CPD Policy Update

CPD Policy Update NACCED Annual Meeting Orlando, Florida September 30, 2012

CPD Today • Assistant Secretary Marquez departed May 2012 • Mark Johnston, DAS for Special Needs, appointed as Acting Assistant Secretary for remainder of term • Cliff Taffet remains as General Deputy Assistant Secretary • Yolanda Chavez remains as DAS for Grant Programs • Ann Oliva now Acting DAS for Special Needs

FY 2012 Operations • FY 2012 formula allocations announced in January 2012 consistent with 60 day provision of law • Field offices are fully caught up on reviews of action plans, making grants in timely manner • CPD has maintained monitoring schedule at field office level despite tight budgetary constraints • Funding constraints having impact on ability of field offices to hire staff and travel

CDBG • FY 12 formula funding level - $2.948 billion • Represents 26% reduction in comparison to FY 10 • $300 million from CDF account for disaster recovery purposes (additional $100 million outside budget cap) • $400 million in CDBG DR allocated in January 2012 to 17 grantees (8 states and 9 local governments)

CDBG in FY 13 • House & Senate passed 6 month continuing resolution for FY 2013 (H. Res. 117) • Provides funding based on FY 2012 level BEFORE deduction of $300 million in CDBG DR funding • Projected amount to be available for CDBG formula allocation is $3.248 billion • House and Senate Appropriations Committees, respectively, provided $3.34 billion and $3.1 billion for CDBG formula in their FY13 appropriation bills

Congressional Interest in CDBG • FY 12 appropriation called for two reviews: • GAO to review best practices in formula programs • HUD to report to committees on data systems improvements • House Appropriations Surveys and Investigations on administrative/planning costs • GAO also reviewing admin/planning costs • House Appropriations staff questions on activity delivery costs, grandfathered communities, public service cap, American Community Survey

CDBG Policy Considerations • Guidance issued on CDBG-R and NSP 1 closeouts, addressing open activities cited by OIG audit, voluntary grant reductions • Preparing guidance on mixed use economic development, activities jointly funded by entitlements and states, use of ACS data for low-mod area benefit, Activity Delivery Costs vs. General Administrative Costs, technical corrections to regs. • Evaluating changes to IDIS performance measurement structure • Other IDIS upgrades: eConPlan suite/mapping tool; enhancements in response to OIG audit

CDBG Issues – IG Audit • Formally issued October 31, 2011 • “HUD did not adequately use its System (IDIS) to provide oversight of activities under the Block Grant program.” • Unaware of how grantees used $67 million to fund more than 1,300 cancelled activities with draws • Lacked oversight of almost $3 billion funding more than 20,000 long-standing open activities

CDBG Issues – IG Audit • Some seriously bad actors • 46 grantees accounted for 11,647 open activities • 64 grantees accounted for $2 billion in open activities • Have reduced open activities to 2,288 or 11.2% of original 20,000, representing 16.09% of funds • Have reduced canceled/drawn activities to 238, representing 27.83% of funds • Guidance to field offices to help on tough issues

CDBG Issues – ACS Data • FY 2012 allocations used American Community Survey (ACS) data for 2005-2009 in place of 2000 Census data (plus 2010 population count) • Significant funding changes for many grantees due to new data and reduced appropriation • Path of appeal on data is to Census Bureau • Next update of OMB Metro Area/City designations sometime in 2013 • Plan to update Low/Moderate Income Summary Data

Section 108 • $240 million in guarantee authority in FY 2012 • FY 2013 Continuing Resolution would effectively provide same authority level • FY 2013 Administration request was $500 million with switch to fee-based approach • At committee level, Senate adopted Administration proposal while House provided credit subsidy • HUD’s Policy Development and Research Office to issue report on Section 108 program shortly

CDBG-R • Deadline for expending funds = 9/30/12 • If you haven’t expended it, it’s too late now! • After today, access to CDBG-R grants in IDIS will be blocked for several days – one re-opened you can enter accomplishments/complete activities • Any funds remaining unexpended will be recaptured from your line of credit • As of 9/26, 97.0% drawn down nationally; $29 million not drawn

CDBG-R • Closeout: see CPD Notice 12-004 • All activities must meet a national objective before you can close out • If you’re at that point, no need to wait to closeout • Final Federalreporting.gov final quarterly reports in October 2012 or January 2013 • HUD expects all activities to meet a national objective & be ready for closeout by 03/31/13

NSP Status – September 10, 2012 • NSP 1 = $3.92 billion • 95.00% expended (112.42% obligated) • Grant amount must be expended by March 2013 • NSP2 = $1.93 billion • 75.51% expended • 54 of 56 Grantees met 50% expenditure mark • Grantees must expend 100% of grant amount by February 11, 2013

NSP Status • NSP3 = $970 million • 18.8% expended • 50% of grant amount to be expended by March 2013, 100% by March 2014 • Working on policies for transition after NSP • Still have technical assistance available, especially for NSP3

Project Rebuild • President Obama included $15 billion for Project Rebuild as part of American Jobs Act • Request repeated as part of FY 2013 budget submission • Introduced in both House and Senate • Would improve upon and expand NSP • $10 billion formula allocation to states and local governments • $5 billion competition to include governmental partners but also non-profits and for-profits

OneCPD TA • OneCPD replaces previous CPD approach to technical assistance • Borrows from and expands upon SNAPS and NSP TA efforts • Almost $70 million available across FY10-12 appropriations • Have already initiated several dozen engagements from highly targeted to comprehensive • New website coming soon • CPD field offices are the access point

HOME Appropriations • FY 2012 Appropriation - $1 Billion • Same as FY 1993 funding level • FY 2013 Continuing Resolution provides $1 billion • FY 2013 Administration Request - $1 Billion • House mark: $1.2 billion • Senate mark: $1.0 billion • $500,000 minimum qualification threshold to minimize new PJs qualifying at lower $335,000 threshold

FY12 HOME Appropriation • Imposed 4 provisions on 2012 HOME projects • Evaluation of Developer Capacity, Underwriting and Market Demand before committing funds; • Homebuyer Units remaining unsold 6 months after construction must be converted to rental; • Projects not completed 4 years after commitment must be terminated and funds repaid; • PJ must certify that CHDO receiving ‘12 funds has staff with demonstrated development capacity;

FY12 HOME Appropriation • CPD Notice 12-07, Operating Guidance for Implementing FY 2012 Appropriation Requirements explains what the law requires • HUD held 8 webinars on FY 2012 HOME provisions • Archived webinars can be found at http:\hometa.info

IDIS System Improvements • HOME PROGRAM CHANGES: • Went Live on May 4th • System flags for Projects: • In final draw for > 120 days • With an initial disbursement but no subsequent disbursement for > 180 days • Committed more than 4 years ago, but not completed

IDIS System Improvements • Required Certifications at Project Set-up: • CHDO Capacity • Assessment of Underwriting, Developer Capacity and Neighborhood Market Conditions

HOME Rulemaking • Proposed Rule Published: December 16, 2011 • Public comments were due on February 14, 2012 – HUD received 320 comments • Final rule has completed Departmental clearance and been sent to OMB • Publication expected later this year • HUD preparing to deliver classroom training and webinars subsequent to publication of final rule

CPD Policy Update