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File #: DIR 2020-035    Version: 1 Name:
Type: Discussion/Direction Item Status: Passed
File created: 8/24/2020 In control: Town Council
On agenda: 9/1/2020 Final action: 9/1/2020
Title: Discussion/Direction: Community Development Block Grant (CDBG) Entitlement Status
Attachments: 1. Attachment A: 2021 Castle Rock CDBG Entitlement Letter, 2. Attachment B: Federal Register Publication, 3. Presentation

To:                     Honorable Mayor and Members of Town Council

 

From:                     David L. Corliss, Town Manager

                     Matt Gohl, Special Projects Manager

 

Title

Discussion/Direction: Community Development Block Grant (CDBG) Entitlement Status

Body

________________________________________________________________________________

 

Executive Summary

The Town of Castle Rock was notified by US Department of Housing and Urban Development (HUD) of its eligibility to receive Community Development Block Grant (CDBG) funds beginning in fiscal year 2021 (Attachment A). The 2021 distribution amount is unknown at this time, however, the Town’s allocation of CDBG Funds for fiscal year 2020 was estimated to be $222,000. In order to receive CDBG Funds, The Town must accept its entitlement status no later than September 15, 2020.

 

The Town received notification of eligibility for CDBG entitlement status in an April 2020 letter from HUD (Attachment A). Additionally, Douglas County made the Town aware of its intent to accept entitlement status earlier this year. At the May 5th meeting, Town Council was provided four options for how to proceed with the CDBG funding opportunity. Council directed staff to conduct further research on the Affirmatively Furthering Fair Housing (AFFH) issue (including the pending rule change) and bring information back for later Council action. Additionally, staff was directed to notify Douglas County that the Town would not partner with them on CDBG efforts at that time.

 

In July, HUD announced the repeal of the 2015 AFFH rule which allowed federal influence with local zoning and land use laws. The new rule continues to support the Fair Housing Act while giving local governments more authority to determine the best way to affirmatively further fair housing in its jurisdiction.

 

Staff recommends that Town Council accept entitlement status for the Town of Castle Rock and inform HUD of its acceptance by the September 15, 2020 deadline. Should the Town accept entitlement status the CDBG program continues to have “off-ramps” that would allow the Town to withdraw if concerns arise. Following this acceptance, staff will provide ongoing updates to Town Council regarding development of the Consolidated Plan and overall CDBG project management.

 

Discussion

The Community Development Block Grant (CDBG) program is a federal grant opportunity provided through the U.S. Department of Housing and Urban Development (HUD). CDBG funds are available to qualifying entities for the purpose of:

 

                     benefitting low and moderate income persons

                     preventing or eliminating slums or blight

                     addressing community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community for which other funding is not available

 

The Town declined to participate in the CDBG program in 2015, 2017 and most recently in 2019 due to concerns with Affirmatively Furthering Fair Housing (AFFH) rules that could arguably impact local zoning and planning powers. Douglas County ended its entitlement status in 2016 due to concerns with HUD rules tied to CDBG funds, but has accepted entitlement status for 2021. Additionally, Castle Pines, Parker and Lone Tree have accepted entitlement status and are partnering with Douglas County on CDBG project planning at this time.

 

Past concerns with acceptance of CDBG funding have centered on requirements of AFFH and the potential that there could be federal input into local planning efforts. This concern stems from the 2015 AFFH rule which included requirements that entitlement communities examine local zoning and land use practices to determine how they may contribute to segregation and take remedial actions. Entities who accept HUD funding have been generally required to affirmatively further fair housing, but this requirement was not originally defined in the 1968 Fair Housing Act. Efforts to define “affirmatively furthering fair housing” (AFFH) began in 1994. Guidance was provided in 1996 to explain AFFH and was most recently updated in 2015 and included language allowing the federal government to engage in local land use matters.

 

Effective September 8, 2020, the 1994 regulations and the 2015 rule regarding AFFH will no longer be in place. Rather, the new rule allows entitlement communities to make the best determination of how to further fair housing in its specific community with its unique needs. Entitlement entities will continue to certify its efforts to AFFH as part of the CDBG grantee process. However, given the revised rule, this certification will be acceptable to HUD as long as the entity has taken active steps to promote fair housing. The new AFFH definition, as published in the Federal Register, states:

 

“this approach to the definition of ‘affirmatively further fair housing’ preserves flexibility for jurisdictions to take action based on the needs, interests, and means of the local community, and respects the proper role and expertise of state and local authorities.”

 

Full text of Federal Register publication of this rule change is available in Attachment B. Part V. of the Federal Register publication summarizes this rule change as follows:

 

The rule repeals the 2015 AFH and 1994 AI [Analysis of Impediments] requirements where they appear in regulation. Thus, it returns to the original understanding of what the statutory AFFH certification was prior to the 1994 regulation: A general commitment that grantees will use the funds to take active steps to promote fair housing. Thus, grantee AFFH certifications will be deemed sufficient provided they took any action during the relevant period rationally related to promoting fair housing, such as helping eliminate housing discrimination.

 

Budget Impact

The Town’s estimated grant award for fiscal year 2020 was $222,000. It is reasonable to assume that grant funding for 2021 would similar to this amount. Note that funding for the CDBG program is subject to Congressional appropriation.

 

Recommendation

Staff recommends that the Town of Castle Rock accept CDBG entitlement status and inform HUD accordingly.

 

Once the Town accepts entitlement status, staff will be required to prepare and submit a Consolidated Plan no later than August 16, 2021. This plan is to be developed with citizen participation and includes housing and homeless needs assessment, housing market analysis, strategic plan, action plan and certifications. Staff will seek a qualified consultant to help reduce the administrative burden associated with developing the Consolidated Plan. Note that the Town may use grant funding to reimburse eligible costs related to the development of the plan. This project will be coordinated by the Town Manager’s Office and will involve other Town staff as appropriate.

 

The Town will be able to withdraw its entitlement status if Town staff or Town Council determine the process to be out of alignment with Town priorities. These “off ramps” are available throughout the process and include the Town notifying HUD of withdrawal prior to receiving funds.

 

Should the Town defer CDBG entitlement status, it is important to note that Castle Rock residents would not be eligible to benefit from the County CDBG grant program. For example, Douglas County would be able to provide CDBG funds to local non-profits such as the Help and Hope Center and Aging Resources of Douglas County. However, entities benefiting from the County CDBG program will not be able to use those funds to help Castle Rock residents. Not only could this situation create difficulty for the non-profit entity, it also results in the possibility that Castle Rock residents may not have the support they need.

 

Proposed Motion

“I move to accept CDBG entitlement status for the Town of Castle Rock and direct staff to proceed with the development of the Consolidated Plan.”

 

Attachments

 

Attachment A: 2021 Castle Rock CDBG Entitlement Letter

Attachment B: Federal Register Publication