Tuesday, December 16, 2008

The CDBG situation: A primer

There's a likely battle on the horizon as the East Athens Development Corporation and Hancock Corridor Development Corporation have both reapplied for chunks of funding from the 2009 Community Development Block Grant allocation. And the discussion as already begun as this editorial rightfully questions whether or not either organization has made substantial progress to grant said funding.

It's important to try and understand the nuances of how CDBG money can be allocated and what it can be spent on. This year, the community should receive a little less than $1.5 million in total CDBG funds, and no more than 15 percent of that total can be dedicated to expenditures on public services.

Athens-Clarke County Human and Economic Development expects that 15 percent to be approximately $218,320 for 2009. That money is made available for public service agencies as 'Challenge Grants' that are doled out in smaller portions of funding - typically somewhere between $10,000 and $20,000 - and limited to three consecutive years of receipt. These grants are distributed by the commission to smaller non-profit organizations (such as the Interfaith Hospitality Network of Athens) and are what most folks perceive CDBG funding to be (and where some of the most difficult decisions come into play).

Athens-Clarke County District Four Commissioner Alice Kinman was instrumental in changing the policy of how the Challenge Grants were awarded, and she noted this in an email ...

There is no cap, although they are three-year grants. I think that the first group of Challenge Grant recipients were capped at whatever their current allocation was. But the ultimate goal is to give fewer agencies more funds for "start-up" purposes.

Also, regarding the 15 percent for public services ... it is not required that 15 percent be designated for public services. The commission could opt to allocate all of the funding for things like public facility improvements or affordable housing and not support any agencies through Challenge Grants. Obviously, that wouldn't be a terribly popular move and, to be clear, isn't one the commission has ever entertained.

HUD permits spending on public services to exceed 15 percent in approved neighborhood revitalization areas, and Athens-Clarke County has two of those in East Athens and the Hancock Corridor. This is largely why EADC and HCDC came into being so they could, in theory, take advantage of this exception and effectively utilize those funds in those areas. Their struggles to do that, of course, led the such scrutiny last year and subsequent reduction in funding by the Athens-Clarke County Commission.

Those organizations, however, do not have any explicit right to said funding, and, as Rob Trevena from HED pointed out to me via email, funds do not have to be allocated for public services in those targeted areas ...

We are not required by regulation to fund EADC or HCDC, nor are we required to specify funding targeted to the HUD-approved neighborhood revitalization zones. ACC could fund any of the other applications, so in that respect the agencies are competing against all other applications.

The designation of those census tracts enable organizations like EADC or HCDC to obtain larger sums of funding to provide public services to citizens who live in those designated areas. It's a way to get around some of the regulatory mumbo-jumbo and allows agencies to offer things like budget counseling or financial assistance or youth tutoring (all public services), provided those services are specific to the census tracts.

Now, those are the only regulatory requirements that deal with those targeted areas, and the remaining 85 percent of allocated funding could be employed in a variety of ways (with a percentage dedicated to program administration). They can used for economic development, affordable housing or public facility improvements and, based on the information I've received, those funds are not restricted to East Athens or Hancock Corridor.

It's a wise move to take advantage of the exception because it enables CDBG funds to be spent on necessary public services above and beyond the cap in an underserved community, so arguably it's appropriate that some funding be designated there. However, it seems a disproportionate amount has gone there in recent years and, quite frankly, not be spent wisely by those two organizations.

What's largely been the problem is that EADC and HCDC have received this funding for so long, it's drowned out the competition for other organizations seeking to obtain those funds. The commission's desire to bring additional agencies into the fold and hold others accountable for their efficiency and effectiveness has resulted in roughly 30 agencies seeking funding.

For the Challenge Grant, currently 13 non-profits are funded and, according to Trevena, all 13 are seeking renewed funding. In addition, nine other non-profits have submitted requests for Challenge Grant funding. Neither EADC or HCDC are among those 22 agencies seeking Challenge Grant funding.


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