June 28, Dear Ms. Cremer: RE: Grant Agreement #B-09-CN-CA-0052 Substantial Amendment

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1 THIS IS A DRAFT DOCUMENT OF THE SUBSTANTIAL AMENDMENT THAT HCD WILL FORWARD TO HUD. IT IS OPEN FOR PUBLIC COMMENT FOR 15 DAYS FROM THE DATE OF PUBLICATION ON THE WEBSITE. HCD WILL BE TAKING ALL COMMENTS AT NSP@acgov.org. Ms. Maria F. Cremer, Acting Director of CPD U.S. Dept. of Housing and Urban Development Office of Community Planning and Development 600 Harrison Street, 3 rd Floor San Francisco, CA Dear Ms. Cremer: RE: Substantial Amendment The Alameda County Housing and Community Development Department (HCD) requests approval of a Substantial Amendment to the Action Plan for its Neighborhood Stabilization Program 2 (NSP2), Grant Agreement #B-09-CN-CA to add 17 new census tracts to its NSP2 grant to allow for greater program impact. Substantial Amendment: Request to add the following seventeen (17) non NSP2 approved census tracts: 4503, 4425, , 4411, 4377, 4383, 4376, 4312, , , 4324, 4326, 4306, 4402, , and 4336, and remove fourteen (14) census tracts; 4504, 4501, , , , , 4363, 4352, , , , 4301, 4357, 4362 Rationale: In late 2010, both of the NSP 2 Development Partners (Hallmark Community Solutions and Habitat for Humanity East Bay) requested that HCD seek to add the NSP 1 census tracts to the NSP2 program to provide more consistency between four overlapping NSP programs (Urban County NSP 1, City of Hayward NSP 1, City of Livermore NSP1 Consortium and Alameda County NSP 2 Consortium). The Development Partners and HCD staff believed that this would provide better access to foreclosed properties in all of the NSP 2 Consortium communities where foreclosures and vacant units were causing blight and depressing property values. HCD undertook a two-part analysis to better understand the

2 Page 2 foreclosure activity occurring in each of the NSP2 jurisdictions, inside and outside of the approved census tracts. First, in December 2010 using data collected from Foreclosure Radar HCD conducted a point in time study and looked at recent foreclosures in the Alameda County NSP2 Consortium. Using GIS software, HCD mapped: Bank absorbed properties in Alameda County in late 2010 Residential vacancies in Alameda County in late 2010 Recent REO counts for properties eligible for NSP2 funding broken down by Mid- County, South County and East County These maps were very useful in illustrating that while there were some foreclosures located in NSP1 census tracts, a great majority of the foreclosures in the County were not located in either NSP1 or NSP2 approved census tracts (see attached maps). For example, in Mid County, where the heaviest concentration of foreclosures in the County has occurred, of the 308 total foreclosures, 192 (over 60%) of them are located in unapproved census tracts. This is the same situation in East County, where 58% of the foreclosures were located in unapproved census tracts. In South County, almost 40% of the foreclosures were in unapproved census tracts. In order to further support our analysis, HCD then conducted a study of foreclosures over a six month period of time in the Alameda County NSP 2 Consortium Jurisdictions. Using data collected from the Neighborhood Stabilization Housing Trust which receives foreclosures per jurisdiction (not census tract), HCD analyzed 600 properties which had come from the Trust. We found that while many of our NSP 2 census tracts had significant numbers of eligible properties, some had almost none. As expected, there were also census tracts with many foreclosures that were not part of NSP1 or NSP2. HCD then looked at NSP2 and NSP3 scores for each census tract and used this information to determine an average score. Although the NSP2 mapping tool can no longer be used to submit NSP2 applications, HCD utilized the tool to determine the NSP2 census tract need score for the census tracts it is interested in adding to its program. HCD also utilized the NSP3 mapping tool, and noticed that many of the scores had dropped significantly from NSP2 to NSP3. Below is a snapshot of the scoring analysis HCD used in making this request for Substantial Amendment to its NSP2 grant.

3 Page 3 Add Jursidiction Cenus Trct # of Prop. High Score Hayw ard San Leandro Fremont Hayw ard/fairview Hayw ard San Leandro Union City Livermore San Leandro Fremont Hayw ard Union City Dublin Fremont Uninc/Castro Valley Livermore San Leandro Average of all Census Tracts HCD took the higher of the scores when determining the average application score for the new census tracts in the above chart, which equals: However, as illustrated by the chart below, when combined with the census tracts already in the NSP2 program the average score is: 15.38, which is significantly under the qualifying threshold for NSP2 eligibility. However, when the lower performing census tracts are removed, the average score increases to 17.57, which is just.43 under the qualifying threshold and our original application score. This data supports HCD s assertion that adding the requested census tracts and removing those lower scoring census tracts will strengthen its ability to implement and manage its NSP2 grant.

4 Page 4 City Census tract High Score Notes Dublin Add Fremont Add Fremont Add Fremont Add Hayward Add Hayward Add Hayward Add Hayward/Fairview Add Livermore Add Livermore Add San Leandro Add San Leandro Add San Leandro Add San Leandro Add Uninc/Castro Valley Add Union City Add Union City Add Dublin & Uninc Keep Dublin & Uninc Keep Emeryville Keep Fremont Keep Fremont Keep Fremont Keep Fremont Keep Hayward Keep Hayward Keep Hayward Keep Hayward Keep Hayward Keep Hayward/cherryland Keep Livermore Keep Livermore Keep Livermore/Uninc Keep Livermore Keep Livermore Keep Newark Keep Newark Keep Newark Keep Newark & Fremont Keep Newark Keep Pleasanton/Uninc Keep Pleasanton Keep Pleasanton Keep San Leandro Keep San Leandro Keep Uninc/Ashland Keep San Leandro Keep Uninc/Castro Valley Keep Uninc/El Portal Ridge Keep Uninc/San Lorenzo Keep Uninc/San Lorenzo Keep Union City Keep Union City Keep Union City Keep Dublin Remove Dublin Remove Fremont Remove Fremont Remove Fremont Remove Hayward/5 Canyons Remove Hayward/Fairview Remove Hayward/Fairview Remove Livermore Remove Livermore/Uninc Remove Pleasanton/Uninc Remove Uninc/Castro Valley Remove Uninc/San Lorenzo Remove Uninc remove Average of All Average of Keep + add 17.57

5 Page 5 Alameda County Housing and Community Development Department (HCD) does not anticipate that the requested Substantial Amendment would negatively impact the original score received on our application. In fact, approving this amendment will increase our ability to obligate and expend NSP2 funds. Thank you in advance for your prompt consideration of this request. Should you have any questions or require additional information, please do not hesitate to contact me at (510) , or by at michelle.starratt@acgov.org. Sincerely, Linda M. Gardner Housing Director cc: Rebecca Blanco, HUD NSP Representative G:\HCD\NSP\NSP 2\taw substantial amendment re census tracts June 2011.doc

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