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SEPTEMBER 26, 1997
CONFEREES BOOST FY98 FUNDING FOR CDBG TO $4.7 BILLION - HOME FUNDED AT $1.5 BILLION
In a stunning move House/Senate Conferees approved FY98 funding for the Community Development Block Grant (CDBG) Program at $4.7 Billion, a$100 million increase from current level of $4.6 Billion. Conferees met today to iron out differences in funding levels between the two chambers on HR 2158, the FY98 appropriations bill for VA. HUD and Independent Agencies. As this edition of the NCDA Washington Report goes to press, the exact level of set-asides within the CDBG is unclear. We will provide specific information as it becomes available.
The Home Investment Partnership (HOME) Program was funded at $1.5 Billion, the amount approved by the House. This amount includes a $15 million set aside for Housing Counseling, up from $12 million in FY97.
While members of the conference committee completed action on the majority of HUD programs the spending measure, there are several issues that are unresolved and will be taken up on September 30.
These include: resolution of the Section 8 expiring rent contracts, which continue to be a major stumbling block toward passage of the VA-HUD spending bill. The issue is one that centers around Representative Rick Lazio's (R-NY), Chairman of the House Subcommittee on Housing and Community Opportunity opposition to a resolution of the matter outside the jurisdiction of his authorizing committee. With the inability to pass an authorizing bill that would remedy the matter, an agreement was ironed out in the budget agreement. After strenuous objection from Lazio, the matter was dropped out of the budget reconciliation bill.
However, both Representative Jerry Lewis (R-CA) and Senator Christopher Bond, (R-MO) Chairman of the House and Senate VA. HUD and Independent Agencies Appropriations Subcommittees respectively, have expressed a dire need for the matter to be solved in order to save $241 million through fiscal year 2002. Became the Senate included its answer to portfolio re-engineering in its version of the FY98 appropriations bill, it remains the only change to implement a solution to the problem this year. There continues to be fierce opposition by Lazio to include the provision in the funding measure. Leadership in both the House and Senate have gotten involved in the issue in an attempt to finally resolve the matter. However, no compromise has been reached. Committee staff will be working over the weekend to identify an acceptable compromise.
Other issues still not resolved include the funding for additional Empowerment Zones, and Brownfield re-development.
After the Conferees pass a bill, the measure must go to the floor of both chambers for debate and passage. Upon passage in each chamber, the spending bill will be forwarded to President Clinton for his signature.
2000 Census Also delayed until Tuesday, September 30, is the issue on whether to allow statistical sampling techniques to be used in the 2000 census. When the House resumes action on H.R. 2267, FY98 appropriations for Commerce, Justice and State, they will consider an amendment to H.R. 2267 offered by Representative Allan Mollohan (D-WV) that would allow the Census Bureau to plan for the census in any manner it deemed appropriate, provided it does not spend money on "irreversible plans" for census sampling. This provision is also contained in the Senate version of the Commerce, Justice and Sate spending bill. The matter is extremely divisive and partisan in the House and it is expected to be the subject of bitter debate.
Appropriations
Congressional leadership indicate that they expect to complete action on at least eight of the thirteen appropriations bills before the end of the current fiscal year, which starts on Wednesday, October 1. Despite progress at moving the bills, both chambers have resigned themselves to adoption of a Continuing Resolution (CR) to fund the government through mid-October. The House is expected to take up the measure on Monday, September 29, with Senate action immediately following. It is not clear if the VA-HUD Measure will be included in the CR.
TIMELINESS OF EXPENDITURES TAKES CENTER STAGE IN CPD
While this issue is not new, HUD is troubled by the number of grantees who are not meeting their 1.5 to 1.0 ratio in drawing down and expending CDBG funds. According to reports HUD obtained from LOCCS and field office personnel, at least one-quarter of entitlement grantees and urban counties are not meeting the threshold. Based on this data, CPD is placing increased significance on this issue. Headquarters is directing field staff, through policy memorandum, to investigate and obtain a complete understanding of the problem.
As you know, HUD has been concerned with the slow spend out of CDBG funds for a number of years. By regulation entitlement communities and urban counties are required to spend out at an annual rate 1.5 to 1.0. Most grantees are already there, however, due to the size of some of the communities that are not in compliance and the relative amount of funding under discussion, we urge grantees to institute policies and administrative practices that will lead them to compliance with the 1.5 to 1.0 spend out ratio.
For all grantees out of compliance, HUD Headquarters wants to know why there are such large numbers of grantees failing to meet the spend out requirement. NCDA staff has obtained a copy of the memo and questionnaire from Jacquie Lawing, Acting Assistant Secretary of CPD, that was sent to the field staff (included with hard copy). We urge you to complete the form to conduct a self-assessment. Then consult with your field staff to ensure that your figures and HUD's are in agreement. Please forward a copy of your findings to NCDA staff, who has pledged our support to assist HUD in working with grantees to understand and ameliorate the problem.
UPDATE ON THE SECTION 108 PROPOSED GUIDELINES
NCDA staff have received many questions relating to the "start date" for the newly proposed underwriting guidelines on the Section 108 Loan Guarantee Program. In discussions with HUD staff they indicated that these guidelines have been used as part of their evaluation process for approximately two years. It is important to note that HUD has been and will continue to use the guidelines as a basic standard of review, but not the only standard of review for 108 projects. For quicker processing of applications, grantees are encouraged to include in the proposal materials that the proposed guidelines were used to determine project viability and success. As far as the publication date of the guidelines, comments are still being considered and upon completion they will go through internal HUD clearance. Once HUD clearance is completed, they will be sent to OMB for approval. Paul Webster, Director of the Office of Financial Management and head of the Section 108 program is hopeful that all of this work will be completed before the end of the calendar year.
NCDA has been involved in the review process of these guidelines from their inception and w e support sound, professional lending practices with minimal default rates. Our position has been that we recognize that these new constraints have been placed on the program by OMB, but we will continue to speak out against these changes to the program. It is the on-going contention of our member that the implementation of these new underwriting requirements will force many localities to discontinue use of the 108 program or considerably restructure the type of projects being undertaken with these funds. NCDA will continue to pursue "fixes" to this problem created by the Credit Reform Act and we hope that HUD will join in our efforts.
ANTI-PIRATING AMENDMENT RESURFACES
Anti-pirating relates to business relocation from one area to another, particularly when the relocation of the business results in a loss of jobs in the area from which the relocation took place. It is a term that has been bandied about for a number of years at HUD and among and between the grantees. It has been linked with CDBG as long as the term has been around. In the minds of HUD's CPD staff and some members of Congress, CDBG funds have been the impetus of businesses relocating from one region to another, one state to another or one area to another, and taking those jobs away with the relocation. This action results in unemployment, often significant unemployment if the business is large enough to employ hundreds, perhaps thousands of people. The bottom line is that HUD and members of Congress don't want to see any federal funds, especially CDBG funds used as enticement for business to relocate from one area to another. Consequently, the anti-pirating amendment was born.
Approximately five years ago several companies relocated from Wisconsin to Kentucky and Missouri after significant infrastructure improvements had been made using CDBG funds. Representative Thomas Barrett (D-WI) was concerned about this practice of using CDBG funds for what he determined as an enticement for companies to relocate from one state to another. He proposed an amendment to the FY 1996 HUD/VA appropriations bill restricting such uses of federal funds. Fortunately, that was the year of the government shut down and the amendment was removed as a compromise issue to advance the funding bill.
In February of 1997, Representative Barrett introduced a stand alone bill HR 671; The Prohibition of Incentives for Relocation Act of 1997. This is a bill to prohibit the use of certain [CDBG] assistance provided under the Housing and Community Development Act of 1974 and the Housing and Community Development Act of 1992 for employment relocation activities. The bill was referred to the House Committee on Banking and Financial Services, which then referred it to the Subcommittee on Housing and Community Opportunity. There it has languished since February 14. Despite the inactivity of HR 671, Representative Rick Lazio (R-NY) liked the language so much that he included it, in tact, as an amendment to HR 2 the Public Housing restructuring bill. At least one of the companion bills to HR 2 in the Senate also contains the same amendment. The complete language is as follows.
Notwithstanding any other provision of law, no amount from a grant provided under the Housing and Community Development Act of 1974 and Housing or the Community Development Act of 1992, in fiscal 1997 or any succeeding fiscal year may be used for any activity (including any infrastructure improvement) that is intended, or is likely, to facilitate the relocation or expansion of any industrial or commercial plant, facility, or operation, from one area to another area, if the relocation or expansion will result in a loss of employment in the area from which the relocation or expansion occurs.
If CDBG dollars are used in any way, for any activity, that directly or indirectly facilitates the relocation of a commercial or industrial business from one area to another, and a loss of employment occurs in the area from which the relocation took place, it could be considered an ineligible activity under the CDBG program. In addition, there are no time constraints placed on this requirement. Meaning, how long after said expenditure of CDBG funds would it be safe for a business to relocate to the new area? Another point to consider is the phrase ...that is intended, or is likely, to facilitate the relocation or expansion of...How would the CDBG staff know what is "likely to facilitate the relocation or expansion of ...?" The language is very broadly written so that it virtually restricts any kind of industrial, infrastructure development with CDBG funds, because it could be seen as intended or likely to facilitate the relocation or expansion of any industrial or commercial plant, facility, or operation, from one area to another area.
Most grantees involved in economic development activities know that CDBG funds alone, are not enough to cause a business to relocate. Other factors such as labor supply, raw materials, tax incentives, distribution networks and quality of life cause businesses to make relocation decisions. CDBG funds are tangential, at best, in business relocation plans.
Since the passage of either of the public housing restructuring bills, including HR 2 or the stand alone anti- pirating bill HR 671 will occur during this session Congress, this issue will likely resurface early next Session. We will monitor this provision. If you have any questions on this issue, please contact Chandra Western at NCDA.
STATUS OF LEAD-BASED PAINT PROPOSED RULE
According to David Jacobs of HUD's Office of Lead-Based Paint Abatement, the publication the new lead- based paint proposed rule will not occur until sometime this winter, probably February at the earliest. Jacobs said that HUD is taking comments by NCDA and others very seriously and is modifying certain aspects of the proposed rule, based upon our input. They are trying to avoid confusion by simplifying definitions, reporting and documenting procedures. Once the modifications have taken place, the rule must go through departmental clearance before it can proceed to publication.
HUD MAKES GRANTS TO HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
On September 24, 1997 HUD Deputy Secretary, Dwight Robinson and CPD Deputy Assistant Secretary for Grants Programs, Ken Williams awarded grants in the amount of $6.5 million to seventeen Historically Black Colleges and Universities. The grants coincide with National Historically Black Colleges and Universities Week, designated by President Clinton to recognize the schools' long record of achievement.
HUD has awarded over $43 million to HBCUs to stimulate economic and community development since 1992. Each of the 17 HBCU grantees will receive up to $400,000 for a variety of activities, including housing rehabilitation, community center development, small business enhancement, and job creation and training.
Recipients of FY 1997 grants of $400,000 are: Stillman College in Tuscaloosa, Alabama; Arkansas Baptist College in Little Rock; Morris Brown College in Atlanta; Kentucky State University in Frankfort; Jackson State University in Jackson, Mississippi; Tugaloo College in Tugaloo, Mississippi; Saint Augustine's College in Raleigh, North Carolina; Fayetteville State University in Fayetteville, North Carolina; Voorhess College, in Denmark South Carolina; and Wiley College in Marshall, Texas.
Other recipients are: Oakwood College in Huntsville, Alabama received $380,000; Howard University in Washington, DC received $370,000; Florida A&M University in Tallahassee, Florida received $350,000; Southern University in Baton Rouge, Louisiana received $330,000; Bennett College in Greensboro, North Carolina received $300,000; Elizabeth City State University in Elizabeth City, North Carolina received $393,000; and Winston-Salem State University in Winston-Salem, North Carolina received $377,000.
President Clinton said during his proclamation of National Historically Black Colleges and Universities Week said "For far too long, historically black colleges and universities were the only avenue of opportunity open to African Americans seeking a higher education. Today, with our record [level of] assistance, these schools continue to produce some of our brightest minds and are reaching beyond the college gates to transform impoverished neighborhoods into outposts of the American Dream."
Deputy Secretary Robinson said these schools "played a vital role in development of their neighborhoods. These projects [HBCU grants] embody a bottom-up approach that is community-based and community- driven."
College presidents call the community involvement on their campuses a natural extension of their schools' mission. Speaking for the entire group of awardees, Howard University President, H. Patrick Swygert said "There is a special kind of education that takes place on these campuses. We are part of the community. We continue to shape it. We are engaged." If any of the award winners are in your communities, we encourage you to work with them in the implementation of their plans.
COMMUNITIES 2020 -- FORMERLY KNOWN AS CPS+ SOFTWARE UPDATE
Presently HUD is conducting training sessions on the new "Communities 2020" software, the next phase of HUD's mapping/consolidated plan software and a list of the training dates and sites is listed below. The software was scheduled to be mailed to grantees and field offices the final week of August.
"Communities 2020" is a new generation of community planning software that is designed to help citizens analyze and participate in the consolidated and neighborhood planning process. This new software replaces MapInfo, is compatible with any databased management or word processing system on the market, and professes to be easier that its predecessors.
This new mapping program will provide more detailed mapping features, allow users to propose their own projects and place them on the map, and enable grantees to submit most of the consolidated plan and annual updates electronically.
According to NCDA members that have already partaken in the "Communities 2020" the program seems to have a number of extremely powerful and productive features and holds a lot of promise for usage.
Schedule of training for "Communities 2020":
October 6-7 Chicago, IL October 8-9 Chicago, IL October 15-16 Buffalo, NY October 21-22 Philadelphia, PA October 23-24 Philadelphia, PA October 28-29 New York, NY October 30-31 New York, NY November 4-5 Hartford, CT November 13-14 Boston, MA November 24-25 Boston, MA
For more information on these trainings contact your local HUD Field Office or HUD Headquarters, Office of Community Viability, (202) 708-0614.
NCDA WELCOMES CHANDRA WESTERN
Chandra Western will be assuming the responsibilities vacated by Margaret McGilvray. She comes to NCDA from the Council of State Community Development Agencies. Chandra has extensive CDBG knowledge and worked within the program for over twelve years. Please contact her on issues relating to CDBG, IDIS, the consolidated plan, lead-based paint, fair housing and many other related issues. We welcome her.
NEW E-MAIL ADDRESS FOR NCDA STAFF
The e-mail address for NCDA is now ncda@ncdaonline.org Please disregard any materials with the old address (ncda@ix.netcom.com) on it. Should you have specific questions for an individual staff member, feel free to also use the following addresses:
Jim Welfley: jim@ncdaonline.org
Chandra Western: chandra@ncdaonline.org
Whatever method you choose to contact us -- be it phone, fax, e-mail or
regular mail -- we look forward to answering any questions you may have.
NCDA LAUNCHES NCDAonline
On Wednesday, September 24, NCDA launched NCDAonline, NCDA's
comprehensive web site on the internet. NCDAonline is loaded with
helpful features, including an e-mail database, the NCDA Washington Report
Archives and a "Chat Room," where members can pose questions
and comments to one another. We encourage you to visit NCDAonline
at:
On Wednesday, all members were mailed a memo that detailed these features and provided the user name and password necessary to access NCDAonline's "Members Only" section. If you have not received the memo, or if you have questions or comments regarding NCDAonline, please contact Jim Welfley by e-mail (jim@ncdaonline.org) or by phone (202.293.7587).
IDIS NEWS - WORKSHOPS SCHEDULED FOR FALL
HUD has been conducting a series of IDIS workshops throughout the summer. We have been following up on the various issues that remain problematic for members. We will continue to provide your comments to HUD and monitor the system's progress. To register for the remaining workshop , please fax or mail a notice of interest to: IDIS Training, c/o Tonya, Inc., 1000 Vermont Avenue, NW, 5th Floor, Washington, DC 20005, fax: (202) 289-8107. At press time, we were unable to confirm the exact location of the Boston, Massachusetts (October 20-23) workshop. Tonya, Inc. should have that information.
NCDA has been following some of the recent issues and "fixes" in IDIS. A list of these is included below:
IDIS can work with Windows 95, as well as Sprintlink and CPS. However, if the grantee is experiencing problems with this coordination it may be around setting Win95 for the proper modem;
Draw down Revisions - draw down revisions can now be made at anytime, although it is still uncertain as to whether or not revisions can be made on a previously made draw downs;
It still takes time to set up IDs for new Users. Grantees should allow at least one month from time all of the required information is received to process a new ID;
Activity Funding Now Available - IDIS now allows grantees to specify from which program(s) (CDBG, HOME, ESG and HOPWA) to fund activities. For more information on how this is done, contact the IDIS hotline or NCDA;
Resetting Passwords - On July 1, HUD centralized the resetting of IDIS passwords and the lifting of IDIS ID suspensions. This operation seems to working smoothly. To get an IDIS password reset, or an IDIS ID unsuspended, a person must call (202) 708-3300. That is HUD's "User Assistance Branch". Neither the HELP Desk or the HOTLINE can reset Sprint passwords. If you need a new Sprintnet ID or password, contact the local CPD representative. Sprintnet passwords should never need to be reset. If a Sprintnet ID and password stop working the grantee should discard it and use one of the spare Sprintnet ID's/passwords that have been provided to field offices and that have been listed in the IDIS LIVE newsletter;
When converting HOME C/MIS data to IDIS it is important to allow one to two weeks to process set-up and completion forms. Project set-up reports need to be received by the C/MIS Unit at HUD Headquarters at least one week prior to the conversion date in order to be processed in the C/MIS. Project completion reports need two weeks; and.
Earlier in August HUD was experiencing a delay in the processing of confirmations coming from LOCCS. Draw downs are getting processed, but the confirmations are not being recorded in IDIS. This should be fixed by now, if it is not contact the IDIS Hotline immediately.
If you have additional problems or issues contact the IDIS hotline: (800) 273-2573 or the IDIS user line: http://www.hud.gov/cpd/idisweb.html or sign on to the IDIS Mailing list operated by David Robinson from Lake County, IL. Send a message to: LISTSERV@EASE.HOME.LSOFT.COM
In other IDIS news:
As of August 22, 589 grantees are "live on IDIS", HUD is forming a "big grantee" forum to deal with the unique IDIS issues with which some of the larger grantees are grappling.
NCDA will continue to bring you IDIS updates throughout the fall. Please feel free to share any IDIS successes or problems you are experiencing with Chandra Western.
HUD CORRESPONDENCE
Below are summaries of recent HUD correspondence on an assortment of issues pertaining to CDBG.
For copies of these memorandums and notices contact Karen Means at NCDA, (202) 293-7587.
FEDERAL REGISTER NOTICES
Fair Market Rents for the Section 8 Housing Assistance Payments Program, Fiscal Year 1998: Final Rule.FR-4232-N-02. These rents become effective on October 1, 1997. Notice of Regulatory Waiver Requests Granted - FR-4250-N-01, August 7, 1997 - This notice is to inform the public on regulatory waivers granted by HUD during the January to March quarter. As part of the HUD Reform Act of 1989, HUD must publish in the Federal Register each instance a waiver is granted. Most of the waivers granted during this period dealt with the mid-west floods.
HOME Investment Partnerships Program; Additional Streamlining; Final Rule. FR-411-F-02 Effective Date: September 22, 1997. Request for Comments by October 21, 1997. This rule implements the proposed rule published on December 11, 1996 and amends the existing HOME program final rule by: replacing the hearing procedures of the current HOME rule with the Department-wide streamlined hearing procedures; removing the closeout requirements and instead providing that HOME funds will be closed in accordance with procedures established by HUD; replacing the extensive requirements for the competitive reallocation of HOME funds with a citation to the competitive allocation of HOME funds with a citation to the selection factors in the HOME statute and a statement of the maximum number of points that may be awarded for each factor; and establishing separate market interest rate formulae for rehabilitation loans. This rule also promulgates an amendment to, and requests public comment on, Section 92:252 (i)(2) to limit the rents charged to tenants of HOME -assisted units whose income rises above 80 percent of area median in HOME projects in which the HOME assisted units "float."
Federal Housing Finance Board, 12 CFR 936 [No. 97-56] RIN 3069-AA35: Technical Amendment to the Community Support Requirement, Final Rule. The Federal Housing Finance Board is amending its regulation on the community support requirement to allow every Federal Home Loan Bank member to provide all of the information necessary to apply to the Finance Board to remove restrictions on access to long-term advances that may adversely affect the member's safety and soundness. Effective Date: October 6, 1997.
HUD Disaster Recovery Initiative: Notice of disaster recovery funds available and waivers. FR-4254-N-01. This rule governs the award of $500 in supplemental disaster funds. It directs grantees how they must work with FEMA on buyouts and provides other guidance on the use of these funds. Effective Date: June 12, 1997
Replacement Housing Factor in Modernization Funding; Proposed Rule - FR-41215-P-01 . Comment Date: December 9, 1997. This rule will revise HUD's regulations that govern the formula allocation of modernization funding under the Comprehensive Grant Program (CGP) to add to the formula a factor that will maintain for five years, aportion of funding that otherwise would be lost by a CGP housing agency (HA) when the number of its public housing units are reduced as a result of demolition, disposition, or conversion. These added funds would be required to be used for approved replacement housing or for the accelerated renovation and reoccupancy of vacant but viable units. This rule would take effect in FY 1998, based on formula characteristics reported as of September 30, 1997.
