HomeMy WebLinkAboutCDBG ED ProgramEconomic
DEVELOPMENT
DEC 2 7 2000
CITY OF LAUREL
TO: Montana Local Government Officials, Community Development Agencies and
Staff, and Others Interested in Community Development
FROM: Ann Desch, CDBG ED Program \/d
DATE: December 19, 2000
RE: PROPOSED CHANGES TO THE APPLICATION GUIDELINES FOR THE
YEAR 2001 ECONOMIC DEVELOPMENT CDBG PROGRAM
PUBLIC HEARING ON January 11, 2001
1:30 p.m., Downstairs Conference Room at the Dept of Commerce
1424 9`' Avenue, Helena, Montana
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The following presents a summary of proposed changes to the Program Year 2001 Montana
Community Development Block Grant (CDBG) Program Application Guidelines for Economic
Development projects. The program year officially begins April 1, 2001. We intend to adopt the
administrative rules for the program by February 22, 2001, and begin receiving applications on
March 1, 2001. Some of the proposals represent significant changes in past policies for
Montana's CDBG/ED Program. We would appreciate your comments on the proposals, either
for or against. The public hearing is scheduled for January 11, 2001. The deadline to receive
written comments is January 19, 2001.
Note: The page numbers, reference pages in the Program Year 2001 Montana Community
Development Block Grant (CDBG) Program Application Guidelines for Economic Development
projects.
Funding Amounts - Page 1
Montana's total allocation available for award is $8,122,000. The MDOC reserves one-
third, or approximately $2,592,780 for economic development projects.
2. Purpose - Page 2
Revise first paragraph to add:
The economic development category of Montana's Community
Development Block Grant Program is designed to stimulate economic
development activity by assisting the private sector to create or retain jobs
for low and moderate income persons primarily through loans to
businesses. CDBG grant funding is also available to companies for
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emnlovee training. A small amount of CDBG grant funding has been
set aside for technical assistance activities in the following categories:
1424 9[h Avenue • PO Box 200505 • Helena, MT 59620-0505 . PH: 406-444-3814 • FX: 406 444 1872
1) to companies competing for federal SBIR funds under the `
State SBIR Outreach Program;
2) to the state-funded network of MicroBusiness Development
Corporations for microbusiness support and development;
3) for technical assistance activities of statewide impact.
Eligible Activities - pages 2 - 5
? Add the new subheading: "1. Loans to Businesses" under "A. Eligible
Activities," page 2, for clarity
? Shorten first sentence (under "A. Eligible Activities," page 2) to read: "Typical
eligible activities for loans to businesses include..."
? At end of first paragraph (under "A. Eligible Activities," page 2), delete: "...and
grants to communities for nonprofit and for-profit entities to provide employee
training"
? Add a new Eligible Activity:
Assistance to Businesses Impacted by the Summer 2000 Wild Fires. A
maximum of $250,000 in Program Year 2001 only could be distributed
to each existing RLF that would make the loans to individual businesses •
located in their service area that were impacted by the fires. The MDOC
is developing criteria to determine which RLFs would be eligible and
how the funds would be distributed. The interest rate would be between
0% - 4%, which would be set by the RLF, but could be no higher than 4%.
To allow for maximum flexibility, seventy percent of the dollars loaned in
the aggregate would have to meet the 51 % benefit to LMI.
? Technical Assistance Grants - Page 3
Technical assistance to the MicroBusiness Development Corporations and State
SBIR Outreach Program activities would be continued. Funding levels proposed
would be $130,000 to be distributed under the following two categories:
1) $55,000 for the network of MBDCs. A maximum of $5,000 would be
available to each MBDC region, and a maximum of $7,500 to an MBDC
region serving seven or more counties.
2) $75,000 for SBIR and other technical assistance activities that have
statewide impact.
Proposed Guideline Changes 2 CDBG Economic Development Program
Program Year 2001
? Customized Training for Employees - Page 4
• Revise and add language in the first paragraph to reflect language used for
the Workforce Investment Act funding:
"The intent of this funding activity is to assist companies in
Montana with customized labor training to provide needed skills
and better-paying jobs for their workers. The goal is to facilitate
the growth of companies in Montana, increase wages for trained
workers, increase employee productivity, and assist in the skill
development of employees. Preference will be given to training
that focuses on developing transferable skills in emerging
industries such as information and advanced technology, health
services, value-added agriculture and communications. Funding
may also be distributed to educational and nonprofit
organizations that provide job training targeted to developing
specific employee skills needed by an aggregate of companies."
Add new language regarding thresholds for employee training funds:
Clarification that a 1:1 match is also required for an application that is
only for employee training funds.
• The training period for which CDBG funds are used cannot extend for
more than one year. At the end of the training period, employees must be
paid a compensation package of salary or salary and benefits totaling
$11.00 per hour.
Only employees working full time, at least 35 hours per week, at the end
of the training period are eligible for reimbursement of training costs. The
definition of what constitutes adequate benefits is subject to evaluation by
MDOC. The Department may consider projects that involve lower
compensation packages only in situations where there is a significant
positive impact overall on the local economy and strong community
support is documented.
The company must provide financial information as listed under the
Business Application Requirements section of the CDBG guidelines.
The threshold language above needs to correlate to the requirements under
E. Hiring and Training Plan for Customized Training of Employees on
page 25, 26, and 27:
• On page 26, revise the first sentence under item 2: "The compensation
package paid after training shall be at a minimum $11.00 per hour.
• • On page 27, under #2, a minimum of $11.00 per hour total
compensation after training replaces $7.15 per hour.
Proposed Guideline Changes 3 CDBG Economic Development Program
Program Year 2001
4. Maximum Grant Amount - Page 7
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The maximum grant amount is still $400,000 for a local government applicant in a
program year (April 1 through March 31).
? Explanation of calculation of administrative costs - Page 8:
Administrative costs are limited to a maximum of 8% of the total grant award.
As an example, for a total grant award of $400,000, up to a maximum of $32,000
(8%) in grant funds would be allowed for project administration, and $368,000
(92%) would be the amount of the loan. As another example, for a total award of
$250,000, up to a maximum of $20,000 (8%) in grant funds would be allowed for
administration with $230,000 (92%) remaining for the loan.
Application Requirements - Page 8
Applications will be accepted no earlier than March 1, 2001. This will allow fire-
impacted businesses to receive their funding in late spring.
6. Thresholds - Page 9
No changes proposed.
7. Business Application Requirements - Pages 12 -16
? General Policies on Loan Requests - Page 15
Interest Rates - The interest rate will remain at 8%
Thresholds for Funding, Sections A through E - Pages 18 through 24
? The Public Benefit Test or the amount of CDBG requested for each job created or
retained will remain at $15,000 and $5,000 for each employee trained.
? Hiring and Training Plan for Customized Training of Employees, Section E -
page 25
On page 26, paragraph #2, change the compensation package required to be paid
after training from $7.15 per hour to $11.00 per hour
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Proposed Guideline Changes 4 CDBG Economic Development Program
Program Year 2001