CDBG Allocation
Planning & Economic
Development
MEMORANDUM
TO:
Mayor and City Councilmembers
Mike Mornson, City Manager
FROM:
Meg Beekman, Community Development Coordinator
DATE:
November 7, 2016
SUBJECT: CDBG Allocation
Background
Each year the City received a little over $100,000 of CDBG funds. CDBG funds may be used to
support a variety of housing and community development activities. The intent of the program is
to fund primarily "bricks and mortar" projects versus social service programs. Activities must
meet at least one of the following objectives of the CDBG program:
Benefiting low and moderate income persons
Prevention or elimination of slums and blight
Meeting a particularly urgent community development need
Additionally, Hennepin County imposes the following guidelines:
15% maximum for public service activities
Activity should be ranked as a high priority in the Hennepin County Consolidated Plan.
Those activities are:
Rental housing for families, elderly, physically disabled persons and homeless persons
o
with incomes below 50% of median income
Supportive housing for persons with mental illness and incomes below 50%
o
Rehabilitation of owner-occupied housing with income below 50%
o
Homeownership assistance to households with income below 80%
o
Public services and/or facilities to assist families and seniors to maintain and/or increase
o
self-sufficiency and independent living, and to assist youth and their families with
counseling and crisis intervention services, and related activities
Neighborhood revitalization activities that address issues of substandard/blighted
o
property in scattered site or defined area redevelopments that will also provide affordable
housing on 20% of the units.
Minimum of 70% of funds spent on low to moderate income households
o
Public Service Activities
Each year the City receives requests for CDBG funds from the following groups:
Resource West
Intercongregation Communities Association
HOME Line
Last year the City received $113,831 in CDBG funds, which would have allowed up to
approximately $17,000 to be allocated to public service activities. The City allocated $11,000 to
public service activities. Resource West requested and received $5,000 in funding, ICA
requested $10,000 and received $5,000, and Home Line requested $6,206 and received $1,000.
The City has not adjusted the allocations to these three organizations in many years.
According to Hennepin County, most communities allocate the full 15 percent allowed to public
service activities, though there are one or two cities that don’t allocate any. Generally speaking,
Hennepin County’s opinion is that these organizations typically do a great job of providing
services to those most in need in the community and funding them aligns well with the intent and
purpose of the CDBG program.
Housing Rehabilitation Program
While the City provides some funding to various public service activities in the community, the
bulk of the CDBG funds have historically been allocated towards the Housing and Rehabilitation
program. This program allows low and moderate income home owners in the community to
receive up to $25,000 in assistance towards housing rehabilitation. The funds allow
approximately four households a year to use the funds.
This program is the only source of funds specifically supporting the preservation of the City’s
single-family housing stock. In the past few years this program has been very popular and well
used. Currently there are two people on the waiting list to receive funds.
Discussion
Given that the City has not increased its CDBG allocation to public service activities in many
years and that these organizations are experiencing increased demand for services, and thus have
increased their request for funds, its seems appropriate for the Council to weigh in on how
CDBG dollars should be allocated. There is clearly more demand for these funds then the City
receives, so staff is seeking direction on how to allocate our 2017 funds. Staff does not yet know
what the 2017 allocation to Hopkins will be, but it has been between $100,000 and $120,000 in
past years.