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HomeMy WebLinkAboutMontana Dept. of CommerceTAN A Department of Commerce TO: FROM: SUB J: DATE: Local Government Officials, Staff, Community and Economic Development Agencies, O~anizations and Others Interested in the Montana Community Development Block Grant (CDBG) Program Gus Byrom, CDBG Program Manager- Housing and Public Facilities Karyl Tobel, CDBG Program Manager - Economic Development 1. Introduction and Background of the CDBG Program 2 Update on Bush Administration Proposal to Eliminate CDBG Program 3. Proposed Application Deadlines, Allocation of Funds, and Program Changes for the Federal Fiscal Year 2006 and 2007 Programs A. Public Hearing on CDBG Guidelines Scheduled for December 15, 2005 B. Proposed Application Deadlines C. Proposed Allocation and Distribution of Funds D. CDBG Planning and Technical Assistance Activities E. CDBG Public Facilities Category - Allow Montana Counties to Submit Applications on Behalf of Tribal Utility Authorities. F. Decrease Maximum CDBG Grant Ceiling from $500,000 to $400,000 G. Allow Counties to Apply on Behalf of Rural Special Improvement Districts H. Capital Improvements Plan (CIP) I. CDBG Public Facilities Ranking Criteria No. 2 and No. 3 November 15, 2005 1. Introduction and Back,qround of the CDBG Pro;Iram Montana's CDBG program is a federally funded, competitive grant program designed to help communities of less than 50,000 population with their highest priority community development needs. All CDBG projects must principally benefit Iow and moderate income persons. The program was established by the federal Housing and Community Development Act of 1974. The Montana Department of Commerce (MDOC) administers the program under contract with the U.S. Department of Housing and Urban Development (HUD). In 1982, MDOC took over administration of the "Small Cities" CDBG program for communities of less than 50,000 population from HUD. The MDOC Business Resources Division administers the Economic Development catego~j. The MDOC Community Development Division administers the Housing and Public Facilities categories. ] 4. Dates and Locations for Public Facilities Workshops for Spring, 2006 2. Urn:late on Bush Administration Pro,n~_~e_! to Eliminate CDBG Program Since the Department of Commerce began administering the State CDBG Program in 1982, the annual budget for the program that has been sot by Congress has seldom varied, up or down, by more than about five percent. In January, 2005, however, the Bush Administration proposed to eliminate the CDBG program from the Federal Fiscal Year (FFY) 2006 budget. In preliminary budget votes this fall, however, a majodty of the members of Congress have voted to continue the CDBG Program and keep its functions within the U.S. Department of Housing and Urban Development (HUD). Hurricanes Katrina and Rita and the war in Iraq have placed additional fiscal pressure on the federal budget. Many in Congress are demanding additional cuts in the domestic budget to offset the costs of hurricane relief and the Iraq war. The funding level for the CDBG program, along with the entire HUD budget, was transferred to a joint House/Senate conference committee to wok out differences between House and Senate proposed funding levels. Last year, Congress established funding for the entire, nationwide CDBG program (including entitlement cities of over 50,000 in population) for FFY 2005 at $4.1 billion. House and Senate conferees have just completed negotiations on the FY 2006 Transportation-Treasury-HUD appropriation. The total allocation for CDBG has been set at $3.877 billion, a 9 percent decrease from the FFY 2005 level. Despite the support from Congress for CDBG, the Bush Administration has again proposed to eliminate the CDBG program and omitted funding for the program from its 2007 budget. We will try to keep Montana local government officials, and others interested in the CDBG program, informed of any further developments regarding the program. If you would like to receive updates on the CDBG budget issue, contact us at the telephone number or e-mail address on the next page and provide your e-mail address. 3. Proposed Application Deadlines? Allocation of Funds~ and Prol:lram Chan;les for th- Federal Fiscal Year 2006 and 2007 ProRram~ The following presents a summary of proposed changes to Montana's CDBG Program Application Guidelines for Economic Development, Housing and Neighborhood Renewal, and Public Facility projects for FFY 2006 and FFY 2007 funds. This summary focuses on the key issues that local government officials and others need to be aware of in order to offer comments. The final guidelines will be distributed to local governments and other interested persons in February, 2006 for Planning and Public Facilities projects; in May, 2006 for Housing and Neighborhood Renewal projects; and in February, 2006 for Economic Development projects. Since the establishment of the Montana CDBG program in 1982, the Montana Department of Commerce has attempted to keep the CDBG program as useful to local governments as possible, consistent with the federal laws and regulations under which it must operate. The proposals presented in this report are an important part of the Department's on-going effort to continually re- evaluate and improve the program. It is important that local officials and others interested in community development review and provide comments on these proposals. By responding to your suggestions, the CDBG program can continue to be responsive to Montana local governments as they seek solutions to their highest priority community development needs. A. Public Hearing on CDBG Guidelines Sche~-!ed for December 151 20_n; A public hearing on the proposed CDBG Application Guidelines will be held Thursday, December 15, 2005, at 1:30 P.M. in the Montana Department of Commerce building, 301 South Park, 2"d Floor - Conference Room #226. Written comments may also be submitted to: 2 Community Development Division Attention: Gus Byrom Montana Department of Commerce P.O. Box 200523 Helena, Montana 59620-0523 Email: ~bvmm('~.mt..qov Telephone: (406) 841-2777 Fax: (406) 841-2771 Business Resources Division Attention: Karyl Tobel Montana Department of Commerce P.O. Box 200505 Helena, Montana 59620-0505 Email: ka rvlt('~.mt.oov Telephone: (406) 841-2733 Fax: (406) 841-2731 Comments must be received no later than 5:00 P.M., Thursday, December 22, 2005 in order to be incorporated into the formel hearing record. B. Proposed Application Deadlines For several years, HUD and Congress have been placing increasing pressure on all of the states that administer the State CDBG Program to expedite the expenditure of their CDBG funds. In response to Congress' concerns and with HUD's encouragement, the Montana Department of Commerce (MDOC) accelerated the funding cycle for Housing and Public Facilities beginning with the Federal Fiscal Year (FF'Y) 2002 CDBG program. To accomplish this, the Department conducted grant competitions for FY 2002, 2003, and 2004 funding allocations within a single 24-monlh pedod. This acceleration of the ~rant cemoetitions was a one-time only event. The objective of this 'l~ast forward" action was to establish a long-term annual grant application cycle that would provide for the ranking of both housing and public facility applications in the calendar year pdor to the state's actual receipt of the federal fiscal year (FFY) CDBG allocation that would fund those projects. CDBG Public Facilities applications for FFY 2007 funds would be due in May 2006 and a Housing and Neighborhood Renewal competition for FFY 2007 funds would have applications due in November 2006. Within the public facilities and housing categories, communities would be applying for FFY 2007 funds without knowing precisely how much CDBG funding will be available. The award of FFY 2007 funds, as well as the award of FFY 2006 funds, will be contingent on Montana receiving its CDBG grant funds from Congress and HUD. The tentative application deadlines for the grant competitions to take place in calendar year 2006 will be as follows: Economic Development - Open Cycle ED Application Guidelines available February 2006 ED Planning Grant Guidelines available May 2006 Planninc~ Grant Competition for FFY 2006 Grants - HousinR and Public Facilitie,= Applications due April 21, 2006 Grant Announcement - July 2006 Public Facilities Competition for FFY 2007 Gran~ Applications due May 26, 2006 Grant Announcement - September 2006 · Housin= and Nei.qhborhood Renewal Grant Competition for FFY 2007 Granlro Applications due November 3, 2006 Grant Announcement - March 2007 C. Prooosed Allocation and Distribution of Fupd- At this time, Congress has not passed a final HUD budget for FFY 2006, including establishing funding for the CDBG program. Whatever final funding level is approved by Congress, the allocation of funds for FFY 2006 CDBG funds would be distributed in a similar manner, based upon the funding level received for FFY 2005, as shown below. Distribution of FFY 2006 CDBG Funds Total FFY 2006 State CDBG Allocation. Est. Less CDBG funds for State program administration (as provided by federal law) Amount Available for Award to Local Governme~ Less 1/3 Allocation for Economic Development Projects Total Available for Housing And Public Facility Projects I. ess Planning Grants . Housing and Public Facilities Sub-Total Allocation for Housing Projects (38%) Allocation for Public Facilities Projects (62~) $7,626,300 $328.789 $2.432.503* $4,065,508 $ 225.050 4, 4o, oo8 $1,763203 $2,876,805 Proposed Distribution of 2007 CDBG Funds The following table summarizes the estimated distribution of CDBG funds for program, based upon the funding level received for FFY 2005. the 2007 Total FFY 2007 State CDBG Allocation - EsL Less CDBG funds for State program administration (as provided by federal law) Amount Available for Award to Local Governmep~ Less 1/3 Allocation for Economic Development Projects Total Available for Housing And Public Facility Projects Less Planning Grants . Housing and Public Facilities Sub. Total Allocation for Housing Projects (34%) Allocation for Public Facilities Projects (66~) $7,636,300 $328.789 $7,297,511 $2.432.503* $ 225.0O0 4, 4o, oo8 $1,577,603 $3,o62,4os * One-third of the total amount available for new grants would continue to be set aside to allow economic development funds to be available to applicants on a continuous basis. The Department will base the funding allocation for the Housing and Public Facilities categories upon the demand for the two categories for the previous two years. Using a two-year average, adjusts for any variability in the demand for CDBG public facilities funding that may be associated with the 4 biennial cycle of the State's legislatively approved infrastructure funding programs: the Department of Natural Resources and Conservation (DNRC) Renewable Resources Grant and Loan Progrem and MDOC's Treasure State Endowment Program (TSEP). In this way, the funding reserved for each category can respond to changing relative demand for CDBG Housing and Public Facilities grants over time. Through this method, the amounts allocated between the two categories will change based upon actual past demand; however, the basic method of distribution remains unchanged. The following chart lists the number of Housing and Public Facilities applications and the total dollars requested for the last two years. CDBG APPLICATIONS RECEIVED 2005-2006 HOUSING PUBLIC FACILITIES FFY YEAR # OF APPS TOTAL $ # OF APPS TOTAL $ REQUESTED REQUESTED 2005 9 $3,803,500 14 $6,494,700 2006 4 $1,980,000 11 $4,749,837 Total: 13 $5,783,500 25 $11,244,537 % of Total Applications 34% 66% As a result of the method of distribution described above, the allocations for the Housing and Public Facilities categories for FFY 2007 funds will be established at 34% and 66%, respectively, regardless of the final funding level approved by Congress. Previously, the percentage for Housing was 38% and the percentage for Public Facilities was 62% for FFY 2006 funds. D. CDBG Plannin;I and Technical Assistance Activitie~ Economic Development Program The Community Development Block Grant - Economic Development Program intends to set-aside approximately $225,000 for economic development planning, capacity building, and technical assistance grants from the FFY 2005 program. The Department intends to use the set-aside for activities similar to those funded in recent years but will establish specific application policies by May 2006. The policies will specify funding priorities, application procedures, and amounts available at that time for each subcategory. Establishing policies in May will provide flexibility to address specific needs identified at the time federal funding becomes available for the CDBG program. Funds not utilized for this category may be used for regular economic development activities. All other aspects of administration of Community Development Block Grant - Economic Development funds will be unchanged from previous years. Housing and Public Facilities Categories For FFY 2007, within the Housing and Neighborhood Renewal and Public Facilities categories, the CDBG program proposes to continue to set aside $225,000 for planning grants to local governments, the same level as last year. The planning grant funds can be used to assist local governments in a wide variety of planning-related activities, including preparation of community growth policies, needs assessments, capital improvements plans, housing studies, and preliminary architectural or engineering plans related to construction of water and wastewater systems, and other public facilities. E. CDBG Public Facilities CateRory - Allow Montana Counties to Submit Appli¢;!_;_n_qs on Behalf of Tribal Utility Authorities. Since 1982, Montana's CDBG Program has been providing infrastructure, affordable housing, and economic development assistance to Montana incorporeted Cities, towns, and counties. This assistance has included funding for incorporated communities located within Montana's tribal reservations, such as Browning, Lodge Grass, and Poplar. The CDBG pregram has also assisted county water and sewer districts located on reservations, such as the Ashland Water and Sewer District where Rosebud County agreed to sponsor the project. Recently, Big Horn County has been actively involved in establishing a tdbal utility authority on the Crow Reservation. The tribal utility authority would have powem similar to those exemised by a city, town or water and sewer district; namely, the ability to set user rates and charges, and provide for the construction and maintenance of improvements for residents. This last spring, under the Treasure State Endowment Program (TSEP), the Legislature approved $500,000 for improvements to Crow Agency's wastewater collection system (Crow Agency is an unincorporated community). At a meeting on October 19 in Crow Agency, County Commissioner John Doyle stressed that Crow Agency may need State CDBG Progrem assistance for further water and wastewater system improvements, in addition to TSEP funds, assistance from USDA Rural Development, and other federal and state funding sources. Under federal law, only general purpose local govemments can apply to the State CDBG Program: cities, towns, and counties. To date, the Montana CDBG Program has never assisted a tribal utility authority. At the October 19 meeting, Commissioner Doyle specifically requested that the State CDBG Program modify its administrative rules to allow Montana counties to submit applications on behalf of tribal utility authorities. At present on the Crow Reservation, tribal utilities are jointly operated by the Bureau of Indian Affairs (BIA), Indian Health Service (IHS), and tdbal government employees. Commissioner Doyle envisions a system whereby management authority, including ownership, eventually could be vested in a single tribal utility authority. Allowing the State CDBG Program to fund tribal utility authorities would provide additional funds to meet the needs of Montana's tribal communities. Already, tribes are eligible for assistance under the Treasure State Endowment Program (TSEP) and USDA Rural Development, as well as other HUD administered programs (including Indian CDBG). On October 25, 2005, at Montana's request, HUD clarified in an e-mail that it is permissible, under federal law, for a county CDBG recipient to assist projects principally benefiting county residents who are members of an Indian Tribe. When members of an Indian Tribe are also residents of a county, that county can use CDBG funds to assist public facilities or services predominantly used by Indians, including those who live on Indian reservations or on allotted Indian land. The Montana State CDBG Program proposes, therefore, that State CDBG funds can be awarded to counties that apply on behalf of tribal utility authorities to assist tribal communities, providing all other federel and state CDBG requirements are met. F. Decrease Maximum CDBG Grant Ceiling from ~500,000 to $400,000 As a result of the pending cut in CDBG funds, the program is proposing to reduce the maximum ceiling on Housing and Public Facilities projects from $500,000 to $400,000. The Treasure Slate Endowment Program (TSEP) has recently increased its maximum grant ceiling from $500,000 to $750,000, which will enable the TSEP program to support more of the costs of water and wastewater projects in Montana. Reducing the maximum grant ceiling for CDBG Housing and Public Facilities projects would allow the program to continue to fund roughly the same number of projects annually in 5 the face of a projected 9% cut in funding for the CDBG Program. The currant grant ceiling for CDBG Economic Development projects is alraady set at $400,000. G. Allow Counties to Apply on Behalf of Rural Special Improvement Distri~o At present a county may sponsor an application on behalf of a county or multi-county water and sewer, or solid waste district. Water or sewer users associations, because they ara private non- governmental entities, and rural special improvement districts (RSID's), must fimt be legally established as a county or multi-county water and sewer, or solid waste district (pursuant to sections 7-13-22 and 23, MCA) prior to the submission of a CDBG application. Comments were raceived during the Traasura State Endowment Program (TSEP) administrative rules process earlier this fall raquesting that this policy be modified to allow counties to submit applications for construction projects on behalf of RSlD's with the raquirament that the county water and sewer district be craated befora a grant could be awarded or funds dispersed. The justification for this request is that it can take an extensive amount of time to form a water and sewer district, complete a preliminary engineering study, and adequately inform residents about the need for the project and necessity to creats the water and sewer district. This change was racently adopted by the TSEP program. The Montana CDBG program similarly proposes to make the same change to allow counties to submit applications for construction projects on behalf of rural special improvement districts, with the condition that the CDBG funds could only be raieased once a county water and sewer district has been created. The district would have to be craated within six months of the date of announcement of the CDBG grant award. The county, which was awarded the grant, would still administer the grant through an interlocal agraement with the newly formed district. H. Capital Imr~rovementa Plan (ClP) In the past, the CDBG program had requirad that applicants, which ware awarded CDBG public facility funds for water, wastewater, or solid waste improvements and that did not have a capital improvements plan, develop an abbraviated ClP that covers at least a 5-year period, during the term of their project. For FFY 2007, within the public facility category, the CDBG program is proposing to drop the raquirament to prepare a CIP; however, applicants would still be encouraged to complete a comprehensive ClP to encourage mora effective long-term planning for the construction, maintenance, and financing of local public facility projects. Local governments, if they wish, could still use CDBG funds to pay for the preparation of the comprehensive ClP as part of the project and include funds for the ClP in the proposed project budget. Funds reserved for the preparation of a ClP, up to $25,000, would not be included in the scoring of benefit to Iow and moderate income persons. An applicant will continue to typically raceive more points during the ranking process if a CIP has been adopted, especially if the plan comprehensively addrasses all major community facilities and is updated annually and utilized as part of the community's annual capital budgeting process. I. CDBG Public Facilities Rankin;I Criteria No. 2 and No. 3 For water and wastewater applications only, clarify that information necessary to scora CDBG ranking criteria no. 2, Need for Project, and no. 3, Proposed Concept and Technical Design, will be taken from the applicant's praliminary engineering report (PER). Applicants do not need to provide any narrative rasponse to this priority unless they are providing additional information not contained in the PER. The criteria that are listed are simply to inform applicants of the issues that will be considered in the scoring of this priority. 7 4. Dates and Locations for Public Facilities Workshops for Spdng~ 2006 In cooperation with the Water, Wastewater, and Solid Waste Agencies Coordinating Team (W2ASACT), the CDBG program will be co-hosting throe workshops designed to familiarize local governments with federal and state Iow-interest loan and grant programs that are available to assist local govemmente and water and sewer districts in financing water, sewer, and other types of public facility projects. Tentative dates and locations in 2006 are as follows: Wednesday, February 22: W2ASACT Workshop in Gmat Falls - 8 a.m. - 5 p.m. Thursday, March 2: W2ASACT Workshop in Missoula - 8 a.m. - 5 p.m. Tuesday, March 7: W2ASACT Workshop in Billings - 8 a.m. - 5 p.m. The CDBG and TSEP programs will also be co-hosting a CDBG/TSEP-only workshop to be held in eastern Montana on Thursday, March 9, 2006 at a location still to be determined. In addition, the CDBG Program will be hosting the following three one-half day workshops focusing on specific details of CDBG requirements related to the upcoming CDBG Public Facilities application deadline May 26, 2006. Tuesday, February 21: CDBG ½ Day Workshop - Gmat Falls - 1- 4:30 p.m. Friday, March 3: CDBG % Day Workshop - Missoula - 8:30 a.m. - noon Wednesday, March 8: CDBG % Day Workshop - Billings - 8:30 a.m. - noon · The February 21, half-day CDBG workshop will be held in Great Falls in the afternoon before the February 22 full-day W2ASACT workshop. · The March 3, half-day CDBG workshop will be held in Missoula on the morning after the March 2 full-day W;ASACT workshop. · The March 8 half-day CDBG workshop will be held in Billings on the morning after the March 7 full-day W2ASACT workshop. Local officials and others will be notified when these dates and locations ars confirmed. Local government officials and all those interested in learning how to plan for and finance local public facilities are encouraged to attend these sessions. The three one-half day CDBG workshops as well as the joint March 9 CDBG/TSEP workshop will cover possible funding for senior centers, Head Start facilities, rural hospitals, and other types of public facilities, in addition to possible assistance for water, wastewater projects, and bridges.