MARCH 15, 2005 PROPOSED ELIMINATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM MARCH 15, 2005 PROPOSED ELIMINATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM

TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS

FROM: ASSISTANT TO THE CITY MANAGER

DATE: MARCH 15, 2005

SUBJECT: PROPOSED ELIMINATION OF COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM

RECOMMENDATION

  1. Consider adopting Resolution No. 2005 – XX, opposing President Bush’s proposal to eliminate the Community Development Block Grant program and urging Congress to retain the CDBG program as a separate, distinct program with an FY 2006 budget at the level of FY2005 allocations.
  2. Consider authorizing the Mayor to send letters to California Senators Dianne Feinstein and Barbara Boxer opposing the elimination of the CDBG program.

BACKGROUND

For thirty years, America’s cities have used Community Development Block Grant (CDBG) funds to create jobs, provide affordable housing, eliminate blight and generate new economic investment.

Since 1986, the City of Rancho Palos Verdes has received CDBG funds from the U.S. Department of Housing and Urban Development (HUD) through the Los Angeles Community Development Commission. Typically the City’s CDBG allocation is used for the Home Improvement Program, the REACH Program for developmentally disabled youth and young adults, American with Disability Act projects and qualifying capital improvement projects.

On December 20, 2004, the City Council approved the following list of projects for the 2005-2006 CDBG program with a preliminary CDBG allocation of $211,754.

1. CDBG Administration and Planning $21,175

    1. REACH Program $31,763
    2. CDBG funds augment general funds to administer a program designed to promote social interactivity, physical fitness, independent living, and community access and assimilation for approximately 45 developmentally disabled students and young adults.

    3. Home Improvement Program $150,000

This program annually benefits on average 10 low-moderate income residents with $5,000 grants and deferred loans up to $10,000 for various home improvements, such as correcting code violations, termite removal, removing lead based paint, repairing the roof, and replacing electrical work.

4. ADA Compliance-City Hall Project $18,816

These funds were programmed for a future project to remove access barriers at City Hall in FY06-07.

DISCUSSION

Mayor Larry Clark requested this item be considered by the full City Council. The League of California Cities is urging cities to oppose the elimination of the Community Development Block Grant (CDBG) program. President Bush’s proposal called "Strengthening America’s Communities Grant" would combine 18 direct grant programs, including CDBG, into one within the Economic Development Administration. At $3.71 billion, the President’s proposal provides nearly $1 billion less than the current CDBG program alone.

At this time, the President’s new all-encompassing grant program is undefined, so the worst-case scenario is total elimination of CDBG funds and the best-case scenario is a 50% reduction. Although the Los Angeles Community Development Commission (CDC) has a funding commitment for the CDBG Program through June 30, 2006, the disposition of these funds is not known at this time if the Administration’s proposed budget is approved.

If CDBG allocations are reduced or eliminated in FY 2005-2006, the City may consider eliminating the projects, reducing projects’ scope of work proportionately, and/or subsidizing the projects with General Fund monies. If the City chose not to replace CDBG funding with General Fund revenue, the Home Improvement Program would be terminated and REACH program would be impacted. For instance, the REACH program currently serves on average 45 regular members by offering approximately 100 program activities per year. The elimination of CDBG funds would equate to reducing the REACH Program’s budget by one-third or more and this would mean 30-40% less program activities. The City’s largest CDBG funded project is the City’s Home Improvement Program, which benefits on average 10 low-moderate income residents by offering $5,000 grants or $10,000 loans for various improvement projects. This program is particularly helpful for residents 60 years and older living alone on a fixed income. Without this program, many older residents would continue to jeopardize their well-being and safety as their homes deteriorate due to deferred maintenance.

The League of California Cities, National League of Cities (NLC), United States Conference of Mayors, and National Association of Counties oppose the elimination of the CDBG program.

FISCAL IMPACT

President Bush’s proposal for the Strengthening America’s Communities Grant may result in the elimination or 50% reduction of CDBG allocation for FY2005-2006 and beyond.

PREPARED BY

Gina Park

Assistant to the City Manager

APPROVED BY

Les Evans

City Manager

Attachment:

  1. Draft Resolution
  2. Draft Letter

RESOLUTION NO. 2005-

A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF RANCHO PALOS VERDES OPPOSING THE

ELIMINATION OF THE COMMUNITY DEVELOPMENT

BLOCK GRANT PROGRAM

WHEREAS, for thirty years America's cities, including both large and small cities in California, have used Community Development Block Grant (CDBG) grants to create jobs, provide affordable housing, eliminate blight, and generate new economic investment; and

WHEREAS, CDBG funds of $150,000 have increased the quality of life in the City of Rancho Palos Verdes, as evidenced by the removal of blight and deteriorating housing conditions through the City’s Home Improvement Program by providing grants and loans to many low and moderate income families in the City of Rancho Palos Verdes; and

WHEREAS, CDBG funds of $32,000 have supported the City’s successful REACH Program, a therapeutic recreation program designed to promote social interactivity, physical fitness, independent living, and community access and assimilation for approximately 45 developmentally disabled students and young adults; and

WHEREAS, the CDBG program offers a mechanism to remove access barriers at City Hall for disabled persons in accordance with the Americans with Disabilities Act; and

WHEREAS, the President has proposed a new "Strengthening America's Communities Initiative" which combines 18 direct grant programs, including CDBG, into one within the Economic Development Administration (EDA); and

WHEREAS, at $3.71 billion, the new program (which combines 18 programs) is nearly $1 billion less the current CDBG program alone; and

WHEREAS, without proper funding for CDBG, we risk undermining the economic well being of our communities, the future generations that live there, and the nation as a whole.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF RANCHO PALOS VERDES that we hereby request that Congress enact a FY 2006 budget and appropriations package that funds CDBG formula grants at no less than $4.355 billion, which is level with FY 2005 allocations; and

RESOLVED FURTHER, that Congress maintain the CDBG as a separate and distinct program from other economic development programs that provides a direct and flexible source of funding to local governments; and

RESOLVED FURTHER, that Congress maintain the current "dual formula" system where 70 percent of CDBG funds go to entitlement communities based on population; and

RESOLVED FURTHER, that we will send a copies of this resolution to Senator Barbara Boxer and Senator Dianne Feinstein, and to the League of California Cities, Attention: Genevieve Morelos, 1400 K Street, 4th Floor, Sacramento, CA, 95814.

PASSED, APPROVED and ADOPTED this 15th day of March 2005.

_____________________________

Mayor

ATTEST:

_________________________

City Clerk

State of California )

County of Los Angeles ) ss

City of Rancho Palos Verdes )

I, Carolynn Petru, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2005-XX was duly and regularly passed and adopted by the said City Council at a regular meeting thereof held on March 15, 2005.

______________________________

City Clerk

Date

The Honorable Dianne Feinstein

The Honorable Barbara Boxer

U.S. Senate

Washington, DC 20510

Dear Senator XX:

On behalf of the City Council of the City of Rancho Palos Verdes, I request your assistance in saving the Community Development Block Grant Program and restoring its funding. The Administration’s FY06 Budget proposes the total elimination of CDBG. In lieu of the long-standing CDBG program, the Administration is proposing the creation of the new "Strengthening America's Communities Grant" which combines 18 direct grant programs, including CDBG, into one. At $3.71 billion this new program is nearly $1 billion less than the current CDBG Program alone.

The City of Rancho Palos Verdes receives funding from the U.S. Department of Housing and Urban Development as administered through the Los Angeles Community Development Commission. CDBG funds allow us to serve low and moderate income residents by offering $5,000 grants and zero-percent $10,000 loans under the Home Improvement Program for correcting code violations, removing lead-based paints, repairing roofs and much more. Each year, this essential program benefits on average 10 low-moderate income residents who are typically elderly residents living alone and on a fixed income. In addition, the City allocates a portion of CDBG funds to supplement the City’s successful REACH Program, designed to promote social interactivity, physical fitness, independent living, and community access and assimilation for approximately 45 developmentally disabled students and young adults by sponsoring over 100 program activities annually.

Many have characterized CDBG as the best federal domestic program ever enacted because of its flexibility and adaptability in meeting the diverse needs of America. I urge you to intercede with your colleagues to restore the CDBG Program as a distinct program with funding in FY 2006 to at least $4.7 billion. Attached is a copy of a resolution adopted by the City Council of Rancho Palos Verdes.

Should you require further assistance or information, please contact me at 310-544-5205.

Sincerely,

Larry Clark

Mayor

enclosure