BILL ANALYSIS Ó AB 232 Page 1 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 Page 2 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