neighborhood workshops, and the formation of the Consolidated Plan Task Force. The survey instrument was developed to receive input from a broad cross section of citizen and service providers on housing and community development needs and to assist in developing priorities for expenditure of CDBG and HOME funds. The survey was distributed by mail to citizens and service providers on Community Development's mailing list, and at every meeting attended by City Community Development staff from September 15 to November 15, 1994. It was also distributed at Bakersfield area libraries and at City Hall. Public information hearings/forums were held on September 15, 1994, at the Bakersfield Convention Center to inform the community about the consolidated planning process, and opportunities for public input into formulation of the Plan. Representatives from government agencies non-profit corporations, business community, as well as, individual citizens attended. The meetings were advertised in the Bakersfield Californian, Bakersfield News Observer, El Mexicalo, by public service spot announcements on radio and television and by direct mail announcement to those on Community Development's mailing list. The focus of the 1:30 P.M. and the 6:30 P.M. meetings was to those who did not represent non-profit organizations who planned on applying for federal assistance. The focus of the 3:30 P.M. meeting was to provide technical assistance to non-profit organizations who planned to apply for funds in the Consolidated Plan Program. II-1 City Economic and Development staff attended, distributed information and answered questions at the Old Town Railroad Festival on October 1, 1994; the Looking Good Neighborhood Festival at Martin Luther King Jr. Community Center on October 8, 1994; Up on the Roof/Down in the Street Celebration of the opening of the City Center Building by the County Superintendent of Schools on October 15, 1994; the Ward I Public Meeting at the Cain Memorial AME Church on January 3, 1995 (a flyer was distributed by community residents to advertise the meeting); the Lead Coalition Meeting at County Environmental Health on January 10, 1995; the Mental Health Housing Subcommittee at the Bakersfield Convention Center on January 17, 1995; and the Homeless Resource Network Committee at the Bakersfield Convention Center on January 25, 1995. Four neighborhood workshops were held in different neighborhoods of lower income census tract areas of the City. They were advertised in various newspapers. In addition, there was a distribution of 13,000 flyers (English and Spanish) which were delivered door-to-door in lower income areas, followed up with flyers (English and Spanish) to community and church groups and various public schools. The flyers were distributed in key locations. In addition to the paid advertisements in three local newspapers, there were also public service spot announcements on radio and television. The neighborhood meetings were held in the evenings on October 25, 1994, at Bessie Owens School; October 27, 1994, at Jefferson School; November 1, 1994, at William Penn School; and November 3, 1994, at Greenfield Jr. High School. A meeting is scheduled with Public Housing residents Thursday, February 2, 1995, at the Oro Vista Housing site. The Consolidated Plan Task Force, composed of members of the community, was organized to identify community needs, review surveys (approximately 75 out of 750 surveys were returned to the City) and community meeting results, give advisory recommendations for strategies and to review the draft Housing and Community Development Strategic Plan. The Task Force has met in the afternoons on November 9, 1994, and on December 7, 1994, at the Bakersfield Convention Center (a February 1 meeting is pending). A final public hearing of the draft Consolidated Plan 2000 is scheduled for early April, with review and'anticipated approval of the Plan by the City Council in early May 1995. II-2 HI. HOUSING & COMMUNITY DEVELOPMENT NEEDS EXECUTIVE SUMMARY ONLY (Rest to be completed later) III. HOUSING AND COMMUNITY DEVELOPMENT NEEDS This section of the Consolidated Plan presents an overall picture of the housing and community development needs in Bakersfield. The needs assessment provides the foundation for establishing priorities and allocating Federal, State and local resources to address identified community needs. The section is divided into two major components: 1) Housing, and 2) Non-Housing Community Development Needs, and is organized to follow HUD's "Guidelines For Preparing A Consolidated Strategy And Plan Submission For Housing And Community Development Programs." While the Consolidated Plan replaces the Comprehensive Housing Affordability Strategy (CHAS) prepared last year, much of the information collected for purposes of the CHAS is still relevant. This needs assessment incorporates information from Part I (Community Profile) of the CHAS and is supplemented with current information collected through a Community Development Needs Survey, public meetings, and interviews with interested parties and city staff. A summary of the Community Development Needs Survey results is included as Appendix A of this Consolidated Plan. City of Balcersfield Consolidated Plan 2000 ~I- I DRAFT January 1995 A. HOUSING NEEDS The first section of the needs assessment focuses on Bakerfield's housing needs, including the following components: · Household Needs · Homeless Needs · Public Housing · Lead Based Paint Needs · Housing Market Conditions · Barriers to Affordable Housing · Fair Housing 1. HOUSEHOLD NEEDS This section summarizes available data on the most significant current housing needs of lower and moderate income Bakersfield residents, and projects those needs over the five-year Consolidated Plan period. Current supportive housing needs of persons with special needs are also summarized. Summary of Major Findings * Thirty-seven percent of the City's total households experienced some kind of housing problems. * Approximately 84 percent of Bakersfield's very low income households were confronted with some form of housing problems in 1990, compared to 62 percent for low income households and 41 percent for moderate income households. * Renter households, and especially large family renters and elderly households, demonstrated a disproportionate need for housing assistance compared to owner households. * The City of Bakersfield comprised approximately half of all population growth which occurred in Kern County during the 1980s. * Between 1980 and 1990, the median age in Bakersfield increased from 27.9 to 29.6, reflective of the increase in the young to middle adult cohort (25-44). * Bakersfield has historically been important to the state in terms &transportation, oil production and agriculture. Between 1980 and 1990, retail, commercial, and manufacturing have diversified the City's economy. City of BoJcersfield Consolidated Plan 2000 III-2 DRAFT January 1995 * Bakersfield is a family-oriented community with over 70 percent of its households in 1990 consisting of families. * An estimated 1,890 elderly households in Bakersfield are lower income households in need of housing assistance. *Approximately 17,300 Bakersfield residents had work, mobility, and/or self-care limitations in 1990, comprising about ten percent of the City's population. *In 1990, Bakersfield had 18,143 female-headed households, 6,645 or 37 percent with children. * Thirteen percent of Bakersfield's total households had five or more members. * An estimated 1,700 persons are HIV positive of which 578 persons have AIDS in Bakersfield. *An estimated 24,475 to 27,971 men and 10,489 women may be alcohol and/or drug abusers in Bakersfield. As part of the Consolidated Plan, the City of Bakersfield conducted a Community Development Needs Survey to assess community opinions and concerns. "Housing Needs" is one of the six needs categories assessed in.the survey. A detailed description of the survey methodology is included in Section III.B anda copy of the survey is included in Appendix A of this Plan. Overall, the survey results indicated that the community considered housing as a "medium" need, ranging from 3.10 to 3.30. In the survey, housing was divided into the following topics: homeownership, homeless/transitional housing, residential rehabilitation, residential property maintenance/code enforcement, improvements for handicapped accessibility, and rental housing. All topics received relatively equal community-wide average response scores. The following lists the community-wide average response score by topic and ranking. Average Housing Needs Survey Response 1. Homeownership 3.30 2. Homeless/Transitional Housing 3.26 3. Residential Rehabilitation 3.25 4. Residential Property Maintenance/Code Enforcement 3.19 5. Improvements for Handicapped Accessibility 3.10 6. Rental Housing 3.10 City of BakersfieM Consolidated Plan 2000 III-3 DRAFT January 1995 a. Summary of Current Estimates and Projected Needs CH,4S Table lC summarizes the housing assistance needs of lower and moderate income households in Bakersfield by household type (owner/renter, elderly, small/large family, other) and "housing problems." This non-duplicative count of households with "housing problems" include those that: 1) occupy units with physical defects (lacking complete kitchen or bathroom); 2) live in overcrowded conditions (housing units with more than one person per room); 3) have a housing cost burden, including utilities, exceeding 30 percent of gross income; or 4) have a severe housing cost burden, including utilities, exceeding 50 percent of gross income. According to these criteria, overall 37 percent of the City's households experienced some kind of housing problems. The overall housing assistance needs among renters (51 percent of 27,155 households) are greater than among owners (26 percent of 35,345 households). Specifically, approximately 74 percent of the large family renters were confronted with one or more housing problems. The types of problems faced by the households vary according to household incomes, types, and/or tenure. As shown in'CHAS Table lC, housing problems experienced by elderly households were mostly associated with cost burden factors, regardless of their income levels. Approximately 68 percent of the City's elderly renters and 22 percent of the elderly owners experienced some housing problems. Almost all of these elderly households had a housing cost burden of over 30 percent of their gross income. Similarly, housing cost burden was a contributing factor to housing problems faced by most owner-households, regardless of income. On the other hand, while a high proportion (51 percent) of renter households experienced one or more housing problems, not all these problems were associated with cost burden factors. For example, 85 percent of the Moderate Income large family renters experienced some housing problems, only 34 percent of them had a housing cost burden. The remaining 51 percent were living in overcrowded and/or inadequate housing. The following table documents overcrowding by housing tenure and incOme, and specifically for large family households. This table illustrates that unit overcrowding in Bakersfield is a more acute problem among renter-households than among owner-households, regardless of income levels. Approximately 13 percent'of the City's Low/Mod Income renter-households resided in overcrowded conditions compared with only three percent of the Low/Mod Income ownership households. The incidence of overcrowding is even more exaggerated for Low/Mod Income large families, with 60 percent of Low/Mod Income renters but only four percent of the Low/Mod Income owners households defined as overcrowded. This reflects the limited supply of large rental units in Bakersfield, and the doubling-up of households to save on housing costs. City of Baker,field Consolidated Plan 2000 Ili-4 DRAFT January 1995 TABLE m-1 PERCENT OF OVERCROWDED HOUSEHOLDS BAKERSFIZI.D- 1990 Renters Owners Large Large Income Groups Total Relate Total Related HH d I]1:i HH Extremely Low Income (0-30% of 18.0% 64.4% 3.3% 6.4% IV[FI) 20.6% 82.4% 4.4% 11.4% Low Income (31-50% of MFI) 13.6% 66.2% 6.2% 10.9% Moderate Income (51-80% of MFI) Total 12.7% 59.9% 3.0% 3.9% Source: HUD CHAS Data Book, Table 8. The following discussion summarizes the housing assistance needs identified in CHAS Table lC by income group. Any disproportionate need, by racial/ethnic group and household type, is identified. HUD defines a "disproportionate need" as any need that is higher than five percentage points of the need demonstrated for the same income category and tenure type. For example, if 15 percent of a jurisdiction's Low Income households and 22 percent of its Low Income Black households are living in substandard housing, there is a disproportionate housing need among Low Income Black households. i. Extremely Low Income Households Approximately 85 percent of the City's 6,059 Extremely Low Income households (0-30% of Area MFI) were confronted with one or more housing problems in 1990. Most of the housing problems experienced by Extremely Low Income households were associated with severe cost burden. Approximately 71 percent (or 4,302) of the City's Extremely Low Income households were paying more than 50 percent of their gross incomes on housing. Within the Extremely Low Income group, renter-households, particularly large families, and elderly, have a disproportionate need for assistance, compared to Extremely Low Income owner-households (see CHA$ Table IC). ii. Low Income Households Eighty-three percent of the City's 6,460 Low Income households (31-50% of Area MFI) were confronted with one or more housing problems in 1990. Particularly, 77 percent City of Bakersfield Consolidated Plan 2000 III-5 DRAFT January 1995 (4,974) of the City's Low Income households were paying over 30 percent of their gross incomes on housing. However, severe housing cost burden was not as acute a problem among this income group than among the Extremely Low Income households; only 37 percent of the Low Income households were paying more than 50 percent of the incomes on housing compared to 71 percent of the Extremely Low Income households. Within the Low Income group, renter-households, particularly large families, and elderly, have a disproportionate need for assistance, compared to Low Income owner-households (see CH,4S Table lC); 91 percent of the Low Income renter-households have some housing problems compared to 59 percent of the Low Income owner-households. The following table summarizes the CHAS Data Book's tabulation on housing problems by minority households and household type. This analysis includes both Extremely Low and Low Income households (0-50% of Area MFI). According to the following table, 100 percent of the Extremely Low and Low income Hispanic large owner-households experienced housing problems in 1990 compared to 93.1 percent of the large owner- households in the City. This demonstrates a disproportionate housing need among the Hispanic large owner-households. Likewise, there is a disproportionate housing need among Black small owner-households compared to small owner-households in the City. TABLE IH-2 PERCENT OF MINORITY HOUSEHOLDS WITH EXTREMELY LOW AND VERY LOW INCOME (0-50% OF MFI) HAVING HOUSING PROBLEMS - BY HOUSEHOLD TYPE All Households Black Non- Hispanic Household Hispanic Type % of % of % of % of % of % of Owner Renter Owner Renter Owner Renter Elderly 54.2 81.2 42.9 78.7 51.8 92.9 Small 78.5 93.0 87.4 96.6 71.3 91.0 Household 93.1 95.4 77.3 96.5 100.0 95.2 Large 64.7 90.1 62.8 92.0 72.9 93.0 Household Total Source: CHA~ Data Book Table 7 (Part 2 and Part 4)' iii. Moderate Income Households Overall, 62 percent of the City's Moderate Income households (51-80% of.area MFI) experienced one or more housing problems in 1990, 54 percent had a housing cost burden of over 30 percent of their gross income. Fourteen percent of B akersfield's Moderate Income households had a severe housing cost burden of over 50 percent of their gross City of Bakersfield Consolidated Plan 2000 111-6 DRAFT January 1995 income. However, renter households (67 percent), and especially large family renters (85 percent) and elderly households (63 percent), demonstrated a disproportionate need for housing assistance compared to the owner households (refer to CHAS Table lC). Housing problems faced by the large renter families were associated more with physical inadequacy and overcrowding than with cost burden factors. This phenomenon is reflective of the limited availability of large and decent rental units at affordable rates. City of Bakersfield Consolidated Plan 2000 1II-7 DRAFT January 1995 iv. Middle Income Households Approximately 41 percent of Bakersfield's Middle Income households (81-95% of Area MFI) had one or more housing problems in 1990, including 35 percent which had a housing .cost burden of over 30 percent of their gross income. Only five percent of the Middle Income households had a severe housing cost burden of over 50 percent. While elderly renter-households (76 percent) in this income group demonstrated a disproportionate need for financial housing assistance compared to elderly owner households (17 percent), non-elderly owner-households disproportionately overextended on housing costs compared to non-elderly renter-households. Overall, only 29 percent of Middle Income renter-households had a housing cost burden, compared to 44 percent of the owner-households in this income group. This indicates that a significant portion of the City's owner-households have overextended themselves financially to afford the option of home purchase. v. Five- Year Projected Housing Needs For purposes of the CHAS, the City projected a five-year housing growth of 12,250 units between FY 1993-1998. This equates to an average growth rate of 2,450 units annually. Assuming a future average household size of 2.85 persons per dwelling unit, oCcupancy of the projected new housing would result in a Citywide population increase of approximately 35,000 between '1993 and 1998. Table 111-3 presents a summary of household increase by income level'and tenure for the City of Bakersfield over the 1993- 1998 period. Detailed projections by tenure, and assumptions and methodologies used are provided in the CHAS. City of Bakersfield Consolidated Plan 2000 IN-8 DRAFT January 1995 TABLE HI-3 SUMMARY OF HOUSEHOLD INCREASE BY INCOME LEVEL AND TENURE CITY OF BAKERSFIELD 1993-1998 Increase Between 1993-98 Income Level I Renters O~ers Total Non-Elderly Households Extremely Low Income (0-30% MFI) 775 156 931 Low Income (31-50% MFI) 696 247 943 Moderate Income (51-80% MFI) 886 361 1,247 Middle Income (81-95% MFI) 795 242 1,037 Above Middle Income (96+% MFI) 1,942 4,382 6,324 Subtotal 4,713 5,388 10,101 Elderly Households Extremely Low Income (0-30% MFI) 119 150 269 Low Income (31-50% MFI) 239 198 437 Moderate Income (51-80% MFI) 102 280 382 Middle Income (81-95% MFI) 37 125 162 Above Middle Income (96+% MFI) 88 811 899 Subtotal 585 1,564 2,149 Total Households 5,298 6,952 12,250 Source: Bakersfield CHAS FY 1994-98. City of BakersfieM Consolidated Plan 2000 m-9 DRAFT January 1995 a. Non-Homeless Populations with Special Needs Certain segments of the population may have more difficulties in finding decent, affordable housing due to their special needs. In Bakersfield, these "special needs" groups include the elderly, disabled persons, female-headed households, large households, persons with AIDS and related diseases, and persons with drug and/or alcohol addiction. CHAS Table IE summarizes the City's special needs populations. For purposes of the CHAS, the Bakersfield Economic and Community Development Department administered a survey to social service providers in metropolitan Bakersfield to identify needs and availability of supportive housing for persons with special needs. A copy of the survey was included in Appendix F of the City's FY 1994-98 CHAS. In addition to contacting social service providers, a number &groups homes licensed in the City &Bakersfield were also contacted. An inventory of all group homes licensed.in the City was included in Appendix G of the CHAS. i. Elderly and Frail Elderly The population over 65 years of age has four main concerns: (1) Income: People over 65 are usually retired and living on a fixed income; (2) Health Care: Because the elderly have a higher rate of illness and dependency, health care and supportive housing is important. (3) Transportation: Many seniors use transit. However, a significant number of seniors have disabilities and require alternatives to transit. (4) Housing: Many live alone and rent. These characteristics indicate a need for smaller, lower cost housing units with easy access to transit and health care facilities. According to the 1990 Census, there are an estimated 15,998 elderly persons (65+ years of age) in the City &Bakersfield, representing nine percent of the total population. Of these, approximately 37 percent, or 5,995 are considered "frail" elderly persons (persons with one or more limitations to daily activities, defined in Census as persons with work or selfcare/mobility limitation.) According to the CHAS Data Book, an estimated 1,890 elderly households in the City are lower income households in need of housing assistance (CHAS Table lC). Assuming the same proportion (37 percent) of these elderly are frail, it can be estimated that 699 of Bakersfield's lower income elderly households are frail elderly in need of housing assistance. Services and Facilities Available: Housing needs of the City's elderly can be addressed through housing programs for assisted senior rental housing, rental subsidies, and housing rehabilitation assistance. The housing needs &the elderly and persons with disabilities who require supportive services include - in addition to architectural design features that accommodate physical disabilities - access to health care, grocery stores, pharmacies, and a convenient, economical means of transportation. Location, planning City of Bakersfield Consolidated Plan 2000 III-10 DRAFT January 1995 and design of these facilities should enhance social communication and independence. Bakersfield currently has three subsidized housing projects specifically targeted for the elderly: the Plaza Towers and Towers Annex, Sunny Lane Village, and Saint John's Manor. Combined, these developments contain 318 housing units for seniors who are capable of living independently. According to the CHAS, 26 residential facilities with 891 beds are licensed to provide housing for persons 60 years and over in Bakersfield. Twenty of these facilities are designed to accommodate non-ambulatory persons. Some of the larger facilities include: Rosewood, 220 beds; Redwood Village, 99 beds; and Hallmark at Bakersfield, 70 beds. The majority of these facilities are currently operating under capacity. Hallmark reports an 18 percent vacancy rate, and Rosewood a 10 percent vacancy rate. Another care option for the elderly are adult day care facilities which in the City of Bakersfield have a combined capacity of 430 persons. In addition, some support is available to persons who live independently. Homemaker and home health care services · provide in-home personal and medical services to the elderly. The majority of these services are provided through the private sector. However, the Kern County Department of Human Services does provide limited homemaker services to the elderly and the County Health Department will make some basic medical calls to elderly households. The Commission on Aging is the primary clearinghouse for information and services about the elderly in Bakersfield. The Commission is a county-wide agency with government funding and serves as an advocate for assisting the needs of the elderly. Facilities and services to assist seniors within the City of Bakersfield include: · Alzheimer Residential Care · Bakersfield Economic and Community Development Department · Bakersfield Senior Center · Community House Senior Center · Kern County Department of Human Services (Adult Protective Services, Friendly Visitor Program, and In-Home Care programs) · Kern County Food Bank · Kern County Health Department (Health Assessment Program) · Senior Citizens Information and Referral Service · YMCA of Kern County These agencies provide a variety of services. Some of the more frequented programs are hot lunches and transportation provided by the Office on Aging, Kern Medical Center, Kern County Food Bank, and YMCA. The Kern Medical Center provides on average 324 hot lunches with the Office on Aging providing transportation and home delivery. The Bakersfield Senior Center provides senior transportation up to 180 van trips daily. The van service links the elderly with other agencies offering specialized services, including Gleaners, Food Bank, RSVP, Kern County Health Department, Friendship City of Bakersfield Consolidated Plan 2000 llI-11 DRAFT January 1995 House, MAOF, and various senior centers. The Kern County Food Bank also provides food to an estimated 280 elderly and frail elderly persons daily, about one-third of these individuals are over the age of 75. In addition to these agencies, the Kern County Medical Center's Utilization Review and Discharge Planning Department provides placement services to all persons needing additional residential care after hospital stays. According to the Department, it is most difficult to find care for destitute persons, and sometimes they must refer these cases to the Los Angeles area. According to the Kern County Office on Aging Needs Assessment, the agency administered a survey to 55 seniors at a Mini-Conference of Aging in 1993 to help identify the concerns and needs of the elderly in Kern County. This survey revealed that health care is a primary ongoing concern, as well as the high costs of energy and utilities. A new concern identified during the survey process was crime and its affect on elderly persons. ii. Disabled Persons Disability is a physical or mental condition that affects the functioning of a person, whereas handicap is a man-made condition resulting from imperfect designs in our physical and socio-economic environments. Physical disabilities can hinder access to housing units of conventional designs, as well as limit the ability to earn adequate income. The proportion of disabled individuals is increasing nationwide due to overall increased longevity and lower fatality rates. An estimated 17,300 Bakersfield residents had work, mobility, and/or self-care limitations in 1990, comprising about ten percent of the City's population. Housing for physically disabled persons must not only be affordable but also contain special construction features to be accessible. The location of housing for disabled persons is also important because many such households need access to a variety of social services, specialized disability services, shopping and public transportation lines. Specifically, the majority of individuals with developmental disabilities need housing that is within walking distance of bus lines. In addition to the housing needs of the physically disabled described above, there should be support services designed to meet individual needs. Severely Mentally Ill: HUD's definition of severe mental illness includes the diagnoses of psychoses (e.g. schizophrenia) and the major affective disorders (e.g. bipolar, major depression). Also, the illness must qualify as chronic meaning that it has existed for at least one year. The 1990 Census indicates that there were 48 Bakersfield residents residing in mental institutes. According to Kern County Mental Health Services, 20 Kern County residents reside in Camarillo State Hospital and 30 residents live in the Institute for Mental Disease. Also, according to the May 1994 "Assessment of Residential Care Needs for the Adult Mentally Ill in Kern County" by the County Department of Mental Health, approximately 250 to 300 mentally persons are regular users of residential care City of Bakersfield Consolidated Plan 2000 III-12 DRAFT January 1995 housing. The CHAS reported that the nationally accepted percentage of the population which can be categorized as severely mentally ill is one percent. The National Institute for Mental Health standard is slightly higher at 2.5 percent. Thus, an estimated 1,748 to 4,371 residents may be considered mentally disabled in Bakersfield. Based on a survey conducted by the Kern County Department of Housing Services (Housing Survey on Current Cases Open for the Chronic Mentally Ill, Aug. 1989), the County's mentally ill are housed as follows: 52% with family members, 18% in hospitals 11% alone, 10% in community care, '1% in group quarters, ~nd 8% other. Assuming that the mentally ill who live with family members have adequate care, an estimated 839 to 2,098 persons in Bakersfield need supportive housing. This estimate is similar to the Mental Health ^dvisory Board which estimates that approximately 2,100 mentally ill persons are inappropriately housed in all of Kern County and require housing assistance. Services and Facilities Available for the Severely Mentally Ill: The State Department of Social Services documents group homes for the disabled in Bakersfield based on State licensing. Each group home on the State's list has an indicated preference for the type of disabled person (developmentally, physically, or mentally) to be served by the facility. As shown in Table III-8, there are 31 licensed residential care f~,cilities, including 18 adult and 13 senior facilities, in Kern County that offer a combined total of about 235 beds for mental he~th clients. Of these, most are small homes of six or fewer residents, ·nd all but two are located in metropolitan B~ersfield. Most appear to be in good physical condition, but some need major renovation ~nd repair. Residents are generally housed two to a room. All facilities accept both men ~nd women ~md provide basic but no enhanced or specialized services. TABLE m-8 CITY OF BAKERSFIELD NUMBER OF RESIDENTIAL FACILITIES FOR DISABLED PERSONS Age Cohort Developmentally Disabled Physically Disabled Mentally Disabled Up to 18 Years 10 11 0 18 - 59 Years 27 26 18 60 Years + 0 17 13 Total 37 54 31 City of Bakersfield Consolidated Plan 2000 III-13 DRAFT January 1995 Sources: (1)State Department of Social Services, Licensing Division, July 1993. (2) "Assessment of Residential Care Needs for the Adult Mentally II1 in Kern County" prepared by the Committee on Housing, Mental Health Board, Kern County Department of Mental Health, May 1994. The continuum of care from complete medical and personal care to independent living is an important facet of understanding the housing options available to disabled persons. The care options for the severely mentally ill consist of four primary levels of treatment: hosPitalization, institutes for mental disease, board and care, and room and board facilities. Mental Health Hospitals offer medical treatment for persons that are severely mentally ill and are the highest level of care available for the mentally ill in the State of California. Institutes for mental disease provide more limited medical care, but still offer a highly supervised environment for the mentally ill. Both of these institutions require substantial medical and technical resources and as a result are typically located in highly urbanized areas. Metropolitan Bakersfield does not contain either of these facilities. The next level of care available io persons who are severely mentally ill are board and care homes which provide supervision and help with medication to patients. According to Living Connection, a service provider to the mentally ill, Bakersfield contains a shortage of quality board and care homes. Most homes provide the minimum of lodging, food, and medical care to tenants. In addition, very few homes provide either counseling, educational, or recreational opportunities for tenants. Mentally ill persons as they become more independent may live in room and board facilities which provide only basic services, such as food. Eventually, these persons may live independently. According to Center Street Board and Care, (a group home), typically their facility is at capacity, and this is typical of most facilities for the mentally - ill. Due to the need for housing for the mentally ill, Union Villa, a group home, recently opened and contains between 80-85 beds for persons that are mentally disabled. This facility is anticipated to meet some of the immediate need for housing for the severely mentally ill. Despite this development, a deficiency for residential facilities for the severely mentally ill exists, especially for those up to the age of 18 and over 60 years. It can be assumed, however, that a large majority of individuals between the ages of 0-18 live with their parents and receive adequate care, and some elderly individuals are housed in senior citizen homes. The Assessment of Housing Needs for the Adult Mentally I11 in Kern County analyzes the housing needs of the mentally ill. The study has several key recommendations, including: · Provide funding for a Housing Resource Developer who will oversee housing options for the disabled; · Promote the development of additional affordable housing and increase access City of Bakersfield Consolidated Plan 2000 III-14 DRAFT January 1995 to existing housing; · Provide supportive services which facilitate housing occupancy; · Provide increased money management services; · Decrease discrimination in access to and occupancy of housing; and - Improve the Mental Health Housing Plan. Gaps in the system may prohibit disabled persons from transitioning from one living environment to another. Living Connection has identified a variety of gaps in service in Bakersfield for the severely mentally ill. One of the primary missing links is a crisis residential home which provides intensive service to persons transitioning from a mental health institute to board and care facilities. The crisis/acute residential treatment program is an alternative to hospitalization and is for persons who are experiencing an acute psychiatric episode or situational crisis not requiring involuntary hospitalization (e.g., without medical needs) and not exhibiting behavior which requires an institutional setting. The program should be available for admissions 24 hours a day, seven days a week. The primary focus of this program is on the reduction of the crisis, on stabilization, and on a diagnostic assessment of the person's existing support system, including recommendations for referrals upon discharge. This program is designed for persons who would otherwise be referred to an inpatient unit, either locally or in the state hospital. The major emphasis of this program is stabilization and appropriate referral for further treatment or support services. Respite care services may be provided as a component of this program. In recognition of the need for a crisis residential center, in October 1993, the County's Mental Health Department issued a request for proposals to build a crisis center. Another barrier for disabled persons is the shortage of affordable housing. Supplemental Security Income typically amounts to $600 month for an individual living independently. Persons reliant on SSI are thus faced with spending well above 30% of their income on housing costs. As a result, many persons who are mentally ill live in substandard conditions. In addition, limited support services are available to these households to promote the independent living environment. Many of the mentally ill live with their relatives because of inadequate housing opportunities. Very few supportive services, such as respite care that allows relatives to drop off the mentally ill person for temporary supervision, exist within the community. Support services for relatives and independent households would help the mentally ill in living as independently as is possible. A subset of the disabled population of particular concern in Bakersfield are children or youth, especially those who are seriously emotionally disturbed. According to the Kern County Department of Mental Health Services, there are only two levels of care specifically structured to accommodate troubled youths: hospital in-patient and Unicorn Gardens (rating 8 1/2 level of care). The Kern Medical Center has added a small residential facility (eight beds) onto the hospital which provides a very high level of care. Unicorn Gardens provides a lower level of care but offers supervision for children. Overall, the Kern County Department of Mental Health Services indicates that children City of Bakersfield Consolidated Plan 2000 III-15 DRAFT January 1995 who are severely emotionally disabled generally live outside the County because of inadequate facilities. As of October 1993, nineteen youth clients of the Department of Mental Health Services were located in Kern County and 111 children outside Of'Kern County. This makes unification between the parents and children difficult. Developmentally Disabled: The base definition of developmentally disability relates to a person's score on standardized intelligence tests. Persons scoring at least two standard deviations below the mean (IQ below 70) are defined as developmentally disabled. Other conditions and complications may also be present. According to the Association for Retarded Persons, the national accepted percentage of the population which can be categorized as developmentally disabled is one to three percent. Translating this proportion to the City's 1990 population, an estimated 1,748 to 5,245 persons may be considered developmentally disabled in Bakersfield. According to the Kern Regional Center's Client Listing (12/90), 75 percent of the developmentally disabled live with their parents, 10 percent independently, 14 percent in community/ health care facilities, one percent in foster care, and less than one percent in "other" situations. AcCording to the State of California Department of Development Services study entitled "Independent Living for Californians with Development Disabilities," only seven percent, or 3,900 of the State's adult clients now live on their own. But over 17 percent - that is nearly 9,500 persons - have profiles suggesting that they can do so successfully. The vast majority - over 5,200 persons live with their families. Applying this 17 percent to the number of Bakersfield's developmentally disabled who live with their parents (1,311 to 3,933 persons), approximately 222-668 disabled individuals who live with their family could live independently with more resources. An estimated 222-668 persons who live with their parents and 262-787 developmentally disabled persons who live in the community/health care facilities, foster care or "other" situations, require supportive housing. Thus, an estimated 484-1,455 developmentally disabled persons require supportive housing. The need for supportive housing will continue to increase as the demographics of the population of the parents of adults with developmental disabilities age and may be in need of care themselves. Kern Regional Center states that they have approximately 400 adult consumers living independently and that all are in need of increased resources in housing and services. However, this number only reflects the individuals currently living independently. Services and Facilities Available for the Developmentally Disabled: A progression of residential care is also available for persons who are developmentally disabled. Bakersfield ARC (BARC) has identified fourteen levels of housing assistance available to the developmentally disabled. A community care facility (Level 1) will provide the most structured care for the developmentally disabled with full medical care and supervision. The next level ARM 4 (Level 2) is a highly structured environment for persons with severe behavior problems City of Bakersfield Consolidated Plan 2000 III-16 DRAFT January 1995 that prevent daily living. These persons may transition to Intermediate Care Facility Designated Nursing (ICDDFN - Level 3). The ICDDFN is a health facility that provides on-going nursing; a maximum of six beds are allowed in the facility. Similarly, the next type of facility is an ICDDFH (habilitation - Level 4) which is also a small facility with 15 beds or less. An ICDDFH provides skilled nursing care and some type of on-site rehabilitation services. The lowest level of intermediate care facilities is the ICFDD that may serve 50 or more clients (Level 5). This facility provides supportive, medical, and personal care services. Care then transitions back to the ARM levels (3, 2, 1). ARM 3 (Level 6) facilities specifically work to teach the developmentally disabled self help skills and basic training'. These persons tend to have serious behavior problems and may be non-ambulatory. ARM 2 (Level 7) is limited to those persons without any behavior problems and teaches self help skills. The lowest level of these services is ARM 1 (Level 8), which provides only general supervision. The next lower level is another kind of community care facility (Level 9) which provides only limited care to the developmentally disabled. The continuum of housing then makes an important transition to more independent living environments: living with the family (Level 10), persons enrolled in independent living programs (Level 11), living on own but with supportive services (Level 12), living independently (Level 13), and cooperative home ownership (Level 14). There are 37 community care facilities in Bakersfield which cater towards the supportive housing needs of developmentally disabled persons. However, no board and care facilities are designed for developmentally disabled persons over the age of 60. The Department of Social Services attributes this to two factors: the developmentally disabled tend not to live over the age of 60 and the elderly (d.d. and m.d.) can receive authorization to live in a 18-59 group home. Discussions with the Newton House (a group home) indicate that most facilities in Bakersfield are operating at capacity and there is a need for more supportive housing facilities for this special needs group. According to BARC, there are several service gaps and problems for the developmentally disabled in Bakersfield. One of the primary concerns is a shortage of"least-restrictive" housing for individuals with development disabilities. Current inventories include 37 facilities in which individuals have little choice and permanency and are limited in quality of life by regulations and policies that govern the operation of residential facilities. The emphasis should be placed on providing individuals with permanency and housing in the least restrictive environment where individuals can exercise choice and develop potentials. Currently, there are two room and board homes that the Kern Regional Center utilizes for individuals that do not need restrictive supervision and care. One home has capacity for six individuals and the other accommodates four. Thus, there is a shortage of"least-restrictive" housing for individuals with developmental disabilities, and with an increase in the housing inventory, Bakersfield could bring more individuals back into the community while offering permanency, choice, increased freedoms, and a better quality of life. Another problem is the lack of transitional living environments which will teach the City of Bakersfield Consolidated Plan 2000 III-17 DRAFT January 1995 disabled basic skills so the person could live independently or transition to a lower level of care. It is estimated that a significant percentage of the developmentally disabled could live independently with the appropriate support services. However, the cost of housing also limits persons from transitioning to the independent living environment. With SSI payments of approximately $600/month and the median contract rent in Bakersfield at $517, the developmentally disabled are faced with spending well above 30% of their income on housing needs. Thus, very few developmentally disabled persons can afford decent housing. One method to alleviate this cost burden are roommates. No roommate program is currently operative in Bakersfield. Physically Disabled: Persons with an illness or impairment which impedes their ability to function independently are considered physically disabled. An estimated 10,744 Bakersfield residents are physically disabled. The 1990 Census estimates that 17,300 disabled persons reside in Bakersfield. By subtracting out those who are severely mentally ill (3,060 mid range between 1,748 and 4,371) and the developmentally disabled (3,496 - mid r~ge between 1,748 and 5,245), an estimated 10,744 Bakersfield residents are physically disabled. Using the national average of 15% of physically disabled persons needing help in basic life activities, 1,612 physically disabled persons need supportive housing. Services and Facilities AVailable for the Physically Disabled: Residential opportunities for the physically disabled consist of five options: rehabilitative hospitals, nursing homes, transitional living facilities, board and care facilities and independent living with home care services. At~er release from an acute hospital, such as Kern Medical Center in -Bakersfield, physically disabled persons can temporarily stay at a rehabilitative hospital to receive intensive rehabilitative treatment. The average stay at this type of facility is 30 days. Persons may need to transfer to nursing homes for continued care or transfer into a transitional living program. Transitional living programs teach physically disabled persons to live independently. If a lower level of supervision is required, persons may transfer to board and care facilities which provide only general supervision to their clients. Ultimately, a person may be' able to live independently with hOme care services. Home care services are a vital link in helping physically disabled persons live independently. The physically disabled seem to have the greatest opportunity for housing of all disabled persons in Bakersfield with 54 group homes accessible to the physically disabled. (These 54 group homes include homes that also provide residential care to the mentally and developmentally disabled). Based on discussions with representatives of Around the Clock Care (a group home), most facilities in Bakersfield are operating at capacity, and there is a need for more supportive housing facilities for this special needs group. Individuals with physical disabilities frequently do not find it affordable to live independently due to the high cost of housing. For the physically disabled who receive SSI assistance, the monetary assistance amounts to approximately $600/month, slightly above the median contract rent in the City. As a result, many of the physically disabled live in substandard housing. Further, the physically disabled housing need is City of Bakersfield Consolidated Plan 2000 m-18 DRAFT January 1995 compounded by design and location requirements which are often costly. Special needs of households with wheelchair-bound or semi-ambulatory individuals, for example, may require ramps, holding bars, special bathroom design, wider doorways, lower cabinets, and elevators. According to the Bakersfield Rehabilitation Hospital, various gaps exist within this system in Bakersfield. The primary concern is the deficit in transitional living facilities which provide 24-hour care with therapy. In addition, there is not adequate board and care facilities to meet the demands of the physically disabled. Another overall problem is the lack of a coordinating agency to act as a clearinghouse of information for physically disabled persons. Housing opportunities for individuals with disabilities can be addressed through the provision of affordable, barrier-free housing. Rehabilitation assistance can be targeted toward disabled renters and homeowners for unit modifications to improve accessibility. Accessible housing can also be provided via senior housing development. iii. Female-Headed Households Single-parent households require special consideration and assistance because of their greater need for day care, health care, and other facilities. Female-headed households with children in particular tend to have lower incomes, thus limiting housing availability for this group. In 1990, Bakersfield had 18,143 female-headed family households, 6,645 or 37 percent with children. Of these female headed households, 3,255 live in poverty, as defined by the Census. (Income cutoffs used by the Census include a set of 48 thresholds cross-classified by presence and number of family members under 18 years old. The overall average poverty threshold for a family of four in 1989 was $12,674). Services and Facilities Available: Affordability needs of female-headed households can be addressed through rental subsidies and the City's housing development assistance program. Housing opportunities for female-headed households with children can be improved through policies that call for the provision of affordable childcare and for the location of family housing sites in close proximity to recreational facilities and public transit. The state and federally funded Aid to Families with Dependent Children (AFDC) program, operated by the Kern County Department of Human Services, is the primary source of services and help for low-income single parent households. To supplement this program, the Great Avenues for Independence (GAIN) program also administered by the Department of Human Services provides financial assistance to families that qualify for AFDC. This assistance may be used for school transportation and child care assistance as well as for job training for any AFDC recipient. In addition, the Transitional Child Care program provides monies to families who previously received AFDC assistance for continued child care support. Golden Empire Gleaners, Inc. manages a transitional housing project for mothers and City of BakersfieM Consolidated Plan 2000 III-19 DRAFT January 1995 their children. Applicants for the program are selected from the GAIN program. All applicants must speak English, have earned a high school diploma or GED, and children must be of school age. The housing project, Golden Empire Haven, currently contains 24 units and upon completion will contain 80 units. These units will be a mix of one, two, and three bedroom apartments. In addition to providing housing, mothers are required to attend Various workshops on job training and basic life skills. Community Connection for Child Care provides numerous services and programs for children in Bakersfield. The agency refers parents to licensed day care facilities in the area, and also educates parents on how to choose the right day care program for their family. The agency also facilitates numerous programs for low income families, such as job training and counseling. In addition, Community Connection operates "Kids on the Block" which features puppets that are deaf, blind, etc. and allows children to ask questions about their disability. Section III.B.2 discusses child care issues in further detail. iv. Large Households Large households are identified as a group with special housing needs based on the limited' availability of adequately sized, affordable housing units. Large households are ot~en of lower income, fi'equently resulting in the overcrowding of smaller dwelling units and in mm, accelerating unit deterioration. The 1990 Census reports 8,052 households with five or more members in Bakersfield, representing 13 percent of the City's total households. The CHAS Table lC further indicates that 59.5 large family renters were lower income and in need of housing assistance. This illustrates a need for room additions and larger homes for large family households. Services and Facilities Available: There are no services and facilitieS available specifically for large households. However, the housing needs of large households can generally be accommodated through Section 8 rental assistance and other housing programs which give priority status to overcrowded households. v. People with HIV lnfection and AID$ This special needs group is the most difficult one on which to gather information. Issues, such as reportability and discrimination, limit the information which is known about the population infected with the HIV virus. In addition, many individuals are unaware that they have contracted the virus. Although the Kern County Health Department only maintains statistics for persons who are HIV positive and were tested by the department, the County estimates that 2,000 persons county-wide are infected with the HIV virus and of these persons, 680 have AIDS. (This includes those tested by the Kern County Health Department and people who have moved to Bakersfield.) The Kern County Health Department has estimated City of Bakersfield Consolidated Plan 2000 Ili-20 DRAFT January 1995 that up to 85 percent of those persons who have tested HIV positive live in Bakersfield. Thus, an estimated 1,700 HIV positive persons (of which 578 persons have AIDS) can be assumed to live within the City. Since the Kern County Health Department started testing in 1985, there have been 1,200 people who have tested HIV positive, of which 375 persons have AIDS. Of the individuals which tested positive, 22 were children under the age of 13, and 22 were pregnant women. The National Commission on AIDS publishes "Housing and the HIV/AIDS Epidemic: Recommendations for Action" which contains percentages for the range of the number of HIV-infected people who are in danger of becoming homeless. The Commission estimates that approximately one-third to one-half of all people infected with AIDS are either homeless or are in imminent danger of becoming homeless. Thus, approximately 570-850 HIWAIDS infected persons in Bakersfield may be in need of supportive housing. The Kern County HIV/AIDS Consortium conducted a survey of persons who are HIV positive to help determine their primary service needs. Medical care and transportation in and out of Bakersfield was overwhelmingly identified as the need with the highest priority. In addition, emergency supplies (food, clothing, utilities, money) housing, counseling, case management, respite and in-home care, child care, and legal services were also identified as important service needs in Bakersfield. The HIV/AIDS consortium is reviewing the needs to establish goals, priorities, and service delivery of support services. Services and Facilities Available: Kern Lifeline is the only comprehensive AIDS/HIV service delivery program in Kern County. The Health Department's Home Community Based Care Pilot Project, a medical model case management program, has a maximum caseload of 15. There is a'significant deficit of any other fully developed medical or social services. According to the Health Department, supportive housing for persons with AIDS is almost non-existent in the Bakersfield area. There are no group homes, supportive housing projects, or other facilities dedicated to treating AIDS patients. The Rancho Bakersfield project is the first housing effort with a component directed towards AIDS patients. Because of the scarcity of housing options, people with AIDS often leave the area to seek treatment and supportive services. The issue for Kern County is not so much duplicating on-going efforts, but maximizing limited resources available and strengthening referral and service delivery mechanisms. The primary medical provider for persons with FIIV infection and AIDS is the Kern Medical Center, providing both out and in-patient care. Despite the level of medical care available at Kern Medical Center, many HIV patients are forced to find additional medical treatment outside of Kern County. The Kern County Health Department (KCHD), as the public health arm of the County, provides extensive services to persons who are I~V positive. As a natural clearinghouse of biomedical information for diagnosis and treatment, the Health Department provides referral services to persons with HIV Infection or AIDS. Additional services available in City of BakersfieM Consolidated Plan 2000 III-21 DRAFT January 1995 the County include case management and an AIDS/Drug program. The Kern County AIDS Task Force publishes a "Resource Guide for People with HIV Disease In Kern County." The guide lists a variety of resources, including where individuals can be tested, participate in counseling, and receive medical care. The City has been awarded a $4.1 million Shelter Plus Care grant to provide supportive housing and technical assistance for persons with AIDS or related diseases, serious mental illness, and/or alcohol and drug problems. A portion of these funds will be utilized to rent 10 rooms from a local motel (Rancho Bakersfield) where these persons will receive counseling and housing. As part of this grant award, various social service providers, including Kern Linkage, Kern County Alcohol Center, Community Health Centers of Kern, and the Kern County Hispanic Commission on Alcoholism are coordinating to provide additional services to these residents. The Kern County HIV/AIDS Consortium funds several AIDS service programs in the community, including medical services, emergency assistance, medications not covered by Medi-Cal, adult and child respite care, and legal assistance. Three additional groups in the County provide case management services, including Clinica Sierra Vista, Kern Linkage Program, and Independent Living Center. Clinica Sierra Vista administers the Kern Lifeline Project, which provides each client with a case manager who helps the client receive financial, emotional, and medical support. The Kern Linkage Program also provides case management for persons who are homeless or are in danger of becoming homeless, and the Independent Living Center assists clients in applying for financial aid. Currently, there are no group homes, supportive housing projectS, or other facility specifically dedicated to treating patients with AIDS in metropolitan Bakersfield. The County Health Department indicates that most people with AIDS live with relatives or friends. Those individuals that do have the opportunity of living with a family member or are not in the hospital often become homeless. Persons who are HIV positive can find limited assistance through hospice care and nursing homes, such as Kern County Hospice. However, Kern Lifeline indicates that an extension of these service would help alleviate the burden on many HIV positive households. vi. Alcohol and Drug Abuse/Addiction Alcohol/other drug abuse (AODA) is defined as excessive and impairing use of alcohol or other drugs, including addiction. The National Institute of Alcohol Abuse and Alcoholism estimates the number of men with drinking problems (moderate or severe abuse) at 14 to 16 percent of the adult male population, and the number of women with similar problems at six percent. Thus, an estimated 24,475 to 27,971 men and 10,489 women in Bakersfield may be alcohol abusers. The Kern Master Plan Needs Assessment includes responses from persons in the criminal City of Bakersfield Consolidated Plan 2000 · III-22 DRAFT January 1995 justice system who are familiar with substance abuse problems in Bakersfield. Based on these interviews, driving under the influence is the most commonly committed crime. Methamphetamine is clearly the most preferred and used illegal drug, especially among Whites, followed closely by cocaine. African Americans evidence the highest use of crack cocaine, while PCP is most prevalent among Hispanics. Heroin and LSD are used by a cross-section of all ethnic groups. According to the National Institute on Alcohol Abuse and Alcoholism, one-third or more of clients in publicly funded residential programs are homeless most of the year before entry into treatment. Because no information is available about persons in residential programs, one-third was applied to the estimated city-wide population who abuse drugs and alcohol. As a result, approximately 8,158 to 9,324 men and 3,496 women can be estimated to need supportive housing. The continuum of care for persons with substance abuse problems consists of four levels of assistance, including public inebriate reception centers, detoxification recovery facilities, recovery homes, and outpatient support groups. A public inebriate reception center refers to a 24-hour facility, allowing people to get immediate help without being jailed. A detoxification recovery facility allows persons to stay up to 30 days for detoxification help, and recovery homes allow between 30-90 day stays for persons who need extended assistance. All of these efforts are supported through outpatient support groups, such as Alcoholics Anonymous. The primary critical need in Bakersfield to help substance abusers is a public inebriate reception center and a model detoxification program. Services and Facilities Available: Numerous agencies in Bakersfield provide services to alcohol and drug abusers. However, most of these agencies provide only outpatient programs: · Adolescent Drug EdUcation and Prevention Program · Alcohol and Drug Abuse Support Group · Alcoholics Anonymous · Alta Vista Chemical Dependency Recovery Hospital · ASAP Family Outpatient Centers · AWARE · Born Free (Clinica Sierra Vista) · Casa de las Flores · Cedar Women's Center · Centinela Hospital Life Start Program · Centro Ollin · Citizens for the Betterment of Community and Country · Comprehensive Indian Alcohol Rehabilitation · CSO de Dolores Center · Ebony Counseling Center · EXODUS Recovery Home · Kaleidoscope City of Bakersfield Consolidated Plan 2000 III-23 DRAFT January 1995 · Kern County Alcohol Center · Kern Recovery Center · Men's Recovery Center · NAR-ANON · Narcotics Anonymous · New Alternatives · New Life Christian Center · Pathways · Mill Creek Response Center · Victory Outreach Men's Home · YMCA of Kern County Kern County Department of Mental Health's Substance Abuse Unit is a major provider of drug abuse services. It also administers most public funding for other community drug and alcohol programs. EXODUS Recovery Home is a community-based substance abuse home for women on an inpatient basis and for men on an outpatient basis. EXODUS offers weekly meetings to help people learn to live without alcohol, drugs, abuse, violence, and crime. AWARE estimates it can provide services to 50 persons daily. Services available to residents include individual and group counseling, out-patient rehabilitation, and recreation/entertainment opportunities. In addition, AWARE refers individuals to outside groups, such as Alcoholics Anonymous, and NAR-ANON. The YMCA of Kern County serves approximately 60 persons daily with alcohol and/or drug addictions. YMCA primarily works with Kern Medical and Alcohol centers to help alcohol and drug users. The Kern Linkage Program provides services to persons who are diagnosed as both mentally ill and substance abusers. Currently (October 1993), the Kern Linkage Program is the only specialized provider in Bakersfield. According to the Kern Master Plan Needs Assessment, the most important strategies to reduce substance abuse problems in the Bakersfield area are: 1) better alcohol/drug education in schools; 2) stronger community prevention efforts; 3) stronger criminal justice response for DUIs; and 4) alternative recreation programs for youth. City of Bakersfield Consolidated Plan 2000 m-an DRAFT January 1995 2. HOMELESS NEEDS Summary of Major Findings * 'The homeless and at-risk populations appear to be growing within the City of Bakersfield and its sphere of influence. * There is a need to increase existing emergency shelter space to meet the growing-homeless population. * There is a need for transitional shelter space within the city. * Transitional services for social, medical, and psychological' purposes are needed for the homeless population due to their additional problems such as mental illness, chemical dependency, domestic violence, and inconsistency, or lack, of employment. * The issue of homelessness transcends city limit boundaries. a. Methodology The 1990 Census provided a point-in-time count of the homeless population within the City of Bakersfield. City staffalso utilized information from three known providers of housing for the homeless within the city limits (Bethany Services, Alliance Against Family Violence, and the Bakersfield Lifeline Center formerly known as the Rescue Mission). Two major homeless service providers were also consulted even though the provision of housing is not a major component of their programs (Clinica Sierra Vista and Kern Linkage). In addition, information relevant to homelessness within the city was also obtained from '~1 Study of Homelessness in the Baker Street Specific Plan ~4rea" by Northcutt and Associates, February 1987. The 1990 U. S. Census figures classified approximately 380 persons as homeless in "sheltered" facilities in Bakersfield. The Census data was never intended to be a complete count of all homeless persons. It does, however, make an attempt to include homeless in the total count of persons residing in the community and does reasonably reflect the number of homeless persons "sheltered" on a particular night. In order to paint a more accurate picture of the number &homeless persons in the metropolitan Bakersfield area, information on the number of"unduplicated" persons receiving services in successive fiscal years has been compiled from three organizations. Table 111-9 illustrates the growing number of homeless persons seeking help between 1990 and 1993. Although one person may have received some form of assistance from all three organizations during the same year, these figures represent the demand for City of BakersfieM Consolidated Plan 2000 III-25 DRAFT January 1995 assistance each agency has been experiencing and Clearly demonstrates a growing trend for increased usage of services. TABLE HI-9 PERSONS RECEIVING HOMELESS SERVICES 1990 - 1993 1990-1991 1991-1992 1992-1993 Bakersfield Homeless Center 85* 2,704 4,063 Clinica Sierra Vista 1,365 2,148 2,685 Kern Linkal~e Outreach 1,849 2,592 2,733 Kern Linkal~e Case Management 192 199 139 Total Average n/a 1,911 2,405 * May and June, 1991 only. Bakersfield Homeless Center statistics reveal that in 1992-1993 thirty-five percent of those receiving emergency services were female-headed households or two parent families. This represents a 100 percent increase for the same period the prior year. Similar information from the other agencies was not available although, Kern Linkage · deals primarily with single adults. The 1987 Northcutt Study identified more than 500 persons in the Baker Street Specific Plan area as homeless. Although the numbers do not accurately reflect the current or projected situation, many of the findings of this study are still relevant:- - Sixty percent of the population are currently looking for work and have. been looking for work for less than 12 months; · Another 20 percent have been homeless for longer than 12 months; · Twenty percent of the population have some sort of mental disability; · Alcohol is used by 80 percent of those surveyed and approximately 35 percent considered themselves excessive drinkers; and · Over 20 percent of the homeless reported receiving no.medical care when they were sick. City of Bakersfield Consolidated Plan 2000 III-26 DRAFT January 1995 b. Needs of Sheltered and Unsheltered Homeless It is the goal of the Consolidated Plan to coordinate services and facilities available for the homeless as a continuum of care. As illustrated in the following flow chart, a continuum of care begins with a point of entry in which the needs of a homeless individual or family are assessed. Once a needs assessment is completed, the person/ family may be referred to permanent housing or to transitional housing where supportive services are provided to prepare them for independent living. For example, a homeless person with a substance abuse problem may be referred to a transitional rehabilitation program before being assisted with permanent housing. The goal of a comprehensive homeless service system is to ensure that homeless individuals and families move from homelessness to self-sufficiency, permanent housing, and independent living. Outreach Intake Assessment [Permanent I Housing [[Transitional Emergency ~ Shelter ~ Housing i Supportive i Housing Men~l Health Substance Abuse Job Training Fan~ Support .... Independent Educa~on ..... I. ivfng Sldls H.L V. c. Subpopulations There is an immediate need to increase shelter space for the general population of homeless as well as all subgroups. Kern Linkage, a division of Desert Counseling Centers, provides outreach, counseling other related services to both the sheltered and unsheltered homeless who are severely mentally ill, as well as the severely mentally ill with a dual diagnosis of alcohol/other drug addiction. Kern Linkage receives FEMA funds to provide shelter vouchers and places clients in appropriate housing when it is available. There is no current emergency facility dedicated to this subgroup. City of Bakersfield Consolidated Plan 2000 111-27 DRAFT January 1995 The Alliance Against Family Violence (AAFV) has been providing an emergency shelter with minimal 60 transitional program for several years. It is the Alliance's intention to increase transitional services if they are awarded Supportive Housing Program funds. AAFV provides services to both sheltered and unsheltered victims, but their primary client base have some form of shelter. Alcohol/other drug addicted homeless ot~en find shelter at the Bakersfield Homeless Center. Although some counseling services are available on site and AA holds meetings there, the Center is not designed to meet the specific needs of substance abusive clients. A detoxification center and establishment of a sober living facility have been identified as immediate needs for this particular subpopulation. The Kern County AIDS Consortium has identified .supportive housing and emergency special service facilities for persons with HIV and AIDS related diseases as primary needs in this community. Although the proposed Shelter Plus Care project includes 10 SRO units for homeless persons with AIDS and related diseases, the project has not been funded and no other alternative is currently available. Additionally, the Homeless Community Resources Network has identified the need for an "after care" facility for homeless persons who have been hospitalized and released, but still require a level of rest and medication, meals, etc., that are not a part of the typical services provided at the shelters. Because there is no such facility, these "recuperating" homeless olden find themselves back in the hospital because of relapses or other complications associated with the environment in which they have attempted to recuperate from their illness and/or injuries. d. Needs of Persons Threatened with l:lomelessness A possible measure for gauging the at-risk population is to identify the severely cost- burdened household population and ascertain what percentage of that group lack an adequate family or social support network. Based On the 1990 Census information, approximately 40 percent of low-income households (or 5,787) are at or near a severely cost-burdened threshold. It is difficult to determine who lacks an adequate support network but a conservative estimate of 10 percent of the severely cost-burdened group could find themselves homeless. In addition, given the estimate that 50 percent of those with HIV disease are at risk of becoming homeless it is conceivable that more than 2200 people may become homeless in the future. Some of the major reasons leading to homelessness include: domestic violence, eviction, loss or reduction in tenant or owner income, and cuts in public assistance (such as a decrease in Aid to Families with Dependent Children and SSI/SSP). In addition, individuals that are released from penal, mental, or substance abuse facilities with no adequate support follow-up may find themselves without immediate housing. City of Bakersfield Consolidated Plan 2000 III-28 DRAFT January 1995 e. Consolidated Plan Homeless Populations and Subpopulations Table Thc Consolidated Plan Homeless Populations and Subpopulations Table is incomplete. According to the instructions, the'City is required to complete the form only to the extent they have data meeting the following standards: · Must be based upon a "point-in-time" (e.g. one day or one week) measure of homelessness; · Must be drawn using methods for counting that eliminate duplication; and · Expert opinion in the number of person turned away or referred from shelter and service providers are not acceptable. The only count used in competing this form was taken from the 1990 Census "S-Night" Enumeration. The City does not have sufficient information to accurately complete the remainder of the form. f. Inventory of Facilities and Services for the ltomeless and Persons Threatened with ltomelessness For the purposes of the CHAS, the Bakersfield Economic and Community Development Department administered a survey to 24 homeless facilities and social service providers in metropolitan Bakersfield to identify the number of facilities and range of services provided to area's homeless. (Some of these providers are located in unincorporated County areas but within metropolitan Bakersfield; due to the very nature of "homelessness," their services are available to the general population.) A list of agencies responded to the survey is included in the City's CHAS and a copy of the survey questionnaire is included in the Appendix to the CHAS. The following section summarizes homeless services and facilities available to homeless individuals and families and to those at risk of becoming homeless, based on survey responses, telephone interviews, and existing studies. L Homeless Facilities Currently the major providers of emergency shelter are the Bakersfield Homeless Center, 1600 East Truxtun Avenue, and the Bakersfield Lifeline Center (formerly known as the Rescue Mission), 830 Beale.Avenue. The Bakersfield Homeless Center has capacity for approximately 130 beds for men, nine beds for women, and nine beds available for family use. In addition, they can accommodate approximately 300 persons per mealtime. They serve two meals per day. The facility also provides medical and dental services, vocational and psychological counseling, case management, and allows for pick-up and distribution of mail. The Bakersfield Lifeline Center has space for approximately 40 women and children, and City of BakersfieM Consolidated Plan 2000 III-29 DRAFT January 1995 80 men. They have capacity for approximately 138 persons per meal. They serve two meals per day. The facility also provides for clothing distribution, counseling, and job opportunities. The Lutheran Social Services agency has been developing a program aimed at young people in crisis. Beginning in early 1994, a counseling and intervention program coupled with a 24-hour hot-line will be inaugurated. The purpose of'the project is to offer an opportunity, for young people in crisis to resolve their problems before they run away. The agency is seeking funding to operate a temporary crisis shelter for youth. Currently there are no such services for youth in crisis or at risk of becoming homeless because of their home situation. ii. Transitional Housing The first phase ora transitional housing project recently opened its doors. Consisting of 24 two-bedroom units, the Golden Empire Haven is providing transitional housing and services to single women with school-aged children for up to a two-year stay. Operated by Golden Empire Gleaners, a non-profit organization, the project will contain 80 units at completion ofbuildout. It is funded entirely by private means. The Housing Authority operates a small program of seven units for families in the unincorporated area of the city. The Alliance Against Family Violence operates a limited emergency/transitional housing program for women escaping a violent home. Space is limited and Currently restricted to a 60-day stay. The Bakersfield Homeless Center began a cooperative program with the World Vision organization mid-1993. World Vision's "Project Home Again" teams a homeless or at- risk family with a sponsoring church group. The Homeless Center identifies potential families, screens and begins initial counseling before the referral is made. The church group provides whatever assistance the family needs in order to remain in their home or find another suitable residence. The group who "adopts" the family continues their guidance and assistance, providing counseling, job search help, assistance with utility deposits, furnishings, etc. for a period of up to one year. The project is too new to have sufficient statistical information for evaluation purposes. Even though these programs exist, the need for additional transitional programs far exceeds the resources currently available; those seeking assistance in transitioning to permanent housing remain extremely underserved. Short-term housing for the mentally disabled is provided by Kern Linkage. Approximately 141 clients are currently being provided housing at various locations within the City of Bakersfield: · American Hotel 910 Baker Street · Bakersfield Hotel 1202 19th Street · Decatur Hotel 2027 19th Street · Hart Hotel 1125~A 19th Street City of Bakerofield Consolidated Plan 2000 III-30 DRAFT January 1995 · Metropole Hotel 627 Sumner Street · Mission Hotel 1822 M Street · Ninety Nine Motel 5930 State Road · Porterfield Hotel 1715 18th Street · Rankin Hotel 921 Baker Street · Saint Francis Hotel 601 ~h Sumner Street Kern County provides an average of 150 vouchers for General Assistance (GA) housing in Bakersfield per month as transitional housing, funded by the Kern County Department of Human Services. The hotels and motels were inspected and met minimum standards before they were allowed to participate in the GA Program. People are placed in those units until they qualify for other benefits, are employed (if they are employable), or as long as they qualify for GA. Additional units are available in the hotels for GA housing, should the county allocate funds to expand the program. iii. Permanent Housing for Homeless Persons with Disabilities In June, 1992, the City of Bakersfield and the Housing Authority of the County of Kern were jointly awarded a $4.2 million Shelter Plus Care (S+C) grant. These funds will be used to subsidize permanent housing costs for qualified disabled homeless individuals. Although housing placement had not begun at the time of the publication of the CHAS, it is anticipated that up to 90 units of supportive housing will be available by early 1994. The S+C Program provides supportive permanent housing in single room occupancy units for persons who are suffering from alcohol abuse, substance abuse, mental illness, a combination of mental illness and substance abuse, and diseases of AIDS. This is the first program of its type in the Bakersfield area. iv. Social Service Programs & Supportive Services The Kern County Department of Human Services (DHS) administers the State Homeless Assistance Program. Applicants must be eligible for Aid to Families with Dependent Children (AFDC) in order to access this program and be able to demonstrate that they are homeless (a "lock-out" notice, statement from a friend or relative that they can no longer live with them, evidence that they are living in their car, or a referral from the Homeless Center). There are two types of assistance provided to homeless families: Temporary Assistance and Permanent Assistance. The Temporary Assistance allows up to 16 days of housing at a maximum of $30 per day. During that period, the family must demonstrate that they are actively searching for permanent housing. Permanent Assistance is in the form of payment of the usually required deposit and last month's rent payment. The applicant must have the funds to make the first month's payment themselves. The maximum benefit is based on the family size and 80 percent of the maximum AFDC grant to which they would be allowed. In both programs, the applicant can only access these funds once every two years. Funding for the program has seen a decline in recent years due to State funding shortages. The most recent report period (October 1992 through September, 1993) indicates 3,684 families have been assisted county-wide. There is no statistical breakdown for the City of Bakersfield. The program City of Bakersfield Consolidated Plan 2000 III-31 DRAFT January 1995 is funded 50 percent from Federal sources, 45 percent from the State with the balance from the County. The program does not provide any case management or follow-up services. The Department of Human Services is also involved in a joint project with HACK to provide rental assistance to families in distress under the Family Unification Demonstration Program. First awarded funds in 1992, DHS and HACK are providing 75 Section 8 certificates to families for whom the lack of adequate housing is a primary factor in the delayed separation, or imminent separation of children from their families. This pilot program enables targeted families at risk of becoming homeless the opportunity to remain together as they work with DHS's Child Welfare Services to resolve the problems contributing to their situation. A variety of additional services and programs for the homeless are available in the metropolitan Bakersfield area offered by several different organizations, both private and government base& Table ]1'I-11 illustrates this point. Several of these organizations also refer their clientele to other agencies to obtain the assistance mentioned. For purposes of clarity, only those services provided on-site are included in this matrix. Most of the information included on the chart was the result of the survey referred to in the opening paragraph of this section. A coalition of homeless service Providers have formed a network, Homeless Community Resources Network, which meets on a semi-monthly basis. The purpose of the organization is to work in a cooperative effort to maximize the effective use of resources, minimize the duplication of services, and advocate on behalf of homeless and homeless providers. The Network hopes to achieve their objective through sharing of information, problem solving, formulation of partnerships and other cooperative efforts aimed are meeting the challenges of serving the homeless. City of Balce~-sfield Consolidated Plan 2000 m-aa DRAFT January 1995 TABLE m-11 HOMELESS SERVICES PROVIDED ON-SITE ~,ROVmERS I A I B Icl o l E I v Icl. I x I J I I( ILI M I N I o TREATMENT Drug Abuse x x x x x x Alcohol Abuse x x x x x x Mental health x x x x Dual diagnosed (alcohol x abuse/mental illness) Medical x x x x x x Dental x Domestic violence counseling x Other counseling services x x x SERVICES Food distribution x x x x x x x x Meals x x x Storage of personal belongings Shower and shave facilities x x x Laundry x x Religious services x x Mail'drop~ x x x x x Clothing x x x x x x x Job counseling x x x Education and training x x x x x Life skills (budgeting, planning, etc.)x x x x x x Legal problems x x Child care x x x x Early childhood education x x x x x Transportation x x x x x Benefit application assistance x x Housing placement x x Mediation x City of Bakersfield Consolidated Plan 2000 III-33 DRAFT January 1995 Note: Providers designated by alpha codes as follows: A--Alliance Against Family Violence, B--American Indian Council of Central California, Inc., C--Bakersfield Homeless Center, D--First Presbyterian Church, E=Goodwill Industries, F--Haven Counseling, G=Kern County Fair Housing Division, H--Kern County Food Bank, I--Kern Count)' Health Department, J=Kern Linkage Program, K--Lutheran Social Services, L=Mexican American Opportunity Foundation, M--Clinica Sierra Vista, N--Bakersfield Lifeline Center, O--Kern County Economic Opportunity Corporation. 3. PUBLIC HOUSING NEEDS The Housing Authority of the County of Kern (HACK) owns and operates four public housing projects in Bakersfield: Adelante Vista, Oro Vista, Plaza Towers, and Plaza Towers Annex, totaling 73 studio units, 159 one-bedroom, 115 two-bedroom, 65 three- bedroom, and 21 four-bedroom units. The 118-unit Plaza Towers is a senior housing project with eight accessible units and two sensory units. The 82-unit Plaza Towers Annex is 'also a senior housing project with the rehabilitation of two accessible units and one sensory unit pending. The ethnic breakdown of the public housing tenants are approximately 32.8% White, 35.6% Hispanic, 30% Black, 0.24% Asian, and 0.96% Native American persons. Public housing is in high demand in Bakersfield with approximately 9,000 applicants waiting for assistance. Utilizing grants (CIAP 9072 and 907A) that allowed for the improvement of the four PHA developments in the City of Bakersfield, HACK has systematically rehabilitated its housing stock. The modernization took place between October 1990 and September 1994. At the present time, the condition of the units are good. The outside appearance of the units in both Oro Vista and Adelante Vista housing communities appear to be in better repair than the surrounding neighborhood. There is a noticeable uniformity of color and detail in the housing communities. The Oro Vista development is a 184-unit complex. HUD has approved this development for conversion to homeownership under the HOPE 1 funding program. The conversion of the 184 rental units to homeownership include also the new construction of 92 rental units to replenish the public housing stock. At the present time, a project site has not yet been identified within the City boundaries. With this in mind, there is a net loss of 92 public housing Units. It should be noted that the Adelante Vista community iS also slated for homeownership with 50 replacement units. NOTE: Housing Authority has been requested to provide additional information to be included in the Consolidated Plan. City of BakersfieM Consolidated Plan 2000 III-34 DRAFT January 1995 4. LEAD-BASED PAINT NEEDS The HUD Consolidated Plan guidelines require that each jurisdiction address lead-based paint (LBP) hazards. To meet this federal requirement, Bakersfield will assess the existing LBP hazards and incidence of lead poisoning in the City's housing supply. The City will also estimate the number of housing units with lead-based paint that are occupied by very-low and low-income families. Based upon these existing and potential LBP conditions, current and proposed actions to evaluate and reduce lead-based paint hazards are presented in the One-Year Action Plan. The Strategic Plan will describe how lead-based paint hazards reduction will be integrated into existing housing policies and programs. a. Housing and the Environmental llealth Hazard of Lead Lead poisoning is the number one environmental health hazard to children in America today. With 10 to 15 percent of all preschoolers in the United States affected, lead poisoning is at epidemic proportions. Lead's health effects are devastating and irreversible. Lead poisoning causes: · IQ reductions; · Reading and learning disabilities; · Decreased attention span; · Hyperactivity and aggressive behavior. While lead was banned from residential paint in 1978, more than three-fourths of pre- 1978 homes contain lead-based paint. And the older the property, the more likely it has lead-based paint. Lead hazards are most severe in dilapidated older housing; the worse the condition of the home, the greater the risk of lead exposure to children. Sources of lead-based paint hazard include: · Lead dust is the most common source of lead exposure. ·Lead is released from paint as a result of: -Deterioration (e.g., on exterior walls) - Abrasion (e.g., on windows, floors, stairs) - Impact (e.g., fi-om doors) - Disturbance (e.g., during painting or rehabilitation). · Unsafe rehabilitation and demolition practices increase lead hazards. b. Title X Requirements The Residential Lead-Based Paint Reduction Act of 1992 focuses on reduction of hazards, risk assessment, and prevention. Virtually all HUD programs are covered by Title X which mandates that jurisdictions address the following areas of concern: · Hazards: "Hazard" means any condition that causes exposure to lead from lead-contaminated dust, soil, or paint that is deteriorated or present in City of Bakersfield Consolidated Plan 2000 III-35 DRAFT January 1995 accessible or friction surfaces. Lead-based paint hazards do not include intact lead-based paint which is not on a chewable, impact or friction surface. · Risk assessment and interim controls: Risk assessment requires on-site analysis to determine existence, nature, Severity, and location of lead hazards. Interim controls focus on measures that temporarily reduce human exposure. · Prevention, as well as treatment: Reduction of hazards before a health problem occurs is critical. The age of housing stock is an acceptable basis for estimating the location of dwelling with lead-based paint. Title X does not rely on children with elevated blood-lead levels (EBLs) as a means of locating dwellings in need of abatement. Jurisdictions and the Federal government have new requirements and deadlines. By: April 1993: OSHA must issue interim final regulations on lead in the construction industry; this applies to LBP activities in residential and construction settings, including structural steel work. April 1994: State certification and licensing programs must meet minimum national standards. If states fail to act, EPA must enforce these requirements. January 1995: HUD must issue regulations implementing Title X provisions for evaluation and reduction of LBP in assisted housing programs. October 28, 1995: LBP-related disclosure and warning requirements must be given at the time of sale or rental of any pre-1978 housing unit. These requirements include a 1 O-day opportunity for home buyers to arrange for a risk assessment or inspection. c. Incidence of Lead Hazards In light of the State legislative mandate and in accordance with the public health implications, the County Public Health Officer is responsible for the overall implementation of the lead poisoning program. Under the direction of the Health Officer, the Maternal, Child, and Adolescent Health (MCAH) Program of the Kern County Health Department (KCHD) will have the primary responsibility of coordinating the Kern County Lead Poisoning Prevention Program along with Environmental Health, Public Health Nursing, California Children Services, and approved public/private laboratories. This program structure is still undergoing refinement. City of Bakersfield Consolidated Plan 2000 111-36 DRAFT January 1995 In 1991, the Centers for Disease Control established the blood lead level of concern to 10 micrograms per deciliter (ug/dL) of human blood. Blood lead levels in children over 10 ug/dL are considered to be elevated. A child with a blood lead level greater than or equal to 20 ug/dL requires a full medical evaluation and public health follow-up. A child with a blood lead level in the 15 to 19 ug/dL range is at high risk for lead poisoning. Such children are followed closely by their health care provider. When this blood lead level persists for two consecutive tests, three to four months apart, public health intervention to identi~ sources of lead exposure is recommended if resources permit. Through the Lead Prevention Program, the County identifies elevated levels of lead in blood, provides case management to lead burdened children in lead-poisoning Levels 1 through 4, and educates families in lead poisoning and prevention. The overriding goal of the Program is to prevent neurological damage from chronic exposure. Table III-12 illustrates the Kern County Health Department guidelines for follow-up blood tests, TABLE I11-12 GUIDELINES FOR FOLLOW-UP BLOOD TEST BY HEALTH ASSESSMENT PROVIDER VENOUS BLOOD LEAD LEVEL VENOUS BLOOD LEAD RETEST FREQUENCY <10 ug/dl o If 12 months of age and low risk, retest at 24 months of age. ff12 months of age and high risk, retest every 6 months until 2 subsequent specimens with <10 ug/dl or 3 specimens at <15 ug/dl, then retest in 1 year. 10-14 ug/dl o Retest in 3-4 months until 2 tests show <10 ug/dl or 3 tests at <15 ug/dl, then retest in 1 year from last specimen. 15-19 ugtdl o Retest in 3-4 months if 2nd test remains in this range. Retest until 2 subsequent tests show <10 ug/dl or 3 tests show <15 ud/dl. o Referral to Public Health for environmental investigation ff 2 test results show lead blood of> 15 ug/dl. 20-44 ug/dl o Immediate retest to confirm results. o Referral to Public Health for environmental investigation. o Referral to the California Children Services for evaluation. 45-69 ug/dl o Referral to Public.Health for environmental invesfigatior~ o Urgent referral to the California Children Services for evaluation. >70 ug/dl or o Referral to Public Health for environmental investigation. symptomatic o Immediate referral to the California Children Services for evaluation. o Immediate hospitalization. Source: Kern County Health Department Maternal Child and Adolescent Health, May 1992. City of Bakersfield Consolidated Plan 2000 III-37 DRAFT January 1995 Since March 1993, the Kern County Health Department has been keeping records of children with blood leads of 10-19 micrograms per deciliter (ug/dl) of human blood. Currently in Kern County, there are 93 children with two consecutive tests of venous blood lead levels over 15 ug/dl. Among these 93 children, approximately 41 of them reside in the central part of Bakersfield where there are concentrations of Hispanic and Black persons and lower income households, as well as the City's older housing stock (Table III-13). However, it should be emphasized that lead-poisoning may come from several sources: lead-based paint, contaminated water, and contaminated soils. TABLE II1-13 INCIDENCE OF CHILDHOOD LEAD-POISONING JANUARY 1995 General Location by Number of Cases Census Tract Tract 12.00 7 Tract 13.00 11 Tract 14.00 2 Tract 15.00 2 Tract 18.00 1 Tract 18.01 1 Tract 19.01 & Tract 19.02 4 Tract 20 00 1 Tract 22.01 & Tract 22.02 3 Tract 23.00 1 Tract 24.01 1 Tract 31.02 & Tract 31.03 3 Total 41 Source: Kern County Health Department, January 1995. Table HI-14 contains a list of the local, state, and federal agencies concerned with the childhood lead-poisoning problem and their services/resources (i.e. education, prevention, detection, treatment, abatement.) For purposes of the Consolidated Plan, the Kern County Health Department was contacted to obtain information on the incidence and general location of lead-poisoning in Bakersfield. ' City of Bakersfield Consolidated Plan 2000 III-38 DRAFI' January 1995 TABLE m-14 CHILDHOOD LEAD POISONING AGENCIES AND RESOURCES Agency/Program/Position Services/Resources Local/County ,4. Kern Count~ Health Department 1. Lead Poisoning Prevention Program · County Public Health Officer · Oversee Program · Maternal, Child, and · Overall Implementation of Lead Poisoning Adolescent Health Program Prevention Program · Public Health Nurse · PbB Report Intake/Referral and Response Condition · Lead Poisoning Education · Lead Poisoning Follow-up · Childhood Lead Case Management · Medical Treatment · Environmental Health Specialist · Environmental Case Management · LBP Inspection State/Federal A. California Dept. of Health Services 1. Child Health and Disability Prevention Program · Director · Local CHDP Coordination Policy Development 2. Childhood Lead Poisoning Prevention Branch · Information Coordinator · Reports status LpB Cases on a Countywide Basis B. National Center for Lead-Safe Housing · Director * Information clearinghOuse · CHAS Technical Assistance · LBP inspection research City of Bakersfield Consolidated Plan 2000 m-39 DRAFT January 1995 d. Estimating Number of Housing Units with LBP For estimating the number of housing units with lead-based paint, the age of the housing stock is the key variable. Starting in 1978, the use of all lead-based paint on residential property was prohibited. It is estimated that nationally, 75 percent of all residential property built prior to 1978 contains lead-based paint, older properties having the highest percentage of LBP. Local data has confirmed the national survey results that the percentage of units containing lead increases with the age of the structure. Certain areas in Bakersfield have an older housing stock. Over 80 percent of the hOusing units in census tracts 7, 8, 9.02, 14, 16, 17, 19.01, 19.02, 21, 25, 26, and 27 are over 30 years old. A substantial portion of these units may contain lead-based paint. The CHAS Data Book provides the number of housing units of various ages occupied by Low/Mod income households. (Lower income households include those earning Extremely Low, Low, and Moderate incomes based on HUD criteria. However, this table does not separately provide estimates on age of housing units occupied by Extremely Low income households, but have included these estimates in the Low income category.) The following table estimates the number of housing units with LBP in Bakersfield that may be occupied by the Low/Mod income households. According to these estimates, more Low/Mod income renter-households in the City maY be exposed to LBP hazards than Low/Mod income owner-households. In assessing the Potential LBP hazard of these older structures, several factors must be considered. First, not all units with lead-based paint have lead-based paint hazards. Only testing for lead in dust, soil, deteriorated paint, chewable paint surfaces, friction paint surfaces, or impact paint surfaces provides information about hazards. Properties more at risk than others include: · Deteriorated units, particularly those with leaky roofs and plumbing · Rehabilitated units where there was not a thorough cleanup with high- phosphate wash at~er the improvements were completed The City of Bakersfield recognizes the need to develop an action plan for evaluating and reducing LBP hazards over the next five years, especially in those census tracts which evidence concentrations of documented lead poisoning. Plans and actions are outlined in the Housing and Community Development Strategic Plan and specific activities are described in the Action Plan. City of Bake. tsfield Consolidated Plan 2000 III-40 DRAFT January 1995 B. COMMUNITY DEVELOPMENT NEEDS The following section of the needs assessment describes the City's CDBG-eligible non- housing community development needs, including: · Public Improvements · Public Facilities · Public Services · Accessibility Needs · Economic Development The section discussion is divided into these five community development categories, and begins with a summary of community input from the Community Development Needs Survey, public information forums, neighborhood workshops, and other community events. Emperical data on community development needs is then presented by specific topic areas within each community development category. Several needs categories, however, have been discussed in detail in previous sections. To avoid presenting redundant information, readers will be referred to different sections of this Plan for detailed discussions on the needs for and availability of certain services and facilities. Community Development Needs Survey As described under the Citizen Participation chapter of this Plan, the Community Development Needs survey was one of several methods the City used to assess community opinions and concerns for the Consolidated Plan. The following explanation of the Needs Survey methodology is important to understanding the survey results utilized throughout the Needs Assessment chapter. A copy of the survey instrument is included in Appendix A of the Consolidated Plan, and a complete set of survey tabulations is included under separate cover and available for review in the City's Community and Economic Development Department. Survey questionnaires were distributed at the Consolidated Plan public hearing on September 15, 1994; at the four neighborhood workshops; and at the City Economic and Community Development booth at three community festivals. Seventy-three surveys were completed and returned to the Economic and Community Development Department by mid-November 1994. While the small number of surveys returned relative to the Bakersfield population does not make this a statistic, ally significant sample, the responses do provide meaningful input from the resident community on key community needs. City of Bakersfield Consolidated Plan 2000 II1-41A DRAFT January 1995 The Needs Survey is divided into six "needs categories": 1. Community Facilities Needs 2. Infrastructure Improvements 3. Community Service Needs 4. Accessibility Needs (Removal of Barriers to the Handicapped) 5. Economic Development Needs 6. Housing Needs These needs categories are further divided into specific topics, such as "senior citizen centers" (from the Public Facilities category), "street improvements" (from the Infrastructure category), and "residential rehabilitation" (from the Housing category). For each topic, the respondent was asked to indicate unmet needs which warrant expenditure of public funds by checking a "priority need level of: · High need · Medium need · Low need · No such need When the survey results were tabulated, a score of 1 to 4 was given to each priority need level, with "no such need~ = 1 and "high need" = 4. Then, an average response score was calculated for each topic. For example, the need for "Youth Centers" received an average response rating of 3.57, indicating a relatively high unmet need, compared with "Parking Facilities" which recieved an average response rating of 2.66. City of Bakersfield Consolidated Plan 2000 lll-41B DRAFT January 1995 TABLE NUMBER OF HOUSING UNITS WITH LBP OCCUPIED BY LOWER INCOME HOUSEHOLDS No. of Units Occupied Estimated No. of Units with by Lower Income LBP & Occupied by Households Lower Income Households Percent Extremely Moderate Units with Extremely Low Moderate Year Units .Low & Low ($1-80% LBP' & Low (51-80% Built (0-50% MFU (0-50% MFI) MFI) MF1) Owner-Occupied Units 1960-1979 1,068 2,257 62% + 10% 555 - 769 1,174 - 1,625 1940-1959 111 686 80% + 10% 78 - 100 480 - 617 Before 1940 93 450 90% + 10% 74 - 93 360 - 450 Total Units 1,272 3,393 707 - 962 2,014 - 2,692 Renter-Occupied Units 1960-1979 2,160 9,706 62% + 10% 1,123 - 1,555 5,047 - 6,988 1940-1959 394 817 80% + 10% 276 - 355 572 - 735 Before 1940 607 770 90% + 10% 486 - 607 616 - 770 Total Units 3,161 11,293 1,885 - 2,517 6,235 - 8,493 Sources: (a) CHAS Data Book, Table 9; (b) Table 3-3, page 3-9, Comprehensive and Workable Plan for the Abatement of Lead-Based Paint in Privately Owned Structures. Note: Housing varies greatly in amount of LBP. These percentages include all housing with some LBP somewhere, no matter how little. City of Bakersfield Consolidated Plan 2000 111-41 DRAFT January 1995 1. PUBLIC IMPROVEMENTS Summary of Findings * .Newly annexed areas into the City of Bakersfield frequently lack adequate roadway facilities. Residents of the newly annexed areas also need to be brought into the City's automated trash collection system. * The economically depressed southeast/south central/Baker Street areas are marked with deteriorated/substandard infrastruture. Trash removal is also identified by residents of these areas as a priority need. * Curbs and gutters are lacking on Lake Street and portions of 14 other streets. * Sewage Treatment Plant No.2, which serves a majority of the City's low and moderate income residents, is reaching its capacity. * Provision of adequate drainage is a problem throughout the City because of its flat topography. Expenditure of CDBG funds on public improvements such as upgrading or expanding the streets, drainage system, water system, or sewer system can only take place in income-eligible areas. The CDBG program defines income eligibility as any block group or census tract with 51 percent or more of the population earning incomes less than or equal to 80 percent of the Area Median Income. Figure 7 in this Plan illustrates the income-eligible low/mod areas in the City of Bakersfield. Based on the Community DeVelopment Needs Survey, the community ranked the importance of public improvement needs as follows: Average Public Improvements Survey Response 1. Street Improvements 3.13 2. Garbagefrrash Removal 3.12 3. Water System Improvements 2.95 4. Sewer Improvements 2.85 5. Flood Prevention and/or Drainage Improvements 2.71 The following discussions on public improvements needs are organized in order of priority as identified by the survey. City of Bakersfield Consolidated Plan 2000 III-42 DRAFT January 1995 a. Streets Improvements The City of Bakersfield Public Works Department is responsible for constructing and maintaining the local street system, including all sidewalks, curbs and gutters, and the local in-street storm drain facilities. The Department prepares long-range capital improvement plans to identify required improvements, estimated improvement costs, and potential funding sources. Overall the City's street system operates smoothly. Points of congestion are beginning to appear, however, as a result of two phenomena. The City is increasing in population and geographic area, thereby placing greater demand on the street system. Secondly, physical barriers such as the Kern River, canals, and railroad tracks, have disrupted the grid of arterial streets and the freeway system, leading to discontinuities. Also, certain streets in the City were built prior to the establishment of current County and City street standards. These substandard streets also contribute to congestion. Specifically, newly annexed areas into the City of Bakersfield frequently lack adequate roadway facilities to serve existing and future residents. It is the City's priority to provide street improvements in these areas. Also, the southeast/south central/Baker Street areas have been identified as economically depressed areas marked with deteriorated/substandard infrastructure. Some of the infrastructure improvements needed in these areas include streets/alleys resurfacing, sidewalk improvements, grade separation at Beale Avenue/Baker Street, street lighting, and landscaping improvements. A windshield survey conducted by City Engineers indicated curbs and gutters are lacking on Lake Street and portions of various streets in the City: 1) the area south of 23rd Street and west of Union Avenue; 2) the area east of Union Avenue to Gage Street; and 3) the area east of Gage Street to Williams Street. Curb cuts may also be needed at various locations on Baker Street between'East Truxlun Avenue and Highway 78 to make this area handicapped accessible for shoppers and residents. In FY 1994/95, CDBG funds will be used to finance curb and gutter efforts in newly annexed areas that are income-eligible under CDBG guidelines. Street Improvements in the Union Annexation No. 10 Area and Panama No. 10 are high priority tasks of the City's street improvement program. Construction of major facilities such as bridges is also a high priority in the City's $11.5 million street improvement program for FY 1994/95. In the coming fiscal year, the City plans to expend $6 million from development impact fees to construct two bridges over the Kern River and the Cross Valley Canal. City of Bakersfield Consolidated Plan 2000 m43 DRAFT January 1995 b. Garbage. Fl'rash Removal Solid waste collection services are provided within the City by the City Sanitation Division and contracted private haulers. A county franchise hauler handles solid waste collection in the unincorporated areas. All solid waste generated in the area is disposed of' in County-operated landfills. Respondents to the Consolidated Plan Community Development Needs Survey identified garbage and trash removal as a priority need. Specifically, a majority (67 percent) of the respondents from the Southeast subarea labeled garbage/trash removal as a "high" need. Furthermore, trash collection services are not mandatory in the County unincorporated areas. As Bakersfield annexes unincorporated areas into the City, residents in these areas need to be brought into the City's automated trash collection program. For FY 1994/95, the City has budgeted $15.9 million in Refuse Service funds to provide an efficient system for the management of solid waste, including costs for Waste Diversion Services to address State mandated recycling goals, conversion to automated vehicles to keep up with future growth, and the automation of residential services. c. Water SYstem Improvements A major portion of the City of Bakerfield is served by California Water Service Company, a privately held public utility; its water supply is obtained principally from wells and supplemented by State Water Project surface water supply treated by Improvement District No. 4 of the Kern County Water Agency. The remaining portion of the City is served by the City's Ashe Water Company, with supplies obtained fi'om wells. California Water Service Company is regulated by the California Public Utility Commission. Plans of maintenance and improvement of the Company's infrastructure/facilities are submitted to the Commission every three years for approval. The Company prioritizes its maintenance program based on the normal life span of the facilities. Overall, there are no deficiencies in the City's water system. Even though the Community Development Needs Survey identified only a "low" need for water system improvements, major water system improvements are anticipated to be needed for"the Union Avenue No. 10 Annexation Area in order to bring fire hydrant flows up to City standards. For FY 1994/95, the City plans to expend $4.4 million in Domestic Water Funds to supply and conserve water for its residents, and to provide adequate water supply and pressures for fire protection services. d. Sewer Improvements The City is served by two major wastewater treatment facilities: the City of Bakersfleld's Treatment Plants No. 2 and No. 3. Treatment Plant No. 2 has the capacity to handle 18 million gallons of sewage per day (mgd) and the plant is currently operating at 17.9 mgd. A majority of the City's low and moderate income households' are served by Treatment Plant No. 2. The City has recently completed a pre-application to the County Economic City of Bakersfield Consolidated Plan 2000 IH.44 DRAFT January 199.5 Development Administration (EDA) for funding to design and construct improvements needed to upgrade and expand the City's Treatment Plant No. 2. These improvements will bring Plant No. 2 into compliance with the State Regional Board Biochemical Oxygen Demand standards and create capacity for future commercial, manufacturing, and industrial demands. The City is applying to the County EDA for $1.4 million in EDA funds, with another $1.4 million in matching funds to come from the City and private sources. The County EDA will review all pre-applications in January 1995 and projects considered economically viable will be invited to submit a complete application. The City of BakerSfield also plans to construct a new treatment plant (No. 4) to serve the City's expanding boundaries and increasing population. The City also has a problem with old concrete sewer lines, many of which are intercept lines over 50 years old and require replacement. The City has budgeted a total of $4.3 million for operation and maintenance of the City's sewage treatment facilities for FY 1994/95. e. Flood Prevention and/or Drainage Improvements Provision of adequate drainage is a problem throughout the City of Bakersfield due to the fiat topography of much of the area and the limited number of available storm drainage disposal points. While CDBG funds can be expended in the City's low and moderate income neighborhoods to improve the drainage facilities, the lack of available funding is a particular problem in the non-low and moderate income areas. Specifically, the Sacramento area is in need of sumps, additional trunk lines, storm water pump stations, and terminal basins, but no funding is available to improve the drainage issues in this area. Currently, the City is using the Koebig & Koebig drainage study prepared in the 1960s to guide the City's drainage improvement efforts. There is a need to prepare an updated master drainage study for the City and areas with potential for annexation. City of Bakersfield Consolidated Plan 2000 111-45 DRAFT January 1995 2. PUBLIC FACILITIES Summary of Findings * Both the Consolidated Plan Community Development Needs Survey and the Kern County Social Service Needs Assessment identified the need for youth centers as a top priority. Programs and activities are particularly needed for at- risk youth. * Child care centers, particularly for infant and toddler care, are much needed in the City. The affordability of child care services is also a critical issue. * While there are a number of health care facilities in the City, the affordability and accessibility of these facilties are issues among the City's lower income residents. * There is a need for community park centers. There is currently only one City- owned community center in the City, while the national standard is one center per 25,000 population. As part of last year's CHAS, the City of Bakersfield administered a survey to social service providers in the metropolitan area to identify the needs and availability of supportive housing, services, and facilities for persons with special needs. (Some of these social service providers are located in unincorporated County areas but within metropolitan Bakersfield and serve the City's population). A copy of the survey questionnaire was included in Appendix F of the City's FY 1994-98 CHAS. In addition to last ye~'s efforts, the City also conducted a Community Development Needs Survey specifically for purposes of the Consolidated Plan. The survey results indicated the following ranking of priority public facility needs by the community: City of Bakersfield Consolidated Plan 2000 III-46 DRAFT January 1995 Average Public Facilities Survey Response 1. Youth Centers 3.57 2. Child Care Centers: Preschool, Daycare 3.33 3. Centers for the Disabled 3.27 4. Health Care Facilities, Clinics, Dental Facilities 3.19 5. Other Neighborhood Facilities/ Community Centers 3.09 6. Parks and Recreation Facilities 3.00 7. Senior Citizen Centers 3.00 8. Parking Facilities 2.66 The following discussion of public facilities needs are generally organized in order of priority as identified by this survey. Results from last year's CHAS survey and the Kern County Social Services Needs Assessment Survey by United Way in 1994 were also used to substantiate this needs assessment. Figure 8: Services andFacdities by Type at the end of this section illustrates the type of major facilities and services available in the Cityl Review of this figure shows that the majority of facilities and services are clustered along Chester Avenue and Truxtun Avenue in the downtown area. a. Youth Centers According to the 1990 Census, over 30 percent of the Kern County population was comprised of children and youth between the ages 0 and 17, and about one-third of this population reside in Bakersfield. It is projected by the Kern County Children's Network that the County's children and youth population will double by the year 2010. The Community Development Needs Survey identified the need for youth centers as the highest priority with regard to public facility needs. This result corresponds with the findings of the United Way survey. There are several major children/youth centers and programs in the City, including the following: · Big Brothers · Boys'& Gifts' Club · Boy Scouts of America, South Sierra Council' · Camp Fire Council of Kern County · Community Action Against Drug/Alcohol Abuse - "Just Say No" Campaign · 4H Clubs of Kern County · Girl Scouts - Joshua Tree Council · Kern Child Abuse Prevention and Haven Counseling Center City of Bakersfield Consolidated Plan 2000 III-47 DRAFT January 1995 · Probation Auxiliary of Kern County · Starlight Foundation · Teen Challenge · Youth for Christ · IMPACT Community Youth Center The City's Parks and Recreation Department recognizes the importance of providing recreation facilities and programs for youth, particularly the at-risk youth. According to a report prepared by the Kern County Children's Network, the Kern County Probation Department Juvenile Investigation Unit reported 11,318 offenses committed by minors in 1992-93. The top two offense areas were welfare/institution violations and property crimes. Additional crimes committed by minors during the same period included petty theft, burglary, vandalism, peace distribution, grand thet~ auto, and violation of probation. As pan of a consOrtium with four other Parks and Recreation Districts in the County, the Bakersfield Parks and Recreation Department is in the process of applying for the Juvenile Crime Prevention Demonstration Grants funded by the State Department of Social Services. The other four Parks and Recreation Districts are: North Bakerfield, Bear Mountain, Westside, and Sha~er. If funded, Bakersfield will. utilize the grants to establish a family resource center at the Martin Luther King ,Ir. Conu'nunity Center. At~er school programming will be provided first at the center and then expanded to the school district. b. Child Care Centers The Survey identified the need for child care centers as the second highest priority public facility need. The survey by United Way also identified affordable child care as a relatively high priority need. According to the Community Connection for Child Care, a program operated by the Kern County Superintendent of Schools, there are approximately 73,000 children with working parents in Kern County who need child care services. As of March 1994, there are only 13,309 spaces in licensed centers and homes, falling short of the demand significantly. According to Community Connection, there are: Licensed Family Day Care Homes Total active licensed homes 531 Homes with weekend care 50 Homes with night care 95 Homes with after-school care 314 Total spaces available in family day care 3,678 Licensed Child Care Centers City of Bakecafield Consolidated Plan 2000 III-48 DRAFT January 1995 Total active licensed centers 183 Centers serving infants 23 Centers serving preschoolers 160 Centers offering full-day care 101 Centers offering part-day care 179 Centers offering after-school care 61 Total spaces available in child care centers 9,631 Total private center spaces 6,072 Total full-time public subsidized spaces 2,000 Total part-time public subsidized spaces 1,559 Specifically, according to Community Connection, there are several areas that suffer critical gaps in services. Almost 45 percent of child care requests at Community Connection in 1992 were for infant care or the under-two age group. There is not sufficient infant care available to meet the growing need. In addition, while some areas of Kern County offer adequate choices for school-age children, the programs are full and have long waiting lists. In other areas of Kern County, no before- or after-school programs are available. Also, children with speech and language delays, mental retardation, autism, physical handicaps, and learning, emotional, and behavioral programs need special attention. Only two centers in Kern County serve preschool children with special needs: the Wesley Center and southeast Bakerfield's Richardson Center. Another one of the most critical child care shortages is for rotating shifts, week- ends, and non-traditional work hours. Only 15 percent of Kern County's licensed child care providers offer care after 7:30 p.m. Only nine percent provide child care on Saturdays and Sundays. The affordability of child care services is also an issue. Based on a 1993 survey by Community Connection, average costs for child care tuition in Kern County are as follows: · Infant care $390/month · Preschool $280/month · School age $160/month The survey also showed that child care expenses amount to between 11 and 19 percent of parents' incomes. While some child care services can be publicly subsidized, them is a critical shortage of funds to meet the demand. In Kern County, them is a waiting list of over 1,000 eligible families seeking subsidized child care. c. Centers for the Disabled According to the 1990 Census, an estimated 17,300 Bakersfield residents had work, mobility and/or self-cam limitations in 1990. There are several centers for the disabled in operation in Bakersfield, including the following: C#y of Balcersfield Consolidated Plan 2000 III-49 DRAFI' January 1995 · Bakersfield Association for Retarded Citizens · Braille Center of Kern County · Downs Syndrome Pari~nts Group of Kern · Independent Living Center of Kern County · National Association for People with Disabilities · National Blind Federation, Kern County Chapter · Society for Crippled Children & Adults of Kern County As shown in Figure 8: Services and Facilities by Type, these centers are generally more spreadout in the City than other types of services and facilities. Section III.A.5 discusses some of the housing and service gaps which exist in the City. In addition, according to the United Way survey, transportation for the disabled elderly and recreation and vocational rehabilitation for the disabled were identified by Bakersfield residents as moderate needs. d. Health Care Facilities, Clinics, Dental Facilities In the metropolitan Bakersfield area, there are several major hospitals, including: Mercy Healthcare, San Joaquin, Kern Medical, Memorial, Mercy Southwest, and Good Samaritan. In addition, there is a Veterans Clinic, five urgent care facilities, nine convalescent hospitals, one psychiatric hospital, three physical rehabilitation centers, and three clinics. ' Respondents to the Consolidated Plan Community Development Needs Survey identified the need for health care facilities as a high priority among other public facilities. While there are a variety of health care centers, clinics, and hospitals in the City, the accessibility and affordability of these facilities may be the issues. As shown in Figure 8: Services and Facilities by Type, most health care facilities are clustered along Chester Avenue and Truxtun Avenue. According to the United Way survey, AIDS education and affordable medical/dental care were ranked second and third on the priority list, respectively, by respondents frOm the City of Bakersfield. e. Parks and Recreation Facilities The Bakersfield General Plan identified a shortage of local parks in the metropolitan Bakersfield area. The shortage is particularly acute with respect to community parks. The General Plan also identified a shortage for community park centers. The City and its planning area combined, contain only two community recreation centers: Martin Luther King Jr. Community Center (City-operated) and Riverview Community Center (County- operated), although there are some smaller meeting room facilities and two regional parks in the metropolitan area. The two regional parks are the Kern River State Park and Metro Recreation Center. As shown in Figure 9: Schools and Parks, there are four major city parks in the City, These are: · Silver Creek Park (15 acres) · Beach Park (27.6 acres) City of Baker,~field Consolidated Plan 2000 III-50 DRAFT January 1995 · Martin Luther King Jr. park (12.9 acres) · Patriots Parks (20 acres) Acreage of local parkland in the City of Bakersfield has continued to grow between 1985 and 1994 primarily as a result of requiring developers to .,;et aside land and pay development fees for parks in residential areas. However, due to the lack of funding, the City experiences a significant shortage of community par}: centers. There is only one City-owned community park center (Martin Luther King .Ir. Community Center) in Bakersfield, which has a 1995 population of approximately 200,000, while the national standard is one community park center per 25,000 population. For FY 1994-95, the City has budgeted approximately $9 million in general fund for park maintenance and operation, recreation programming, convention center operation, and community promotion. f. Senior Centers A variety of services for seniors are provided through the seven senior centers in the City of Bakersfield: · Alzheimer's Day Care Center · Bakersfield Senior Center · Bakersfield Community House · East Bakersfield Senior Center · Friendship House · East Niles Senior Center · Rasmussen Senior Center Rassmussen is the largest senior center serving Bakersfield residents. It provides a variety of' services including recreation activities, health services, in-home services, and education. With the exception of the Alzheimer's Day Care Center, congregate meals are available for any persons 60 years and over at all of the senior centers in Bakersfield. Home-delivered meals are also available from the East Bal~ersfield Senior Center and North Bakersfield Recreation and Park District. The Bakersfield Senior Center and the North Bakersfield Recreation and Park District also provide transportation services to the elderly. . Neither the Consolidated Plan survey nor the United Way survey identified senior centers as a high priority community facilities need. City of BakersfieM Consolidated Plan 2000 ffl-51 DRAFl' January 1995 3. PUBLIC SERVICES Summary of Findings * While the overall crime rate in the City declined slightly, violent and property crimes increased significantly between 1993 and 1994. The Bakersfield Police Department identified the southeast/south central portions of the City as areas of high crime rates. Crime awareness and prevention programs are much needed. * Youth services and recreational activities are needed, particularly for at-risk youth. Affordability of these services is also an issue. * Current unemployment rate in the City of Bakersfield is 13.8%. Employment training services are needed. * While a variety of community and public services are available in the City of Bakersfield, accessibility and aff'ordability are two critical issues, particularly for the City's elderly and disabled population. Transportation services for the elderly and disabled have been identified by social Service agencies and residents as important needs. Based on the Community Development Needs Survey, the survey respondents rated the importance of public services as follows: Average Public Services Survey Response 1. Crime Awareness 3.49 2. Youth Services 3.49 3. Employment Training 3.46 4. Substance Abuse Services 3.32 5. Child Care Services 3.29 6. Health Services 3.26 7. Transportation Services 3.18 8. Handicapped Services 3.07 9. Fair Housing/Counseling 3.03 10. Tenant/Landlord Counseling 3.01 11. Senior Citizen Services 2.97 a. Crime Awareness Both the Consolidated Plan survey and United Way survey identified crime awareness and prevention as a top priority need in Bakersfield. From the Bakersfield Police Department at 1601 Truxtun Ave., fifteen patrol districts City of Bakersfield Consolidated Plan 2000 III-52 DRAFT January 1995 operate and cover an estimated 84-square mile area for 1995. Police services are currently not divided into precincts or substations except for the Lakeview Ave. area substation which is anticipated to be in operation by mid-1995. The 16 patrol districts are manned on a 24-hour basis, with a 1994 average response time of under 6 minutes for emergency calls (Priority I); under 15 minutes for Priority II calls (non- emergency - as soon as possible), and under 45 minutes for Priority III calls (non-emergency - according to available manpower in the field). The 1994 authorized police manpower allocation of 253 officers provides a ratio of 1.13 officers per 1000 residents. It is estimated that an additional 39 officers over the present authorized complement would be required to bring the ratio up to a 1.3 level (standard ratio of police officers to population for cities of comparable size). Based on statistics reported by the Bakersfield Police, while overall crime rate in 1994 in the City declined slightly by 1.3 percent, some violent and property crimes increased dramatically. Between 1993 and 1994, robbery in Bakersfield decreased by 7 percent and burglary decreased by 13 percent, while vehicle theft increased by 26 percent, rapes increased by 24 percent, and homicides increased by 38 percent. The Bakersfield Police Department identified the southeast/south central portions of Bakersfield as areas of high crime rates. Particularly, the Lakeview community has been identified as an economically depressed area stigmatized by violent crime, alcohol, and drug abuse and drug sales. The City is sponsoring a new policing program in Lakeview. using CDBG funds. The new Community-Oriented Policing and Problem-Solving (COPPS) program assigned two officers in the Lakeview community to perform door-to-door visits, set up neighborhood watch programs, keep track of homes and businesses where a high incidence of 911 calls were received, and organize other community activities such' as meetings with residents and basketball games with young men ages 13 to 21. Since inception of the COPPS program, community responses to the program have been positive and perception of safety in the Lakeview community has improved. b. Youth Services A list of youth centers and programs has been included in Section III.B.2 - Community Facilities. The centers and programs, provide a variety of youth services, including education, recreation, and counseling. While there are many privately-run facilities in Bakersfield providing services and activities for children and youth, these services and activities are not typically affordable to low income families. According to the City's Community Services Department, there are additional needs for summer and after school recreation programs, youth sports, family, and health-related programs. The Housing Authority of the County of Kern (HACK) is proposing a Youth Sports Program (YSP) which will involve recreational youth sports activities at existing recreational facilities, education and vocational training, and leadership and life skills training. This program is designed to serve over 940 youth in the County's public housing projects, City of Bakersfield Consolidated Plan 2000 III-53 DRAFT January 1995 including 279 youth in the Oro Vista/Adelante Vista complex in Bakersfield. These two projects are located in the Lakeview area, the highest crime area in the City. HACK, in conjunction with the Police Athlete League (PAL) and the City of Bakersfield Recreation Department, proposes to provide a program for youth in the Oro VistaIAdelante Vista complex to include structured activities designed to increase self-confidence, self-esteem, desire to learn, culture heritage, awareness of the world, goal-setting, and communication skills. c. Employment Training The Community Development Needs Survey identified employment training services as a relatively high unmet need. As reported by the Census, unemployment rate in Bakersfield was 7.1 percent in 1989. The Bureau of Labor Statistics (BLS) reported a 13.8 percent unemployment rate for Bakersfield as of July 1994, representing a significant increase since 1989. (Unlike the Census, the BLS's estimated unemployment rates exclude those who are not actively seeking work and those who do not seek unemployment benefits. Therefore, the BLS estimates may represent an underestimation of the unemployment picture in relation to the definition of unemployment used by the Census.) For a detailed analysis of employment needs and existing job training services available in the City, refer to Section III.B.5 below. d. Substance Abuse Services Alcohol/other drug abuse (AODA) is defined as excessive and impairing use of alcohol Or other drugs, including addiction. According to the CH_AS, there are an estimated 24,500 to 28,000 men and 10,500 women in Bakersfield may be alcohol abusers. Numerous agencies in Bakersfield provide services to alcohol and drug abusers. Services provided by these agencies have been discussed in Section III.A. 1. The primary critical need in Bakersfield to help substance abusers is a public inebriate reception center and a model detoxification program. e. Child Care Services Community Connections for Child Care is the major child care coordinator in metropolitan Bakersfield. Availability and affordability, the tw9 most important issues related to child care services, have been previously discussed in Section III.B.2. f. Health Services As discussed in Section III.B.2, there are a variety of health and medical services available to the Bakersfield residents. The issue with health services is related more to affordability than to availability. The United Way survey indicated that affordable medical and dental care is the third highest priority need in Bakersfield, at%r teen pregnancy prevention and AIDS education. All of the top three priority needs are health-related issues. g. Transportation Services City of BakersfieM Consolidated Plan 2000 II1-54 DRAFT January 1995 Transportation is another public service need. Transportation needs affect lower income residents, the elderly, the disabled, and youth most severely. Public transportation in Bakersfield includes local buses, intercity buses, AMTRAK, and paratransit services. The largest transit system in Bakersfield is the Golden Empire Transit (GET), which is the local bus operator. GET operates fourteen routes throughout the metropolitan area and carries 9,000 passengers per day. Intercity bus operators include Greyhound, Trailways, Orange Belt Stages, Foster's Transit, Airport Bus of Bakersfield, and Kern County. Kern County provides services between Bakersfield and rural communities, such as Lamont, and the Kern River Valley, while the private carriers serve other major cities. AMTRAK provides rail service to and from Bakersfield and the Central Valley cities to the north. The AMTRAK station is located at 16th and F Streets. Paratransit providers include the taxi system and various social service agencies providing specialized transportation to their clients. For example, the Bakersfield Senior Center and the Noah Bakersfield Recreation and Park District provide transportation services for the elderly. According to the Bakersfield General Plan, transit issues in Bakersfield include: · Buses are being run on local residential streets; · Buses find it difficult to serve the new closed-block design subdivisions; · New developments are lacking in design to accommodate bus stops; and · Establishment of an intermodal transportation terminal downtown. Affordability of transit services and their ability to accommodate disabled persons are also relevant issues relating to the transportation needs of the City's lower income residents. h. ltandicapped Services The need for supportive housing is one of the most important issues related to disabled persons; this issue has been discussed in Section III.A. 1 of this Consolidated Plan. A detailed inventory of supportive housing and services available to disabled persons in Bakersfield has also been included in the City's CHAS. According to the United Way survey, transportation services for the elderly disabled, and recreation and vocational training for the disabled are greatly needed. A number of agencies provide services to the disabled in Bakersfield. Major publicly- funded outpatient and inpatient service providers for the mentally ill include: Kern County Department of Mental Health Services, both Adult and Children's Services; Kern Linkage Program/Desert Counseling Clinic, for homeless and dually diagnosed adults; Henrietta Weill Child Guidance Clinic; Kern Medical Center, Emergency Room and Ward 3-B, for outpatient crisis intervention and inpatient treatment, respectively; and Memorial Center for Behavioral Health. The Kern County Mental Health Association provides referral services for disabled persons. City of Bakersfield Consolidated Plan 2000 111-55 DRAb'T January 1995 The Association typically helps individuals find medical care, food, and shelter. '~'-- The Ruggenberg Career Center provides extensive vocational training for disabled persons and coordinates with the Department of Rehabilitation to provide these services. Bakersfield ARC (BARC) specializes in helping the developmentally disabled. The agency provides a variety of services, including an independent living program, marriage and family counseling for families of developmentally disabled adults, transportation to surrounding areas, employment programs, nutrition classes, literacy classes, recreation and entertainment opportunities, and a community outreach program which provides supportive life training to individuals residing independently in the community. Key to the integration of mentally disabled persons into society are "outpatient services." The Utilization Review and Discharge Planning Department arranges for continued care in convalescent homes or other living situations. The agency also helps arrange rehabilitation for persons leaving the hospital. The Social Services arm of the Kern Medical Center helps arrange for in-home nurse care and house cleaning services. The Kern Department of Mental Health Services (Adult Services Department) helps persons that are diagnosed as mentally ill find housing in either a board and care (supervised living arrangement), room and board facility, or Section 8 rental assistance. (This includes anyone discharged l~om a mental health institution). The homeless mentally ill persons are referred to Kern Linkage. i. Fair Housing Counseling Since August 1994, the City of Bakersfield has begun administering its own Fair Housing Program which provides education, a hotline service, mediation, and coordination. Statistics kept by the Kern County Fair Housing Division indicate that the County received over 2,900 calls for fair housing services between July 1993 and July 1994 from Bakersfield residents. Of these calls, five percent were related to discrimination services. j. Tenant/Landlord Counseling The Bakersfield Fair Housing Program provides referral services regarding tenant/landlord disputes. According to statistics kept by the Kern County Fair Housing Division, 65 percent of the 2,900 calls for fair housing services between 1993 and 1994 were related tenant/landlord disputes. City of Bakersfield Consolidated Plan 2000 111-56 DRAFF January 1995 It. Senior Citizen Services There are seven senior centers providing a variety of services for the elderly in Bakersfield: · Alzheimer's Day Care Center · Bakersfield Senior Center · Bakersfield Community House · East Bakersfield Senior Center · Friendship House · East Niles Senior Center · Rasmussen Senior Center A number of homemaker and home health care services provide either medical or personal care to elderly persons in Bakersfield. Homemaker services refer to agencies who provide occasional cleaning and personal care to the elderly and home health care provides medical assistance. The majority of these services are provided through the private sector. However, the Kern County Department of Human Services does provide limited homemaker services to the elderly and the County Health Department will make some basic medical calls to elderly households. The Commission on Aging is the primary clearinghouse for information and services about the elderly in Bakersfield. The Commission is a county-wide agency with government funding and serves as an advocate for assisting the needs of the elderly. City of Bakersfield Consolidated Plan 2000 III-57 DRAFT January 1995 4. ACCESSIBILITY NEEDS Summary of Findings * In order to comply with the requirements ofthe Americans with Disabilities Act (ADA), a number of improvements are needed in the City's public buildings, parks and recreation facilities, and Convention Center. Needed improvements include lowered counters, handicap accessible restrooms and drinking fountains, signage, and handicap ramps, etc.. * Curb cuts are needed to make certain areas'in the City handicapped-accessible. Persons who are physically disabled, including blindness, and persons who suffer from brain impairments due to diseases, accidents, or resulting from birth, often have accessibility needs. Respondents of the Community Development Needs Survey ranked the importance of accessibility needs as follows: Average · Accessibility Needs Survey Response 1. Health Facilities 3.11 2.. Public Buildings 3.09 3. Park and Recreation Facilities 3.00 The Americans with Disabilities Act (ADA), which went into effect January, 1992, provides comprehensive civil rights protection to persons with disabilities in the areas of public accommodation, employment, State and local government services, and telecommunications. The design, implementation, and maintenance of all park facilities must comply with ADA. Persons of all abilities must have the opportunity to participate in recreational activities. The City of Bakersfield has developed a transition plan which identifies the renovations needed to bring public buildings, parks and recreation facilities, and the Convention Center up. to compliance with the ADA. Needed improvements are listed in Table III-24. In addition, based on a windshield survey by the Public Works Department, curb cuts are needed to make certain areas in the City handicapped-accessible. For example, curb cuts are needed at various locations on Baker Street between East Truxtun Avenue and Highway 78 to make this area handicapped-accessible for area residents and shoppers. City of Bakersfield Consolidated Plan 2000 I11-58 DRAFl' January 1995 TABLE F1'I-24 ADA TRANSITION PLAN CITY OF BAKERSFIELD Buildings Improvements Needed Public Buildings · Automatic doors; · Ramps with gentle slopes; · Elevator accesses; · Lowered counters and notice boards; and · Handicapped restrooms; Parks and Recreation · Drinking fountains; Facilities · Repave telephone areas at Beale Park and Jastro Park; and · Lowered telephones at Corporation Yard. · Convention Center · Interior and exterior signage; · Increase dining table heights; · Lavatory control handles; · Door hardware; and · Platform lif~ for stage and head table access Miscellaneous · Stairway handrails; · Drinking fountains; · Signage (both exterior and interior); · Braille signs; and · Interior door hardware Source: City of Bakersfield (FY 93-94). City of BakersfieM Consolidated Plan 2000 m-59 DRAFT January 1995 ECONOMIC DEVELOPMENT ACTIVITIES Summary of Findings * Unemployment in the City of Bakersfield increased from 7.1 percent as reported by the 1990 Census to 13.8% as reported by the Bureau of Labor Statistics. * The 1990 Census determined poverty status for 171,835 Bakersfield residents, 15 percent of these were identified as living below the poverty level. * Approximately 39% of the City female-headed families were also determined to be living below the poverty level. * Employment training services (under public services) and job' creation activities have been ranked high in the Community Development Needs Survey by the respondents. Based on the Community Development Needs Survey, the community ranked the importance of economic development needs as follows: Average Economic Development Activities Survey Response 1. Job Creation 3.70 2. Business Support Services 3.20 3. Neighborhood-Based Small Business Uses Laundromat, Grocery Market, etc.) 3.14 4. Commercial Rehabilitation 3.08 a. Needs Assessment Since the late 1980s, the Country and specifically California have suffered an economic recession that is slow in recovery. Natural disasters, civil unrests, defense budget cuts, military base closures, and loss of aerospace and other high-wage industries all contributed to a stagnant economic climate and growing unemployment in California. According to the 1990 Census, which reported unemployment statistics for 1989, the State unemployment rate was 6.6 percent. The Bureau of Labor Statistics recorded that the State unemployment rate had increased to 9.3 percent in July 1994. Bakerfield also experienced a significant increase in unemployment during the past five years. According to the Census, the unemployment rate in Bakersfield was 7.1 percent in 1989. The Bureau of Labor Statistics reported an unemployment rate of 13.8 percent as of July 1994. While during the 1980s, the City had experienced an expansion in its employment base, a substantial portion of the new jobs were in the service and retail sectors, City of Bakersfield Consolidated Plan 2000 m-60 DRAFT January 1995 providing relatively low wages. According to the Census, over 7,500 households in Bakersfield received public assistance in 1989, with an average public assistance income of $5,485. The 1990 Census reported the number of persons living below the poverty level. Poverty status was determined for all persons except institutionalized persons, persons in military group quarters and in college dormitories, and unrelated individuals under 15 years old. The average 1989 poverty threshold for a family of four persons was an annual household income of $12,674. The 1990 Census determined poverty status for 171,835 Bakerfield residents. Of these individuals, a total of 25,782 (or 15 percent) were identified as living below poverty. Poverty status was determined for 14,881 persons aged 65 or over; 1,416 (or 9.5 percent) of these persons lived below the poverty level. Of the City's female-headed families, 3,255 (38.5 percent) were determined to be living below the poverty level; almost all of these families had children under 18 years of age. More recently, KeTM County is gradually emerging 'fi.om the recession. Economic projections indicate that the County's low land and housing costs will attract businesses to locate back-office operations in the County, thereby contributing to an estimated two percent increase in non-farm employment during 1995. Economists project that the overall improvement in the County economy and additional jobs will contribute to an average increase in personal income of over six percent in 1995 and 1996. To sustain and further encourage this economic recovery, the City needs to address economic development issues at both the micro and macro levels. On the micro level, job training and other counseling services are required to better match the job skills of individuals with the demands of the changing labor market. On the macro level, economic development and business retention programs are necessary to stimulate economic recovery in metropolitan Bakersfield. Also, the effort to provide affordable housing opportunities should be furthered. b. Existing Job Training Services i. Employers' Training Resources (El) The Employers' Training Resources (ETR) is a consortium consisting of Kern, Inyo, and Mono counties which administers the Job Training Partnership Act (JTPA) program for the counties and coordinates with the Employment Development Department and individual employers to provide no-cost job training services. ETR offers a variety of programs including the following: Job Search Assistance: This program provides no-cost job search assistance to individuals who have already completed one of ETR's training programs. This two-week program teaches job search techniques such as: identify job openings; organize the job search; complete job applications; prepare an effective resume; make a good first impression; and interview with an employer. ETR works closely with local employers to maintain an up-to- date list of job openings. City of Bakersfield Consolidated Plan 2000 ltl-61 DRAFT January 1995 On-the-Job Training Program: This program reimburses the employer up to 50 percent of the trainee's wages during the training period. Depending upon the complexity of the job, the training period can last from two weeks to five months. The individual is responsible for looking for an employer who is willing to participate in the program. Dislocated Worker Program: This program offers job search assistance, on-the-job training, and retraining services for workers of dislocated industries and businesses. Trades and Industrial Skills: This program provides training in specific areas such as: welding; automotive maintenance and repair; farm tractor mechanics; and well servicing. Work Experience Program: This program matches program participants with temporary employment in public and nonprofit agencies. At the end of the program, job Search assistance is also available to, help the participants locate permanent employment. Clerical/Office Worker Program: This program offers training in clerical/office skills: payroll and accounting; medical assistance; clerical; computer/word processing; typing; medical office worker; and bookkeeping. Older Worker Program: This program offers skill training in'a wide variety of career areas for older adults (55 years of age or over). Individuals may also be eligible to participate in the On-the-Job Training, Work Experience, and Job Search Assistance programs. Migrant and Seasonal Farmworkers: An individual is eligible to participate in this program if over half of his/her income was earned a migrant or seasonal farmworker during the past 24 months. This program offers training and services designed to help the participants find year-round employment. ii. Education Institutes Bakersfield College: The Bakersfield College serves over 12,000 students and offers more than 100 career and transfer-credit programs, vocational certificate programs, and community service classes. ill School-to-Career Task Force The federal School-to-Work Opportunities Act of 1994 was signed into law on May 4, 1994. It is an ambitious law which places major responsibility for developing coherent systems of school-to-career transition on state government. In order to develop a system, California applied for and received a development grant in early 1994. The Governor's School-to- Career Task Force was formed to develop a preliminary plan. The Preliminary School-to- Career State Plan recommends that the initial focus in building an effective school-to-career system in California be on improving education, grades K-12, and improving schools' connections with higher education and industry. The Plan calls for strengthening career guidance in the lower grades and developing career pathways leading to career or program majors for all students. The Plan includes recommendations in the following areas: City of Bakersfield Consolidated Plan 2000 Irl-62 DRAFT January 1995 · Career pathways, standards, and certifications; · Local partnership development and demonstrations; · Role of business and labor; · Accountability and state relations; · ' Labor market information; and · Collaborative administration and implementation. The Task Force recommends that the School-to-Career system be implemented in two phases. Phase I would cover the five-year period of anticipated federal support. Federal funds would be Used to continue state planning activities, to draw together resources and existing efforts relevant to School-to-Career, to formulate a common policy framework under which the state system would operate, and to facilitate the development of local partnerships, including demonstration sites. Phase II would result in the full-scale implementation of the California School-to-Career system in the years to follow. c. Existing Economic Development Activities i. Bakersfield Central District Development Agency (CDDA) The Downtown Bakersfield Redevelopment Project Area was originally adopted in 1972, and has since been expanded several times to encompass a total of 73 square blocks in the City's central business district and bounded generally within 23rd Street on the north, "H" Street to the west, 16th Street to the south, and "Q" Street to the east. The Project Area is characterized by economic dislocation, deterioration, and disuse, resulting in depreciated land values, impaired investments, and economic maladjustment. Given the economic disinvestment, the entire Project Area qualifies as low and moderate income area under HUD's established standard (see Figure 7: Low and Moderate Income Area). In September 1994, the Bakerfield Central District Development Agency (CDDA) conducted a market potential study of the Project Area to determine potential future demand for retail and office space in Downtown Bakersfield, and to recommend specific actions to promote and attract development to the Project Area. The study concludes that there is a significant opportunity to establish Downtown as an area for entertainment and other evening activities. Currently, there are two major theaters located in the Downtown area - the Fox Theater and Niles Theater. The Fox Theater in Downtown has recently been proposed for renovation, which when completed, will provide a facility for live performances. The Niles Theater could serve as the initial "anchor" for the recommended entertainment theme while the Fox Theater is being renovated. The study further recommends that attraction of a multi-theater cinema to the Project Area be a high-priority objective of the overall redevelopment implementation strategy. In November 1994, the CDDA adopted a five-year Implementation Plan for the Downtown Bakersfield Redevelopment Project Area. The plan contains the following five-year economic revitalization goals for the Project Area: · Preservation and Enhancement of Commercial Areas within the Project Area. City of Bakersfield Consolidated Plan 2000 Ili-63 DRAFT January 1995 This goal will be achieved through the regulation of land uses, the establishment of development standards, and the rehabilitation and improvement of obsolete, deteriorated, or inappropriate buildings. · Economic Revitalization oft he Project Area. This goal will be achieved through the retention and expansion of existing businesses and the encouragement of new businesses in and around the Project Area. · Removal of Economic Impediments to LardAssembly and In-Fill Development in Areas Which Are Not Properly Subdivided for Development. This goal will be achieved through the consolidation of existing parcels to induce or expand centralized commercial development. To achieve these goals, the Central District Development Agency proposes to undertake the following economic revitalization strategies: · Provide Incentives to Attract a Multi-Theater Cinema and Other Entertainment Facilities Such as Restaurants, Bars, and a Variety of Adult and Children's Activities. Typical activities may include: - The acquisition, assembly, marketing, and resale of property to support area redevelopment activities. - Facilitation of adaptive reuse of existing vacant space. - Provision of financial incentives to encourage the development of entertainment uses. · Promote the Economic Revitalization of the Project Area. Typical activities may include: - Facilitate the distribution of informational materials marketing current retail and entertainment facilities. - Formulate newspaper advertisements highlighting goods and services available in the Downtown area. - Develop radio advertisements to enlarge the customer base for the Downtown area. - Coordinate special events to increase the exposure of the Downtown to a wider market area. - Encourage window displays by downtown businesses to promote goods and services. · Provide Improved Community Services. Typical activities may include: - Explore the feasibility of a trolley to service the Downtown area to facilitate increased customer traffic for existing and proposed retail/entertainment uses. identify empty parcels and vacant buildings which could be used as future City of Bakersfield Consolidated Plan 2000 1II-64 DRAfT January 1995 parking sites within walking distance of current and proposed concentrations of commercial activities. · Preservation and Enhancement of the Streetscape within Downtown Commercial Areas. Typical activities may include: Line the sidewalks with medium-sized tress. Add color and/or texture to street intersections with colored concrete or brick pavers. - Facilitate the construction of directory kiosks to inform pedestrians of retail/commercial facilities. ii~ Metropolitan Bakersfield Incentive Area The Incentive Area program is offered by the State of California to provide benefits to businesses located in or locating to a designated area of southeast metropolitan Bakersfield. To be eligible for benefit, a business must be certified by the State. There are two major tax benefits to qualifying businesses: · sales/use tax credit for the purchase of manufacturing or processing machinery; and · hiring tax credit. The hiring tax credit is the most significant benefit of the Incentive Area program. When a certified business hires eligible workers fi.om the High Density UnemploYment Area (HDUA), the hiring tax credit can be claimed. A certified business can claim a five-year tax credit for each eligible employee, whether full-or part-time, according to the following schedule: · 50% of the eligible salary is claimed in year 1 ,, · 40% of the eligible salary is claimed in year 1 · 30% of the eligible salary is claimed in year 1 · 20% of the eligible salary is claimed in year 1 · 10% of the eligible salary is claimed in year 1 The Employer's Training Resources (ETR) is currently working with the Holiday Inn to recruit eligible workers to participate in the Incentive Area program. iiL City Programs Community Development Block Grants (CDBG): Under the City's CDBG program, the City attempts to attract new businesses to relocate to the Incentive Area by offering eligible employers up to $2,000 for each new employee hired provided the businesses fulfill the following: City of BakersfieM Consolidated Plan 2000 111-65 DRAFT Jan;~._n_ry 1995 · Construct, purchase, or rehabilitate a facility located within the City's portion of the Incentive Area. The facility should have a net value of at least $500,000. · Create a minimum of 25 new jobs within two years after operation. Of these new jobs, 51 percent must be made available to iow and moderate income individuals. The positions should be full-time, extend for a duration of at least 12 months, and provide benefits. · Submit a report detailing information on quaiif~fing employees. KEEP- Keeping Fod~'ng Employers Profitable: KEEP is the City's multi-phased business retention program. A business retention survey of the area's largest employees was conducted as a major component of the KEEP program. The results of the survey will' be used to: · identify and Solve problems which hinder an employer's viability; · address issues before they become problems; · educate local government about the wants, needs, and perceptions of the local business community; and · channel these businesses toward variety of public services such as training, financing, and infrastructure which can promote the long-term success of the business community. iv. Kern County Kern Small Business Loan Fund: Most commercial lending institutions do not make small business loans of less than $20,000 and have established credit criteria that exclude most individuals wishing to startup their own businesses. This program is established to provide funds to finance startups or expansion for small businesses in Kern County. A venture loan fund of $500,000 was established in a non-profit foundation for investment in small businesses in Kern County. The loan fund is secured by local corporate sources and funded by local banks at prime rates. Loans of $15,000 at 6 points over prime with flexible payment terms for a 'maximum of three years can be made to qualifying, small businesses. v. ,Pn'vate,/Non-Profit Resources Mid State Development Corporation: This is a private, nonprofit, public benefit corporation established in 1981 to further economic development throughout Kern County. The corporation's primary means of fostering economic development is through its status as a U.S. Small Business Administration (SBA) Certified Development Company (CDC). As a result of this certification, Mid State is empowered to administer the SBA 504 Loan Program in the County of Kern. The purpose of the 504 loan program is to provide small businesses with a portion of long- term fixed asset financing. In general, an eligible project meets two conditions: 1) the creation or retention of jobs; and 2) use of 504 funds are for the following types of project City of Bakersfield Consolidated Plan 2000 111-66 DRAFT January 1995 costs: · Land and site improvements; · Purchase and/or remodel of.an existing building; · Take-out financing on new construction; · Purchase of,long-lived machinery and equipment; · Prof,¢ssional f'ees (e.g. engineering and architectural, etc.); and · Interest and points on an interim loan. Greater Bakersfield Chamber of Commerce (GBCC): The Greater Bakersfield Chamber of Commerce was established in 1920 and continues to serve local businesses. The Chamber of Commerce works with local governments, businesses, and residents to develop competitiveness of the local and regional economies. It strives to target business opportunities that will work toward long-term economic stability and growth in Greater Bakersfield, and focuses on reducing government red tape, business retention, and creating job opportunities. The GBCC periodically sponsors seminars on topics related to business needs, and a subcommittee within the GBCC was formed to deal specifically with business retention issues. The Greater Bakersfield Chamber of Commerce is located at 1033 Tmxtun Avenue in Bakersfield. (805) 327-4421. Weill Institute: The Weill Institute is the small business development center in Bakersfield. Located in Downtown Bakersfield, it offers free counseling and services to local small businesses and start-ups. Programs range from accounting and electronics to management, marketing and administration. Service Core of Retired Executive (SCORE): SCORE is a group of retired business executives who provide information on how to solve problems in marketing, distribution, operations, accounting, and many other areas. Counseling is provided by qualified people at no cost to GBCC members. Bakersfield Minority Business Development Center (BMBDC): BMBDC provides a wide range of business services to minority owned and operated businesses located in Kern County at affordable rates. The BMBDC is funded by the Minortiy Business Development Agency 0V[BDA) under the auspices of the U.S. Department of Commerce. The BMBDC offers programs designed to assist small minority businesses with management and technical issues such as financial planning, marketing strategy and loan preparation. City of BakeryfieM Consolidated Plan 2000 I11-67 DRAFT January 1995 IV.HOUSING & COMMUNITY DEVELOPMENT 5 YEAR STRATEGIC PLAN - DRAFT PRIORITIES EXECUTIVE SUMMARY ONLY (Rest to be completed later) e Summary of Five-Year Strategy The City has chosen to develop its priorities based on the following categories which would primarily assist low-income families and individuals within the community: Housing, Homelessness, Supportive Needs of the Non-homeless, and Community Development (Non- housing). The general strategic priorities of the City's Consolidated Plan Five-Year Strategy are reflected in the following broad goals: · Provide decent housing by assisting homeless persons to obtain affordable housing; retaining the affordable housing stock; increasing the availibility of perrnanent housing that is affordable to low-income resdients without discrimination; and increasing supportive housing that includes structural features and services to enable persons with special needs to live in dignity. · Provide a suitable living environment by improving the safety and livability of neighborhoods; increasing access to public facilities and services; reducing the isolation of income groups within areas by deconcentrating housing opportunities and revitalizing deteriorating neighborhoods; restoring and preserving natural and physical features of special value for historic, architectural, or aesthetic reasons; and conserving energy resources. · Expand economic opportunities by creating jobs acessible to low-income persons; providing access to credit for community development that promotes long-term economic and social viability; and empowering Iow-income persons to achieve self-sufficiency in federally-assisted and public housins. IV. HOUSING AND COMMUNITY DEVELOPMENT 5 YEAR STRATEGIC PLAN DRAFT PRIORITIES In this section, the City of Bakersfield will establish general priorities for assisting Iow- income residents based on the analysis of Housing and Community Development needs. The following discussion focuses on strategies to be followed and actions to be taken over the next five years of the Consolidated Plan. Four main priority areas, Housing, Homelessness, Special Needs, and Community Development Needs (non-housing) and their related goals are outlined below. 1. HOUSING - Draft Priorities i. Priority a: Rehabilitation Provide decent housing by rehabilitating substandard housing in all areas of the City, especially the older areas, which were identified by Census data and surveys, as likely to have a significant number of substandard housing units occupied by low and very 'low income households. Identification and protection of historical residential buildings as described in the City's Historical Preservation Ordinance will also be addressed. The City will develop an action plan for evaluating and reducing Lead Based Paint hazards over the next five years, especially in those census tracts which evidence concentrations of documented lead poisoning. In conjunction with the rehabilitation efforts, local building code enforcement will be addressed to minimize public Safety hazards and reduce the number of substandard housing units within the City. Potential funding sources are 1) state (e.g., CHFA), 2) federal (e.g., HOME, CDBG), 3) local' (e.g., Low and Moderate Income Redevelopment Housing Fund), and 4) private institutional funds (e.g., private lenders, credit unions). ii. Priority b: Housing Development Develop adequate and affordable rental housing for low and very low large renter households and very low income elderly households. The two groups identified were given high priority in the area of housing development, because of the scarcity of suitable affordable units for large Iow income households, and the cost burden on the very low income elderly as shown on table 2. Potential funding sources include private capital (e.g., developers, private lenders), state (e.g., CHFA), federal (e.g., HOME, RTC, FHA 223(f)), and local (Tax Increment Financing). Programs to be implemented city-wide. IV-I iii. Priority c. Rental Housing Provide decent rental housing and relieve cost burdened low and very low income elderly renter households, low and very low income large renter households, and rehabilitate substandard rental housing; through tax credit programs, Section 8 rental subsidies administered by HACK, and local housing rehabilitation programs. The City will develop an action plan for evaluating and reducing Lead Based Paint hazards over the next five years; especially in those census tracts which evidence concentrations of documented lead poisoning. In conjunction with the rehabilitation efforts, local building code enforcement will be addressed to minimize public safety hazards and reduce the number of Substandard housing units within the City. Potential funding sources include state (E.G.,CHFA) and federal programs (e.g., HOME, CDBG, RTC, Public Housing Development, Section 8 Voucher and Certificate Programs, Supportive Housing for the Elderly). Geographic Distribution In order to create substantive neighborhood improvement and stimulate additional, unassisted improvement efforts, the City will focus a portion of its housing-related funding in targeted low-income neighborhoods.. Based on the widespread need for affordable housing, however, assistance will also be available city-wide. As illustrated in map Figures 4, 5 and 6, (Ethnic Concentrations), there are very high concentrations of minority populations in low-income neighborhoods. In order to stimulate the de-concentration of minority and low-income residents, whenever feasible, the City will distribute funds in non-impacted areas. 2. HOMELESS - Draft Priorities The goal of a comprehensive homeless service system is to ensure that homeless individuals and families move from homelessness to self-sufficiency, permanent housing and independent living. To that end the City recognizes the need to address the issues of homelessness on several levels: 1.) Assessment and Outreach, 2.)' Emergency Shelter, 3.) Transitional Housing, 4.), and 5.) Permanent Housing. Funding to address all five components of the continuum of care model for homeless services and programs come from a variety of sources including the Federal government through the Stewart B.. McKinney Act, some of which is directly allocated to the City of Bakersfield, the State of California Department of Housing and Community Development and private foundations. IV-2 i. Priority a: Assessment and Outreach Assessment and Outreach activities are ongoing components of the various homeless service providers in the community. Ongoing funding of this component is a continuing need for all of these agencies and a goal of this plan. Resources range from federal (e.g. Emergency Shelter Grant Program, Stewart B. McKinney Act programs), to state (e.g. Emergency Housing Assistance Program). ii. Priority b: Emergency Shelter The continued growth in the numbers of homeless individuals, families with children, as well as those at risk of becoming homeless has put a tremendous strain on those agencies currently serving these populations. A goal of the Consolidated Plan is to support efforts for additional emergency shelters for families and homeless individuals with special needs (i.e. mentally ill, and those with a dual diagnosis of alcohol/other drug addition.). The Plan also supports the establishment of a detoxification center. Potential funding may be available from federal ESG, CDBG, state EHAP and private resources. iii. Priority c: Transitional Housing Transitional housing programs with services on-site to guide families and individuals toward self-sufficiency are very limited (non-existent for individuals and two-parent families) in the Greater Bakersfield area. It is the goal of the Consolidated Plan to address this issue over the next five years through support of the expansion of existing programs and the creation of new ones. Funds may be available from the federal ESG, CDBG, and Supporting Housing programs, among others,-as well as the state EHAP grant. iv. Priority d: Permanent Supportive HoUsing The ultimate goal of any homeless plan is the transition of homeless families and individuals to independent living and appropriate permanent housing situations. For some .that situation might include a supportive services component; for the majority, it simply means long-term affordable, decent housing. Supportive housing projects cross the bridge between homeless and "special needs" categories. Supportive housing is generally defined as "housing, including group quarters, that have a supportive environment and includes a planned service component". Currently, there are several community care facilities, group homes and other · supportive housing situations in the Greater Bakersfield area, however while the facilities might accept formerly homeless individuals into their programs, the bulk of those facilities do not target those individuals. Since the majority of these facilities are regularly at capacity, the need for additional supportive permanent housing is becoming critical. It is a goal of the Consolidated Plan to seek funding and support efforts to increase the number and capacity of supportive housing projects. Funding may be available through the federal ESG, CDBG, HOME, Shelter Plus Care, and HOPWA programs, among others. IV-3 v. Priority e: Permanent Housing The development and support of permanent affordable housing is more fully addressed in the "housing" component of the strategic plan's Draft Priorites section. Geographic Distribution of Funds As agencies identify potential funding sources to address the continuum of care, the City will support those projects without respect to the location of the activity. Geographic distribution of funding from the City's entitlement programs will be based solely on the location(s) identified by the individual agencies. However, by the very nature of the programs and population served, the majority of funding will be directed to predominately low-income areas. The issue of homelessness transcends boundaries and must be addressed accordingly. 3. SPECIAL NEEDS - Draft Priorities "Special Needs" groups include thc elderly, the frail-elderly, disabled persons (mental, physical and developmental), persons with HIV/AIDS and their families, persons with alcohol and/or drug addiction and public housing residents. Many in these special categories would benefit from housing situations which include a supportive environment. i. Priority a: Housing Housing for many of this population requires specialized construction to accommodate special needs in addition to the costs associated with the provision of supportive services. It is the goal of the Consolidated Plan to support projects which provide the enhanced physical environment required for many in this group in existing housing units, as well as the creation of additional units. Funding may bc available through the federal ESG, CDBG, HOME, Shelter Plus Care, Section 202, Section 811 and HOPWA programs, among others. ii. Priority b: Supportive Services Thc goal of the Consolidated Plan is to maintain and expand (where possible) programs which offer supportive services for the special needs individuals and families to achieve their maximum potential of self-sufficiency. Such programs may be in tandem with a supportive housing program or in a "stand alone" supportive service facility. Funding may be available through the federal ESG,, Shelter Plus Care, Section 202, Section 811, HOPWA programs, as well as the Community Services Block Grant (CSBG) among others. IV-4 Geographic Distribution As individuals, groups, businesses and agencies identify potential funding sources to address the needs of this unique population, the City will support those projects. Oeographic distribution of funding from the City's entitlement programs will be based solely on the location(s) identified by the individual applicants. 4. COMMUNITY DEVELOPMENT (Non-Housing) - Draft Priorities i. Priority a: Economic Development Expand economic opportunities for Iow income residents through activities such as real property acquisition, rehabilitation of structures, and construction of improvements (off-site and on-site) to accommodate commercial-industrial facilities development and expansion; technical and support services for microenterprises, and existing businesses; and other commercial-industrial, business, and economic development activities such as leasehold improvements, furniture, fixtures and equipment acquisition, incubator development, and working capital assistance. This priority is justified by the 15% general family poverty rate, 39% female-headed family poverty rate, and the 13.8% unemployment rate by the Bureau of Labor Statistics. Potential funding programs for these activities include private capital (e.g., owner equity, commercial loans), local (e.g., Kern Small Business Loan Fund, tax increment financing, revolving loan funds), state (e.g., incentive area tax credits, Employment Training Panel Program, California Main Street Program, SSED), and federal (e.g., CDBG, JTPA, EDA, SBA 502/504) funds. ii. Priority b: Public Improvements Develop a viable living community by constructing and rehabilitating infrastructure improvements for areas that primarily benefit low income persons through activities such as flood drain improvements, water/sewer improvements, garbage collection/removal, and street related improvements. Justification for this priority is based on deteriorated/substandard infrastructure in older sections of the city .and newly annexed areas, and the general lack of adequate drainage and storm water facilities in certain flat terrain neighborhoods. Potential funding sources include private capital (e.g., developers equity, private utility financing), local (e.g., tax increment financing, gas tax), state (e.g., Safe Drinking Water Bond Act Program), and federal (e.g., CDBG, EPA, ISTEA) funds. iii: Priority c: Public Facilities Provide a suitable living environment by acquiring, rehabilitating, and constructing improvements for qualified activities and providers in such areas as parks and recreation facilities, health, youth and child care centers, and other public facility projects including the protection and enhancement of buildings and structures that reflect special artistic, cultural, IV-5 and architectural characteristics. This priority is justified by the need for additional community/recreational facilities, and the lack of sufficient child and health care facilities, and youth centers for the City's lower income residents. Sources of funding include private capital (non-profits, foundations), local (e.g., special district financing, certificates of participation), state (e.g., varioUs state bond funds), and federal (CDBG, ESG). iv. Priority d: Public Services Develop a suitable living environment by funding public services primarily provided by municipal departments in the area of crime awareness, graffiti removal, fair housing, neighborhood beautification/clean-ups, and economic development marketing/training. Justification for this priority is based on the increases in violent and property crimes, unemployment, and lack of sufficient job training/marketing. Potential sources of funding include local (maintenance district, general funds), state (Employment Training Panel Program), federal (CDBG, DOJ - COPS AHEAD). These activities will be primarily focused in low income areas in various neighborhoods within the city. v. Priority e: Accessibility Provide a viable living environment for disabled persons by providing reasonable access to public accommodations/services, and transportation related facilities. This priority is justified by the lack of sufficient accessibility for disabled persons in the areas of public accommodation/services, and transportation related services. Potential funding sources are primarily limited to local funds such as CDBG, gas tax, and general funds. Geographic Distribution Distribution of accessibility funding emphasis is citywide. Primary focus of economic development efforts will be in the southeast of the city (state incentive area) but additional focus includes business districts located in qualified low-income areas as well as industrial parks and commercial sites in various city locations. Geographical emphasis fOr funding of public improvements and public facilities activities will primarily be low-income neighborhoods located in throughout the city. IV-6 V. ACTION PLAN: ONE YEAR USE OF FUNDS · (Rest to be completed later) Exhibits/Maps U.S. Department of Housing and Urban Development CPD Consolidated Plan Table 1 Homeless Populations and Subpopulations Total # TOTAL NUMBER SERVED BY Total # Homeless Reception/Day Emergency Transitional Homeless Unsheltered Centers Shelters Housing Part 1: Homeless Population (a + c + d) (a) (b) (c) (d) Families with Children '~ '~.\ \ ~ 1. Number of Homeless Families 0 0 0 0 0 2. Number of Persons in Homeless Families 0 0 0 0 0 Individuals not In F~mllles 3. Youth (17 years of age or younger) 8 0 0 8 0 4. Adults (18+ years of age) 341 0 0 341 0 TOTAL (llnee 2 + 3 + 4) 349 0 0 349 0 Part 2: Continued Part 2: Subpopulaflons '~ N I I~ % of % of Homeless Persons with Special Needs Related to: Total Number 6. Other (Specify) Total 1, Severe Mental Illness (SMI) Only 0,0 0 2, Alcohol/Other Drug Abuse Only 0.0 0 3, SMI and Ncohol/Other Drug Abuse 0,0 .0 4, Domsstlo Violence 0,0 0 5. AIDS/Related Diseases 0.0 0 CHA$ Table lA U.S. Depadment of Housing and Ud3an Development Office of Community Planning and Development Population & Household Data Comprehensive Housing Affordabllity Strategy (CHAS) Instructions for L_~x'?I Jurisdictions 5 Year Pe~,c<l (enter fiscal yrs.) Name of Jurisdiction: FY: through FY: 19041 1998 BAKERSFIELD A. Population 1980 1990 % ID. Relative Median Inco,~e of Jurisdiction Census Data Census Data Change I (A) (B) (C) MSA Median I Jurisdiction's National 1. White [non-HispanicI 74,996 115,767 54% ::.::..':~':~ ::.. :.~: :..' ~... Family Income Median Family Median Family 2. Black Inon-HIspanlc) 11,055 16,222 47% ':ii~:::'::.: :?:: Income (not Income 4.3' HIspanlCNatlve American(all raceS)(non. Hlspanlc) 15,886 35,033 121% ::':?: :!:::':~ : i ': available for 367 1.587 327% : . ' u~ncount~eS 6.7. O~,rTotal ,op-I,tlon(r~"'Hiepanic) 105.811 474.620 66% :i!::i: i B. Special Categoflee (e.g. etudent,, military, militant faint workera, etc.) ¢. Households Total % o~ Total % Extramely ~ % Moderate % Middle % (A) (B) lC) (D) {E) i. White (non-Hispanic) 45,085 72% 15% 12% 7% 66% 2. Black (non-H!~___qlc) 5,344 9% 45% 16% 8% 31% 3. Hispanic (all m_ce~) 9,652 15% 28% 20% 7% 45% 4. Native American Inon-HIspanlc) 685 1% 28% 17% 11% 45% 5. Asian & Pacific Islanders (non-Hispanic) 1,664 3% 18% 9% 7% 65% $. All Ho~-=--~--holda 62,500 100% 20% 13% 7% 60%; rCHAS Table lB U.S. Department of Housing and Urban Development Office of Community Planning and Development Market & Inventory Conditions Comprehensive Housing Aflordabilib/Strategy (CHAS) Instructions for Local Jurisdictions Name of Jurisdiction: Check One: 5 Year Period (enter fiscal yrs.) _X_ 1990 Census FY: through FY: BAKERSFIELD ~ Other Source: (specify) 1994 1998 Data as of: (enter date) A. Housing Stock Inventory 0 and 1 3 or more Total Vacancy Rate bedroom 2 bedrooms bedrooms Cate~or7 (A) (B) (C) (O) (E) 1. Total Year-Round Housing 66,175 10,885 20,923 34,367 : 9,762 19,376 33,329 2. Total Occupied Units 62,467 8.602 12.765 6.670 3. Renter 28,037 4. Owner 34,430 ·. 1,160 6,611 26,659 ' "" 1,123 1,547 1,038 5. Total Vacant Units 3,708 '. .. 6. For Rent 2,039 6.78% 787 927 325 7. For Sale 556 1.59% 31 229 296 B. Substandard Units % % Suital:~e fo~ '. ..... ~-:~:: · :'. C. Public Housing 0 and 1 3 o~ more Total Vacancy Rate bedroom 2 bedrooms bedrooms Cate<~io~ (A) (13) (C) (O) (E) Rehabilitation Estimated Hard Costs-Physical Improvements: Grand Total PHA Needs: Needs: 1993 $2,142,564 HUD 40090-A CHAS Table 1C u.s. Department of Housing and Urban Development Office of Community Planning and Development Housing Assistance Needs of Comprehensive Housing Affordabllity Strategy (CHAS) Low & Moderate Income Households Instructions for Local Jurisdictions Name of Jurisdiction: ISou~cas of Data: . . IData is current IFIve Year Period: I las of the following date:IIFY: 19941through FY: BAKERSFIELD IHUD CHAS DATA BOOK 11990 Census . 199! Renters Owners Elderly Household by 1 & 2 Member Small Related large Related All Other Total Renters Elderty All (::)thor Total Total Typo, Income, & Households (2 to 4) (5 or more) · Households Owners Owners Households Houaln~l Problem (A) (B) (C) (D) '(E) (F) (G) (H) (I) 11. Lower Income (0 to 50% MFI)* II 1,889 II 3,894 II 1,479 II 2.046 II 9,308 II 1,766 II 1,445 II 3.211 II 12,519' I2. Extremol]f Low (0 to 30% MFI)* II 638 II 2,251 II ' 592 !1 1,012 II 4,493 II 764 II 802 II 1,566 II 6,059 13. %wlth~nyHouslngProldems II 84%11 9~11 93%11 64%11 9°%11 63%11 78%11 71%11 85-/. 14. % Cost Burden > 30% II 84%11 9°~11 84%jl 61%!1 87%11 63%11 78%ll 70%ll 83°/.l 15. % co~t Burd,.>50~ II 67%ll 78%ll 75%11 8°'~'11 77%11 48%Jl 63%11 56%!1 71%J 16. Low Income (31 toE0% MFI)* II 1,251 II t,643 II 687 Il 1.034 II 4,815 II 1,002 II 643 II 1,645 II 6,460 I 17. %w~thanyHoualn~Problema II eO%11 94%11 97%11 93%11 91%11 48%11 77%11 59%11 83°/.I 18.- % Cost Burden > 30% il 8~11 91%11 67%11 92%11 64%11 48%11 74%11 56%11 77°/ol 19. % Cost Burden > 50% II 47~11 41%ll 15%11 49%11 39%ll 21%ll 47%11 31%Jl 37°/.I I10. Moderate Income I$1 to 80% MFI) II 568 II 2.250 II 733 II -1,538 II 5.o89 II 1,423 II 1,848 II 3.271 II 8,350 Ill. % with any Housln~l PrOblems II 63%11 63%11 85%11 6~11 67%11 28%11 75°/°11 5~°/oll 62°/° It2. % Cost Burden > 30% II 59%11 57%11 34%11 64%11 56%11 27%11 70%11 51%11 ~4% 113. % Cost Burden > SOY. II 2'/°11 7%11 5%11 8%11 9%11 9%11 31%11 21%11 14°/' 114. Mlddlelncomo{81-95%MFI)* Il 179 II1,170II 240 II 8to II2,399II 636 II1,223II 1,859 II4.258 115. % with any Houslng Problems II 76%11 32%11 65%11 28%ll 36%11 17%11 61%11 46%ll 41% ile. % Cost Burden > 30% II 76%11 24%jl 2~11 27%11 29%11 17%Jl 58%11 44%!1 36% 117. % Cost Burden > 50% II 23%11 2~11 °~11 1%11 3%11 4%11 lie. Tot., Households** II 3,091 II 12,5o6 II 3,520 II 8.o38 II 27,155 II 7,938 II 27.407 II 35,345 II 62.500 119. %wffhan~,HouslngProblems II 68%11 47~ll 74%11 41%ll 51%1~ 22%11 27%11 26%11 37% · Or, based upon HUD mllusted Income limits, If applicable, form HUD-40090-A (1/93) · * Includes ali Income groups - Including those above 95% of MFI ICHAS Table 1 E u.s. Department of Housing and Ur'can Development Office of Community Planning and Development Non. Home,ss Comprehensive Housing Affordability Strategy (CHAS) ~Special Nc,,ds Populations Instn~ti~s for Local Jurisdictions IName of Judsdic§on: ' I ~Oata Source: (specify) ~ ~5 Yr. Period: (enter fiscal yrs.)~ IIcHAS HUD DATA BOOK 'I1~:~roug~: I ~.~.s~,~o Ilcu .., beta a. of: (.ate) II '""1 '""1 1990 CENSUS E ..... .....] B°~"~"~' In ""~ cd su~o~v..ous,ng__ I~-.r~ E~e~, I[ S~ !"' S.v.r....,~'"ne--- "IF- ~,o~ 14. ~v,~o~en,,,,~/D~..~. I E ~,e I~. P,y.~/o~ed I[ t.6,2 16. Po,.o~,~th ~ or D~ A~o,on IDen: ..~..324 woman: 3.4.6 17. Persons with AIDS ar,::l Related Dis~sesl [ 570-850 I.. o~.~ (sp~/l: II Instructions for Table 1E NocYHomeless Specla] Needs Populations Refer to ,ac)pendix A, Genera] Definitions Used ~ the C~, for Line 2- Enter the estimated number of frail elderly additional definitions of terms used in this table, households in need of suplx~rtive housing. Table 1E provides a format for estimating the head for supportive Line 3- Enter the estimated number of households housing for other (than homeless) populations with special needs, composed of at least one person with severe mental ~ potential resource agencies and client groups they serve Iflness in need of supportive housing. include: Line 4-- Enter the estimated number of households o State or local mental health agencies for persons v4th severe composed of at least one developmentally disabled mental illness; person in need of supportive housing. o State or local agencies of mental retardation or State local Line 5-- Enter the estimated number of households develc~)mental disabilities councils for people vAth developmental composed of at least ~ physically dlsaJ:ded perscxl disabilities; In need of supportive housing. o State rehabilitation agencies or State or local Centers for Une 6- Enter the estimated number of househokls Independent Living for people v/~th physical disabilities; composed of at least one person with alcohoUother drug ado'iction In need of supportive houa]ng. o State or area agencies on aging for elderly people; Line 7- Enter the estimated number of households o ~ Public H~ Service Center for Disease ~ for persons con~po~___ of at least one pemon ~ AI~ ~ related Line 6- Estimate for any other ca~ of special Specific Instructions: need that the Juftso'lction may Identify the number of I.Jne 1- ~ar the estimated nuf~d~r cd elderly I~:x~esholds In need : ', Kern River State 1.0~ "' · · ~:~ ~'~ ; · · eJ · Bakersfield · .'.'" ~'...' i-...-'. -'. · ~.02 · . . I0 .... · . ':- _';1" ~ Figure1 · PanaM Line Persons .... . ,.. unemp,oyeu METROPOLITAN BAKERSFIELD 1 Dot. 1 Person 21.22 Tract Number .... ~ City Bounds/ / ~ Tract Boundmy ~'] .. Block Group I /, Kern River State Park / ~ .01 5.01 4.01 \. Bakersfield 8.02 ................ . ' c~ 24 .. 3,.,, ~ Figure 2 P~n~ I,~z~ Overcrowded Owner-Household · ~*~:o~ . __METROP__OLFAN BAK_ERSF!ELD._ ...... 1 Dot - 1 Household 21.22 Tract Number ~ City Boundary / ~ Tract Boundary  ' Block Group Kern River State Park 1.o$ Rosin B~ker$field '"" ~, Figure 3 ,.....L... Overcrowded Renter-Household.. '~:b~ ' ' METROPOMTAN BAKERSFIELD 1 Dot = 1 Household 21~2 Tract Number ~ City Bounclmy ,.. Tract Boundary  . .. Group Block -" Kern River State Pa,k 1.01 - ~ ; /' 5.01 1 h~ .." ...,.-~, ..,../I '- . .. .. . 9,1 * · ' ' , . · Rose, " Bakersfield $0(~ · . ; 32.01 :..' 3,.-'...~ Figure 4 ~'~'~ · HisPanic Population · ' : :,~ ' ",-:' METROPOLITAN BAKERSFIELD - ~ : :.~,0~ .' · __ ............................ I Dot - 1 Person 21.22 Tract Number ·. ~ City Boundary j... ...v · Tract Boundary ~-~ " · ' ' Blod< Group 5.01 fi " 1.01 Rose( .. Bakersfield 38.~32- 10 .. 24 ".' ,,;~.1 .j Figure 5 "'":' '; 'P'~'~" Black Population · ~2.0~- METROPOLITAN BAKERSFIELD 1 Dot. 1 Person 21.22 Tract Number ~ City Boundar/ /) Tract Boundary L-] i Bloct( Gro~Jp Kern River State Park 5.01 1.01 : '~'----~ g.1 'h Bakersfield 3a.o2 lO ~.Ol 'o 31.11 ~ Figure 6 P.~. L,~ Asian Population a2.0~. M~I'ROPOLn'AN BAKERSFIELD 1 Dot = 1 Person 21.22 Tract Number * · ~ City BoundaW · Tract Bounda~/ ~'] ....... BIo~ Group I I t.' Kern River State Park Bakersfield $.02 10 32.01 24 ~ Figure 7 P,.,..L.o Low and Moderate Income Area 32.o2 METROPOLITAN BAKERSFIELD [] Low/Mod BG (>=51% of Persons) 21.22 Tract Number ~ City Boundar/ .i ~.': ""--" Tract Boundary ...... ~ ................... Block Group -- --'"'~ Kern River State Park I.Ot ,:-'~ /' 5.01 / ~ I .... Bakersfield 10 ~. Figure 9 31.11'k ~ Schools and Parks Psr~m~ L.~* METROPOLITAN BAKERSFIELD 32.02 'k Parks · [, Schools 21.22 Tract Number "-'-" City Boundmy Tract Boundary Block Group Kern River State Park R 1.01 1.01 ~' ~.' ' Bakersfield M.02 10 32.01 24 Figure 8 Services and Facilities by Type METROPOLITAN BAKERSFIELD · AIDS 21.22 Tract Number · Alcohol/Drug ==-.= Cl~y Boundary 31.11 j *~ Children/Youth -- Tract Boundmy p~ ~ · Community Block Group · Counseling 32.o~ * Disabled · .Employment a Health Services · Homeless ; + Hospital/Clinic .' -~ Senior ~1 [] Low/Mod BG % of (>=51 HHs) t · ... ,. · ' Kern RIverState Park " . : . ' 1.0~ · .' . .'.' . . ~ '~--, . · .. 5.01' · . :: · ::' · -. · . . · . ..' ,.., , . . f.~.~ /"~..~ .. , .. " ' ."' . · '.9.-1. · ' A." ': ' . . Ro,, · .. ..:' ~' :.' ': :: '.___ ' ""'-.Bakersfield' · - ~.0~ " :'5: ' · '" : . . .' : .. ·: '1.0. ' ~.m '~ · ... ...... ·' "' ' ' - ';" x' ::...'..'.:....~ :.. · i? ."". '"':"" '-'.:' :' '."~ ~ " '~l' "~1, . ' ' ' ' " :. ...-~ ..~ :. '.... · ' .. :... ',i~J.;t ' ' :' ' ' · .;: .... . .....;- .. .. : . .: Persons in Poverty ,, ..:. '... ~ '- · :.. M~'FIOPOUTAN BAKERSFIELD " -' "' ' 1 Dot ,= 1 Person · · · 21.22 Tract Number · .. ~ C~ Boundary '. ".. '.: . · . '. : -- Tract Boundary · · .' ' · ' · Block Group .:. : Kern River State Park · ' - 1.(~1 .. ·' ·'1201 ::-": ' " Rosedal'e ". '-' · . · · -. .. : = =.- · .:. . -~ ..: :. . .. "'"_".., -. ' "u I( Stl Id'-a-er---e-- · 5.02 · · .. .':......:'.. ~i¢ " .:.: a~J~ ..... t0 24 " ~...:'."" .' .'. ~ . · ... : a~.~! · ' ' "· P~'I.~ .. .. - :.....: ip Housing OYerpayment I Do~ = '10wn~r-Hou~hold :'.;:. 21.22 Tract Number : '" ~.. c~ City Boundary · ' ...: ---,--- Tract Boundary · . : BIo~ Group Kern Rlve~ State Park Ros · · · ~.1- · ' :Bakersfield 10 32.o'~ :.: ....: .'i. · .. .... '. " ' ' " Elderly Population .. .- .. ' METROPOLITAN BAKERSFIELD · . ': I Dot = 1 Person .' · 21.22 Tract Number --.' '. . ~ City Boundary · , :. Tract Boundmy '* · ' · Block Group Table Information The following tables reflect needs information drived from the surveys and needs assessment conducted in Section III. The priority table is used to designate the relative priority to be given to each category of needs during the next five years as designated in the strategy portion of the document. 'The table identifies those activities that could be eligible to receive assistance over a five year period. "High" priority means that the jurisdiction will be addressing this need by allocating funds during the five year period. "Medium" priority means if funds are available, activities to address this need may be funded by the locality during the five year period. "Low" priority means that the locality does not intend to fund activities to address this need during the five year period. "No" such need means that there is no need or the jurisdiction shows that this need is already substantially addressed. TABLE 2 .~; PRIORITY NEEDS SUMMARY TABLE *., PRIORITY HOUSING NEEDS Priorl~ Need Level .~.. (household) High. Medium, Low, No Such Need Unal 0 - 30% 31 - 51% 51 - 80% Cost Burden ) 30% M M M 4804 33.435.840 Cost Burden ) 50'/* M M M 2587 180.055.200 Small Related Substandard M M M 5033 100.660.000 Overcrowded M M M 597 14,034.080 Cost Burden ) 30~ H H H 1340 932,400 Cost Burden ) 50% H H H 614 12.280.000 Large Substandard H H H 2034 40,680.000 Renter Related Overcrowded H H H 1596 43,459.080 Cost Burden ) 30'& H H H 1872 13,029.120 Cost Burden ) 50~ H H H 1134 7.892.640 Elderly Substandard M M M 1889 37.900.000 Overctcr~:led M M M 299 6,286.000 Cost Burden ) ~ L L L 3718 2,156.440 Cost Burden ) 50% L L L 2074 1.202.920 Owner Substandard H H H 3849 76,980.000 Overcrowded M M M 327 8,829.000 PRIORITY HOMELESS Prkxlty Need Level Estimated Dollara NEEDS High. Medium, Low, No Such Need Addresl Assessment/Outreach Familiel Individuals Persons W'ith Special Needs 2,500.000 H H H Emergency Shelter Famil'~s Individuals PemonsW'rth Special Need~ 10.750.000 H M H ~Transitional Housing Familie~ Individuals Pemons With Special Needs 15.000.000 H M H Permanent Supportive Familie~ Individuals Persons With Special Needs 31.200.000 Housing L L H Permanent Housing Families Individuals Pemons With Special Needs 13,000.000 H H H TABLE 2 (Continued) PRIORI'rY COMMUNITY DEVELOPMENT Priority Need Level Eltlmated Dollar8 to NEEDS High. Medium. Low. No Such Adde$$i Need (om.m~ ~ (To be completed later) PUBLIC FACILITY NEEO,~ Sen~ Centare M Youth Centers H Neighborhood Facilities H Child Care Centers H Parks and/or Recreation Facilities M Health Facilities H Paddng Facilities L Other Public Facilities M INFRASTRUCTURI~ IMPROVEMENT Solid Waste Disposal Improvement~ H Flood D~ain Improvements H Water Improvement~ H ~reet Improvement~ H Sidewalk Improvements L Sewor Improvements H .~$bestce Removal L Other Infrastructure Improvement Neeo~ M PUBLIC SERVtCE NEEDS ' Senior Services L Youth Se~ices H Transpiration Services M Substance Abuse Sewices M Employment Training H Crime Aware~ H Fair Housing Counseling M Tenant/t.argllord Counseling L Child Care Service~ M Health Semices M Other Public Sendce Need~ M ACCESSIBILITY NEEDS H RESIDENTIAL HISTORIC PRESERVATION NEE0~ M NON-RESIDENTIAL HISTORIC PRESERVATION M ECONOMIC DEVELOPMENT NEEOS Commercial*.lndust~al Rehabilitation M Commercial-ln~lustrial Infrastructure H OU~er Commercial-ledustrial Improvements H M~o-Businees H Other Bus~nes~ M Technical Assistance H othe~ Ecomm~ic Development Nee~l~ M OTHER COMMUNITY DEVELOPMENT NEEDS Energy Efficiency Improvements M Lead ~,Based PainttHazard~ H Code Enforcement M PLANNING H B A K E R S F i E LD Iii r ...... , February 3, 1995 Dear Valued Member of the Community: ~-- The City of Bakersfield cordially invites you to attend your choice of three very_ important commumty meetings as the City develops our new Community Development Consolidated Plan. The five-year plan is a community revitalization strategy based on the collaborative efforts of local institutions, commumty groups, citizens and government officials. Your participation in the development of the Consolidated Plan is a key component in the process. The workshops were scheduled as a part of the City's ongoing efforts to provide opportunities for the community to participate in the Consolidated Planning process. These informal public meetings will focus on specific topics of impoi'tance to the improvement of the City's low-income neighborhoods and economic oppommities for low- income residents. All three meetings are scheduled Friday, February 10 in the "Potato Room" of the Convention Center, 1001 Truxtun Avenue. 10:30 Focus on Public Improvements(infrastructure) / Economic Development 1:30 Focus on Housing / Homelessness / Special Needs 3:00 Focus on Public Facilities / Public Services Please RSVP to Lisa Moton at 326-3765 by February 9 As you may know, over the past year the U.S. Department of Housing and Urban Development has been identifying ways to make its programs work better. Currently HUD programs require several uncoordinated applications and separate planning and citizen participation processes. Each program operates on its own time- frame, making coordination difficult and integration into the city's budget cycle impossible. Consolidating the submission requirements for the formula grant programs for which the City is entitled: Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME), Emergency Shelter Grants (ESG), and Housing Opportunities for Persons with AIDS (HOPWA), will offer the City a better chance to shape these and other programs into effective, coordinated neighborhood and community development strategies. Over the past few months the City's Economic and Community Development Department has been working on a draft Consolidated Plan. The "Focus" workshops will give you a chance to provide additional information, make corrections to the draft strategy and Offer your opinions on the City's future direction. Enclosed are highlights of the 5-year strategy. If you would like a copy of the working draft strategy of the Consolidated Plan prior to the meetings, please call Vince Zaragoza or Jan Fulton at 326-3765 or stop by the City of Bakersfield Economic and Community Development Department, 515 Truxtun Avenue. I look forward to your attendance and input. Very Truly Yours, ~ tyn~ Developntght Coordinator focus.Itt/vision 2000/jr City of Bakersfield · Economic and Community Development Department 515 Truxtun Avenue · BaKersfield · California 93301 (805) 326-3765 · Fax (805) 328-1548 · TDD (805) 324-3631 Executive Summary City of Bakersfield Consolidated Plan 2000 The Consoliated Plan 2000 is a new consolidated planning process that replaces all current Federal Community Planning and Development (CPD) planning and application requirements with a single submission. Beginning in 1995, this strategic Plan will satisfy the minimum statutory requirements for four CPD formula programs which are administered by the Federal Department of Housing and Urban Development (HUD): Community Development Block Grants (CDBG), HOME Investment Partnerships (HOME), Emergency Shelter Grants (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). In addition, in order for other affordable housing providers to access 17 differenct federal programs, the city will be required to certify to HUD that they have an approved consolidated plan: Major components of ~e Plan include: 1) housing and market socioeconomic data; 2) housing and community needs assessment; 3) demographic maps; 4) housing and community development resources; 5) housing and community development su'ategies and priorities; 6) an action plan (one year use of funds); and 7) public participation and coordination. HUD's revised submission guidelines emphasize broad citizen participation and community partnerships to bring about a unified vision for housing and community development actions that will primarily benefit residents from low and moderate income families. Consolidating submission requirements require coordinating all elements of community and housing development such as housing, homelessness, economic development, infrastructure, public facilities, and public services. The city's vision for the Consolidated Plan 2000 is to become a more am'active, safe, family- oriented Bakersfield by' unifying the city, enhancing economic prosperity, improving cultural, recreational, health, housing, and educational opportunities with the involvement of all city residents. The city's mission for this Plan is: tofprovide decent housing by assisting low- income residents to obtain affordable housing; provide a suitable living environment by improving the safety and livability of neighborhoods; and expand economic opportunities by creating jobs accessible to low-income persons. EXECUTIVE SUMMARY CITIZEN PARTICIPATION PROCESS FOR THE CONSOLIDATED PLAN 2000 Following are the major components of the City's citizen participation process for the Consolidated Plan: 1. Provide for and encourage citizen participation primarily from moderate, iow income and extremely low income groups. 2. Afford adequate, and timely notification to local meetings and forums. 3. Provide access to relevant information by way of translation and disability accessibility. 4. Make available technical assistance to lower income groups who request assistance in developing applications for housing and community development funds. 5. Hold at least two public hearings at convenient times to obtain views of citizens, agencies, and interested persons. 6. Publish a summary of the Consolidated Plan and notify the public where the plan can be reviewed for possible comment. 7. Encourage the receipt of public comments. A strategy was developed to meet the major components listed above. The part of the strategy implemented to date involved the development and use of a survey instrument, public information forums, providing information at meetings organized be non City groups, neighborhood workshops, and the formation of the Consolidated Plan Task Force. The survey instrument was developed to receive input from a broad cross section of citizen and service providers on housing and community development needs and to assist in developing priorities for expenditure of CDBG and HOME funds. The survey was distributed by mail to citizens and service providers on Community Development's mailing list, and at every meeting attended by City Community Development staff from September 15 to November 15, 1994. It was also distributed at Bakersfield area libraries and at City Hall. Public information hearings/forums were held on September 15, 1994, at the Bakersfield Convention Center to inform the community about the consolidated planning process, and oppommities for public input into formulation of the Plan. Representatives from government agencies non-profit corporations, business community, as well as, individual citizens attended. The meetings were advertised in the Bakersfield Californian, Bakersfield News Observer, El Mexicalo, by public service spot announcements on radio and television and by direct mail announcement to those on Community Development's mailing list. The focus of the 1:30 P.M. and the 6:30 P.M. meetings was to those who did not represent non-profit organizations who planned on applying for federal assistance. The focus of the 3:30 P.M. meeting was to provide technical assistance to non-profit organizations who planned to apply for funds in the Consolidated Plan Program. II-1 City Economic and Development staff attended, distributed information and answered questions at the Old Town Railroad Festival on October 1, 1994; the Looking Good Neighborhood Festival at Martin Luther King Jr. Community Center on October 8, 1994; Up on the Roof/Down in the Street Celebration of the opening of the City Center Building by the County Superintendent of Schools on October 15, 1994; the Ward I Public Meeting at the Cain Memorial AME Church on January 3, 1995 (a flyer was distributed by community residents to advertise the meeting); the Lead Coalition Meeting at County Environmental Health on January 10, 1995; the Mental Health Housing Subcommittee at the Bakersfield Convention Center' on January 17, 1995; and the Homeless Resource Network Committee at the Bakersfield Convention Center on January 25, 1995. Four neighborhood workshops were held in different neighborhoods of lower income census tract areas of the City. They were advertised in various newspapers. In addition, there was a distribution of 13,000 flyers (English and Spanish) which were delivered door-to-door in lower income areas, followed up with flyers (English and Spanish) to community and church groups and various public schools. The flyers were distributed in key locations. In addition to ....... the~Paid advi~i'iiSements in three 'local newspapers, there were also public service spot announcements on radio and television. The neighborhood meetings were held in the evenings on October 25, 1994, at Bessie Owens School; October 27, 1994, at Jefferson School; NOvember 1, 1994, at William Penn School; and November 3, 1994, at Greenfield Jr. High School. A meeting is scheduled with Public Housing residents Thursday, February 2, 1995, at the (ho Vista Housing site. The Consolidated Plan Task Force, composed of members of the community, was organized to identify community needs, review surveys (approximately 75 out of 750 surveys were returned to the City) and community meeting results, give advisory recommendations for strategies and to review the draf~ Housing and Community Development Strategic Plan. The 'Task Force has met in the afternoons on November 9, 1994, and on December 7, 1994, at the Bakersfield Convention Center (a February I meeting is pending).. A final public hearing of the draft Consolidated Plan 2000 is scheduled for early April, with review and'anticipated approval of the Plan by the City Council in early. May 1995. II-2 Summary of Five-Year Strategy The City has chosen to develop its priorities based on the following categories which would primarily assist low-income families and individuals within the communitT Housing, Homelessness, Supportive Needs of the Non-homeless, and Community Development (Non- housing). The general strategic priorities of the City's Consolidated Plan Five-Year Strategy are reflected in the following broad goals: · Provide decent housing by assisting homeless persons to obtain affordable housing; retaining the affordable housing stock; increasing the avallibility of permanent housing that is affordable to low-income resdients without discrimination; and increasing supportive housing that includes structural features and services to enable persons with special needs to live in dignity. · Provide a suitable living environment by improving the safety and livability of neighborhoods; increasing access to public facilities and services; reducing the isolation of income groups within areas by deconcentrating housing opportunities and revitalizing deteriorating neighborhoods; restoring and preserving natural and physical features of · special value for historic, architectural, or aesthetic reasons; and conserving energy resources. · Expand economic opportunities by creating jobs acessible to low-income persons; providing access to credit for community development that promotes long-term economic and social viability; and empowering low-income persons to achieve self-sufficiency in federally-assisted and public housing. IV. HOUSING AND COMMUNITY DEVELOPMENT 5 YEAR STRATEGIC PLAN DRAFT PRIORITIES In this section, the City of Bakersfield will establish general priorities for assisting low- . income residents based on the analysis of Housing and Community Development needs. The following discussion focuses on strategies to be followed and actions to be taken over the next five years of the Consolidated Plan. Four main priority areas, Housing, Homelessness, Special Needs, and Community Development Needs (non-housing) and their related goals are outlined below. 1. HOUSING - Draft Priorities i. Priority a: Rehabilitation Provide decent housing by rehabilitating, substandard housing in all areas of the City, especially the older areas, which were identified by Census data and surveys, as likely to have a significant number of substandard housing units occupied by low and very low income households. Identification and protection of historical residential buildings as described in the City's Historical Preservation Ordinance will also be addressed. The City will develop an action plan for evaluating and 'reducing Lead Based Paint hazards over the next five years, especially in those' census tracts which evidence concentrations of documented Icad poisoning. In conjunction with the rehabilitation efforts, local building code enforcement will be addressed to minimize public ~afety hazards and reduce the number of substandard housing units within the City. : Potential funding sources are 1) state (e.g., CHFA), 2) federal (e.g., HOME, CDBG), 3) local (e.g., Low and Moderate Income Redevelopment Housing Fund), and 4) private institutional funds (e.g., private lenders, credit unions). .ii. Priority b: Housing Development Develop adequate and affordable rental housing for low and very low large renter households _and very lowincome elderly households. The two groups identified~were-given high priority in the area of housing development, because of the scarcity of suitable affordable units for large low income households, and the cost burden on the very low income elderly as shown on table 2. Potential funding sources include private capital (e.g., developers, private lenders), state (e.g., CHFA), federal (e.g., HOME, RTC, FHA 223(f)), and local (Tax Increment Financing). Programs to be implemented city-wide. IV-I iii. Priority c. Rental Housing Provide decent rental housing and relieve cost burdened low and very low income elderly renter households, low and very low income large renter households, and rehabilitate substandard rental housing; through tax credit programs, Section 8 rental subsidies administered by HACK, and local housing rehabilitation programs. The City will develop an action plan for evaluating and reducing Lead Based Paint hazards over the next five years, . especially in those census tracts which evidence concentrations of documented lead poisoning. In conjunction with the rehabilitation efforts, local building code enforcement will be addressed to minimize public safety hazards and reduce the number of Substandard housing units within the City. Potential funding sources include state (E.G.,CHFA) and federal programs (e.g., HOME, CDBG, RTC, Public Housing Development, Section $ Voucher and Certificate Programs, Supportive Housing for the Elderly). Geographic Distribution In order to create substantive neighborhood improvement and stimulate additional, unassisted improvement efforts, the City will focus a portion of its housing-related funding in targeted low-income neighborhoods.. Based on the widespread need for affordable homing, however, assistance will also be available city-wide. As illustrated in map Figures 4, 5 and 6, (Ethnic Concentrations), there are very high concentrations of minority populations in low-income neighborhoods. In order to stimulate the de-concentration of minority and Iow-income residents, whenever feasible, the City will distribute funds in non-impacted areas. '2. HOMELESS - Draft Priorities The goal of a comprehensive homeless service system is to ensure that homeless individuals and families move from homelessness to self-sufficiency, permanent housing and independent living. To that end the City recognizes the need to address the issues of homelessness on several levels: 1.) Assessment and Outreach, 2.) Emergency Shelter, 3.) Transitional Homing, 4.), and 5.) Permanent Housing. Funding to address all five components of the continuum of care model for homeless services and programs come from a variety of sources including the Federal government through the Stewart B. McKinney Act, some of which is directly allocated to the City of Bakersfield, the State of California Department of Housing and Community Development and private foundations. i. Priority a: Assessment and Outreach Assessment and Outreach activities are ongoing components of the various homeless service providers in the community. Ongoing funding of this component is a continuing need for all of these agencies .and a goal of this plan. Resources range from federal (e.g. Emergency Shelter Grant Program, Stewart B. McKinney Act programs), to state (e.g. Emergency Housing Assistance Program). ii. Priority b: Emergency. Shelter The continued growth in the numbers of homeless individUals, families with children, as well as those at risk of becoming homeless has put a tremendous strain on those agencies currently serving these populations. A goal of the Consolidated Plan is to support efforts for additional emergency shelters for families and homeless individuals with special needs (i.e. mentally ill, and those with a dual diagnosis of alcohol/other drug addition.). The Plan also supports the establishment of a detoxification center. Potential funding may be available from federal ESG, CDBG, state EHAP and private resources. iii. Priority c: Transitional Housing Transitional housing programs with services on-site to guide families and individuals toward self-sufficiency are very limited (non-existent for individuals and two-parent families) in the Greater Bakersfield area. It is the goal of the Consolidated Plan to address this issue over the next five years through support of the expansion of existing programs and the creation of new ones. Funds may be available from the federal ESG, CDBG, and Supporting Housing programs, among others, as well as the state EHAP grant. iv. Priority d: Permanent Supportive Housing The ultimate goal of any homeless plan is the transition of homeless families and individuals to independent living and appropriate permanent housing situations. For some that situation might include a supportive services component; for the majority, it simply means long-term affordable, decent housing. Supportive housing projects cross the bridge between homeless and "special needs" categories. Supportive housing is generally defined as "housing, including group quarters;: that have a supportive environment and includes a planned'service component". Currently, there are several community care facilities, group homes and other supportive housing situations in the Greater Bakersfield area, however while the facilities might accept formerly homeless individuals into their programs, the bulk of those facilities do not target those individuals. Since the majority of these facilities are regularly at capacity, the need for additional supportive permanent housing is becoming critical. It is a goal of the Consolidated Plan to seek funding and support efforts to increase the number and capacity of supportive housing projects. Funding may be available through the federal ESG, CDBG, HOME, Shelter Pins Care, and HOPWA programs, among others. IV-3 v. Priority e: Permanent Housing The development and support of permanent affordable housing is more fully addressed in the "housing" component of the strategic plan's Draft Priorites section. Geographic Distribution of Funds As agencies identify potential funding sources to address the continuum of care, the City will support those projects without respect to the location of the activity. Geographic distribution of funding from the City's entitlement programs will be based solely on the location(s) identified by the individual agencies. However, by the very nature of the programs and population served, the majority of funding will be directed to predominately low-income areas. The issue of homelessness transcends boundaries and must be addressed accordingly. 3. SPECIAL NEEDS - Draft Priorities "Special Needs" groups include the elderly, the frail-elderly, disabled persons (mental, physical and developmental), persons with HIV/AIDS and their families, persons with alcohol and/or drug addiction and public housing residents. Many in these special categories would benefit from housing situations which include a supportive environment. i. Priority a: Housing Housing for many of this population requires specialized construction to accommodate special needs in addition to the costs associated with the provision of supportive services. It is the goal of the Consolidated Plan to support projects which provide the enhanced physical environment required for many in this group in existing housing units, as well as the creation of additional units. Funding may be available through the federal ESG, CDBG, HOME, Shelter Plus Care, Section 202, Section 811 and HOPWA programs, among others. ii. Priority b: Supportive Services The goal of the Consolidated Plan is to maintain and expand (where possible) programs which offer supportive services for the special needs individuals and families to achieve their maximum potential of self-sufficiency. Such programs may be in tandem with a supportive housing program or in a "stand alone" supportive service facility. Funding may be available through the federal ESG,, Shelter Plus Care, Section 202, Section 81 i, HOPWA programs, as well as the Community Services Block Grant (CSBG) among others. IV-4 Geographic Distribution As individuals, groups, businesses and agencies identify potential funding sources to address the needs of this unique population, the City will support those projects. Geographic distribution of funding from the City's entitlement programs will be based solely on the location(s) identified by the individual applicants. 4. COMMUNITY DEVELOPMENT (Non-Housing) - Draft Priorities i. Priority a: Economic Development Expand economic opportunities for low income residents through activities such as real property acquisition, rehabilitation of structures, and construction of improvements (off-site and on-site) to accommodate commercial-industrial facilities development and expansion; technical and support services for mieroenterprises, and existing businesses; and other commercial-industrial, business, and economic development activities such as leasehold improvements, furniture, fixtures and equipment acquisition, incubator development, and working capital assistance. This priority is justified by the 15% general family poverty irate, 39% female-headed family poverty rate, and the 13.8% unemployment rate by the Buret_au of Labor Statistics. Potential funding programs for these activities include private capital (e.g., owner equity, commercial loans), local (e.g., Kern Small Business Loan Fund, tax increment financing, revolving loan funds), state (e.g., incentive area tax credits, Employment Training Panel Program, California Main Street Program, SSED), and federal (e.g., CDBG, JTPA, EDA, SBA 502/504) funds: ii. Priority b: Public Improvements Develop a viable living community by constructing and rehabilitating infrastructure improvements for areas that primarily benefit low income persons through activities such as flood drain improvements, water/sewer improvements, garbage collection/removal, and street related improvements. Justification for this priority is based on deteriorated/substandard infrastructure in older sections of the city and newly annexed areas, and the general lack of adequate drainage and storm water facilities in certain flat terrain neighborhoods. Potential funding sources include private capital (e.g., developers equity, private utility financing), local (e.g,, tax increment financing, gas tax), state (e.g., Safe Drinking Water Bond Act Program), and federal (e.g., CDBG, EPA, ISTEA) funds. iii. Priority c: Public Facilities Provide a suitable living environment by acquiring, rehabilitating, and constructing improvements for qualified activities and providers in such areas as parks and recreation facilities, health, youth and child care centers, and other public facility projects including the protection and enhancement of buildings and structures that reflect special artistic, cultural, IV-5 and architectural characteristics. This priority is justified by the need for additional community/recreational facilities, and the lack of sufficient child and health care facilities, and youth centers for the City's lower income residents. Sources of funding include private capital (non-profits, foundations), local (e.g., special district financing, certificates of participation), state (e.g., various state bond funds), and federal (CDBG, ESG). iv. Priority d: Public Services Develop a suitable living environment by funding public services primarily provided by municipal departments in the area of crime awareness, graffiti removal, fair housing, neighborhood beautification/clean-ups, and economic development marketing/training. Justification for this priority is based on the increases in violent and property crimes, unemployment, and lack of sufficient job training/marketing. Potential Sources of funding include local (maintenance district, general funds), state (Employment Training Panel Program), federal (CDBG, DOJ - COPS AHEAD). These activities will be primarily focused in low income areas in various neighborhoods within the city. v. Priority e: Accessibility Provide a viable living environment for disabled persons by providing reasonable access to public accommodations/services, and transportation related facilities. This priority is justified by the lack of sufficient accessibility for disabled persons in the areas of public accommodation/services, and transportation related services. Potential funding sources are primarily limited to local funds such as CDBG, gas tax, and general funds. Geographic Distribution Distribution of accessibility funding emphasis is citywide. Primary focus of economic development efforts will be in the southeast of the city (state incentive area) but additional focus includes business districts located in qualified low-income areas as well as industrial parks and commercial sites in various city locations. Geographical emphasis for funding of public improvements and public facilities activities will primarily be low-income neighborhoods located in throughout the city. IV-6 V. ACTION PLAN: ONE YEAR USE OF FUNDS (Rest to be completed later)