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Fund Distribution Method

Community Development Block Grant Program

Each year, the State of California's Department of Housing and Community Development (HCD) receives an allocation of CDBG funds from the federal government. The federal Department of Housing and Urban Development (HUD), typically announces the award amount available in late February, and awards the funds to the State in May of each year.

Under State statute and regulation, HCD then allocates the federal CDBG award into various program components. The State allocation of federal CDBG dollars occurs according to the following methodology.

  1. State Administrative Costs: Consistent with CFR 570.489, the State of California uses up to two percent (2%) of the annual CDBG award, plus $100,000 for State administrative costs. The two percent figure is matched with non-CDBG State dollars on a one-for-one basis.
  2. Technical Assistance: Under Title I, Section 106(d)(5), the State may allocate up to one percent (1%) of the annual CDBG award for technical assistance activities to local governments and nonprofit program recipients. The State of California elected to set aside this one percent out of its 1993, 1994 and 1995 awards. The State will set aside 1 percent in program year 1996/97 and 1997/98.
  3. Colonias: Section 916 of the National Affordable Housing Act of 1990, as amended, established an annual set-aside for activities benefiting the residents of colonias. In 1995/96, the State of California will set aside and make two percent (2%) of its CDBG award available for colonias.
  4. Native American Activities: Under State Health and Safety Code Section 50831, the State annually sets aside one and a quarter percent (1.25%) of its CDBG award for grants on behalf of nonrecognized tribes and rancherias.
  5. Economic Development (ED): Title 25 of State regulations, Section 7062.1 requires the Department to set aside thirty percent (30%) of the annual federal CDBG award for ED activities. State statute also mandates how the ED set-aside dollars are to be allocated. The economic development distribution method is as follows:
    1. Economic development Planning and Technical Assistance (P/TA): State Health and Safety Code Section 50833(a) states that ten percent (10%) of the ED set-aside will be made available for P/TA activities. The Department makes these dollars available on a continuous, over-the-counter basis, as announced in the Notice of Funding Availability.
    2. The "California Community Economic Enterprise Fund" (Enterprise Fund) component: State regulations Section 7062.1(d) stipulates that, based upon prior years' demand, the Department will determine what percentage of the ED funds will be set aside for Enterprise Fund applications. In 1993, the Enterprise Fund's initial year, fifty percent (50%) of the ED funds were set aside for this component. In 1995, the Department set aside 50 percent of the ED allocation for Enterprise Fund applications. In 1996/97, the Department proposes setting aside seventy percent (70%) of the ED funds for Enterprise Fund applications. Any unawarded Enterprise Fund dollars will be made available through the "over the counter" ED component.
    3. The "over the counter" (OTC) economic development component: Health and Safety Code Section 50834 requires that a separate training manual and Notice of Funding Availability be issued for this component. In the past, the quarterly deadlines and funding dates have been announced within the annual Notice of Funding Availability. In 1996/97 and 1997/98, the Department will entertain applications on an ongoing basis, and make funding recommendations as submitted applications are finalized and reviewed.
  6. The "general" allocation: This component receives those funds remaining after the mandated set-asides described above are satisfied. The general allocation contains two funding mechanisms:
    1. "General" P/TA: Health and Safety Code Section 50833(b) sets aside ten percent (10%) of the general CDBG allocation for planning and technical assistance grants. Like the ED P/TA component, this component implements the same over the counter funding cycle, and is announced in the same Notice of Funding Availability as the ED P/TA. Funding decisions are based on a first-come, first served basis, applying eligibility threshold criteria (see Attachment 3, p.25).
    2. The annual "general" component: This component forms the mechanism through which a broad variety of CDBG-eligible activities are funded. Through this once-yearly process, applications are received for housing rehabilitation, public facilities, new construction, community facilities, public services, and economic development activities.