March 18, 2015 CPD-CDBG Policy Update

CDBG Funding in FY15 CDBG Funds $3.066 billion - $66m for Indian CDBG = $3.0 billion for formula vs. $3.03 billion for FY2014. Roughly a 1% decrease Formula allocations announced 2/10/15 FY 2015 grants computed using ACS data vs. the ACS data for FY 2014 allocations - every grantee’s data will change slightly every year in comparison to every other grantee’s data Median change in CDBG allocations = - 0.8%

Submitting FY15 Action Plans  CPD Notice : Don’t submit your action plan until FY 15 allocations are announced. You can delay submission up to 60 days after announcement  If a grantee’s normal 2015 Program Year Start Date is on or before May 1 st, the grantee has until April 11 to submit  If a grantee’s Program Year Start Date is 6/1 – 10/1, the grantee should plan to submit its plan 45 days before its Program Year Start Date, as usual.  Most grantees submit a new 3-5 year Con Plan in 2015

FY15 Appropriation Provisions  20% cap on planning + PACs  No exchanging of funds among units of government  Eminent domain prohibition for economic development (ED)  New provision for 2015: Underwriting is now mandatory for ED assistance to private for-profit businesses o HUD will issue a CPD Notice providing implementation guidance on this new provision

FY 16 – Administration Budget  CDBG formula funding $2.8b (-$200m)  Section 108 loan guarantee authority $300m (- $200m)  HOME $1.06b [incl. $10m for SHOP. (+ $150m)  HOPWA $332m (+ $2m)  Homeless $2.480b (+ $345m): incl. $2.223b for Continuum of Care (CoC)  $250m for Emergency Solutions Grants (ESG)  $7m for Homeless Management Information System (HMIS) Technical Assistance

FY2016 – Administration Budget  Pursuant to the Moving CDBG Forward initiative of 2013, HUD anticipates submitting a legislative reform package to Congress: (these include but are not limited to):  grantee eligibility,  aligning program cycles,  improving grantee accountability,  increasing State colonias set-aside from 10% to 15%  other state program changes

Moving CDBG Forward TA and Program Outreach listening sessions to solicit feedback from grantees about CDBG - 9 topic areas Sought input on ways to improve CDBG program, make it easier to administer and to improve grantee performance and accountability 9 in-person sessions + 10 interactive webinars held ase/articles/ moving-cdbg-forward-technical- assistance-and-prog ase/articles/ moving-cdbg-forward-technical- assistance-and-prog 7

FY2016 – Administration Budget Upward Mobility Initiative Proposal: Allows up to 10 states, localities or consortia to blend funding across 4 programs: Social Services Block Grant (SSBG), Community Services Block Grant (CSBG), CDBG, HOME In exchange for more accountability for results, ability to use the funds beyond the current allowable program purposes, to implement evidence-based/ promising strategies for helping individuals succeed in the labor market and improving economic mobility, children's outcomes, and the ability of communities to expand opportunity

FY2016 – Administration Budget Upward Mobility Initiative Proposal: Jointly administered by HUD and HHS Participating communities would be eligible to receive up to $300 million annually over five years through the HHS Social Services Block Grant (SSBG) to support implementation of the pilot projects

National Disaster Resiliency Competition Approx. $1b of the $16b CDBG disaster recovery funding appropriated by PL ( the Sandy appropriation ) has been dedicated to the National Disaster Resilience Competition (NDRC) Eligible applicants include 48 states, PR, DC & 17 local governments that had a Presidential disaster declaration during These include states & local governments that received direct allocations of PL funding from HUD Covers over 2100 counties nationally 10

National Disaster Resiliency Competition (continued) Goals of the NDRC : Fairly & intelligently allocates remaining CDBG Disaster Recovery funds from Public Law Creates examples of modern disaster recovery that applies science-based & forward-looking risk analysis to address recovery/resiliency/ revitalization needs Institutionalizes the implementation of thoughtful, sound, and resilient approaches to addressing future risks Builds on the successful model set forth by Rebuild by Design 11

National Disaster Resiliency Competition (continued) Allows communities to: Carry out program and planning activities to help recover from their last disaster & prepare for a more resilient future Implement exemplary projects in select communities to demonstrate the value & importance of resilient disaster recovery NOFA: ndrc-nofa.pdf Questions mailbox: 12

National Disaster Resiliency Competition – 2 Phase Process Phase I: Awards of up to $500,000 to applicants Funds to help applicants frame recovery needs, vulnerabilities, and community development opportunities, and tie the proposed disaster recovery and economic revitalization activities to the effects of the community’s Qualified Disaster from Applications due March 27,

National Disaster Resiliency Competition – 2 Phase Process Phase II: Highest-ranking Phase I applicants will be invited to compete in Phase II Award in Phase II of between $100,000 and $250,000,000 to up to 2 0 recipients Communities will propose a disaster recovery or revitalization project or program that addresses the vulnerabilities and community development opportunities identified in Phase I Submission timetable TBA 14

Section 108 Program Update For FY2015, $500 million loan guarantee authority Previously, Congress appropriated credit subsidy for Section 108 each year to cover potential defaults HUD has never had to use this credit subsidy, but each year must estimate the potential subsidy need In FY2014 appropriations act, Congress directed HUD to transition to a fee-based Section 108 program starting in FY2015, to make the program budget-neutral 15

Section 108 Program Update  Proposed Section 108 Fee Rule published in Federal Register on 2/5/15 ; comment period ended 3/9/15  Once rule is finalized, HUD will collect fees from borrowers to offset the costs of Section 108 loan guarantees. The fee in the first year is estimated to be 2.42% of the principal amount of the loan  Fee can be paid upfront, paid with CDBG funds, or paid with guaranteed loan proceeds. 16

CDBG Policy Guidance Issued Activity Delivery vs. General Admin Costs ( CPD Notice ) Closeout Instructions for NSP, CDBG-R, CDBG-DR, State CDBG, Entitlement ( CPD Notice ) Corrective Action for Violation of the Public Services and Planning and Administration Caps ( 5/16/13 memo ) – over- obligations must be reimbursed Transition to New Low/Moderate Income Summary Data ( CPD Notices & ) Updated Survey Methodology ( CPD Notice ) Code Enforcement Activities ( CPD Notice ) Program Income waiver for certain NSP 2 grants [ 1/28/15 ]

Future CDBG Policy Development Pursuant to Moving CDBG Forward, discussions regarding CDBG regulatory changes Rulemaking on new OMB “Super Circular” Financial Management requirements (replaces HUD Parts 84 & 85 regulations, OMB Circulars A-87, A-133, etc.) Rulemaking to implement Grant-Based Accounting for FY2015 grants & henceforth (elimination of FIFO drawdown process) AFFH Rule & Tool. HUD provided an additional comment period until 2/15/15 for States, Insular Areas, qualified PHAs, small CDBG grantees