NACCED Annual Meeting Orlando, Florida September 30, 2012 CPD Policy Update

CPD Today Assistant Secretary Marquez departed May 2012 Mark Johnston, DAS for Special Needs, appointed as Acting Assistant Secretary for remainder of term Cliff Taffet remains as General Deputy Assistant Secretary Yolanda Chavez remains as DAS for Grant Programs Ann Oliva now Acting DAS for Special Needs 2

FY 2012 Operations FY 2012 formula allocations announced in January 2012 consistent with 60 day provision of law Field offices are fully caught up on reviews of action plans, making grants in timely manner CPD has maintained monitoring schedule at field office level despite tight budgetary constraints Funding constraints having impact on ability of field offices to hire staff and travel

CDBG FY 12 formula funding level - $2.948 billion Represents 26% reduction in comparison to FY 10 $300 million from CDF account for disaster recovery purposes (additional $100 million outside budget cap) $400 million in CDBG DR allocated in January 2012 to 17 grantees (8 states and 9 local governments)

CDBG in FY 13 House & Senate passed 6 month continuing resolution for FY 2013 (H. Res. 117) Provides funding based on FY 2012 level BEFORE deduction of $300 million in CDBG DR funding Projected amount to be available for CDBG formula allocation is $3.248 billion House and Senate Appropriations Committees, respectively, provided $3.34 billion and $3.1 billion for CDBG formula in their FY13 appropriation bills

Congressional Interest in CDBG FY 12 appropriation called for two reviews: GAO to review best practices in formula programs HUD to report to committees on data systems improvements House Appropriations Surveys and Investigations on administrative/planning costs GAO also reviewing admin/planning costs House Appropriations staff questions on activity delivery costs, grandfathered communities, public service cap, American Community Survey

CDBG Policy Considerations Guidance issued on CDBG-R and NSP 1 closeouts, addressing open activities cited by OIG audit, voluntary grant reductions Preparing guidance on mixed use economic development, activities jointly funded by entitlements and states, use of ACS data for low-mod area benefit, Activity Delivery Costs vs. General Administrative Costs, technical corrections to regs. Evaluating changes to IDIS performance measurement structure Other IDIS upgrades: eConPlan suite/mapping tool; enhancements in response to OIG audit

CDBG Issues – IG Audit Formally issued October 31, 2011 “HUD did not adequately use its System (IDIS) to provide oversight of activities under the Block Grant program.” Unaware of how grantees used $67 million to fund more than 1,300 cancelled activities with draws Lacked oversight of almost $3 billion funding more than 20,000 long-standing open activities 8

CDBG Issues – IG Audit Some seriously bad actors 46 grantees accounted for 11,647 open activities 64 grantees accounted for $2 billion in open activities Have reduced open activities to 2,288 or 11.2% of original 20,000, representing 16.09% of funds Have reduced canceled/drawn activities to 238, representing 27.83% of funds Guidance to field offices to help on tough issues 9

CDBG Issues – ACS Data FY 2012 allocations used American Community Survey (ACS) data for in place of 2000 Census data (plus 2010 population count) Significant funding changes for many grantees due to new data and reduced appropriation Path of appeal on data is to Census Bureau Next update of OMB Metro Area/City designations sometime in 2013 Plan to update Low/Moderate Income Summary Data

Section 108 $240 million in guarantee authority in FY 2012 FY 2013 Continuing Resolution would effectively provide same authority level FY 2013 Administration request was $500 million with switch to fee-based approach At committee level, Senate adopted Administration proposal while House provided credit subsidy HUD’s Policy Development and Research Office to issue report on Section 108 program shortly 11

CDBG-R Deadline for expending funds = 9/30/12 If you haven’t expended it, it’s too late now! After today, access to CDBG-R grants in IDIS will be blocked for several days – one re-opened you can enter accomplishments/complete activities Any funds remaining unexpended will be recaptured from your line of credit As of 9/26, 97.0% drawn down nationally; $29 million not drawn 12

CDBG-R Closeout: see CPD Notice All activities must meet a national objective before you can close out If you’re at that point, no need to wait to closeout Final Federalreporting.gov final quarterly reports in October 2012 or January 2013 HUD expects all activities to meet a national objective & be ready for closeout by 03/31/13 13

NSP Status – September 10, 2012 NSP 1 = $3.92 billion 95.00% expended (112.42% obligated) Grant amount must be expended by March 2013 NSP2 = $1.93 billion 75.51% expended 54 of 56 Grantees met 50% expenditure mark Grantees must expend 100% of grant amount by February 11,

NSP Status NSP3 = $970 million 18.8% expended 50% of grant amount to be expended by March 2013, 100% by March 2014 Working on policies for transition after NSP Still have technical assistance available, especially for NSP3

Project Rebuild President Obama included $15 billion for Project Rebuild as part of American Jobs Act Request repeated as part of FY 2013 budget submission Introduced in both House and Senate Would improve upon and expand NSP $10 billion formula allocation to states and local governments $5 billion competition to include governmental partners but also non-profits and for-profits 16

OneCPD TA OneCPD replaces previous CPD approach to technical assistance Borrows from and expands upon SNAPS and NSP TA efforts Almost $70 million available across FY10-12 appropriations Have already initiated several dozen engagements from highly targeted to comprehensive New website coming soon CPD field offices are the access point 17

FY 2012 Appropriation - $1 Billion Same as FY 1993 funding level FY 2013 Continuing Resolution provides $1 billion FY 2013 Administration Request - $1 Billion House mark: $1.2 billion Senate mark: $1.0 billion $500,000 minimum qualification threshold to minimize new PJs qualifying at lower $335,000 threshold HOME Appropriations

FY12 HOME Appropriation Imposed 4 provisions on 2012 HOME projects Evaluation of Developer Capacity, Underwriting and Market Demand before committing funds; Homebuyer Units remaining unsold 6 months after construction must be converted to rental; Projects not completed 4 years after commitment must be terminated and funds repaid; PJ must certify that CHDO receiving ‘12 funds has staff with demonstrated development capacity;

FY12 HOME Appropriation CPD Notice 12-07, Operating Guidance for Implementing FY 2012 Appropriation Requirements explains what the law requires HUD held 8 webinars on FY 2012 HOME provisions Archived webinars can be found at

IDIS System Improvements HOME PROGRAM CHANGES: Went Live on May 4th System flags for Projects: In final draw for > 120 days With an initial disbursement but no subsequent disbursement for > 180 days Committed more than 4 years ago, but not completed 21

IDIS System Improvements Required Certifications at Project Set-up: CHDO Capacity Assessment of Underwriting, Developer Capacity and Neighborhood Market Conditions 22

HOME Rulemaking Proposed Rule Published: December 16, 2011 Public comments were due on February 14, 2012 – HUD received 320 comments Final rule has completed Departmental clearance and been sent to OMB Publication expected later this year HUD preparing to deliver classroom training and webinars subsequent to publication of final rule 23