BILL ANALYSIS Ó
AB 325
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
325 (Wood) - As Amended May 13, 2015
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|Policy |Housing and Community |Vote:|6 - 0 |
|Committee: |Development | | |
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Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill makes specified changes to the Community
Development Block Grant (CDBG) Program application process, and
provides a two year extension of HCD's Building Equity and
Growth in Neighborhoods (BEGIN) program. Specifically, this
bill:
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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:
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.
1)Extends the period to liquidate the encumbrances of certain
appropriations from the BEGIN fund to HCD until June 30, 2017,
and June 30, 2018. Because the bill provides for
appropriations related to the budget in the Budget Bill, this
bill shall take effect immediately.
FISCAL EFFECT:
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1)On-going costs to HCD of up to $176,000 (GF) for up to one
position to provide additional information to grant
applicants. HCD administers approximately 200 CDGB contracts
each year. Each contract can have eight or more activities,
and each activity can have several individual disbursements.
2)One-time cost exceeding $3.8 million (BEGIN Fund) to extend
the program.
COMMENTS:
1)Purpose. 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."
In addition, it is the intent of the author to assist cities,
including Santa Rosa, by extending the period to liquidate
encumbrances associated with the BEGIN program.
2)CDBG Program. 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.
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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.
Since 1983, HCD has administered the state CDBG program in
California. Under the state CDBG Program, the state 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 almost $25 million in
state-administered federal CDBG funds.
3)BEGIN Program Extension. The BEGIN fund is available, upon
appropriation, to HCD for grants to cities and counties for
downpayment assistance to qualifying new home buyers in those
cities and counties that have taken specific actions to remove
barriers to affordable housing.
The city of Santa Rosa has worked in partnership with Burbank
Housing, a nonprofit that builds affordable housing units for
low-income people, to increase the number of affordable homes
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in Sonoma County. The BEGIN program awarded Burbank Housing
$3.8 million for the project. The construction of 32 homes has
started, but Burbank Housing was recently informed by HCD that
the $3.8 million award has to be spent by next month, June 30,
2015, the date that the BEGIN program expires. Effectively,
the deadline places the entire Catalina Townhomes project in
jeopardy. This bill extends the deadline to spend the money so
the builder can complete the project.
4)Budget Discussion. The existing periods to liquidate the
encumbrances for the BEGIN program were contained in the
Budget Act of 2010 and the Budget Act of 2011. The issue of
extending the encumbrance dates is also being discussed as
part of this year's budget process and may get resolved
through budget language.
5)Prior Legislation.
a) AB 232 (V. Manuel Pérez), Chapter 386, Statutes of 2012,
regarding the economic development portion of the CDBG
Program, eliminated the dollar-per-job test and the
requirement that benefit to low- and moderate-income
persons be a scoring factor in ranking applications.
b) AB 2188 (Arambula), Chapter 95, Statutes of 2008,
deleted 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
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be set aside for technical assistance and planning grants.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081