To: Honorable Mayor and Members of Town Council
From: Kristin Zagurski, Senior Management Analyst
Teri Whitmore, Planning Manager
Title
Discussion/Direction: Community Development Block Grant (CDBG) Entitlement Community Status
Body
________________________________________________________________________________
Executive Summary
Because Castle Rock’s population is greater than 50,000, the Town may now accept status as a Community Development Block Grant (CDBG) entitlement grantee. The CDBG program provides communities funds to assist with community development needs, such as infrastructure improvements, as well as with public-focused services - particularly for low and moderate-income persons.
Castle Rock currently qualifies for and receives these funds through Douglas County’s CDBG program and may continue doing so if desired. Or, Town Council could direct staff to accept status for the Town as an entitlement grantee, and the Town could administer its own, Town-controlled CDBG program.
The purpose of this memo is to highlight points that Council should consider before providing staff direction. The Town has until Friday, August 21, to notify the U.S. Department of Housing and Urban Development of its intent to accept or defer entitlement status.
Discussion
The Town received notice this month, based upon its population, that it may accept status as a CDBG entitlement community. In short, this means the Town could receive upwards of $210,000 in federal funds annually, starting in 2016, for use toward activities including infrastructure improvements and public services. This amount is based upon a formula that gauges community need, including extent of poverty and age of housing.
The Town currently participates in CDBG through Douglas County and was awarded a grant for $50,000 in 2015 for alley rehabilitation. The Town, on average, has received a similar level of CDBG funding annually but is not guaranteed any particular funding level through this competitive program.
Capital improvement projects like alley rehabilitation and pothole repairs are just one potential use for CDBG funds. The monies may also be used toward public service and community and economic development projects. 2015 public service recipients in Castle Rock include the Douglas/Elbert Task Force ($39,405) and Saint Vincent de Paul of Castle Rock ($7,000), which use the monies to provide various types of emergency assistance. The Town currently has a representative on the County’s advisory board that reviews local CDBG requests.
The County’s CDBG allocation for 2015 was just over $1 million. If Castle Rock elects to become an entitlement community, Douglas County’s allocation would be reduced by the amount of the Town’s allocation, and Castle Rock service organizations would no longer be eligible to apply for funds through the County’s program. Rather, they would apply directly to the Town for funding, and the Town would determine how its allocation - estimated to be $212,200 in 2016 - would be dispersed. In other words, Castle Rock programs would no longer have to compete on a County-wide level for CDBG funds
Entitlement communities develop their own CDBG programs and funding priorities. In addition to those already mentioned, other eligible activities include acquisition of real property; relocation and demolition; rehabilitation of residential and nonresidential structures; and provision of assistance to profit-motivated businesses to carry out economic development and job creation/retention activities. Each activity must meet one of the following national CDBG program objectives:
• Benefit low and moderate-income persons
• Prevention or elimination of slums or blight (blighted areas in Castle Rock have been identified through the urban renewal process)
• Address community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community or for which other funding is not available
Many municipalities throughout the state have elected to become entitlement communities: Arvada, Aurora, Boulder, Centennial, Colorado Springs, Denver, Ft. Collins, Grant Junction, Greeley, Lakewood, Longmont, Loveland, Pueblo and Westminster. In those communities, the programs are administered through the municipal development department. This is the arrangement staff would propose if Council elects for Castle Rock to become an entitlement community. Current Town staff members have experience in administering a CDBG program.
Up to 20 percent of a CDBG program’s allocation, or $42,440 in Castle Rock’s case, can be used to cover the cost of administration such as staff salaries and training or audit expenses. Public service programs may comprise up to 15 percent of a CDBG program’s allocation, which would mean $31,875 available for that purpose in Castle Rock. The remaining funds may be used for other projects, such as public facilities/infrastructure. The Town’s allocation can be expected to increase as its population grows.
If Council decides now that Castle Rock should become an entitlement community, the local program would start between July 1 and October 1, 2016. That is because the Town would first need to prepare several plans related to the program.
Becoming an entitlement community and administering its own CDBG program isn’t Council’s only option. The Town could become an entitlement grantee but enter into a joint agreement with the County for the program’s administration. Or, the Town could defer acceptance of entitlement status and continue participating through the County’s program. If Council chose that option, the next time it could be revisited would be in 2018, for program years 2019-2021.
Additional considerations on federal requirements
There are substantial procedural and planning requirements associated with the receipt of CDBG federal funding, some of which follow from current receipt of funds through Douglas County, while other requirements would be placed as an entitlement community. Staff is not aware of any specific current CDBG funding requirements which would appear to be at odds with Council and community desires and directions. However, the requirements can change in the future. Staff would recommend that, if the Town proceeds with entitlement community status, that these federal requirements be closely monitored, with the understanding that if either existing or new requirements would be determined inappropriate by Council, that the Town would reject continued participation in the program.
Budget Impact
If the Town starts a CDBG program, a future budget amendment would be necessary to accommodate approved projects within annual appropriations.
Staff Recommendation
Because of the advantages offered by having its own CDBG program - including Council approval of all locally funded projects - and because opportunity exists through the program to recoup administrative costs, staff recommends that the Town accept entitlement status and take steps necessary to prepare the required plans.
Proposed Motion
“I move to direct staff to notify HUD of its intent to accept entitlement status and to bring back to Council for consideration a proposed local CDBG program.”
Attachment
Attachment A: Letter Regarding Town’s Entitlement Status
Attachment B: Map of Douglas County CDBG Target Areas
Attachment C: List of Potential CDBG Administrative, Public Service and
Facility/Projects for Castle Rock