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May 2, 2011

Re: HUD Posts Current Year CDBG Info

Dear Mayor:

Last Friday, April 29, the U.S. Department of Housing and Urban Development (HUD) released an F.A.Q. on Community Development Block Grant (CDBG) funding for Fiscal Year 2011 – the Federal Government’s current Fiscal Year.  The text is pasted in below. 

Among other things, it provides a link that will give you a close estimate of CDBG allocations for FY2011 and some insight into the timeline for when municipalities can expect to draw on FY2011 funds.

Frequently Asked Questions on CDBG Funding in the FY 2011 Budget

1. What is the CDBG formula appropriation amount for FY 2011?

The FY 2011 Continuing Resolution provides $3.343 billion for the CDBG formula allocation. This represents approximately a $600 million or 15.15% reduction in comparison to the FY 2010 formula allocation amount of $3.942 billion. It should be noted that the Continuing Resolution calls for a further across the board rescission of 0.2% and authorizes HUD to use up to 1% of the CDBG formula amount for purposes of its Transformation Initiative (TI). As of April 22, 2011, HUD had not decided the actual amount of the TI allocation. Therefore, the amount available for CDBG formula purposes may be up to 1.2% less than $3.343 billion.

2. Will HUD be releasing CDBG planning estimates or the final allocation numbers?

The Department has posted CDBG FY 2011 allocation estimates on its website at http://www.hud.gov/offices/cpd/about/budget/budget11/index.cfm. Again, these are estimates subject to revision when HUD receives the final apportionment amount from the Office of Management and Budget (OMB) and subject to HUD’s decision with regard to the Transformation Initiative holdback. The Department will post final FY 2011 CDBG allocation amounts as soon as they can be developed and will convey this information directly to CDBG grantees via either email or regular mail.

3. If a CDBG grantee has already submitted its annual action plan/consolidated plan to HUD, how should it treat the reduction in funding?

HUD will shortly issue guidance to CDBG grantees regarding the need for amendments to action plans already submitted to HUD. While appropriations have been delayed in past years, the substantial reduction in CDBG funding for FY 2011 introduces a new complexity as many grantees with early program year start dates used FY 2010 allocations as a planning baseline for FY 2011 action plans. Since the overall CDBG allocation for FY 2011 is down by more than 15%, individual allocations will be reduced in a similar range and may cause grantees to consider significant revisions to plans predicated on FY 2010 funding levels.

4. When will HUD begin to make FY 2011 CDBG grant agreements available to grantees?

The Department recognizes the exceptional delay in appropriations process for FY 2011 and will work to make CDBG funds available to grantees as quickly as possible. Usually, it may take 75 to 90 days after enactment of the appropriation for HUD to begin issuing CDBG grant agreements, but HUD will seek to expedite the entire process in recognition of the already delayed timeline. As noted above, HUD cannot issue the final allocation numbers or extend grant agreements until OMB apportions the CDBG funds to HUD.

5. Does the FY 2011 Continuing Resolution have any effects on prior year CDBG funds?

No. All prior year CDBG funding remains available to grantees.

6. Is HUD contemplating any relief from the CDBG timely expenditure requirements given the delay in the appropriation process?

The Department does not anticipate granting an across the board relief from CDBG timely expenditure requirements. The delay in the availability in the FY 2011 appropriation may become a timeliness issue in future years but HUD does not see a need to suspend or otherwise remove timely expenditure requirements.

7. What is the status of the Section 108 loan guarantee program?

The FY 2011 Continuing Resolution provides the Section 108 loan guarantee program with the same funding levels as FY 2010. Thus, HUD will have authority to issue approximately $250 million in Section 108 loan guarantee commitments based on a credit subsidy appropriation of $6 million. The Department urges grantees to consider using the Section 108 program to help address local funding shortfalls created by the 15% overall reduction in CDBG funding for FY 2011.

For further information, contact Jon Moran at 609-695-3481, ext. 121 or jmoran@njslom.com

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

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