Memo - CDBG Policy Review
Planning & Economic
Development
I
MEMORANDUM
TO: Honorable Mayor Maxwell and Hopkins City Council Members
FROM: Kersten Elverum'\JSing & Development Coordinator
DATE: January 5,2005
SUBJECT: Hopkins CDBG Funding Policy
Purpose of Memo
The purpose ofthis memo is to provide background for the discussion at the January 11, 2005,
City Council work session regarding the method in which Community Development Block Grant
(CDBG) funding requests from outside agencies are evaluated. This is an item which the City
Council asked be brought back for discussion following the public hearing for the 2004
allocation of CDBG funds.
The allocation ofCDBG funds is tied to a separate set ofmles than that oflocal taxpayer dollars.
Because of this, the discussion at the work session will focus on the CDBG allocation policy. It
is related, however, to the broader issue of social service funding, so information regarding the
funding of social service organizations utilizing other sources (i.e. general fund) is attached for
additional background information.
Overview
Each year the City of Hopkins receives an allocation of federal funds through our participation in
the Urban Hennepin County CDBG Program. The majority of the funds are typically used to
fund the Housing Rehabilitation Loan and Grant Program.
The City does have the limited ability to also fund social service activities with CDBG dollars.
The total allocation to social service activities is limited to 15% of the total CDBG budget. and
the funds must primarily benefit low and moderate-income residents. On average, the City's
maximum allocation to social service activities would be limited to approximately $22,000.
In the past the City has received funding requests from a variety of social service agencies
including HOME Line, The Hopkins Minnetonka Family Resource Center, CASH, Senior
Community Services and Sojourner Shelter. Over the past two years, the City has limited its
CDBG allocation to the Hopkins Minnetonka Family Resource Center with allocations of $7,500
and $5,000.
In reviewing requests for CDBG dollars, staff has utilized the social service funding procedure
requiring that the service to be funded be directly related to the goals and/or responsibilities of a
department of the City and supported by that department. For example, the Hopkins Minnetonka
Family Resource Center has received funding because they take numerous calls that would
otherwise need to be answered by City staff and take referrals from several departments
including the Police, Housing and Activity Center. The importance and need for the service is
also considered.
The City began reviewing requests using this method several years ago after attempts to evaluate
requests based on need were found to be very subjective. It also became increasingly difficult to
meet all the financial needs of the community, so limiting funding to only those activities that the
City would be expected to provide seemed logical.
Primarv Issues to Consider
The primary issue to consider is whether the City Council would like to continue to evaluate
CDBG funding requests using this policy, or if not, what evaluation method would the Council
support?
Conclusion
The philosophy that cities use in determining the appropriate level of social service funding
varies greatly, even among suburban Hennepin County cities participating in the CDBG
program. The City of Hopkins' fairly conservative approach towards social service funding is
largely due to the significant need for CDBG funds for the housing rehabilitation program.
The City Council does have the ability to change how social service requests are evaluated and
staff is open to any suggestions regarding this issue.