[ Reply ]
From: Ed Gramlich
email: mailto:gramliche@commchange.org
link: http://www.communitychange.org
date: April 2, 2001
Date: 4/2/01
Time: 10:47:43 AM
Remote Name: 216.135.217.149
HIGHLIGHTS COMMUNITY DEVELOPMENT BLOCK GRANT RENEWAL ACT
Representative Carrie Meek of Miami is introducing a bill to improve the CDBG Program by:
· directing a minimum amount of CDBG to benefit "low" income people;
· minimizing "benefit inflation" through methods of counting benefit to lower income people that are proportionate to their actual benefit; and,
· reducing barriers to nonprofits gaining CDBG to foster and provide public participation.
There are eight features in the bill which focus more CDBG for low income people, and which enhance public participation.
1. Increase the "Primary Objective" to 80% Benefit to Lower Income People
The "Primary Objective" of CDBG always has been to "principally" benefit lower income people. Currently, the law requires that at least 70% of a jurisdiction's CDBG be used to benefit lower income people. The bill raises the minimum to 80%.
The increase to 80%, especially in combination with other provisions in the bill, highlights and strengthens Congressional intent that, in the face of a severe affordable housing crisis and changes in welfare law, CDBG must "principally" benefit lower income people. It sends a signal to jurisdictions that use of CDBG for activities such as airport runways, US Post Offices, museums, and untold miles of concrete are not consistent with Congressional intent.
2. Direct a Minimum of 40% to "Low" Income People
The bill requires that, at a minimum, 40% of a jurisdiction's CDBG funds be spent on activities that directly benefit people with incomes below 50% of the areawide median income. Even though jurisdictions' Consolidated Plans universally state that "extremely low" and "low" income people have the most acute needs, far too often jurisdictions use most of their CDBG for activities benefiting people with incomes at the relatively high level of 80% of the areawide median income.
3. Proportional Treatment of "Benefit" to Lower Income People
The bill diminishes "benefit inflation" by introducing a method to more fairly count the degree to which lower income people benefit from CDBG activities. CDBG expenditures will be counted as benefiting lower income people based on the actual amount of CDBG used, and only to the extent that lower income households are assisted.
Currently, if a jurisdiction spends $500,000 on a road in a census tract where 52% of the households are lower income, that jurisdiction reports to HUD that all $500,000 of the CDBG benefits lower income people, rather than the proportional amount of $260,000 ($500,000 x .52).
The bill requires proportional counting for activities that claim to benefit lower income people on an "area basis" or through job creation/retention.
For housing activities the law already requires proportional counting; however, HUD's regulations dilute the law's intent by using the "total development cost" rather than the amount of CDBG in a project. The bill corrects this benefit inflation practice.
Activity by activity, without proportional counting, jurisdictions readily give the impression that over 70% of their funds "benefit" lower income people.
4. Prevent Use of the "Area Benefit Test" in Central Business Districts
The bill adds to the law, the current regulatory language which limits the use of the "area benefit test" to areas that are "primarily residential in character".
To determine whether an activity serving anyone (eg, a road) "primarily" benefits lower income people, the law requires that the activity be "clearly designed to meet identified needs" of lower income people. HUD regs use the "area benefit test" which looks at the service area of the activity; if 51% of the residents are lower income, HUD judges the activity to benefit lower income people.
Downtowns generally have few residents, but because most of those residents are low income, jurisdictions claim that downtown roads, parks, streetscapes, and fire protection primarily benefit low income people -- when in practice daytime business visitors are the major beneficiaries. Years ago HUD regs sought to prevent this abuse by limiting the "area benefit test" to areas that are "primarily residential in character".
Jurisdictions and HUD are ignoring the spirit of the law and the letter of the regulations. By placing the regulatory language in the law, the bill intends to reinforce the spirit of "principal" benefit to lower income people.
5. Assess Whether Lower Income People Are the Primary Beneficiaries
The bill adds current regulatory language which looks at "the full range of direct effects" of an activity in order to assess whether lower income people are actually the primary beneficiaries.
The mere location of an activity in a service area where a minimum of 51% of the residents are lower income does not mean that lower income people are the primary beneficiaries. Roads and bridges are often located in low income neighborhoods, but are designed to get the general population through the neighborhood on their way into and out of the central business district.
The law currently requires that an activity "be clearly designed to meet identified needs" of lower income people. HUD's regs reinforce this. However, neither HUD nor jurisdictions are adhering to the law or regs. The added language underscores Congressional intent that CDBG principally benefit lower income people.
6. Improve Lower Income Benefit from Economic Development Activities
The bill eliminates the "presumption" that lower income people benefit from the use of CDBG for economic development activities simply if employees live in areas that have a 70% lower income concentration or meet the definition of an empowerment zone (or if the business itself is in the latter).
Businesses getting CDBG assistance will have to ensure that at least 51% of any new or retained jobs are for lower income people, as is generally the rule.
7. Define "Public Hearing" to Improve Public Participation
The bill defines a public hearing as a hearing held in accordance with any state and local laws.
The intent is to increase the impact of low income people on the public decision-making process. Current law declares that one of the purposes of the various public participation provisions is "to enhance the public accountability" of jurisdictions. In addition, current law calls on jurisdictions to "encourage" participation by low income people.
Too often, so-called public hearings are events not attended by elected officials. When "public hearings" are conducted without elected officials present, the ideas, concerns, and priorities of low income people are not conveyed to those most responsible.
8. Reduce Barriers to Nonprofit Access to CDBG for Promoting and Providing Public Participation, or for Monitoring.
The bill creates a new specific eligible CDBG activity: use of CDBG by nonprofit organizations which represent lower income people for promoting or providing public participation, or for monitoring the use of CDBG by a jurisdiction. In addition, the bill clearly states that this kind of use is not subject to the 20% administration and planning cap, or the 15% public service cap.
While nonprofits are currently eligible to carryout monitoring or public participation with CDBG, such use is subject to the 20% admin cap. Since jurisdictions pay their own staff out of this pot of money, nonprofits find it especially difficult to get CDBG to foster public participation or monitor the jurisdiction's use of CDBG.
For More Detailed Information Contact;
Ed Gramlich Center for Community Change 1000 Wisconsin Ave Washington DC 20007 202.342.0567 fax 202.342.1132 gramliche@commchange.org
March 7, 2001