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HomeMy WebLinkAboutCDGB ChangesDate: September 3, 2010 To: Deschutes County Board of Commissioners From: Judith Ure, Management Analyst Subject: Proposed Comments Regarding 2011 Community Development Block Grant Method of Distribution The Infrastructure Finance Authority (IFA), a division of the Oregon Business Development Department (OBDD), is currently seeking public comment regarding the proposed 2011 Community Development Block Grant (CDBG) Method of Distribution (MOD) document. A new MOD document is issued periodically to reflect changes in rules that govern the CDBG program and associated funding decisions. Comments are due to the IFA by September 8, 2010. The attached summary outlines some of the most significant changes to the CDBG program under consideration, many of which reflect a need to streamline program administration and reduce costs. In several cases, such as potential increases to various categorical grant limits, future applicants may benefit from the proposed changes. In other instances, including eliminating certain project types from eligibility, applicants may face greater challenges when seeking project funding. Staff have reviewed the proposed 2011 MOD document and suggests that Deschutes County offer the following comments for consideration by the IFA Board and OBDD Commission during the ongoing review process: 1. Support the increase in funding limits from $1,500,000 to $2,000,000 in the Public Water and Wastewater project category and $1,000,000 to $1,500,000 in the Public/Community Facilities category. The increase in maximum grant amounts accurately reflects rising construction and project costs. 2. Oppose eliminating certain project types from eligibility under the Public/Community Facilities category, including mental health treatment facilities; transitional housing; shelters or workshops for persons with disabilities; health clinics; drug and alcohol treatment facilities; family resource centers; fire stations, community centers, and libraries. While the IFA states that such projects are eligible for alternate funding sources and/or were rarely funded by the CDBG program in the past, several facilities within Deschutes County and Central Oregon have qualified for funding under these project types, including the Alyce Hatch Center, Crisis Resolution Center, Juniper Canyon Fire Station, and Ochoco Community Clinic. Similar projects more recently suggested as potential applicants for CDBG funds, such as the Sunriver Fire Station, would no longer qualify under the proposed 2011 guidelines. This change would severely restrict the region's ability to construct facilities necessary to provide critical services to vulnerable populations. The two comments suggested above address only a few of the general concerns that may be shared by local governments and communities across the state. However, the Association of Oregon Counties (AOC) has compiled a more detailed list of recommendations. As a result, staff recommends the following: 3. Endorse and support comments on proposed 2011 CDBG guidelines as described in a letter from the Association of Oregon Counties dated September 3, 2010 (see attached). In addition to these general comments which are directly related to changes specifically proposed for the 2011 MOD document by the IFA, staff suggests seeking clarification or revision of two other provisions which could potentially limit the County's ability to seek CDBG funds for qualifying projects. While these are not related to proposed new language of the MOD document, the current review process may provide the best opportunity to address these issues: 4. The MOD document states that "CDBG funds can be used for the acquisition of facilities needed to provide shelter or services to persons with special needs" and that CDBG funds may be used for "property acquisition (including appraisal costs), clearance and disposition by the city or county grant recipient." However, in recent discussions, IFA and OBDD staff have indicated that CDBG funds cannot be used to retire debt and/or to pay for property currently owned by a government agency that is acting as applicant for CDBG funds on behalf of a qualifying non-governmental recipient. In the example under consideration, Deschutes County could not apply for CDBG funds to enable the Bethlehem Inn to purchase the site that currently serves as a homeless shelter because the County holds title to the property. County staff can find no specific language in the MOD document that addresses this point and suggests that Deschutes County request further clarification concerning this interpretation with a goal toward recommending that any such provisions be revised to allow greater flexibility in property acquisition. 5. All recent MOD documents include the following statement under the "Non- Entitlement/Entitlement Boundaries" section of the "Eligible Applicants/Limits on Applications" chapter (2): "When an eligible non -entitlement city or county applicant applies for a project that will be located within the boundaries of a CDBG entitlement city or county whose residents are also residents of the non -entitlement applicant (for example, Lane County sponsoring a project to be physically located within the City of Eugene), eligible project costs are limited to the estimated pro rata share of the project activity beneficiaries who reside in the non -entitlement portion of the project's service area." As the City of Bend is an entitlement city, this provision would appear to either limit prospective grant awards for regional projects that may be located within city boundaries to considerably less than the maximum amount allowed or cause the applicant to raise matching funds equivalent to the amount of the CDBG grant requested. While this issue has not been directly raised by IFA or OBDD staff in regard to any project recently proposed by Deschutes County, further discussion might be needed to determine and possibly mitigate the effect it could have on regional facilities such as the Bethlehem Inn. As noted, comments concerning the CDBG program guidelines are due to the IFA no later than 5:00 p.m. on September 8, 2010. If the Board agrees with the comments outlined in this memorandum, staff will format them into a letter to be submitted in time to meet that deadline. IFInfrastructure Finance Authority August 9, 2010 To: City Councils, County Boards of Commissioners, Councils of Govemment, Economic Development Districts and Interested Organizations and Individuals From: Lynn Schoessler, Infrastructure Finance Authority (IFA) Director Subject: Proposed 2011 Community Development Block Grant Guidelines — Request for Comments A copy of the proposed 2011 "Method of Distribution" Community Development Block Grant Program Guidelines is available on the Department's web site at: http:lIwww.orinfrastructu re.org1Leam-About-Infrastructure-Proara ms/lnterested-in-a- Community-Development-ProjectlCommunity Development -Block -Grant! Please take time to review this message and the proposed Guidelines. If you are unable to download a copy of the guidelines the IFA staff will gladly forward a copy to you upon request. The State of Oregon expects to have approximately $15 million in federal funds for award to rural cities and counties in the year 2011. The money comes from the federal Community Development Block Grant Program administered through the U.S. Department of Housing and Urban Development. These grant funds must be awarded under a system with published rules and criteria, which are adopted following an opportunity for public comment. The department is proposing to make changes to the program guidelines adopted for year 2010 funds. The attached "Summary of Significant Changes Proposed for 2011" describes the proposed changes. Your comments and suggestions will help us to improve service in 2011. The deadline for written comments is September 8, 2010. You can send your comments and suggestions in writing, either by letter or e-mail. Letters should be addressed to: Mary Baker, Infrastructure Finance Authority, Oregon Business Development Department, PO Box 866, Klamath Falls, OR 97601. E-mail responses can be sent to: marv.a.baker anbiz.state.or.us Thank you for your interest and participation in this very important process. If you have questions, please call Mary Baker at (541) 882-1340. August 9, 2010 Oregon Business Development Department Infrastructure Finance Authority Community Development Block Grant Program Summary of Significant Changes Proposed for 2011 Comments Requested: Please review the following summary and the proposed °Method of Distribution° (program guidelines) for the 2011 Community Development Block Grant program. Comments and suggestions are encouraged and welcomed. Comment Period and Public Hearing Comments on the proposed 2011 Community Development Block Grant Program's Method of Distribution can be submitted either orally, in writing or by e-mail. The 30 -day comment period ends at 5:00 pm on September 8, 2010. Please address written comments by letter to Mary Baker, Community Development Division, Oregon Business Development Department -Infrastructure Finance Authority, P.O. Box 866, Klamath Falls, OR 97601 or by e-mail to mary.a.baker(o)biz.state.or.us Public Hearing Date: September 8, 2010 Time: 11:00 am to 12:00 noon Location: OBDD-IFA 775 Summer Street NE — Suite 200 Salem, Oregon 97301 Conference Room 201 Summary of Proposed Changes for 2011 The State of Oregon is facing a budget crisis. Every agency has been forced to reduce budgets and furlough employees. Although the Community Development Block Grant program is funded with an annual federal allocation, it comes with a limited amount of administrative dollars. The program also comes with extraordinary federal regulations that must be followed as well as extensively reported on. In the program's origin, the State of Oregon chose to narrowly focus the CDBG program on public health and safety issues. However, over the years the program has expanded to include numerous other funding categories that have resulted in added administrative burden. The cost of program administration has forced the department to use state resources beyond the federal administrative funding allowance to properly administer each annual CDBG allocation the state receives. August 9, 2010 The OBDD-IFA must consider options to reduce the administrative cost of the program and to ease the burden on state resources. At the same time, the IFA program staff is hearing about the ever increasing cost of projects and how the project expense is unaffordable to low and moderate income communities that are the only jurisdictions eligible for the program. The OBDD-IFA is proposing to increase individual project grant funding amounts but limit the number of eligible projects funded to address both issues and accomplish two program imperatives. Proposed program changes include: 1) Public water and wastewater projects: a. Increase the maximum grant from $1,500,000 to $2,000,000 to accommodate rising construction and project costs. b. Limit projects to address health and safety issues: i. Water or wastewater projects for systems that are currently out of compliance with the Safe Drinking Water Act or Clean Water Act requirements; ii. Water or wastewater projects for systems that will be out of compliance with the Safe Drinking Water Act or Clean Water Act requirements in two years if the system is not improved; and iii. Water projects necessary for the provision of dependable and efficient water storage, treatment and/or transmission; iv. Wastewater projects necessary for the provision of dependable and efficient wastewater collection, treatment and disposal/re-use. 2) Public/Community facilities: a. Increase the maximum grant from $1,000,000 to $1,500,000 to accommodate rising construction and project costs. i. Limit projects to those that address hunger and homeless issues: Shelters for Victims of Domestic Violence, Emergency/Homeless Shelters, Senior Centers, Food Banks; and ii. Head Start centers. 3) Housing Rehabilitation: a. Streamline the delivery of the regional housing rehabilitation program and make the application dates more flexible. The preservation of the state's aging housing stock through the owner occupied housing rehabilitation program otherwise remains substantially unchanged. 4) Other: a. The Economic Development Revolving Loan Fund, Microenterpiise Grant Program, Certified Main Street Facade Program and the Microenteprise Assistance Program have been eliminated. b. The Regional Housing Center program will no longer be offered by the CDBG program. OHCS will continue to fund this program with a Idss onerous altemate state funding resource. The comments and ideas provided regarding this proposal will assist the IFA staff and Board as they consider the final design of the 2011 CDBG program. Your assistance and comments are appreciated. August 9, 2010 The budget issues the state and all agency programs face will require difficult decisions that must be addressed during the coming months. It has been impossible for the CDBG program to meet all of the needs of rural low and moderate income citizens in Oregon and the future holds no hope this situation will change. OBDD-IFA's task is to try and find the best way to meet the highest priority needs of the rural low and moderate income communities statewide. GENERAL PROGRAM CHANGES 1. Matching Funds — Many applicants to the program had unsecured/committed matching funds that couid not be secured within 4 months after grant contract execution. Therefore all matching funds necessary to complete the proposed CDBG project must be committed and available at the time the application is received by OBDD. 2. Readiness to Proceed — This section was revised to reflect the change in the matching funds requirement identified above, and to provide the ability for an exception to the matching funds requirement to accommodate funding from other federal or state resources. 3. Non•English Speaking Resident Citizen Participation — To enforce the federal Limited English Proficiency requirements Step 3 of Chapter 7, has been modified so that every applicant must provide the percentage of non-English speaking residents within their community derived from the most recent decennial census data. If more than 5% of the population is non-English speaking than the public notices must be published or posted in that language and the application must include the affidavit of publication or the certification of posting of the non-English speaking public hearing notice. FUNDING CATEGORY CHANGES (Refer to the specific chapter in the proposed 2011 Method of Distribution for more detailed information about each funding category.) Chapter 2 —Eligible Applicants/Limits on Applications: 1. This chapter was revised to incorporate housing rehabilitation projects into the three open grant rule. Chapter 7 — OBDD Application Procedures: 2. This chapter was modified to incorporate the housing rehabilitation projects within the quarterly competitive application process and to include the housing rehabilitation application scoring criteria. This section was also modified to include the modified matching fund and readiness to proceed criteria. Chapter 9 — Public Works: 1. The maximum grant was increased from $1,500,000 to $2,000,000 to accommodate rising construction and project costs. 2. The maximum grant exception was increased accordingly from $3,000,000 to $3,500,000. August 9, 2010 3. The historically rarely funded Type 2, Downtown Revitalization and Type 3, Off -Site Infrastructure for New Affordable Housing project types were eliminated as eligible activities from the category. Chapter 10 — Public/Community Facilities: 1. The maximum grant was increased from $1,000,000 to $1,500,000 to accommodate rising construction and project costs. 2. The facility types that have historically demonstrated altemate funding sources or were rarely funded by the program have been eliminated from the category. Eliminated activities include: Mental Health Treatment Facilities; Transitional Housing; Shelters or Workshops for Persons with Disabilities; Health Clinics; Drug and Alcohol Treatment Facilities; Family Resource Centers; Fire Stations, Community Centers and Libraries. Chapter 11- Housing Rehabilitation: 1. To streamline the delivery of the regional housing rehabilitation program, on January 1, 2011 OBDD-IFA will administer the regional housing rehabilitation program within OBDD- IFA and discontinue providing funding for this program to Oregon Housing and Community Services (OHCS). OHCS will administer the grants awarded by OHCS until administrative closure and then transfer files to OBDD-IFA. OBDD-IFA will commence making awards quarterly in calendar year 2011. 2. The housing rehabilitation program remains substantially unchanged and Chapter 11 has been revised to reflect the administration by OBDD and to include federal and state requirements for financial review; identified priorities for the housing rehabilitation program; non -competition with local financing institutions; reasonable accommodation policies; borrower defaults; and an entitlement area review. Chapter 15 — Outcome and Performance Measure Reporting: 1. This chapter was modified to provide a better summary of the program's accornplishments under the 2006-2010 Consolidated Plan and to provide the proposed performance measures for the 2011-2015 Consolidated Plan. Other: 1. The Economic Development Revolving Loan Fund, Microenterprise Grant Program, Certified Main Street Facade Program and the Microenteprise Assistance Program have been eliminated. 2. The Regional Housing Center program will no longer be offered by the CDBG program. OHCS will continue to fund this program with a Tess onerous altemate state funding resource. August 9, 2010 Association of Oregon Counties September 3, 2010 Mary Baker Infrastructure Finance Authority Oregon Business Development Department P.O. Box 866 Klamath Falls OR 97601 RE: Comments on Proposed 2011 Community Development Block Grant Guidelines Dear Ms. Baker: The Association of Oregon Counties (AOC) appreciates the opportunity to comment on the Infrastructure Finance Authority's proposed 2011 "Method of Distribution" Community Development Block Grant Program Guidelines (MOD). The Community Development Block Grant Program is the only 100% grant program to address community facility and infrastructure needs for low and moderate income populations and is often an important and strategic funding source necessary to complete critical projects. Oregon's counties support enhanced community-based economic and community development activities with maximum flexibility to recognize regional needs and differences. Since no two Oregon counties are exactly alike, these differences require a flexible approach to statewide policymaking. We believe it is important to have local capacity to deliver economic and community development services for the retention/creation of jobs in all regions of the state. We strive to provide opportunities for connecting and partnering with the state and the business community to achieve these goals. Oregon's counties act as the hub for coordination and delivery of many shared state -county services such as senior services, alcohol and drug treatment, mental health services and public health services. Like the state of Oregon, counties face severe fiscal strains in the upcoming years that will be exacerbated by the state's financial condition as well as the loss of federal forest payments. Given the severe financial plight facing counties and the state, it is important to allow for as much flexibility and retain as many tools in the economic and community development toolbox as possible to meet individual county needs and let communities determine how best to meet its highest priority needs to serve its low and moderate income citizens. For these reasons, AOC urges the state not to restrict the type of projects which can be funded by CDBG and recognize the different needs and priorities of counties. 1201 Court Street NE • Post Office Box 12729 • Salem • Oregon • 97309 • 503-585-8351 • www.aocweb.org AOC understands the difficulty that the state is facing with its finances; however, we also recognize that CDBG and the IFA receive different sources of funding than the General Fund. The current amount of the over -match for the 2009-11 biennium is about $37,000, or 0.2 % of the FY 2010 CDBG funds ($20.7 million) available and overseen by IFA, an amount which should be manageable within the IFA/CDBG budget. In addition, the IFA still has about half of its CDBG resources remaining ($9.9 million) following the recently awarded 2"d quarter projects to allocate for future awards for the remainder of the biennium, and this should allow the IFA the flexibility to fund other types of projects. AOC urges that internal efficiencies be implemented to address this minor over -match so that important potential CDBG-funded programs/projects such the types of community facilities, micro -enterprise, downtown revitalization, and Maln Street are not restricted or eliminated from consideration. Over the past four years, local governments have seen flexible funding sources such as the Regional Investment Program eliminated; consequently, a grant program like CDBG that can be used for infrastructure, community facilities, and economic development is more important than ever. Water and Wastewater Projects AOC supports increasing the maximum water and wastewater project grants from $1,500,000 to $2,000,000 in recognition of the high cost of construction and to address the needs of individual projects and affordability requirements. It should be noted, however, that raising the cap could result in fewer number of projects being funded. We suggest that this increased amount provides some additional discretion on the part of the IFA to consider those low and moderate income communities that are struggling to finance needed facilities at affordable rates but awarding the higher amounts will need to be weighed when balancing other project priorities. AOC recommends not eliminating public works funding for Type 2 (downtown revitalization) and Type 3 projects (publicly owned off-site infrastructure necessary for the construction of affordable rental or single family homes for low and moderate income persons). Restricting the use of the funds will make it more difficult to achieve community objectives consistent with CDBG. We recognize that Type 3 projects can be complicated because they cannot assist beneficiaries other than low and moderate income individuals. However, there may be circumstances such as with the City of Cascade Locks which needs to extend water/sewer service directly to an affordable housing project. Without access to CDBG funding, the City of Cascade Locks and the Mid -Columbia Housing Authority will not be able to leverage other federal and state funding sources to provide needed affordable housing. 1201 Court Street NE • Post Office Box 12729 • Salem • Oregon • 97309 • 503-585-8351 • www.aocweb.org Community Facilities We are very concerned that the proposed CDBG 2011 MOD significantly reduces flexibility and choice for funding important community facilities. Since the needs of each community vary greatly especially during the difficult financial times, we urge that communities have the ability to recommend projects that will meet the primary objective of the CDBG program: ":..the development of viable (livable) urban communities by expanding economic opportunities, providing decent housing and a suitable living environment principally for persons of low and moderate income." A county should be able to decide which type of community facility its highest priority is given the county's demands and economic and social issues. For example, a fire department building may be needed to address safety and economic development needs while another community with high unemployment and low literacy and test scores may need a library to support educational needs for low and moderate income families that cannot afford books and periodicals and need access to computers especially for job searches, on-line courses, homework, etc. AOC urges that the type of eligible community facilities should not be narrowed as proposed in the 2011 MOD; rather, we recommend that OBDD retain the types of community facilities that were included in the 2010 MOD. CDBG is one of the few remaining grant sources to help local governments fund important community facilities including shelters or workshops, health clinics, mental health treatment centers, drug and alcohol treatment facilities, community centers, family resource centers, fire stations and libraries. In addition, AOC requests that the state include mixed use facilities as CDBG eligible provided those facilities meet the federal CDBG requirements. While we recognize that these type of facilities may be more complicated to manage, they may also be the most efficient way to consolidate and manage programs and services to low and moderate income persons on a local level. Funding facilities provided for in the 2010 MOD is consistent with the agency's Goal 4 as well as the Quality Development Objectives/Healthy Communities to support the four key systems that provide the foundation for all other community activities: an economic base, infrastructure, community facilities, and housing. AOC supports the proposed increase in the maximum grant from $1,000,000 to $1,500,000 to accommodate rising construction and project costs. 1201 Court Street NE • Post Office Box 12729 • Salem • Oregon • 97309 • 503-585-8351 • www.aocweb.org Economic Development Revolving Loan Fund, Microenterprise Grant Program, and Microenterprise Assistance Program With the state's unemployment rate stuck at 10% and many businesses facing tight credit markets, it is critical that communities have tools to retain and attract small businesses, thereby keeping and generating local jobs. CDBG is one of the few sources left for communities to establish economic development revolving loan funds and microenterprise grant programs especially after the loss of the Regional Investment Program. Small businesses generate a substantial portion of new jobs and will be important for our economic revitalization. The IFA should explore potential changes as recommended by the Oregon Economic Development Districts for the Economic Development Revolving Loan Fund Program. This recommendation includes requiring jurisdictions to identify borrowers prior to applying for an Economic Development Revolving Loan Fund grant as a way to simplify the monitoring process and reduce administrative costs. AOC recommends the retention of these programs to receive funding from CDBG and also believes that increased training can reduce administrative costs by helping sub -grantees understand OBDD's expectations in order to comply with the CDBG requirements. Downtown Revitalization and Main Street Eliminating downtown revitalization as an eligible CDBG activity further constrains the community and economic development efforts of local governments and is counter to one of the three CDBG national objectives of prevention or elimination of slum or blight as well as the state's goal of having economically viable and vibrant communities. The Main Street Program has helped many communities revitalize their central business districts by coordinating various state programs including transportation, historic preservation, and urban forestry. Currently, there are 63 Oregon communities participating in one of the three levels of the Oregon Main Street Program. While we understand that CDBG has not been used for Main St. projects to date, interest has been growing and there are many communities that are now involved in the initial tiers such as the "Exploring" and "Transforming" stages. The loss of CDBG funding would be a blow to low and moderate income communities that are formulating their plans and financing packages. For example, communities such as Toledo, Klamath Falls, Philomath, Baker City, Canyonville, Riddle, Enterprise, Bonanza, Irrigon, Lebanon, Myrtle Creek, North Bend, Bandon, Coos Bay, Condon, Turner, St. Helens, and Woodburn would be impacted by the loss of using CDBG as a funding and leveraging revenue source to achieve their downtown revitalization objectives. AOC asks that downtown revitalization and funding for Main Street continue to be programs that can receive CDBG funding. 1201 Court Street NE • Post Office Box 12729 • Salem • Oregon • 97309 • 503-585-8351 • www.aocweb.org Matching Funds Requiring applicants to have all matching funds necessary to complete the proposed CDBG project to be committed and available at the time the application is received by OBDD will be a problem for communities. CDBG funding can be the catalyst to secure the necessary funding from other sources in order to complete a funding package. Although the state has included the possibility for an exception, this adds another step in the application procedure. In recognition of the difficulty in packaging various funding sources and also that CDBG can be used to match other programs, AOC recommends that the state continue to use the CDBG 2010 MOD language that states: "If any necessary funds are not committed, the applicant must provide clear and convincing evidence with the application that demonstrates the funds will be secured within 4 months following the date of grant contract execution." If you have any questions regarding our comments, please do not hesitate to contact me at (503) 585-8351, ext. 116 or my cell phone at (503) 871-9764, or email at ahanus@aocweb.org. Sincerely, Ann Hanus Policy Manager Cc: Mike McArthur, Director Steve Grasty, President Lynn Schoessler Infrastructure Finance Authority Board 1201 Court Street NE • Post Office Box 12729 • Salem • Oregon • 97309 • 503-585-8351 • www.aocweb.org