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Community Development

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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 one of two 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 five 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
  
• 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 US Department of Housing and Urban Development (HUD)?

The US Department of Housing and Urban Development (HUD) uses one of two 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?

The amount is 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
  
• Provision of assistance to profit-motivated businesses to carry out economic development and job creation/retention activities
  

8. What activities are not eligible for CDBG funding?

Generally, the following types of activities are ineligible:

• Acquisition, construction, or reconstruction of buildings for the general conduct of government
  
• Political activities
  
• Certain income payments
  
• Construction of new housing by units of general local government
  

9. What is the Consolidated Plan?

The Consolidated Plan is the document the US 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.

10. 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.

11. 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.

12. What is a grant agreement?

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

13. What are the responsibilities of a CDBG Subrecipient?

"Playing by the Rules - A Handbook for CDBG Subrecipients on Administrative Systems" is an excellent training handbook published by the US Department of Housing and Urban Development. It is extremely important for subrecipients 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.

14. Is there a time limit for a Subrecipient 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.

15. When can a subrecipient incur costs for an approved activity?

Under no circumstances should a subrecipient 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.

16. What is the purpose of Subrecipient Monitoring?

Subrecipient monitoring is a key part of the CDBG Program. The City bears the responsibility to ensure that its Subrecipients 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 Subrecipient Agreement. Monitoring also serves to ensure that Subrecipients fulfill their responsibilities throughout the course of the project implementation.

In addition, monitoring provides opportunities for both the City and its Subrecipients 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 Subrecipient 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.

17. How is monitoring normally conducted?

Before the planned monitoring of a Subrecipient, City staff contacts the Subrecipient 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 Subrecipient to clearly identify any issues and offer recommendations or technical assistance for the Subrecipient to address these issues.