To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Title
Discussion/Direction: Community Development Block Grant (CDBG) Entitlement Community Status
Body
________________________________________________________________________________
Executive Summary
The Community Development Block Grant (CDBG) program provides communities with federal 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. Because Castle Rock’s population is greater than 50,000, the Town may accept status as a CDBG entitlement grantee.
Town Council in 2015 declined to participate in the CDBG program due to uncertainty surrounding a then-new rule regarding Affirmatively Furthering Fair Housing (AFFH). The Town has until Friday, September 15, to notify the U.S. Department of Housing and Urban Development (HUD) of its intent to accept or defer entitlement status for 2018.
The AFFH rules that caused Council concern in 2015 remain in place. HUD has provided some information about AFFH (Attachment B), however, the rules remain in place. Additionally, Douglas County is no longer in the CDBG program and does not receive funding.
Council generally has two options related to this item. Council could 1) decline to participate as it did in 2015, or 2) accept status as an entitlement grantee and administer a local CDBG program. The purpose of this memo is to provide background on this topic so that Council can provide direction as to the two options.
Discussion
The Town received notice (Attachment A) August 11 that, based upon its population, that it may accept status as a CDBG entitlement community. In short, this means the Town could receive roughly $198,500 in federal funds annually, starting in 2018, 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.
Entitlement communities develop their own CDBG programs and funding priorities. Eligible activities include acquisition of real property; relocation and demolition; rehabilitation of residential and nonresidential structures; construction of public facilities and improvements; public services, within certain limits; activities related to energy conservation and renewable energy resources; 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
• Prevent or eliminate of slums or blight
• 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
In the past, CDBG funds have been used within Castle Rock to complete alleyway improvements and make curbs ADA accessible, as well as to support public service programs. Castle Rock was a grantee community under Douglas County for these projects. Douglas County ended its entitlement status in 2016 due to concerns with HUD rules tied to CDBG funds.
The AFFH rules that caused Council concern in 2015 remain in place. Council’s prior concerns regarding the rules included that they could impact local zoning and planning powers. Council in 2015 was not willing to accept federal funding that could impact its ability to make local decisions regarding land use matters.
According to the letter the Town received in August, if the Town elects to receive CDBG funds, the Town must: “follow a citizen participation plan and prepare a Consolidated Plan (Plan) that includes a housing and homeless needs assessment, housing market analysis, strategic plan, action plan and certifications.” CDBG funds may be used to reimburse costs for the administrative actions necessary to receive an initial grant, so long as certain requirements are met.
Up to 20 percent of a CDBG program’s allocation, or $39,700 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 $29,775 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.
Also of note relevant to this discussion is information from the Colorado Municipal League that the CDBG program could be eliminated under the proposed 2018 federal budget. Council may not elect to initiate a CDBG program here at this time, when the future of the program is in question. Further information is available in Attachment C.
Staff Recommendation
Staff recommends that Council discuss the options outlined and direct staff how to reply to the letter from HUD.
Possible Motions
“I move to direct staff to notify HUD of its intent to defer entitlement status.”
OR
“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.”
Attachments
Attachment A: Letter Regarding Town’s Entitlement Status
Attachment B: AFFH Fact Sheet
Attachment C: CML Newsletter Article Regarding CDBG Funding