Beyond the 15% Cap: Options for CDBG Grantees A Presentation for the National Community Development Association’s Winter Policy and Legislative Meeting Washington, DC, January 2007.

The Basics 15% of current CDBG allocation Plus 15% of prior year program income Option: maximize program income Regs: 24 CFR (e)(1).

Boston Example CDBG Allocation = $21 million 15% of allocation = $3,150,000 Program income = $3 million 15% of program income = $450,000 Total public service cap = $3,600,000 Public service budget = $4,518,133 (18.8%)

Boston Public Service Budget Homebuyer and foreclosure counseling = $415,000 Landlord/tenant counseling = $180,000 Project Pride (anti-crime) = $80,000 Social Services = $3.4 million Fair Housing = $450,000

Exceptions to the 15% Cap: #1 – The1982/1983 Exception 15% of prior year program income, plus the greater of : 1.The $ amount of public service funds obligated in 1982 or 1983, or 2.The percentage of public service funds obligated in 1982 or 1983 Regs: (e)(2) Note: this exception is only available if higher 1982/1982 amount/percentage was duly authorized by HUD and amounts were actually legally obligated

Boston Example 1983 allocation = $22.9 million 1983 public service amount = $4,175, public service % = 18.2% Public service cap = $4,175, % of prior year program income ($450,000) = $4,625,275 FY06 public service budget is just under this 1982/1983 exception cap

Exceptions to the 15% Cap: #2 – CBDO/Neighborhood Revitalization Strategy Any public services that are provided by a CBDO pursuant to a HUD-approved Neighborhood Revitalization Strategy, including an empowerment zone or enterprise community, etc. Regs: (b)(2)(ii)

Boston Example $1,030,000 of Boston’s public service activities are carried out by CBDOs located in and providing services to Boston’s Empowerment Zone, a HUD- recognized NRSA Plan to serve EZ is part of rating factors for CDBG Public Service RPF

Exceptions to the 15% Cap: #3 –CBDO/Services Related to Increase in Economic Opportunities Services provided by a CBDO that are specifically designed to increase economic opportunities through job training and placement, along with related support services, including, but not limited to, childcare and transportation. Does not have to be in an NRSA Does not have to be related to a CDBG-eligible special economic development activity. Regs: (b)(2)(i)

Exceptions to the 15% Cap: #4 –Employment Services Related to Special Economic Development Projects Employment services related to employment opportunities generated by CDBG-eligible economic development activities (including, but not limited to, job training, job placement, etc.) Does not have to be provided by CBDO Does not have to be in an NRSA Regs: (c)

Exceptions to the 15% Cap: #5 – Services provided to Owners of Micro-Enterprises General support services to owners of and/or persons developing Micro Enterprises. Very broad range of services are eligible, not just economic development or employment-related services. Regs: (o)(2)

Exceptions to the 15% Cap: #6 – Homebuyer Down Payment Assistance Homebuyer down payment assistance under (n) is not subject to public service cap, but all buyers must be low/mod. Can also do under (e). Subject to cap but only 51% low/mod required. If done by CBDO as part of NSRA could be exempt from cap and only 51% low/mod required. Can also do under HOME (any low-mod buyer) or ADDI (first time buyers only)

Exceptions to the 15% Cap: #7 – Homebuyer Counseling/Foreclosure Counseling Eligible as public services under (e), but are subject to public services cap. Can be exempt from cap if carried out by CBDO in NSRA Homebuyer Counseling can also be eligible under HOME or ADDI if buyer completes purchase

THE END Bob Gehret, Deputy Director Policy Development & Research Division Department of Neighborhood Development 26 Court Street, 8 th Floor Boston, MA Phone: (617) References: CDBD Desk Guide Chapter 2, pgs (Public Services) Chapter 2, pgs (Making the Best Choice) Appendix E (Neighborhood Revitalization Strategy Areas), esp. pg. 3.

Thomas M. Menino, Mayor City of Boston Charlotte Golar Richie, Director Department of Neighborhood Development