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HomeMy WebLinkAboutMINUTES - 02282006 - C.87 a ' Contra l :.'Z./ � Costa 'TO: BOARD OF SUPERVISORS ,'•. .` County FROM: Dennis M. Barry, AICP Community Development Director DATE: February 28, 2006 SUBJECT: COMMUNITY DEVELOPMENT BLOCK.GRANT PROGRAM ADMINISTRATION COSTS SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) &.BACKGROUND AND JUSTIFICATION RECOMMENDATION 1. APPROVE a substantial amendment to the County's FY 2005/06 Community Development Block Grant (CDBG) program Action Plan by increasing the percentage of CDBG entitlement grant allocated to administration costs from 13 percent to 15 percent and the percentage of CDBG program income allocated to administration costs from 13 percent to 20 percent in Fiscal Year 2005/06, and 2. APPROVE an increase in the percentage of CDBG entitlement grant allocated for administration costs from 15 percent to 20 percent starting in Fiscal Year 2006/07 and thereafter, and change the Board of Supervisors policy regarding the allocation of CDBG funds as presented. FISCAL IMPACT No General Funds are involved. I CONTINUED ON ATTACHMENT: X YES SIGNATURE: _RECOMMENDATION OF COUNTY ADMINISTRATO t RE MENDATION O BOARD COMMITTEE �cPPROVE OTHER i SIGNATURE(S): F ACTION OF BOA D N Akp,81cr, APPROVED AS RECOMMENDED ' O HER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A y1 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. Source: Bob Calkins, CDBG Program Manager (925) 335-7220 ATTESTED �4 Orig. Dept. Community Development - CDBG JOHN SWEETEN, CL RK OF cc: County Administrator THE BOARD OF SUPERVISORS Auditor - Controller AND COUNTY ADMINISTRATOR County Counsel BY�4- , DEPUTY s ' BACKGROUND /REASONS FOR RECOMMENDATIONS In 1993, the Board of Supervisors (Board) adopted a policy of allocating CDBG funds based on the following formula: Housing — 50% Public Services — 15% Economic Development — 15% Infrastructure/Public Facilities — 5% Administration — 13% Contingency— 2% (typically,these funds have been allocated to projects/programs in the Public Service category). Since 1993 the amount of the County's CDBG entitlement grant was basically flat. Starting in FY 2003/04, the County's annual CDBG entitlement grant has decreased by approximately seven percent. Additionally, staff was recently informed that the County's CDBG grant will be cut an additional 10 percent next year(FY 2006/07). During the same time period, the number of CDBG projects/programs approved for funding has increased slightly or remained constant - from a low of 65 projects/programs to a high of 82 projects/programs in FY 2004/05. Costs for staff and support services/materials have gone up reflecting general cost of living and inflationary trends. Although staff has made a number of changes in the way it administers the CDBG program and continues to look for ways to be as cost efficient/effective as possible, including instituting the highly popular 2- year funding cycle, the administrative requirements of the CDBG program continue to require a specific and constant level of administrative oversight. Taken together — decreased funding, same or slightly higher number of projects/programs that must be managed, and the administrative oversight requirements of the CDBG program - an increase in the percentage of the CDBG entitlement grant and program income is needed to ensure the CDBG program continues to be administered in an appropriate manner consistent with the regulations. Since the beginning of the CDBG program in 1974, the regulations have permitted an entitlement community to allocate up to 20 percent of its grant amount plus program income received during the year for administration costs. A survey of a number of CDBG entitlement jurisdictions in the Bay Area, shows that all of the CDBG entitlement jurisdictions in the area, including the five other CDBG entitlement jurisdictions in Contra Costa County, allocate the full 20 percent of their entitlement grants to administration. Proposed Changes to Funding Formula: To ensure the County has the staff and resources to properly administer the CDBG program, staff recommends the following changes in how the Board allocates CDBG funds: FY 2005/06 Housing — 48% Public Services — 15% Economic Development— 15% Infrastructure/Public Facilities — 5% Administration — 15% Contingency— 2% Starting in FY 2006/07 Housing — 45.1% Public Services — 15% Economic Development— 14% Infrastructure/Public Facilities — 3.9% Administration — 20% Contingency— 2% Staff is recommending the largest reduction, from 50% to 45.1%, be applied to the Housing category because this approach is expected to have the least negative impact on project sponsors. For example, sponsors of housing development projects typically have many more potential funding sources available through federal and State programs including the County's HOME program. In addition, the administrative support for housing transactions tends to be more time and resource intensive, hence appropriations in support of housing remain relatively neutral. Sponsors of public service, economic development and infrastructure projects don't have as many funding sources they can turn to if there is a significant reduction in the amount of CDBG funds available to them. The reduction in the amount of funds available in the Housing category, estimated to be approximately $175,000 in FY 2006/07, is a small portion of what is typically needed to finance a housing project—a similar reduction in any of the other categories would have a detrimental impact on the ability of project sponsors to fund a project. It is proposed that the 2 percent increase ($80,000) in the amount of funds available for Administration in FY 2005/06 be financed from the Housing Development Assistance Fund (HDAF) which currently has an unallocated balance of approximately $1.7 million.