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Community Development Block Grant (CDBG)

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1. What is the Community Development Block Grant (CDBG) and what is its purpose?

CDBG is a federal program that provides annual grants on a formula basis to entitled cities and counties to develop viable urban communities by providing decent housing, a suitable living environment and by expanded economic opportunities, principally for persons of low and moderate income.

2. What is the CDBG grant amount the city gets each year?

The CDBG grant amount the City of Fayetteville receives varies every year. The Department of Housing and Urban Development (HUD) uses 1 of 2 established formulas to calculate the allocation amount for each entitlement grantee every year. These formulas take into consideration factors such as population, the number of people with incomes below the poverty level, housing overcrowding and age of housing.

3. Does the city have to apply for CDBG funds each year from the Department of Housing and Urban Development (HUD)?

No. The City of Fayetteville is an Entitlement Community and automatically receives a CDBG grant each year. However, the city is required by the Department of Housing and Urban Development to submit a Consolidated Plan every 5 years, and an Annual Action Plan to HUD in order to spend the funds.

4. What is an Entitlement Community under CDBG?

Entitlement Communities are: Principal cities of Metropolitan Statistical Areas (MSA), other metropolitan cities with populations of at least 50,000, and qualified urban counties with populations of at least 200,000 (excluding the population of entitled cities).

5. How is the city's grant amount determined by the U.S. Department of Housing and Urban Development (HUD)?

The U.S. Department of Housing and Urban Development (HUD) uses 1 of 2 established formulas to calculate the allocation amount for each entitlement grantee every year. These formulas take into consideration factors such as population, the number of people with incomes below the poverty level, housing overcrowding and age of housing.

6. When is the grant amount announced?

Between January and March of the current program year.

7. What activities are eligible for CDBG funding?

CDBG funds may be used for activities which include, but are not limited to: acquisition of real property; relocation and demolition; rehabilitation of residential and non-residential structures; construction of public facilities and improvements, such as water and sewer facilities, streets, neighborhood centers, and the conversion of school buildings for eligible purposes; public services, within certain limits; activities relating to energy conservation and renewable energy resources; and provision of assistance to profit-motivated businesses to carry out economic development and job creation / retention activities.

8. Who can apply for Fayetteville CDBG funds?

Please refer to question 7.

9. Are there strings attached to the CDBG funds?

Definitely. Please view the U.S. Department of Housing and Urban Development's sub-recipient training manual, Playing by the Rules, for more information. You are strongly encouraged to review this information to evaluate your organization's capability to manage complying with the CDBG funding rules. Playing by the Rules Training Manual (PDF)

10. What other factors should an applicant consider before submitting an application for funding?

In addition to the above information, the following should be considered:

1) Is the activity you are proposing meeting the needs of the community as identified in the Consolidated Plan?

2) Is the activity you are proposing meeting a goal or objective as established in the Consolidated Plan?

3) What is the timing and urgency of the activity?

4) Are your clients / beneficiaries willing to provide personal information as required by HUD in order to receive CDBG benefit?

11. Is there a checklist for prospective applicants to use?

No. A checklist does not currently exist.

12. Can a private individual apply for CDBG funds?

No. However, individuals eligible under U.S. Department of Housing and Urban Development guidelines may apply for financial assistance through programs the city offers such as the Housing Rehabilitation Program, Transportation Program and Redevelopment Program or from nonprofit organizations which receive CDBG funds through the City of Fayetteville CDBG Program.

13. What is the deadline for submitting an application for CDBG funds?

CDBG grant applications are accepted and selected for funding annually. The application submission deadline is determined yearly. Normally, the deadline is 5 p.m. on the last day of August, but this date is subject to change.

14. Who determines the allocation of CDBG funds?

The 5 member Grant Ranking Committee reviews and evaluates the applications and ranks them for funding. A recommendation for the full council to adopt the allocation plan by ordinance is submitted by the Community Services Division. The plan is submitted to the U.S. Department of Housing and Urban Development for approval before CDBG funds may be used.

15. What is the Consolidated Plan?

The Consolidated Plan is the document the U.S. Department of Housing and Urban Development (HUD) requires each entitlement agency to prepare in order to receive HUD funding. A typical Consolidated Plan is normally a 3 year or 5-year plan that identifies local needs in housing and community development and establishes local goals to accomplish utilizing HUD grant funds. The Consolidated Plan also identifies programs to be carried out and resources to be used as implementation strategies.

16. What is an Annual Action Plan?

The Annual Action Plan, also known as the Consolidated Plan Amendment, is prepared by entitlement communities for the program year; it outlines in more detail what activities will be carried out and how they will be funded. The programmed activities in the Action Plan should help achieve the community's long-term goals identified in the Consolidated Plan.

17. What is an environmental review and why is it required for a CDBG funded activity?

Generally speaking, any undertaking that receives federal funding is subject to an environmental review. The city, as the Grantee of the CDBG Program, has the sole responsibility to conduct required environmental reviews for activities that receive CDBG funds through the city's CDBG Program. Simply, an environmental review is required in order to ensure that the activity will not cause negative impact on the environment.

18. What is a grant agreement?

A grant agreement, also known as a sub-recipient agreement, is a legal, binding agreement between the city as the Grantee and the the sub-recipient. U.S. Department of Housing and Urban Development CDBG regulations (24 CFR 570.503) require that grantees have written agreements in effect for each sub-recipient before CDBG funds can be used.

19. What are the responsibilities of a CDBG sub-recipient?

Playing by the Rules - A Handbook for CDBG Sub-recipients on Administrative Systems, is an excellent training handbook published by the U.S. Department of Housing and Urban Development. It is extremely important for sub-recipients to understand their responsibilities in order to carry out CDBG activities successfully. It is also important for prospective applicants to understand these responsibilities so that they can realistically assess the burdens of accepting CDBG funds and their capabilities to shoulder these responsibilities.

20. Is there a time limit for a sub-recipient to spend CDBG funding?

The City of Fayetteville requires that approved funds should be committed by September 15th of the program year funds are awarded. This ensures that the city's CDBG funds are spent in a timely manner.

21. When can a sub-recipient incur costs for an approved activity?

Under no circumstances should a sub-recipient incur any cost to be paid with CDBG funds without receiving a formal letter to proceed from the city. The city needs to complete the required environmental review and, if required, receive approval for the release of funds before the city can issue the letter to proceed. Any cost incurred prior to completion of the required procedures will not be eligible for reimbursement from the city.

22. What is the purpose of sub-recipient monitoring?

Sub-recipient monitoring is a key part of the CDBG Program. The city bears the responsibility to ensure that its sub-recipients follow the federal regulations governing the use of CDBG funds in conducting CDBG funded activities and accomplishing the goals established by both parties in the sub-recipient agreement. Monitoring also serves to ensure that sub-recipients fulfill their responsibilities throughout the course of the project implementation.

In addition, monitoring provides opportunities for both the city and its sub-recipients to identify issues that hinder the efforts to successfully accomplish the goals and address these issues in a timely manner. Monitoring is also commonly used by the grantee to identify sub-recipient needs and provide technical assistance if necessary.

HUD requires the city to incorporate a monitoring plan in its Annual Action Plan as well as in its Consolidated Plan.

23. How is monitoring normally conducted?

Before the planned monitoring of a sub-recipient, city staff contacts the sub-recipient to outline the time of the monitoring, what needs to be reviewed and the goal of the monitoring. After the monitoring, staff will normally summarize the monitoring results and send a follow-up letter to the sub-recipient to clearly identify any issues and offer recommendations or technical assistance for the sub-recipient to address these issues.

24. Who is a beneficiary?

The U.S. Department of Housing and Urban Development does not have an official definition, however, in general, a beneficiary is an individual, a household or an organization that the use of CDBG funds benefits.

25. Does a beneficiary have any responsibilities?

Beneficiary responsibilities are varied dependent on the nature of the program from which they receive benefits. Basically, beneficiaries are required to provide certain personal information for certain programs and the information must be provided accurately. CDBG funded programs normally outline beneficiary responsibilities.

26. What are the current income limits and what do they mean?

The Community Development Block Grant Program is essentially a federal program designed to benefit low-to-moderate income (LMI) persons and families. The U.S. Department of Housing and Urban Development establishes, as required by law, income limits for the program year. Low-income individuals or households mean that their household incomes are below 50% of the median income for the entire metropolitan area. Moderate income individuals and households are those that have incomes above 50%, but below 80%.

27. What is the Consolidated Annual Performance and Evaluation Report (CAPER)?

The U.S. Department of Housing and Urban Development (HUD) requires every grantee to submit a CAPER within 90 days after the end of each program year. The CAPER is a report on progress made in implementing the community's Consolidated Plan, through the proposed actions identified in the 1-year Action Plan.

HUD requires the CAPER to include 3 key parts:

1) Narrative of accomplishments in relation to goals and objectives identified in the 1-year Action Plan

2) Statistical and Financial information about individual activities undertaken during the program year

3) Information on expenditures, caps and program income

The primary goal of the CAPER is for the grantee, as well as HUD, to evaluate performance against the established goals and objectives.

28. How does the US Department of Housing and Urban Development (HUD) measure the effectiveness of the City's CDBG Program?

The most common tools used are grantee monitoring, the Consolidated Annual Performance and Evaluation Report (CAPER), and the HUD Timeliness Index.

29. What is a Timeliness Index and what does it mean?

The U.S. Department of Housing and Urban Development will consider an entitlement recipient to be failing to carry out its CDBG activities in a timely manner if 60 days prior to the end of the grantees current program year, the amount of the entitlement grant funds available to the recipient, but not dispersed by the U.S. Treasury, is more than 1.5 times the entitlement grant for its current program year.

30. What impact will it have on the city's CDBG Program if the city goes over the timeliness index limit?

The U.S. Department of Housing and Urban Development (HUD) will require the city to develop a Workout Program to better facilitate the program and manage progress.

If the city fails to bring the index below 1.5 within a specified time period, HUD reserves the right to reduce the city's grant amount in future years. If the city's grant is reduced, not only will the CDBG Program suffer, but the sub-recipients will suffer as well.

31. What type of income should I include in my application?

All incomes from all members of the household from all sources must be included. Certain documentation is required at the time of the application, depending upon the status of employment for all household members. You may be asked to provide additional documentation or information if deemed necessary at the time your application is being processed.

32. Who should be included as household members?

It is important to note that CDBG uses household income instead of family income when determining eligibility based on income. A family includes all members of a household living together who are blood related or related by marriage or adoption, whereas a household includes all persons living together regardless of their relationship. When determining an applicant income level, all the incomes from all persons living together regardless of their relationship must be included.

33. Who should I contact if I have further questions?

The Community Services Division at 479-575-8260 .