BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 325 Hearing Date: 7/7/2015
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|Author: |Wood |
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|Version: |7/1/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Alison Dinmore |
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SUBJECT: Community Development Block Grant Program
DIGEST: This bill makes specified changes to the Community
Development Block Grant (CDBG) program application process.
ANALYSIS:
Existing Law:
1) Provides that the Legislature intends funds to be allocated
to the state pursuant to the federal CDBG program, and
administered by the Department of Housing and Community
Development (HCD), to be of maximum benefit in meeting the
housing and economic needs of persons and families of low or
moderate income.
2) Requires HCD to administer the state CDBG program to
eligible cities and counties.
3) Defines "non-entitlement area" as an area which is not a
metropolitan city or part of an urban county and does not
include Indian Tribes. "Urban county" generally means having
a population greater than 200,000 and "metropolitan city"
generally means having a population greater than 50,000.
4) Requires HCD to allocate not less than 51% of CDBG funds for
purposes of providing or improving housing opportunities for
low- or moderate-income households.
AB 325 (Wood) Page 2 of ?
5) Requires HCD to allocate 30% of CDBG funds for purposes of
economic development.
This bill:
1) Requires HCD to provide a grant agreement to an applicant
for execution no later than 60 days after HCD notifies the
applicant that it was approved for funds. The 60 days' notice
requirement shall not apply if the federal government or the
Legislature makes significant changes to the CDBG program.
2) Requires HCD to provide the applicant with a complete and
final list of all the activities the applicant must complete
to receive a disbursement of funds pursuant to the agreement
at the time HCD enters the agreement with the applicant. HCD
may make appropriate and corresponding changes to the complete
and final list of activities if the applicant makes changes to
the original application or the federal government or
Legislature requires changes.
3) Requires HCD to do one of the following no later than 30
days after it receives a request for 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 the remaining activities the applicant must complete
for disbursement of funds.
COMMENTS:
Purpose of the bill. According to the author, HCD allocates
funds under the federal CDBG program to local municipalities.
The small cities and counties that stand to gain the most from
this program do not have the expertise or resources to navigate
the complicated and drawn-out grant process. To make the
program more accessible, this bill seeks to establish a timeline
to improve stability and predictability for grant applicants.
Background of the CDBG program. Existing law established the
CDBG program under the U.S. Housing and Community Development
Act (the Act) of 1974 and it is administered at the federal
AB 325 (Wood) Page 3 of ?
level by the U.S. Department of Housing and Urban Development
(HUD). The purpose of the CDBG Program is to provide
communities with resources to address a wide range of unique
community development needs, including affordable housing,
services to the most vulnerable, and job creation through the
expansion and retention of businesses, particularly 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.
HUD allocates CDBG funds via formula to "entitlement
jurisdictions" (i.e., cities over 50,000 population and counties
over 200,000 population). In 1981, Congress amended the Act to
give each state the opportunity to administer federal CDBG funds
for smaller cities and counties, known as "non-entitlement
areas," which include cities with populations under 50,000 and
counties with populations under 200,000. Since 1983, HCD has
developed funding priorities and criteria for selecting projects
for the state CDBG program in California for non-entitlement
areas.
Each year, generally in January, the CDBG program 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 nearly $25 million in
state-administered federal CDBG funds.
State process following application. Federal and state laws
apply to the state CDBG program. Following the notification to
an applicant that the application was approved for funds, HCD
prepares a grant agreement between HCD and the applicant. The
grant agreement outlines, among other things, the activities for
the use of the awards, federal and state requirements, and an
expenditure timeline. HCD also sends a cover letter describing
the next steps and a checklist of required documentation along
with the grant agreement before disbursing funds. These
checklists are also available on the HCD website. Once HCD has
received, reviewed, and approved the appropriate documentation,
it will disburse the funds to the applicant.
AB 325 (Wood) Page 4 of ?
What's the problem? The author points to instances in his
district in which an applicant was asked on multiple occasions
to provide additional documentation, which resulted in
months-long delays in the disbursement of funds. HCD has met
with the author's office and is actively working to rectify
delays and any ambiguities in the program. HCD has taken steps
to streamline its application process and remove procedural
requirements, and posted checklists for the program on its
department website. Additionally, HCD provides standard
agreement trainings across the state and has offered to provide
webinars for more rural districts. HCD also has technical
assistance advisors available to answer questions to navigate
the process. In the author's view, however, placing timelines
in statute will further ensure HCD is notifying applicants of
their duties and ensuring the disbursement of funds in a timely
fashion.
This bill would require HCD to provide a grant agreement to an
applicant no later than 60 days after approving an applicant for
an award. The bill provides an exception in instances in which
substantial changes were made at the federal or state level that
require HCD to amend their regulations. When HCD sends the
grant agreement, HCD must provide a complete and final list of
all the activities the applicant must complete to receive
disbursement of funds. HCD may make changes to the list of
activities in instances in which the applicant makes changes to
the original application or if the federal or state government
require changes. Additionally, within 30 days of receiving a
grantee's request for 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 the
remaining activities the applicant must complete for HCD to
approve the disbursement of funds.
Inserting regulations into statute. Program deadlines and
procedural requirements such as those in this bill are generally
not provided in statute to give the agency flexibility to adopt
its own procedures and make necessary changes to align with
federal requirements, as needed. The author believes, however,
that these changes are necessary to ensure timely distribution
and communication with small cities and counties, as well as
make the CBDG program more accessible to those communities.
Assembly Votes:
Floor: 77-0
Appr: 17-0
AB 325 (Wood) Page 5 of ?
H&CD: 6-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
July 1, 2015.)
SUPPORT:
California State Association of Counties
Community Development Commission of Mendocino County
Leading Age California
Rural County Representatives of California
West Company
OPPOSITION:
None received
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