AGENDA #

AGENDA #4m

MEMORANDUM

TO: Mayor and Town Council

FROM: W. Calvin Horton, Town Manager

SUBJECT: A Resolution of Support for the Federal Community Development Block Grant Program

DATE: March 7, 2005

The purpose of this memorandum is to update the Council on President Bush’s proposed 2006-2007 budget that includes major changes to the federal Community Development Block Grant (CDBG) Program.

The attached Resolution would state the Council’s support for continuing the Community Development program to operate as a separate program with a funding level consistent with current amounts, and maintain the current system where 70% of the Community Development funds are allocated to entitlement communities as a block grant based on population. If the Resolution is approved, the Mayor would be authorized to forward the Resolution and send a letter to North Carolina’s U.S. Representative David Price and Senators Dole and Burr to express the Town’s position.

BACKGROUND

In response to President Bush’s proposed budget for 2006-2007, both the North Carolina League of Municipalities and the American Planning Association are coordinating efforts to encourage Congress to reject the President’s proposed budget and recommend continued support of the Community Development Block Grant Program.

The President’s proposed budget eliminates the Community Development Program, and includes a new program, “Strengthening America’s Communities Initiative”. This program would combine eighteen federal grant programs, including the Community Development program, into one new program within the Department of Commerce. In addition to the Community Development program the Empowerment Zone/Enterprise Community and the Brownfields Economic Development Initiative programs would also be combined into the “Strengthening America’s Communities Initiative” program. The proposed budget for the new Initiative is $3.71 billion, nearly $1 billion less than the current budget for the Community Development Program alone.

Community Development Block Grant funds currently are allocated to the Town and other “entitlement cities” across the counrty as a block grant. The program provides annual grants on a formula basis to entitlement cities and counties to develop viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low- and moderate-income persons. Each year, the U.S. Department of Housing and Urban Development informs the Town of its Community Development allocation. With input from citizens, the Town develops a plan for how to spend the funds and submits the plan to the Department of Housing and Urban Development for approval.

The Town of Chapel Hill has received Community Development grants since 1975 under the Housing and Community Development Act of 1974. From 1975-1985, the Council allocated Community Development funds for public improvements in the Northside and Pine Knolls neighborhoods. Funding in the early years included replacement housing, housing renovation, street construction, provision of water and sewer improvements, parks and recreational facilities, and human services funding.

Since the mid 1980s, the Council has used a significant amount of Community Development funds for the renovation of public housing communities, affordable housing projects and neighborhood revitalization. Funds have been used to rehabilitate the exterior of public housing apartments, for drainage improvements, and to refurbish the interior of apartments. Over the past several years, the Council has also budgeted funds for affordable housing development such as the Legion Road and Meadowmont Townhomes and a Habitat for Humanity subdivision on Rogers Road, neighborhood revitalization activities with EmPOWERment, Inc., and community service activities programs with local non-profit agencies such as the YMCA, the Orange County Family Resource Center, and the Orange County Literacy Council.

Below is a summary of the amount of Community Development Block Grant funds the Town has received over the past five years:

2000-2001 $466,000

2001-2002 $441,000

2002-2003 $445,000

2003-2004 $723,000

2004-2005 $711,000

The Town expects to receive $666,392 in fiscal year 2005-2006.

DISCUSSION

The Community Development program has been beneficial to Chapel Hill and other cities because it allows local governments to establish priorities within the framework of federal requirements.

The Community Development program is used to support many of the Town’s affordable housing and community development efforts. Non-profit agencies have been able to use the Community Development fund to leverage additional funds for programs and services that benefit households earning less than 80% of the area median income. Affordable housing developments funded through the Community Development program have helped the Council meet affordable housing and neighborhood revitalization goals established in the Comprehensive Plan.

We believe that continued funding of the Community Development Block Grant Program is essential to help the Town meet its affordable housing and community development goals. The proposed elimination of the Community Development program could result in a significant decrease in the Town’s affordable housing and community development activities

RECOMMENDATION

The attached resolution would state the Council’s support for continuing the Community Development program to operate as a separate program with a funding level consistent with current amounts, and maintain the current system where 70% of the Community Development funds are allocated as a block grant to entitlement communities based on population. If approved, the Mayor would forward the Resolution along with a letter to U.S. Representative David Price and Senators Dole and Burr to express the Council’s position.

A RESOLUTION STATING THE COUNCIL’S SUPPORT FOR THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM (2005-03-07/R-4.1)

WHEREAS, the Community Development Block Grant Program is a foundation of revitalization and development in America’s cities, towns, and neighborhood; and

WHEREAS, the Community Development Block Grant Program is a flexible and reliable source of funding; and

WHEREAS, the Community Development Block Grant program promotes housing choice, affordability and homeownership; and

WHEREAS, the Community Development Block Grant Program supports the repair, modernization and security of critical infrastructure; and

WHEREAS, the Community Development Block Grant Program is a vital resource for implementing the vision of citizens articulated in local plans; and

WHEREAS, the Community Development Block Grant Program is a good investment of public resources; and

WHEREAS, the Town has received Community Development Block Grant Funds since 1974; and

WHEREAS, Community Development Block Grant Funds have allowed the Town to provide affordable housing and community services to lower income Chapel Hill residents; and

WHEREAS, the Community Development Block Grant Funds have been used help the Council meet goals of providing affordable housing and neighborhood revitalization established in the Comprehensive Plan; and

WHEREAS, elimination of the Community Development program could result in a significant decrease in the Town’s affordable housing and community development activities;

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council supports continuing the Community Development Block Grant program to operate as a separate program with a funding level consistent with current amounts, and maintain the current system where 70% of the community development funds are allocated as a block grant to entitlement communities based on population.

BE IT FURTHER RESOLVED that the Council authorizes the Mayor to forward this Resolution and to send a letter of support to U.S. Representative David Price and Senators Dole and Burr expressing the Council’s position.

This the 7^th day of March, 2005.