BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 232
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          Date of Hearing:   January 19, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

               AB 232 (V. Manuel Perez) - As Amended:  January 4, 2012 

          Policy Committee:                              JEDE Vote:6-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill eliminates the requirement that small cities seeking 
          funds under the federal Community Development Block Grant 
          Program (CDBG) must create or retain a job for every $35,000 
          dollar in grants.   

           FISCAL EFFECT 

          Minor and absorbable costs to the Department of Housing and 
          Community Development (HCD).

           COMMENTS  

           1)Purpose  :  According to the author, this bill will provide 
            flexibility to the small cities portion of the federal CDBG 
            Program and would allow CDBG grant money to be disbursed more 
            quickly to local economic development projects.  Under the 
            federal guidelines, states are required to certify that 
            economic development projects funded through the Small Cities 
            program generate a sufficient public benefit.  Federal 
            guidelines afford states several options for certifying public 
            benefit, ranging from the number of jobs created per 
            investment to the level of goods and services generated for 
            persons of low and moderate incomes.  
             In California, however, the state chose to avail itself of 
            only one of the options afforded under federal law for 
            certifying public benefit.  This measure removes the more 
            limited requirement from the statute, allowing HCD the 
            flexibility to more quickly certify and award funding for 
            economic development projects across the state.  

          2)Community Development Block Grant Program  .  The CDBG Program 








                                                                  AB 232
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            was established by federal law in 1974.  Large and medium 
            sized municipalities receive allocations from the federal 
            Housing and Urban Development Department.  States administer 
            allocations for the CDBG program for smaller cities and 
            counties on a competitive basis.  California's small cities 
            CDBG program administered by HCD provides funding to counties 
            with fewer than 200,000 residents in unincorporated areas and 
            cities with fewer than 50,000 residents that are not 
            participants in the federal CDBG Program.  
             
          3)  Related legislation.  

             a)   AB 1556, 2010, (Assembly Committee on Jobs, Economic 
               Development and the Economy), would have required CDBG 
               grantees to contract with approved financial 
               intermediaries.  AB 1556 was held in this committee.

             b)   SB 194, 2010, (Florez), would have provided that unless 
               prohibited by federal regulations, local governments must 
               include representation from disadvantaged unincorporated 
               communities in their Citizen Advisory Committee.  This bill 
               was vetoed by Governor Schwarzenegger.


           4)There is no registered opposition to this bill.

           
           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081