March 17, 2015

FY2015 States & Small Cities CDBG Update for COSCDA

Pamela Glekas Spring, Director

States & Small Cities DivisionOffice of Block Grant

Assistance

State CDBG Update

Key topics that were covered included:

OMB Super Circular

Moving from FIFO to Grant-Based Accounting

Section 108 Fee-based Summary

Using the American Community Survey data for CDBG projects

Demo on the Low Moderate Income Summary data mapping tool and

Guidance on how to design an effective state program and overcome capacity issues

National Disaster Resilience Competition FY2015 Program Budget Section 108 Fee-Based Summary LMISD Notice and Data OMB Super Circular Implementation Moving from FIFO to Grant-Based

Accounting NSP Closeout Update Recent Policy Issuances

State CDBG– Key Topics

National Disaster Resilience Competition

Announced by the President June 14, 2014

• Qualifying disaster in 2011, 2012, or 2013• 67 potential applicants – states, local

governments, District of Columbia, and Puerto Rico

• Includes local governments that received HUD CDBG-DR funding under PL 113-2

• Applicants must tie proposal to qualifying disaster

• Competitive program with a focus on resilience and recovery

National Disaster Resilience Competition(continued)

Notice of Funding Availability (NOFA)• Launch – NOFA release, webinars, etc• Total of $1 billion available - $181 million

reserved to Sandy-region• Geographic diversity considered in the selection• Minimum grant size $1M – Maximum $500M• Deadline for applications extended to March 27,

2015 & review of the applications will begin late soon thereafter

• For more info, go to HUDexchange.info or email resilientrecovery@hud.gov

FY 2015 CDBG Program Budget

• President’s CDBG Request - $2.8 billion

• Final Budget figure - $3 billion for States & Entitlement areas (~ 1.5% less than 2013)

• $900 million for States & Small Cities• Timing the Submission of Your Plan

Section 108 Fee-Based Summary

Background 2014 HUD Appropriations Act authorizes HUD to

collect fees from borrowers Proposed rule would amend Section108 regulations

to permit HUD to collect fees from borrowers to offset the costs of Section 108 loan guarantees

Fee is intended solely to offset credit subsidy cost, and determined accordingly

Current Status A Rule/Notice published in Federal Register Thursday

2/5/15 as a proposed rule w/30-day public comment period (shortened public comment period to ensure HUD will not exhaust credit subsidy prior to Rule being in place);

Comment period expires Monday 3/9/15

Low/Moderate Income Summary Data

Historically, Low/Moderate Income (LMI) data was derived from decennial long-form census

In 2010 – Census’s long form was replaced by American Community Survey (ACS).

American Community Survey (ACS) is a mandatory, ongoing statistical survey that samples a small percentage of the population every year -- giving communities the information they need to plan investments and

services.This was a problem for Entitlement grantees since CDBG regulation

requirements are based on block groups as geographic building blocks. So far a while grantees were told to keep using 2000 Census-derived data. A VICTORY! HUD appealed to Census & (for the most part) won, so

HUD received 2006-2010 ACS data at the block group, but not for split block groups.

Ultimately, as a result of ACS replacing the Census long form, IDIS had to be revised to accommodate more frequent/multiple years’ worth of data

In June 2014, HUD issued CPD Notices 14-10 and 14-11, implementing new LMISD for States and Entitlements (respectively).

Low/Moderate Income Summary Data(continued)

Census Bureau releases new data each year — you can get the latest on American FactFinder website, or get advice on choosing the right tool or data table for your needs. Learn more about the annual Census data releases or browse the supporting documentation. Go to www.census.acs.gov

The new ACS data must be used to qualify all LMI area benefit activities for which funds are first obligated after July 1, 2014 (meaning under contract for a specific activity and a specific dollar amount)…

…unless it meets the 4-part test to determine whether the old data can still be used:

1. Funds were obligated before July 12. For a specific activity identified in the Action Plan3. For a specific dollar amount4. With a clearly defined service area.

Low/Moderate Income Summary Data(continued)

For the future Presently, HUD intends to issue new LMISD

every 5 years. Census has advised us that it is not a good thing to use data sets that have overlapping years, that we should run data based on mutually-exclusive 5 year datasets.

HUD has observed that the ACS data jumps around a lot. We will continue to monitor the ACS data over time to determine if it still makes sense to issue new LMISD every 5 years.

New Government Wide Financial Management Requirements

aka “OmniCircular”

The “Omni Circular” or Super Circular replaces multiple existing regulations and OMB circulars: A-87, A-110, A-122, A-133, Parts 84 & 85

Also included in this circular are updated requirements that apply consistently to grantees, subrecipients, nonprofit organizations, across all grant programs

State CDBG remains partially exempt because they were never subject to Part 85 – but are subject to the provisions that replace A-87, A-133, etc.

Federal Agencies were directed to have implementing regulations in place by 12/26/14.

New Government Wide Financial Management Requirements

aka “OmniCircular” (continued)

This means HUD will be issuing regulations that replace Parts 84 & 85 and incorporate the other Circulars.

These changes will also require conforming regulation changes to other regulations that cross-reference the various financial management requirements…like recordkeeping requirements.

OMB & various other sources already have webinars, training materials, FAQs, etc.

HUD anticipates the need for cross-programmatic training for grantees once these are out.

Eliminating First-In First Out (FIFO) & Moving to Grant Based Accounting

HUD’s OIG and OMB have determined that the First In First Out (FIFO) drawdown process does not comply with federal financial standards. The FIFO drawdown process predates IDIS – it’s been used since the beginning of the CDBG program in 1975.

A memorandum detailing this change was sent on May 9, 2014 to all CDBG grantees from Acting Assistant Secretary Cliff Taffet

This will affect all formula CPD programs beginning with FY15 funding. FY14 and earlier funding will stay on a FIFO drawdown process. This means the drawdown process will become a bit more complicated

Eliminating First-In First Out (FIFO) & Moving to Grant Based Accounting (continued)

For FY15 funding and thereafter, you will draw down money for a specific activity (as you do currently, but rather than drawing on all available money from your line of credit, you will designate a specific year allocation in funding an activity.

As an example, if you are drawing down $100,000 for an FY15 Action Plan activity, the money will come out of your FY15 allocation amount.

For the States grantees, you an breathe a small sigh of relief – this means somewhat less of an imposition for you because states have always operated more on a discrete grant year by grant year basis than on a cumulative approach.

Neighborhood Stabilization Program (NSP) Closeout Update

• Notice & Guide• Website materials• Readiness checks• Progress to date• No deadline to close your grant• Special note for NSP-2 grantees

Recent Policy Issuances

Some relevance for States as a reference: CPD Notice 13-07 issued August 2013: Clarifies the distinction between Activity Delivery Costs and Program Administrative Costs. A State may decide to adopt or follow the notice in allowing their UGLG’s to have “activity delivery costs” State may also use this guidance as an “interpretive reference” for their program admin costs

Closeout Notice 14-02 issued February 2014: Closeout instructions for NSP, for CDBG-R, for State CDBG and for Entitlement CDBG. All but 19 CDBG-R grants closed out as of 9/30/14.

Code Enforcement: CPD Notice 2014-16, issued October 2014. Clarifies use of national objectives, delineating ‘deteriorated/deteriorating areas’ that code enforcement must be targeted to, issues of eligible/allowable costs & documentation.

HUD plans to issue a companion set of FAQs related to the Code Enforcement Notice.

HUD’s Future Directions

HUD’s New Secretary -Julian Castro Secretary Castro well versed

w/CDBG funding as a former Mayor of San Antonio & has publically stated his support for the program

The FY2016 budget will be the first policy imprint Secretary Castro has on longer term directions for HUD’s programs

40th Anniversary of CDBG Program

HUD’s Housing & Community Development Act enacted into law Aug 22,1974 as one of the first acts of former President Gerald Ford

HUD launched a 40th Anniversary Page in 2014 featuring your best practices! HUD Launched 5 new video and multimedia products that showcase the CDBG program and its flexibility

Collaborating with TA Provider to bring 20 more learning products in 2015-2016!!!!

Coming Soon – New Web portal on the HUD Exchange to submit project profiles. HUD encourages grantees to showcase how your community has been helped by CDBG by either emailing CDBGturns40@hud.gov or tweet it with the hashtag #CDBGturns40

THANK YOU – for sharing your inspirational stories that remind people what a great program CDBG is.

Wrap-Up

Pamela Glekas SpringDirector

State and Small Cities Division