BILL ANALYSIS Ó
AB 325
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB 325
Wood - As Amended April 16, 2015
SUBJECT: Community Development Block Grant Program: funds
SUMMARY: Makes specified changes to the Community Development
Block Grant (CDBG) Program application process. Specifically,
this bill:
1)Provides that, no later than 60 days after the Department of
Housing and Community Development (HCD) notifies an applicant
that their CDBG application has been approved, HCD must enter
into a grant agreement with the applicant.
2)Requires HCD, when it enters into a grant agreement with an
applicant, to provide the applicant with a complete and final
list of all of the activities the applicant must complete in
order to receive a disbursement of funds pursuant to the
agreement.
3)Requires HCD to do either of the following no later than 30
days after it receives a request for the disbursement of funds
from a grantee:
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a) Notify the grantee that HCD has approved
disbursement of the funds.
b) Provide the applicant with a complete and final list
of all of the remaining activities the applicant must
complete in order for HCD to approve disbursement of the
funds.
EXISTING LAW:
1)Provides that the Legislature intends that funds allocated to
the state pursuant to the federal CDBG program, and
administered by HCD, be of maximum benefit in meeting the
housing and economic development needs of persons and families
of low or moderate-income (Health & Safety Code Section
50825).
2)Requires HCD to administer the State CDBG Program to eligible
cities and counties (Health and Safety Code Section 50825, et
seq., and the California Code of Regulations, Title 25,
Section 7050, et seq.).
3)Defines the term "non-entitlement area" as an area which is
not a metropolitan city or part of an urban county and does
not include Indian tribes (42 United States Code Section
5302).
4)Defines an urban county generally, as having a population
greater than 200,000 given certain specified criteria (42
United States Code Section 5302).
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5)Defines a metropolitan city as having a population greater
than 50,000 given certain specified criteria (42 United States
Code Section 5302).
6)Requires generally, HCD to allocate not less than 51% of CDBG
funds for purposes of providing or improving housing
opportunities for low or moderate-income households (Health &
Safety Code Section 50828).
7)Requires generally, HCD to allocate 30% of CDBG funds for
purposes of economic development (Health & Safety Code Section
50827).
FISCAL EFFECT: Unknown.
COMMENTS:
Background: The CDBG program was established by the United
States Housing & Community Development Act of 1974 (HCD Act) and
is administered at the federal level by the U.S. Department of
Housing and Urban Development (HUD). The primary federal
objective of the CDBG program is to develop viable urban
communities by providing decent housing and a suitable living
environment and by expanding economic opportunities, principally
for persons of low and moderate-income. "Persons of low and
moderate-income" are defined as families, households and
individuals whose incomes do not exceed 80% of the county median
income, with adjustments for family or household size. Among the
many uses of CDBG funds are infrastructure improvements and
activities in support of the construction of housing.
Congress amended the HCD Act in 1981 to give each state the
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opportunity to administer CDBG funds for small cities and
counties. Since 1983, HCD has administered the state CDBG
program in California. Under the state CDBG Program, states
award grants to smaller cities and counties to develop and
preserve decent affordable housing, to provide services to the
most vulnerable in our communities, and to create and retain
jobs. Annually, each state develops funding priorities and
criteria for selecting projects. Eligible applicants include
counties with fewer than 200,000 residents in unincorporated
areas and cities with fewer than 50,000 residents that do not
participate in the HUD CDBG entitlement program. These are
known as "non-entitlement" areas.
Each year, generally in January, HCD releases one combined
Notice of Funding Availability (NOFA) encompassing all
CDBG-eligible activities, including Community Development,
Economic Development, and the Native American and Colonia
Set-Asides. The most recent NOFA was issued in January 2015,
and announced the availability of $24,983,999 in
state-administered federal CDBG funds.
Federal and state laws and regulations apply to the state CDBG
program, and HCD issues a grant management manual and numerous
memoranda, checklists, and other documents that further expand
on the CDBG application and grant management process and
requirements. Applicants that receive award letters later
receive a grant agreement, which is entered into between a local
representative and HCD. The grant agreement reserves monies
from the CDBG allocation approved for funding by HCD. Grant
payments are made to grantees by an advance or a reimbursement,
and the grant payment process must minimize the time between the
transfer of funds to the applicant and the applicant then
disbursing the funds. Grantees must submit funds request forms
to HCD to request contract funds. According to HCD's grant
management manual, HCD reviews each funds request and will
return it if corrections are needed.
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Need for this bill: The author contends that certain CDBG
grantees are facing obstacles when applying for fund
disbursements with HCD, leading to confusion about what steps
need to be taken in order for the application to be acceptable.
According to the author, "the small cities and counties that
stand to gain the most from this program do not have the
expertise or the resources to navigate this unnecessarily
complicated and drawn out process. In order to make the program
more accessible to some of our most underserved constituencies
we need to approve these efficiencies."
The Rural County Representatives of California, a supporter of
the bill, states that "current practice in the grant program has
no limitation as to how long HCD has to respond to a completed
application, nor is there any requirement to give any reason or
justification as to denial or rejection of that application."
Additionally, "CDBG grants generate economic development
opportunities within our rural and remote communities, but small
local governments with minimal resources have difficulty
engaging in the initial process, let alone working through and
recovering from a rejection from a state agency."
The author points out that there have been attempts to address
this issue non-legislatively with HCD. The author points to
previous instances where local governments throughout the state
"have met several times over the past two years along with past
legislators and staff from HCD in attempts to make the program
more effective. Each time HCD has promised action and the
problems have only become worse."
Staff comment: AB 325 would provide statutory authority for
when and how HCD is required to respond to grantees in two
situations. First, upon approving an applicant for an award,
HCD would be required to enter into a grant agreement with the
applicant no later than 60 days after it notifies the applicant
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that their CDBG application has been approved. When it enters
into a grant agreement with an applicant, HCD must provide a
complete and final list of all of the activities the applicant
must complete in order to receive a disbursement of funds.
Second, within 30 days of receiving a grantee's request for the
disbursement of funds, HCD must either notify the grantee that
it has approved the disbursement or provide the grantee with a
complete and final list of all of the remaining activities the
applicant must complete in order for HCD to approve disbursement
of the funds.
Generally these types of program deadlines are not provided for
in statute in order to give agencies the flexibility to adopt
their own procedures. In the author's view, AB 325 is needed to
better streamline the grant process, so as to make the CDBG
program more accessible to small cities and counties.
Related legislation:
AB 232 (V. Manuel Pérez), Chapter 386, Statutes of 2012: This
bill, for the economic development portion of the CDBG Program,
eliminates the dollar-per-job test and the requirement that
benefit to low- and moderate-income persons be a scoring factor
in ranking applications.
AB 2188 (Arambula), Chapter 95, Statutes of 2008: This bill
deletes the sunset on provisions allowing HCD to annually
establish the maximum grant amounts under the General Program
and Economic Development Allocations of the CDBG program and
to determine the amount of funding that will be set aside for
technical assistance and planning grants.
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REGISTERED SUPPORT / OPPOSITION:
Support
Community Development Commission of Mendocino County
Leading Age California
Rural County Representatives of California (RCRC)
West Company
Opposition
None on file
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Analysis Prepared by:Rebecca Rabovsky / H. & C.D. / (916)
319-2085