BILL ANALYSIS Ó
AB 325
Page 1
ASSEMBLY THIRD READING
AB
325 (Wood)
As Amended May 28, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+----------------------|
|Housing |6-0 |Chau, Steinorth, | |
| | |Burke, Chiu, Beth | |
| | |Gaines, Lopez | |
| | | | |
|----------------+------+--------------------+----------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, | |
| | |Eggman, Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 325
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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:
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.
FISCAL EFFECT: According to the Assembly Committee on
Appropriations, on-going costs to HCD of up to $176,000 (General
Fund) for up to one position to provide additional information to
grant applicants. HCD administers approximately 200 CDBG contracts
each year. Each contract can have eight or more activities, and
each activity can have several individual disbursements.
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COMMENTS:
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
this 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 contends 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."
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 United States
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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. "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
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
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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.
This bill 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 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.
Analysis Prepared by:
Rebecca Rabovsky / H. & C.D. / (916) 319-2085 FN:
0000782
AB 325
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