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HomeMy WebLinkAboutMINUTES - 12141993 - FC.3 � � . 3 ` Contra Costa TO: BOARD OF SUPERVISORS County r �W � ��1 FROM: Finance Committee DATE: December 14, 1993 SUBJECT: Community Development Block Grant Funding Guidelines SPECIFIC REQUEST(S) OR RECOMMENDATIONS) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ADOPT recommendations of the Housing & Community Development Advisory Committee and Deputy Director - Redevelopment establishing new funding guidelines for the Community Development Block Grant program. FISCAL IMPACT No General Funds are involved. BACKGROUND/REASONS FOR RECOMMENDATIONS At its September 28, 1993 meeting the Board of Supervisors met in workshop session with members of the Housing & Community Development Advisory Committee. Among the discussion topics was modification of the Board adopted funding guidelines for the Community Development Block Grant (CDBG) program. The Committee made suggestions shown as recommendations on the attached December 13 , 1993 report. The Community Development Department staff recommended more precise guidelines, consistent with the Committee's recommendation, to enhance implementation. Those recommended Funding Guidelines are as follows: CONTINUED ON ATTACHMENT: XX YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) : ACTION OF BOARD ON /'{ /993 APPROVED AS RECOMMENDED x OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A UNANIMOUS (ABSENT '�' ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Jim Kennedy 646-4076 cc: Community .Development f CAO ATTESTED k L e--W� / County Counsel PHIL BATCHELOR, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR JK:1h BY , DEPUTY sra I I/cdbg.bos 1. Housing - not less than 50% of the annual grant (plus program income that is not revolving in Contracted Programs [PI] ) , with the Housing Development Assistance Fund being 15% of the annual grant plus PI income. 2 . Economic Development- not less than 15% of the annual grant plus PI. 3 . Public Services - up to 15% of the annual grant plus PI. 4 . Open - 5% of the annual grant plus PI. 5. Program Administration - not less than 13% of the annual grant plus PI, or the amount necessary to cover general program administration. 6. Contingency - up to 2% of the annual grant plus PI which the Board of Supervisors could program subsequent to its public hearing. CONTRA COSTA COUNTY COMMUNITY DEVELOPMENT DEPARTMENT DATE: December 13, 1993 TO: Finance Commi FROM: Jim Ken Depu it o - Redevelopment SUBJECT: Staf mmendations on Funding Guidelines for Community Deve pment Block Grant Program The purpose of this memorandum is to provide the Finance Committee with the information needed to re-examine the Funding Guidelines approved by the Board of Supervisors in 1985-86. At a luncheon workshop meeting between the Board of Supervisors and the Housing and Community Development Advisory Committee (HCDAC) on September 28, 1993, both groups agreed that it is an appropriate time to re-visit the Guidelines in today's context so that they may be either re-affirmed or modified. RECOMMENDATIONS Housing and Community Development Advisory Committee Recommendations 1. The Housing and Community Development Advisory Committee advises that the Contingency Fund be eliminated. It is also that Committee's recommendation that any "surplus" Economic Development funds, along with the money which would have been allocated to the Contingency Fund, should be utilized for projects in the Open category. 2. The Housing and Community Development Advisory Committee suggests that the Funding Guidelines for Economic Development be reduced and the Contingency Fund greatly reduced with the freed-up funding available for allocation to the Open category. In their recommendation, the Committee also suggested that Public Services and Open be listed as two separate funding categories within the Funding Guidelines. Staff Recommendations The following staff recommendations conform to. those of the Housing and Community Development Advisory Committee, but are more precise to enhance implementation. 1. Housing - not less than 50% of the annual grant (plus program income that is not revolving in Contracted Programs [PI]) with the Housing Development Assistance Fund being 15% of the annual grant plus PI income. 2. Economic Development - not less than 15% of the annual grant plus PI. 3. Public Services - up to 15% of the annual grant plus PI. 4. Open - 5% of the annual grant plus PI. 5. Program Administration - not less than 13% of the annual grant plus PI, or the amount necessary to cover general program administration. 6. Contingency -up to 2% of the annual grant plus PI which the Board of Supervisors could program subsequent to its public hearing. BACKGROUND The adopted Funding Guidelines for the CDBG program, which have existed since 1985, have been very useful to the Housing and Community Development Advisory Committee as it reviews applications for annual funding and develops a preliminary program to recommend to the Board of Supervisors. The Funding Guidelines currently provide that the County's CDBG annual grant be allocated as follows: • Housing 32% • Housing Development Assistance Fund 15% • Economic Development 20% 0 Public Services/Open 18% • Administration 10% • Contingency Fund 5% To briefly review these categories, Housing includes housing rehabilitation and the development of new housing; Housing Development Assistance Fund is essentially a set-aside fund for housing projects which emerge during a program year; Economic Development is for projects which create or retain jobs; Public Services are generally non-profit organizations who are funded to deliver a broad spectrum of human services to the low-income residents of the urban county; 02en is the term for projects of a capital nature which address infrastructure and public facilities needs; Administration comprises all staff and all personnel and non-personnel needs of the County to administer the CDBG program; the Contingency Fund consists of unprogrammed funds which are set-aside to cover unforeseeable costs which arise during the program year, primarily cost overruns in capital projects. DISCUSSION There are several factors to be considered in reviewing the above Funding Guidelines. These include Federal Regulations, County policies and priorities, economic realities, and, the nature and number of the proposals which are received for Community Development Block Grant funding. To assist the Finance Committee and the Board of Supervisors in its review of the CDBG Funding Guidelines, staff has identified issues/considerations. 2. 1. There are statutory limitations in two areas of the CDBG program. (a) No more than 15% of the annual grant combined with 15% of the prior year's income can be used to support Public Services. In recent years the County has utilized the full 15% allowed by the statute to support Public Services. (b) No more than 20% of the grant may be utilized for Administration purposes. This 20% includes not only Program Administration, but also certain types of projects which are carried out by the County or by sub-recipients which are only eligible as administrative expenses. (These projects are represented in their primary categories - e.g., housing, pre-development costs, during the funding cycle.) 2. The merging of Public Service and Open categories, combined with the practice of fully utilizing the 15% Public Service cap has resulted in only 3% for "Open" Projects (public infrastructure and facilities projects). When the Funding Guidelines were adopted by the Board, there was much less emphasis on supporting Public Service projects so that a larger portion of the Guideline for Open/Public Service projects could be utilized in the Open category. 3. Public Services resources are calculated by adding 15% of the new grant award to 15% of the prior year's program income. However, the program income itself is not always available for re-programming, because it is left for re-use in the programs which generate it (e.g., housing rehabilitation loan repayments recycle to make new loans). Thus, the new grant available for the program is actually reduced by the amount of program income included in the Public Services category. An alternative approach would be to calculate the Public Service cap using 15% of new funds and reprogrammed dollars. 4. The 47% guideline for the Housing and the Housing Development Assistance fund is fully utilized by these types of projects. When the Guidelines were adopted, construction of new housing was an ineligible activity in the CDBG program. Now, however, the housing categories support both new and rehabilitated projects. The 47% Guideline for both housing categories is generally consistent with the County's State-approved Housing Element, which says that 50% of the grant will be used for housing. In the past two program years, actual housing programming has exceeded 50% of available funds. 5. The County's 10% cap on Program Administration has become inadequate to support administration due to diminishing grants and increased personnel and non-personnel costs. Although the final figure for 1994-95 funding will not be released by HUD until mid-December, the withdrawal of the City of Pittsburg from the Urban County may result in a decreased grant for the upcoming program year in which case 10% will actually provide fewer dollars for 94/95 administration than the dollars committed to this area in the 93/94 program year. 3. 6. The County's guideline of utilizing 20% of the Block Grant for Economic Development has never been met. The primary reason for the under utilization of CDBG funds for Economic Development in the past has been the extremely restrictive interpretation of the Economic Development regulations and statutory requirements by HUD which, has in turn, resulted in very few Economic Development proposals. Generally, proposals for Economic Development funding have been well below 5% of the grant with 3 or 4 percent being approved as viable, worthwhile projects. 7. The new Federal administration has increased the focus on economic development as a way to spur recovery of the national economy. As a result of this emphasis, the U. S. Department of Housing and Urban Development is evaluating ways in which the CDBG Economic Development rules and regulations can be loosened to improve their viability as an economic development tool. 8. The Federal administration's emphasis on Economic Development coupled with the Economic Development goals established in Contra Costa County has resulted in an enormous increase in CDBG proposals in the Economic Development area. The dollar amount of proposals received for Economic Development for 1994/95 has jumped to approximately 23% of the grant planning figure of $3.3 million. (Not all of these projects will necessarily be recommended or approved for funding). 9. In recent years, the lack of effective demand for Economic Development dollars has resulted in a large amount of money which could be allocated by the County to proposals for Open and/or Housing projects. In the last few years, in fact, an average of 12 to 13% of the grant was approved by the County for Open projects. If Contra Costa County's final statement for 1994/95 utilizes the fully allowed 15% for Public Services, 47% for Housing purposes, 20% for Economic Development purposes, and 10% and 5% for Program Administration and the Contingency Fund respectively, proposals in the Open category could receive only 3% of the grant. In its RFP process, the County received 46 Open proposals, totalling over 4 million dollars. Assuming full utilization of all other categories and 3% allocated to Open projects, only $99,000 would be available to allocate to projects in this category based on the planning estimate of a $3.3 million 1994/95 grant. 10. The 5% Contingency Fund is viewed by HUD as unprogrammed funds. HUD is very much opposed to this type of set-aside for a variety of reasons, including the citizen participation and grantee performance report requirements of the program. The presence of a contingency in the Housing & Community Development Advisory Committee's recommendation has provided the Board of Supervisors with the flexibility to respond to concerns expressed at the public hearings, without reprogramming funds from projects recommended by the Committee. Only the amount remaining in Contingency after the adoption of the final statement would be considered un-programmed or contingency funds. 4. In a recent survey by Community Development staff, it was discovered that among the entitlement jurisdictions surveyed, none of their final statements contained unprogrammed or contingency funding, with the exception of the City of Antioch which has approximately $10,000 in a contingency fund. 11. Elimination of the Contingency Fund could necessitate a contingency amount calculated for and built into each capital project funded by the Block Grant program. These contractual contingencies, however, could be utilized only under certain conditions and any dollars left unused at the closeout of the capital project would be available for reallocation in the following program year. In looking at.recent capital projects, we are learning that most of them do contain contingencies. SumI/Jb/CDBGuide.m= 5.