BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 325| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT 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 SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 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. 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. AB 325 Page 2 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 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. Background AB 325 Page 3 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 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. 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 AB 325 Page 4 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 AB 325 Page 5 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 **** END **** AB 325 Page 6