BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 325|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |


          Bill No:  AB 325
          Author:   Wood (D)
          Amended:  7/1/15 in Senate
          Vote:     21  

           SENATE TRANS. & HOUSING COMMITTEE:  11-0, 7/7/15
           AYES:  Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,  
            McGuire, Mendoza, Roth, Wieckowski


           ASSEMBLY FLOOR:  77-0, 6/2/15 - See last page for vote

           SUBJECT:   Community Development Block Grant Program

          SOURCE:    Author

          DIGEST:   This bill makes specified changes to the Community  
          Development Block Grant (CDBG) program application process.  

          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.


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          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.

          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  

             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. 



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          Background of the CDBG program.  Existing law established the  
          CDBG program under the U.S. Housing and Community Development  
          Act (Act) of 1974 and it is administered at the federal 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  

          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.

          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  


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          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. 

          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 Web site.  Once HCD has  
          received, reviewed, and approved the appropriate documentation,  
          it will disburse the funds to the applicant. 

          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. 

          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.  
           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.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


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          SUPPORT:   (Verified8/17/15)

          California State Association of Counties
          Community Development Commission of Mendocino County
          Leading Age California
          Rural County Representatives of California
          West Company

          OPPOSITION:   (Verified8/17/15)

          None received

          ASSEMBLY FLOOR:  77-0, 6/2/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo  
            Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley,  
            Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer,  
            Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,  
            Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark  
            Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,  
            Wood, Atkins
          NO VOTE RECORDED:  Chávez, Eggman, Grove

          Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
          8/18/15 12:48:42

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