Funding Your Community Development Projects with CDBG
Claire Knowles became homeless after her husband died in a car crash in 2009. With nowhere to go for a hot meal, she relied on the Friendly Kitchen in Concord.
“It was hard carrying everything you owned in a suitcase or backpack,” says Knowles. “It was very important to know that that kitchen was there.”
But when the Friendly Kitchen was destroyed by fire in April 2011, the area’s low- and moderate-income residents faced the prospect of going hungry. Raising the money to rebuild the nonprofit facility seemed a monumental task.
Through the City of Concord, the Friendly Kitchen was able to receive $500,000 from the Community Development Block Grant program. A federally-funded HUD initiative established in 1974, CDBG is administered in New Hampshire by the Community Development Finance Authority. Projects funded include affordable housing, public facilities, and economic development initiatives that benefit low- and moderate income residents.
“In New Hampshire, any municipality or county can apply for CDBG funds,” says Kathy Bogle Shields, Executive Director of CDFA. The only exceptions are the entitlement communities of Manchester, Nashua, Portsmouth, Rochester, and Dover – all of which receive a direct CDBG allocation from HUD. While funding levels from Washington have teetered in recent years, the state generally receives $8-$10 million for CDBG.
Under CDBG, communities can receive up to $500,000 a year for projects that promote affordable housing or upgrade public facilities. The communities can also receive up to $500,000 each year for economic development activities. In addition, each city or town can receive between $350,000-$500,000 for emergency projects – like the Friendly Kitchen rebuild – and up to $12,000 for planning grants to examine the feasibility of potential CDBG projects.
“CDBG is a valuable tool because it often provides the gap financing that a business or nonprofit needs to complete its budget,” says Shields. “For public facilities projects, like water infrastructure upgrades, it helps offset the cost to local taxpayers for getting the job done.”
Initiatives are often dreamed up at the grassroots level. CDBG is a bottom-up, not top-down program, with local officials telling CDFA what priorities in their community need addressing.
“The size of your community has nothing to do with whether you’re approved. It has everything to do with the strength of your individual project,” says George Hunton, CDFA Senior Portfolio Manager. “Every awarded project must meet the national objective for CDBG: helping low- and moderate-income residents with access to housing, access to public facilities, or job creation.”
The US Council of Mayors has declared CDBG to be the most successful domestic program ever enacted by Congress. Over the last three years, CDFA’s CDBG program has created 1,128 jobs, 980 units of affordable housing, and improved public services to 23,400 New Hampshire residents. View 2011-2013 CDBG Awards List .
Raya Nepomuceno, a gardener by trade, was looking for a quality place to live in the Lakes Region. Her clients live in some of the most affluent communities in the state, but property values are so high that blue collar laborers like Nepomuceno find it hard to live in the towns in which they work.
“It makes it difficult to find work. Bad weather can keep you from getting to your job,” she says. “And the quality of some of the apartments out there is really sketchy.”
She and her sister were able to move into Harriman Hill, a 24-unit workforce housing project envisioned by Eastern Lakes Regional Housing Coalition and the Laconia Area Trust for Community Housing. Through the Town of Wolfeboro, the project received $500,000 for site work in 2008. The Town received an additional $500,000 in 2012 to begin work on phase II.
CDBG awards are granted to the municipality or county, who often subgrant the money to a nonprofit which will develop or operate the affordable housing project. In order to qualify, the application must demonstrate that at least 51% of beneficiaries will be of low-to-moderate income (“LMI”) (determining income levels can often be achieved by census data tracks or by income surveys).
Applications recently awarded include the renovation of Berlin’s abandoned Notre Dame High School into senior housing, a family housing facility at the Pine Valley Mill in Milford, and a grant to upgrade a failing water and septic system at the Oak Hill Acres Cooperative in Hinsdale.
Nepomuceno loves her new apartment at Harriman Hill. She even has a place on her stoop to plant her own flowers. As she tips a watering can into a bed she says, “Maybe someday I’ll be able to buy my own house here.”
Valley Regional Hospital reported that 11% of patients turning up in their emergency room were there for dental pain. Identifying that its at-risk residents had little access to oral health care, the City of Claremont and a nonprofit teamed to create Community Dental Care of Claremont. The facility provides dental services for patients all over Sullivan County. The effort was partially funded by a $500,000 CDBG grant.
Public facility projects eligible for CDBG funding include water and sewer system improvements, transitional and homeless shelters, adult and child care centers, sidewalks, handicapped access, and neighborhood or community centers. Awards are made directly to the city, town or county. The work can be done by municipal crews or subgranted to a nonprofit to implement the initiative.
As with all CDBG applications, 51% of the beneficiaries must be low-to-moderate income. While it’s assumed the majority of clients at a soup kitchen are LMI, the applicant may have to demonstrate for example that 51% of residents in an affected water district meet the income requirements.
“Many of these grants remediate health and safety issues to at-risk populations,” says Hunton. “Facilities like childcare and adult daycare help remove a barrier for people to get into the workforce.”
Examples of recent public facilities grants include $304,586 to the Town of Belmont for phase II of the Belmont Village waterline replacement, $350,000 the City of Franklin to house the Head Start program, and $500,000 to the Town of Pittsburg to build a new water treatment facility and improve infrastructure.
When corporate management of Rotobec USA was looking for a facility to assemble a new line of heavy-duty grappling claws, manager Mike Currier argued they could do the work in Littleton. Currier ran Rotobec’s 10,000 square foot warehouse, but he envisioned creating an assembly line to manufacture the logging and construction gear.
“I knew we could find the people in Littleton to run the equipment,” says Currier. “I knew we could do it if we just had the chance.”
Management agreed to take that chance. But in order to add the high-end machining equipment needed to fabricate the parts, the company was going to need some financial assistance.
For economic development projects, CDBG funds are granted to the municipality which in turn subgrants the money to a nonprofit economic development entity, such as a regional development corporation. The Economic Development Entities (EDE) then makes a loan to the business.
“It’s important to note that the money going to the for-profit business is a loan and not a grant,” says Glenn Coppelman, CDFA Economic Development Director. “Once the loan is paid back, the EDE creates a revolving loan fund with the money to capitalize further economic projects in the region.”
Businesses must pledge to create or retain jobs with benefits for low- and moderate-income people. They must create at least one job for every $20,000 loaned, and 60% of the jobs must be available to LMI people (meaning there are no special educational or training requirements for the position that could not be taught on the job).
With the help of the Town of Littleton, Rotobec USA received a $175,000 equipment loan through CDBG. This helped the company purchase two high-end machines that fabricate the necessary parts for the claws. The award created ten new jobs, six of which were available for LMI residents.
Other recent economic development projects funded include $140,000 to the Town of Woodstock to create a bottling operation at the Woodstock Inn Brewery, $500,000 to the Town of Merrimack for the relocation and expansion of medical devices manufacturer Resonetics, and $500,000 for the Town of Rollinsford to start up Green View Technologies, a business that recycles used oil.
“Municipal leaders should know that if a project fails to create the jobs, or cannot pay back the loan, taxpayers in their community will be held harmless,” says Coppelman. “CDFA would instead expect the city or town to assist in recovering delinquent funds.”
As he watches the second shift clock in at Rotobec, Currier feels a strong sense of satisfaction. “I’ve seen my share of jobs leave the area. It feels really good to be able to bring some back.”
Communities and their nonprofit partners can apply for a CDBG grant online at www.nhcdfagrants.org. Because of the complexity of the federal program, municipalities often hire independent grant writers who specialize in CDBG to help them (their fee can often be paid from the grant). CDFA also offers free application writing workshops to walk applicants through the process.
“For towns that have never applied for CDBG, it can be very daunting at first blush,” says Donna Lane, one of several independent CDBG grant writers and administrators working in New Hampshire. “But we can help you craft a strong application and then work through the red tape when it’s time to implement the award.”
Although most of the project work is done by the subgrantee, the municipality does have some obligations before applying for the federal money. The city council or board of selectmen must hold public hearings on the application. They must also adopt a Housing and Community Development Plan, a Residential Anti-displacement & Relocation Plan, and completed HUD Disclosure Form 2880, among other statutory requirements.
Once submitted, the application is scored by CDFA staff against a set of federal and state criteria, such as project impact, readiness for implementation, and cost per beneficiary. Twice a year a competitive awards round is held for housing and public facilities projects, in April and October. The highest scoring projects are funded first, with lower scoring projects awarded until funds for that round are all gone.
“Naturally a homeless shelter will be a higher priority than a teen center,” says Hunton, “but that doesn’t mean towns should not apply. Our goal is to fund as many projects as we have funds for.”
Economic development applications are considered every month. Projects are not scored against one another, but they must reach a scoring threshold in order to be considered.
If staff recommends passage, the application is presented to CDFA’s Community Development Advisory Committee, an independent panel of nonelected municipal and community development officials. The Committee will vote the application up or down.
After contracts between all the parties are drawn up, the CDBG application goes to the Governor and Executive Council for final approval. Councilors may ask CDFA staff to explain components of the CDBG project or further discuss how it will benefit New Hampshire’s LMI population.
Once the grant is awarded, CDFA staff holds a mandatory implementation workshop to make sure the communities and their subgrantees are doing everything Uncle Sam requires. Issues can include everything from proper signage to Davis-Bacon wages for construction workers, and outcome reporting.
The recipient can now begin requesting reimbursement for any CDBG-related activities outlined in their contract, such as purchasing building materials or necessary equipment. As with many programs out of Washington, it’s common for HUD not to release its CDBG funds for the states until several months into the calendar year.
“This year, we didn’t get our federal allocation until September for a program that began in January,” says Shields. “It puts us in the unenviable position of having to make some awards contingent upon the money showing up. And with a weather-shortened construction season, some CDBG projects cannot afford delays.”
Despite the increased demand from local communities, support for CDBG in Washington has been destabilized. Since 2001, funding for CDBG nationwide has declined 33%, falling by over $1 billion.
In April, CDFA and the NH Housing Financing Authority toured the state to bring attention to the issue. Governor Maggie Hassan and US Representative Carol Shea Porter spoke in favor of federal and state community development efforts. Mayors from Concord, Berlin, Claremont, and Portsmouth all called on Congress to reverse the funding trend for CDBG.
This summer in Washington, the House T-HUD (Transportation and Housing and Urban Development) committee proposed cutting CDBG by more than 47%, leaving the program with fewer dollars than when President Ford signed the Community Development Block Grant into law in 1974. (On the Senate side, US Senator Jeanne Shaheen voted with the Appropriations Committee to adequately fund CDBG.) Intense public pressure – instigated by mayors, housing advocates, and other action groups – forced the House committee to abandon that proposal. Instead, this September, T-HUD proposed level funding for CDBG.
It appears funding levels for CDBG could be unstable for the foreseeable future. In New Hampshire, that 33% decline in funding means fewer community development projects identified by local leaders will be funded.
For certain, the rebuild of Concord’s Friendly Kitchen would have been greatly delayed without CDBG, extending the hardship to the region’s homeless and at-risk residents. The $500,000 emergency grant helped the soup kitchen open its new facility in December 2012. For people like Claire Knowles, access to an important facility would be challenging.
Today, Knowles is no longer homeless, no longer unemployed. But she’s grateful that programs like the Community Development Block Grant helped her in her time of need. “I can’t thank everybody enough for all they’ve done for me,” she says. “I was surprised how many homeless people were out there – and who are still out there.”
Kevin Flynn is former radio and television reporter and the author of four best-selling books. He is External Relations and Communications Director for the Community Development Finance Authority.