To: HONORABLE MAYOR AND From: Vice Mayor Pat Dando

CITY COUNCIL

Subject: SEE BELOW Date: 12-11-03

Council District: Citywide

SNI: All SNI Areas

SUBJECT: PROPOSED HEALTHY NEIGHBORHOODS VENTURE FUND (HNVF)

2004-2005 APPLICATION PROCESS, RATING CRITERIA, SCHEDULE AND ASSOCIATED POLICIES.

RECOMMENDATION

1. Adoption of the application process, rating criteria, schedule and associated policies for HNVF Cycle 5 as detailed in this memorandum.

2. Approval of continued funding for the following HNVF projects:

· Homework Centers

· Children’s Health Initiative

· HNVF Administration

3. Approval of HNVF Policies as follows:

· Leverage Policy requiring that proposed projects also provide funding from non-City sources;

· Innovation Fund Policy setting up of a Fund for “innovative” projects, the amount for which shall be the higher of $500,000 or 5% of available funds for allocation;

· Fiscal Agent Policy allowing applicants to use a fiscal agent to apply on an agency’s behalf only one time;

· For-profit Applicants Policy strongly encouraged that for-profits collaborate and apply for HNVF funding through an eligible nonprofit organization or a public entity;

· Multi-Year Funding Policy allowing multi-year funding of up to three (3) years for vital services and only for special cases;

· Appeals Policy designating the Director of Parks, Recreation and Neighborhood Services and one HNVF Advisory Committee member as the final authority for determining the disposition of an appeal; and

· Number of Applications Policy limiting the number of applications that may be submitted to two (2) per category, except for vital services identified by the City Council as priority services.

BACKGROUND

PRNS consolidated five (5) programs into one Grants Unit for the purpose of simplifying and streamlining the granting process, and reducing the paperwork and time spent in allocating and contracting the grant awards. As part of this effort, the Grants Unit is actively improving processes while meeting with key stakeholders, such as the City Attorney’s Office, City Manager’s Office, United Way of Santa Clara County, County of Santa Clara, City and County of San Francisco, and the Silicon Valley Council of Nonprofits. At the request of the HNVF Advisory Committee, staff administered a survey and convened focus groups with HNVF funded and not-funded applicants to identify potential solutions to the most common challenges found in the HNVF allocation process.

ANALYSIS

Results of Survey, Focus Groups, and Staff Meetings

More than 180 surveys related to the HNVF process were distributed and 25 (or 14%) completed surveys were returned. Results are as follows:

• Application forms and instructions: applicants requested a shorter application and suggested eliminating repetition in instructions.
• Application workshops and technical assistance: 92% respondents rated workshops and technical assistance as very valuable or valuable.

· Criteria and ratings: 80% of respondents rated the criteria and ratings as “clear.”

· Communication: respondents noted that email was the preferred method.

In June, Grants Unit staff began its series of work groups to identify challenges and solutions for each stage of the grant process. Opportunities identified include:

• Designing an application that would effectively solicit information needed to evaluate the feasibility and reasonableness of the proposed project, as well as the capacity of the applicant to implement the proposed project and produce positive results;
• Developing a mechanism to screen applications that are not in alignment with City priorities or those that are not ready to be implemented;
• Narrowing the activities to be funded;
• Evaluating the impact of the programs;
• Considering the possibility of a 3-year funding cycle;
• Limiting the Hearings for new programs and applications that need further clarification and review for consideration; and
• Redesigning the rating criteria.

Furthermore, staff is examining ways to simplify the contracting and reporting processes once the agencies are awarded HNVF grants. For example, simplifying and standardizing the contract boilerplate and reporting forms, eliminating duplication of paperwork that needs to be submitted prior to executing an agreement, consolidating files, integrating tracking systems, and maximizing the use of technology wherever possible.

Five focus groups were conducted during the month of August and one in October 2003. Forty-three (43) participants attended the focus groups. General themes include the following:

· Application Packet: application and instructions should be simplified.

· Review, Analysis and Ratings: a high interest in a screening out process. The role of staff and the Committee should be well defined and made clear to the applicants.

· Workshops and Technical Assistance: applicants praised for workshops and technical assistance conducted by City staff.

· Hearings: No consensus among applicants on how hearings should be conducted.

· General Comments: Clearly define the purpose of HNVF and what needs should be addressed.

In summary, both the community and City staff strongly agreed about the importance of redesigning the allocation process to one that is effective, efficient, and transparent. Although, not all suggestions and comments can be integrated this year, staff is making a concerted effort to apply what has been learned from various process improvement efforts.

Proposed Application Process & Schedule

1. Narrowing Funding Categories

There are three (3) HNVF funding categories. They are: Tobacco-Free Community/Health, Education/Health Services, and Seniors/Health Services.

The goal of the Tobacco-Free Community/Health category is:

To decrease the use of tobacco products and related health problems associated with tobacco use for San José residents, contributing to improved overall health for the City’s population.

In FY 2003-04, the City transferred the task of leading the Tobacco-Free Collaborative from the City to the American Lung Association (ALA). The ALA is developing a strategic plan for the delivery of a Tobacco-Free Community program for the City of San José. Using the Center for Disease Control and the National Cancer Institute standards for the tobacco control prevention, ALA will identify service gaps in the City, and develop a 3-year strategic plan to address both the identified gaps and the spectrum of needed services. The plan will delineate strategic goals and objectives for each year of the 3-year plan, the services to address the objectives, and the mechanism to measure success. This strategic plan will be completed by June 2004 for implementation in FY 2005-2006.

The goal of the Education/Health category is:

To improve academic success of San José students through programs that address unmet health care needs and provide for healthy developmental age-appropriate activities.

Although “education” can be broadly defined, the key words of the goal that was adopted by City Council for the Education/Health category are “improve academic success.” Also adopted by the City Council are specific strategies to improve academic success. These strategies are detailed in the Blueprint for Bridging the Digital Divide – Youth Services Master Plan. Staff recommends limiting the scope of the Education/Health category to those specific impact areas that directly relate to academic success, thereby aligning with the adopted goal of the category.

The goal of the Seniors/Health category is:

To improve the quality of life for seniors by increasing subsidized programs and services, providing for basic health and nutritional needs, and promoting independent living through social and recreational activities.

The Aging Master Plan will be updated and will be completed by December 2004. For the upcoming allocation process, staff recommends limiting the types of services that would be funded to projects that directly align with specific strategies in the current Master Plan that relate to basic and nutritional health needs and promote independent living. HNVF will readjust the focus of the Seniors/Health category once the updated plan is approved. Implementation of a revised focus is targeted for FY 2005-06.

Attachment A illustrates the alignment between the HNVF goals, the impact areas found in the adopted plans, and related long-term outcomes.

2. Release of Request for Proposals (RFP)

Staff plans to release the RFP on January 9, 2004, with a submittal date of February 17, 2004.

3. Workshops and Technical Assistance

Workshops related to the RFP will be conducted prior to the proposal deadline. (ATTACHMENT B)

4. Receipts of Proposals

The deadline for submission of proposals is 5:00 P.M., Tuesday, February 17, 2004. To be fair to all applicants, this deadline will be strictly enforced. Late and/or incomplete proposals will not be accepted beyond the due date and time.

5. Pre-Screening of Proposals – Phase 1

The HNVF Advisory Committee and staff debriefing, as well as the HNVF Focus Groups that were conducted during the summer of 2003, surfaced the need for a screening mechanism to reduce applications to be heard to only those that align with the HNVF Program objectives, are feasible, and will produce positive results.

All proposals will be pre-screened to determine eligibility for HNVF funding and capacity to achieve desired results. Applicants that propose innovative projects but do not have the track record of providing the proposed services to demonstrate capacity to achieve results will be considered for funding.

Screening for eligibility includes verification of the following entry requirements:

i. Eligible applicant – Applicants must be a government entity, a non-profit agency with a 501(c)(3) status, or a recognizable association of people with a fiscal agent who agrees to abide by the City’s grant agreement on behalf of the association. A fiscal agent must meet all eligibility requirements.

ii. Eligible Category – Proposals must align with one or more of the three HNVF funding categories: Tobacco-Free Community/Health, Senior Services/Health, or Education/Health.

iii. Eligible activity – Proposed activity must be one of the approved activities. These activities have been narrowed down to align with the City Council approved goal for each category.

iv. Eligible clientele - Clients to be served by the proposed project must be San Jose residents.

v. Completeness of project proposal, including a description and budget for a smaller project.

Applicants who do not meet the entry criteria will not be considered for funding. They will be notified in writing that their application will not be considered for funding, including the reason why their application was not eligible.

Screening for Capacity includes a determination of whether the proposed project aligns with the new focus of the category in which the proposed project qualifies (Needs), an evaluation of the applicant’s ability to successfully implement a proposed project (Capacity to Achieve Results), and its overall track record of accomplishing goals in a timely manner (Operational Performance).

To be considered feasible, physical improvement projects must demonstrate that they have site control for the proposed project, meet City’s security requirements, have a satisfactory construction management plan, and adequate resources to complete and operate services upon completion of the project.

Proposed projects that have not demonstrated alignment with the revised focus of each category, or applicants who have not demonstrated the capacity to achieve desired results, or do not have the overall track record of accomplishing goals, or have not demonstrated feasibility (physical improvement projects only) will not be considered for funding. However, proposed projects that demonstrate alignment with the new focus of an HNVF category as well as promote a new and unique service delivery approach (i.e. an Innovative Project) and are submitted by an applicant that has not demonstrated overall track record but does not have a negative evaluation from other funding sources, including other City grant programs, and has demonstrated sound financial practices, may be considered for funding under the Innovation Fund. This Innovation Fund is being created to encourage new approaches to delivering services and to encourage emerging service providers.

Applicants will be notified in writing if their proposal will not be considered for funding, including the reason why the application will not be considered.

6. Rating of Proposals – Phase 2

City staff will rate all proposals that have met and passed the pre-screening criteria. Staff will apply the Rating Scale (ATTACHMENT C) to each proposal, record the ratings, and submit the ratings together with the project analysis to the HNVF Advisory Committee for consideration. Applicants will be provided an opportunity to review and react to the ratings prior to the Ratings Presentation meeting of the HNVF Advisory Committee on April 14, 2004.

The HNVF Focus Groups that were conducted during the summer of 2003, surfaced much discontent with the current rating method (Likert Scale). One of the three major areas of improvements that stakeholders felt strongly about is the replacement of this Likert Scale by a clearer and more objective rating system. To respond to the need for a more objective rating system and the need for a mechanism to pre-screen applications so that only projects that address the HNVF goals and providers that can demonstrate positive results are funded, staff recommends a two-pronged rating system for Operating Projects as follows:

A. Pre-screening: A 2-Point Rating Scale consisting of “Yes”, “No”, to evaluate and limit the applications to be considered for funding to only those that demonstrate alignment with the revised focus of each category (Needs), the applicants capacity to achieve desired results (Capacity to Achieve Results), and its overall track record of accomplishing goals (Operating Performance). Applications that receive a “No” rating are considered to not have demonstrated that a successful project can be implemented. These projects will not be heard.

B. Proposal Rating: The 5-point Likert Rating Scale that ranges from Very High to Very Low was replaced by a 3-point Likert Scale ranging from Low – Medium – High to rate the following evaluation criteria:

1. Project Design;

2. Work Plan;

3. Project Outcomes; and

4. Leverage.

Proposed projects will be funded primarily based on the rating received. Although the rating is the primary basis for the decision to fund a project, it will be emphasized once again that a high rating does not guarantee funding. Other indicators such as geographic equity of services, service gaps that require immediate attention, maintenance of vital services to minority populations, and under-funded services will be considered. Projects that rated “Low” will be excluded from the Proposal Hearings phase and will not be considered for funding. Applicants will be informed in writing that their application will not be considered for funding, including the reason why their application rated “Low”.

Physical Improvement Projects will also be rated based on the feasibility of completing the project during this funding cycle. Physical Improvement projects must demonstrate that they have site control, adequate financial resources to complete and operate the project after completion, meet the City’s Security requirements of first position in a Deed of Trust, and have a satisfactory construction management plan. Feasibility will be rated on a 3-Point Rating Scale consisting of “Yes”, “No”, “Conditional.” All feasibility requirements must be met to be considered for funding. Applications that do not meet all feasibility requirements will not be considered for funding. Applicants will be informed in writing that their applications will not be considered for funding, citing the feasibility criterion that was not met.

7. Proposal Hearings – Phase 3

Hearings will be limited to proposed projects that meet the entry criteria, demonstrate capacity to successfully implement the proposed projects, and rated either “High” or “Medium”. Proposals that do not meet the Pre-Screening Criteria or rated “Low” will not proceed to the hearing phase.

Staff and category experts will analyze proposed projects that passed the Pre-Screening phase. Analysis shall include but not be limited to clarification of unclear points contained in the application and alignment with new focus of the category, and analysis of the proposed budget and its cost effectiveness, and how the proposed projects contributes to the goal of the category. The HNVF Advisory Committee will be given an analysis of each project that will be heard. Hearings will be limited to questions from the Committee and staff needed to clarify any issue contained in the application or analysis. Staff and category experts will rate the projects after evaluation and hearing.

8. Funding Recommendations– Phase 4

Funding recommendations will be provided by Administration to the HNVF Advisory Committee. The Committee will discuss Administration’s funding recommendations in a public meeting, after which the Committee will formulate its funding recommendation to the City Council.

9. Grant Awards – Phase 5

The City Council has the final authority to fund projects. The HNVF Advisory Committee’s funding recommendations will be forwarded to the City Council in May.

10. Schedule

Attachment B delineates a schedule of activities for the HNVF Cycle 5 allocation process.

Proposed Policy Changes

1. Leveraging Policy. The HNVF Advisory Committee (Committee) recommends that the City require applicants to provide some leveraging for the proposed project. Applications requesting 100% funding from the HNVF program will not be considered for funding. Leveraging HNVF funds with other funds demonstrates an agency’s commitment to provide services to City of San Jose residents by bringing in other resources for the project. Staff also recommends that leverage be calculated based on the funds leveraged for the proposed project, rather than leverage funds for the entire agency, and that the leveraged funds be non-City resources. Allowing total agency funding gives an overstated picture of funds available for the proposed project. Excluding other City resources from leverage calculation encourages the applicant to seek funding sources other than the City and contributes toward a diversified funding base that will help the agency’s fiscal stability.

2. Innovation Fund: The Committee recommends setting up an Innovation Fund in the amount of $500,000 or 5% of the total HNVF award for “innovative” projects. Should the “Innovation Fund” not be depleted, the remaining amount would be redistributed to the other three funding categories. Innovation is defined as a new, untried, service delivery method for a proposed project that aligns with the revised focus of the category in which the project is applying for funds.

3. Revision to Entry Criteria: The Committee strongly encourages “for-profit” businesses that apply for HNVF funding to collaborate with a non-profit organization or a public entity that will be directly involved in the delivery of the proposed project.

4. One Time Use of Fiscal Agent Policy: Staff recommends that applicants be permitted to use a Fiscal Agent only one time. It is expected that an agency that uses a Fiscal Agent for one year, will build its capacity to become a fully independent and eligible organization. As an exception to this policy, recognized neighborhood organizations may apply using a Fiscal Agent more than once to encourage neighborhood involvement in affecting change in the community.

5. Multi-Year Funding: Multi-year funding up to three (3) years for vital services and special cases is recommended. Multi-year funding may not be awarded to a new HNVF applicant or a new project. It may be awarded to applicants who have demonstrated exceptional track record in providing HNVF funded services.

6. Sunset Policy: The HNVF Advisory Committee will be developing a sunset policy that would gradually decrease the amount awarded to each grant recipient by a specific percentage. A sunset mechanism will encourage HNVF funded agencies to seek other funding sources to sustain its program using sources other than the HNVF Program. This will help ensure the availability of HNVF program funds for future innovative projects.

PUBLIC OUTREACH

Recommendations for process improvements included in this memorandum was a result of input from stakeholders of the HNVF allocation process, including representatives of County of Santa Clara, City and County of San Francisco, United Way, and the Silicon Valley Council of Non-Profits, and applicants of the recently concluded FY 2003-2004 HNVF allocation process.

COORDINATION

This memorandum was coordinated with the City Manager’s Office and the City Attorney’s Office.

COST IMPLICATIONS

There is no impact to the General Fund. The Anti-Tobacco Master Settlement Agreement Revenue Fund (Fund 426) is a dedicated funding source for the HNVF Program.

CEQA

Not a project.

VICE MAYOR PAT DANDO

Chair, HNVF Advisory Committee

HNVF GOALS, IMPACT AREAS AND LONG-TERM OUTCOMES RELATED TO HEALTH AND SAFETY

HNVF Goal	Strategic Impact Areas	Long-term Outcomes
To decrease the use of tobacco products and related health problems associated with tobacco use for San José residents, contributing to improved overall health for the City’s population.	TOBACCO-FREE COMMUNITY (San Jose Tobacco-Free Collaborative) Stop tobacco addiction and reduce the impact of tobacco use in San Jose through prevention and education, tobacco cessation, and counter-marketing.	1. San Jose will be a tobacco-free community.
To improve academic success of San José students through programs that address unmet health care needs and provide for healthy developmental age-appropriate activities.	EDUCATION (Blueprint) Provide for safe opportunities for youth to be successful and productive.	1. Young children will enter kindergarten ready to succeed academically. 2. Elementary/middle school children will be educationally at or above grade level and will choose healthy behaviors. 3. Teenagers have a sense of purpose and graduate from high school with a plan for higher education or career preparation.
To improve the quality of life for seniors by increasing subsidized programs and services, providing for basic health and nutritional needs, and promoting independent living through social and recreational activities.	SENIOR SERVICES (Aging Master Plan) Foster the independence of older persons in San José and assist them in meeting their basic life needs through planning, advocacy, funding, and/or directly providing services to this growing, diverse population.	1. Every older adult in San José receives an adequate daily diet. 2. Older persons in San José maintain optimum physical and mental health, and have full access to affordable preventive and treatment health services. 3. Older adults needing homemaker, attendant, respite and/or nursing care receive appropriate types and levels of affordable services in their homes. 4. Older adults in San José have full protection from physical, psychological, and/or financial abuse and neglect.
INNOVATION	Promotes one of the HNVF funding categories by way of a new and unique approach to cultivating good health, safe communities and enriching the lives of San José residents.

ATTACHMENT AATTACHMENT b

PROPOSED

2004–05 HNVF MEETING SCHEDULE

SCHEDULE	HNVF ACTIVITY
Wednesday, December 3, 2003 City Hall, Room 204 6:30 PM- 8:30 PM	Committee Meeting: Public Hearing on criteria and process. Committee approves criteria and process for recommendation to Council.
Tuesday, December 16, 2003	City Council approval of criteria and process.
Tuesday, January 6, 2004	Applications released to the public
Tuesday, January 13, 2004	Technical Assistance begins
Thursday, January 15, 2004 4 N. Second Street, Room 600 Large Conference Room 9 AM - 12 PM	Workshop: On Eligibility
Tuesday, January 20, 2004 4 N. Second Street, Room 600 Large Conference Room 9 AM - 12:30 PM	Workshop: Nonprofit agency-sponsored physical improvement project
Tuesday, January 20, 2004 4 N. Second Street, Room 600 Large Conference Room 1:30 PM – 5 PM	Workshop: City-sponsored physical improvement project
Wednesday, January 21, 2004 Franklin McKinley School District 645 Wool Creek Drive 9 AM - 12 PM	Workshop: City-sponsored public services or operating project
Wednesday, January 21, 2004 Franklin McKinley School District 645 Wool Creek Drive 1 PM - 5 PM	Workshop: Nonprofit agency-sponsored public services or operating project (new applicants)
SCHEDULE	HNVF ACTIVITY
Thursday, January 22, 2004 Lenninger / Okayama Room 1300 Senter Road 9 AM - 12 PM	Workshop: Nonprofit agency-sponsored public services or operating project (repeat applicants)
Thursday, January 22, 2004 Lenninger / Okayama Room 1300 Senter Road 1 PM - 5 PM	Workshop: Outcomes
Tuesday, January 27, 2004 Lenninger / Okayama Room 1300 Senter Road 1 PM - 5 PM	Workshop: Outcomes
Friday, February 6, 2004	Last day for Technical Assistance for draft review
Wednesday, February 11, 2004	Last day for all other Technical Assistance
Tuesday, February 17, 2004 4 N. Second Street, Room 600 Large Conference Room 8 PM – 5 PM	Applications Due
Wednesday, March 17, 2004 801 N. First Street, Room 205 Council Chambers 4 PM – 9 PM	Committee Hearing: Application Hearing 1 2^nd Quarter Monitoring Report
Wednesday, March 24, 2004 801 N. First Street, Room 205 Council Chambers 4 PM – 9 PM	Committee Hearing: Application Hearing 2
Wednesday, April 7, 2004 801 N. First Street, Room 205 Council Chambers 4 PM – 9 PM	Committee Hearing: Application Hearing 3
Saturday, April 10, 2004 Fire Training Center 245 S. Montgomery Street 9 AM - 12 Noon (AS NEEDED)	Committee Hearing: Application Hearing 4
SCHEDULE	HNVF ACTIVITY
Wednesday, April 14, 2004 801 N. First Street, Room 205 Council Chambers 6:30 PM – 9 PM	Committee Meeting: Ratings Presentation and Discussion and Administration’s Recommendation
Wednesday, April 21, 2004 801 N. First Street, Room 205 Council Chambers 6:30 PM – 9 PM	Committee Meeting: Committee Recommendation

ATTACHMENT C

Rating Criteria	Description	Rating
Statement of Needs	Meets a demonstrated community need and has clearly stated funding need for a project that falls within one of the funding categories. Articulately describes how the proposed project addresses the need.	Yes: Agency demonstrates need and proposed project can feasibly and credibly address the need. No: Proposed project does not directly relate to addressing the need.
Project Design	Proposed service is explained, clearly described and includes the location of services, number of clients served, and hours of operation. Demonstrates how it impacts the community need identified.	High Medium Low
Work Plan	Illustrates an achievable work plan for the proposed project, with reasonable inputs, outputs, and activities to obtain the stated results.	High Medium Low
Project Outcomes	Quantifiable outcome measures stated and shows evidence that the approach has been successful. Outcomes are realistic and agency has clearly defined the measurement methodology.	High Medium Low
Leverage	Demonstrates substantial leveraging of funding sources other than the City’s. Coordinates proposed services with City departments or other key players.	High Medium Low
Capacity to Achieve Results	Demonstrates an ability to successfully implement proposed project.	Yes: Agency has expertise, experience, sufficient level of staffing, and an established (best practices) approach to meet the need. No: Agency does not have the experience, sufficient level of staffing, or an established approach to meet the need.
Operational Performance	Demonstrates a successful overall track record of accomplishing goals in a timely manner.	Yes: Good to excellent prior performance. No: Has a poor performance record- had difficulty accomplishing goals
Feasibility Capital Projects Only	Capital projects must demonstrate they have site control for proposed project, have adequate financial resources to complete and operate the project with completion, meet City’s security requirements, and a satisfactory management plan.	Yes: All feasibility criteria are in place. Conditional: Not all feasibility criteria are in place, however, incomplete criteria can easily be resolved prior to July 1, 2004. No: Not all feasibility criteria are in place, however, incomplete criteria cannot be resolved prior to July 1, 2004.