BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 325


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          325 (Wood)


          As Amended  July 1, 2015


          Majority vote


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          |ASSEMBLY:  | 77-0 | (June 2,      |SENATE: |38-0  |(August 20,      |
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          Original Committee Reference:  H. & C.D.




          SUMMARY:  Makes specified changes to the Community Development  
          Block Grant (CDBG) program application process.  Specifically,  
          this bill:




          1)Requires the Department of Housing and Community Development  
            (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. 











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          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. 


          The Senate amendments:


          1)Provide that the 60 days' notice requirement shall not apply  
            if the federal government or the Legislature makes significant  
            changes to the CDBG Program.


          2)Authorize HCD to 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  








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            government or the Legislature requires changes.


          3)Require HCD to provide a grant agreement to an applicant no  
            later than 60 days after HCD notifies the applicant that it  
            was approved for funds, rather than enter into the agreement  
            with the applicant within 60 days.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.  
           


          





          COMMENTS:  


          Background of the CDBG program:  The CDBG program was  
          established by the United States (U.S.) Housing & Community  
          Development Act of 1974 (HCD Act) and is administered at the  
          federal level by the U.S. 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  








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


          Purpose of the 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 resources to navigate the complicated and drawn-out  








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          grant process.  To make the program more accessible, this bill  
          seeks to establish a timeline to improve stability and  
          predictability for grant applicants. 


          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 Web site.   
          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.  


          Senate amendments provide flexibility to HCD in meeting program  
          deadlines under specified circumstances, such as if the  
          applicant makes changes to the original application or the  
          federal government or the Legislature requires changes.  Senate  
          amendments also require HCD to provide a grant agreement to an  
          applicant no later than 60 days after HCD notifies the applicant  
          that it was approved for funds, rather than enter into the  
          agreement with the applicant within 60 days.


          Analysis Prepared by:                                             
                          Rebecca Rabovsky / H. & C.D. / (916) 319-2085     
                                                                  FN:  
          0001460








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