The City Council is scheduled to hold a public hearing on the FY2015-2019 five-year Consolidated Plan, the FY2015-2016 Annual Action Plan and the allocation of Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) program funding. The public hearing is a mandatory condition to receive U.S. Department of Housing and Urban Development (HUD) entitlement funding. City Council action is needed to approve the Consolidated / Annual Action Plans and budget recommendations in preparation for HUD’s submission deadline for the Consolidated Plan on May 15 (see Attachment A). A preliminary informational presentation was made during the April 20, City Council Work Session.

City Council will hold a public hearing and may:

• Approve the FY2015-2019 Consolidated Plan, FY2015-2016 Annual Action Plan and budget allocations; or,
• Not Approve the FY2015-2019 Consolidated Plan, FY2015-2016 Annual Action Plan and budget allocations.

HUD has awarded $562,741 in new CDBG and $263,688 in HOME funding to the City of Billings for use in affordable housing and other projects benefiting low income residents. Additional CDBG and HOME funding is anticipated through loan repayments in programs such as First Time Home Buyer and Housing Rehabilitation. The Corporation for National and Community Service has awarded the City of Billings over $460,000 in federal funds to support the Billings Metro VISTA Project contingent on the City’s CDBG allocation supporting the program.

Federal revenues allocated for the CDBG and HOME programs are provided through HUD (Attachment B). Staff and Community Development Board recommendations are attached (see Attachment C) and comply with funding limitations. Any program income received will be allocated on a close / shovel-ready basis in previously approved programs, such as First Time Home Buyer, Housing Rehabilitation, Foreclosure Acquisition / Rehabilitation, Manufactured Home Repair, Affordable Housing Development, etc.
 
Priority-Based Budgeting: Recommendations reflect the results of the City’s 2012 priority budgeting process by allocating funding to Tier One programs; First Time Homebuyer and home repair programs. Tier Two programs recommended for funding include the Foreclosure Acquisition / Rehabilitation and the Billings Metro VISTA Project.

Introduction
The Community Development Board has completed the recommendations and public input process for the FY2015-2019 Consolidated Plan, the FY2015-2016 Annual Action Plan and the allocation of CDBG and HOME funding for FY2015-2016. The Consolidated Plan addresses current housing needs and the priorities identified in the 2013 Analysis of Impediments to Fair Housing Choice. The documents can be viewed online at www.ci.billings.mt.us/CDreports.
 
The five-year Consolidated Plan for FY2015-2019 is required for participation by the City of Billings in HUD programs, including: CDBG and HOME; homeless programs funded under the McKinney-Vento Act; and the Housing for Persons with AIDS (HOPWA) program. The City of Billings does not receive McKinney-Vento or HOPWA funds, therefore the City's Consolidated Plan and Action Plans are focused on CDBG and HOME activities.
 
The purpose of the Consolidated Plan is to identify the housing and community development needs of low-income households in Billings and develop strategies for addressing those needs in a comprehensive, coordinated fashion utilizing available federal and non-federal resources. The Consolidated Plan and Annual Action Plans serve as planning tools for the City’s CDBG and HOME programs and combines the planning and application requirements for the City’s HUD-funded programs.This allows program planning and citizen participation to take place in a comprehensive context covering both programs.
 
Procedural History
The City of Billings has been receiving CDBG funds since the mid-1970s and HOME funds since the early 1990s. These funds are provided by the federal government and are primarily targeted in Billings to address the affordable housing and neighborhood revitalization needs of the community.
 
In allocating CDBG and HOME resources, the Community Development Division facilitates an extensive process to gather public input on the use of federal funds. Applications were available at the beginning of December and due at the end of January. Applications are then forwarded to the Community Development Board and recommendations are prepared for the City Council consideration. Task force input was requested in February and March on housing and neighborhood projects (see Attachment D). The Community Development Board prepared preliminary recommendations for the use of CDBG and HOME on April 7.
 
The City Council public hearing is required by the Federal government and is part of the 30-day public comment period on the program beginning March 27 and extending to April 27. The City Council is also scheduled to act on the CDBG and HOME programs during the April 27 meeting. An application will then be submitted by HUD’s May 15 deadline for review and, pending HUD approval, the program year will begin July 1.
 
Funding Allocation Requirements
Allocation recommendations conform to pre-determined spending requirements on several categories including: CDBG and HOME Administration caps (maximum of 20% and 10% of new funding respectively); public service caps (up to 15% of new CDBG funding); and Community Housing Development Organizations (at least 15% of new HOME funding). Changes made out of compliance with federal spending requirements would place the City’s entitlement status for federal funds at risk.
 
The allocation of funding is restricted by the eligibility requirements for CDBG and HOME funding. Projects are focused on activities that promote new affordable housing or preserving the existing supply of affordable housing and neighborhoods where the affordable housing stock is located. The proposed housing, neighborhood and public service activities are consistent with this focus. The Community Development Board reviewed the proposed projects and analyzed various alternatives for funding.
 
The City is required to provide no more than 20% of its CDBG funding for administration and planning type activities, and no more than 10% of HOME funding for administrative purposes. The City must also provide at least 15% of its annual HOME allocation for activities carried out by Community Housing Development Organizations (CHDOs). The City may allocate up to 15% of CDBG resources to other projects classified as public service activities such as the Billings Metro VISTA Project. Public service cap calculations include 15% of the new CDBG allocation and 15% of the current year’s program income, considered the previous year’s program income for FY2015-2016.
 
Funding Recommendations
Recommendations from Staff and the Community Development Board reflect the following considerations:

 - Long-term sustainability of operating loan programs rather than issuing grants, which will never be recouped by the City to use in future projects. All loan products do not contain forgiveness features.

 - The likelihood of continuing Community Development activities would substantially diminish if the City chose to fund grant programs generating no program income. 

Funding recommendations include the following for CDBG:

• Administration set at the maximum cap for the program; 20% of new allocation and eligible program income; $112,548.
• Foreclosure Acquisition / Rehabilitation support totaling $65,000.
• VISTA program administrative support set at $75,000 to assist with implementation costs as a public service activity.
• Remaining CDBG funds to be allocated to the Housing Rehabilitation Loan Program; $310,193.

Funding recommendations include the following for HOME:

• Administration set at the maximum cap for the program; 10% of new allocation and eligible program income; $26,369.
• Allocation of 15% of new HOME program funding set aside for Community Housing Development Organizations - as per federal regulation; $39,553.
• Allocation of $35,000 to augment required financial commitments for Community Housing Development Organizations for the Affordable Housing Development program totaling $84,810; includes $39,553 as noted above in addition to the FY2014-2015 allocation of $45,257.
• Remaining HOME funds to be allocated to the First Time Homebuyer Loan Program; $162,766.

Additional program income received will be allocated on a close / shovel-ready basis in previously approved programs. Program income must be allocated, committed and expended prior to drawing CDBG and HOME entitlement funds as per federal requirement.
 
CDBG and HOME resources represent the main federal commitment to communities to address the need to preserve the existing supply of affordable housing and promote the development of new affordable housing. Few other federal, state or local resources are available to address these housing needs.
 
Public Comment
Comments of the speakers at the public hearings may relate to funding amounts awarded, activities prioritized for funding with lower federal revenue allocations, and general comments regarding the FY2015-2019 Consolidated Plan and Annual Action Plan for FY2015-2016.

Stakeholders for CDBG and HOME programs include:

1. Program Recipients - The City serves low income households through a variety of affordable housing programs such as home repair, home buyer, etc. Full descriptions of available programs can be found online: www.ci.billings.mt.us/comdev.


2. Neighborhood Task Forces - The Task Forces communicate neighborhood needs and solutions to identified needs utilizing both CDBG and HOME resources. Task Forces are also asked to prioritize housing and neighborhood applications. These priorities have been provided in Attachment D for your review. Funding recommendations are in alignment with Task Force priorities including emphasis on housing repair and home buyer programs.


3. The Community Development Board - As an advisory body to the City Council, the Community Development Board provides detailed oversight to both the CDBG and HOME programs throughout the year and facilitates an extensive process to prepare recommendations for the City Council consideration. Six of nine total Community Development Board members are representatives of low-income neighborhoods either by residence or Task Force delegation, ensuring low-income citizen involvement of planning and allocation processes.


4. Non-Profit Organizations - Community organizations serving those experiencing poverty are supported by the Billings Metro VISTA Project. VISTA members build capacity in order to complete assessments, expand or create new services to meet data-verified needs, build volunteer management programs and to generate cash and in-kind resources.

Consolidated Plan: Projects proposed for consideration are consistent with the goals and objectives of the drafted FY2015-2019 Consolidated Plan and the drafted FY2015-2016 Action Plan for the use of CDBG & HOME resources in Billings. The following strategies have been proposed to the City Council in the five-year Consolidated Plan to address Billings’ housing and community development needs:

Strategy A. Preserve existing affordable housing supply, particularly in older neighborhoods, to support the stability of the current affordable housing stock.

Strategy B. Create affordable housing opportunities to further improve access to and quality of the affordable housing stock.

Strategy C. Expand housing choice options for existing and potential new residents to foster stable, socio-economically diverse neighborhoods citywide.

Strategy D. Support housing and community development specific to lower income and special needs households through poverty-impact initiatives.  
 
Additional information regarding each strategy is located in the drafted Consolidated Plan; Attachment A. The drafted FY2015-2019 Consolidated Plan, the drafted FY2015-2016 Action Plan and 2013 Analysis of Impediments to Fair Housing Choice can be found online: www.ci.billings.mt.us/CDreports.
 
Welcome Home Billings: The City’s ten-year plan to impact homelessness was adopted by the City Council in October 2009. Allocations supporting the Billings Metro VISTA Project as the City’s anti-poverty strategy meet CDBG regulations and provide an avenue for human resources to build the capacity of non-profit organizations serving those experiencing poverty.
 
City Council Strategic Plan: Projects align with the proposed Strategic Plan in the following strategies and objectives:

Comprehensive, Orderly Growth: Develop, preserve and revitalize residential neighborhoods that are safe, attractive and provide diverse, affordable housing.
  - Dedicate resources to rehabilitate substandard housing via the provision of loan financing to lower income household in order to preserve and revitalize neighborhoods city-wide.
  - Dedicate resources to develop new affordable housing in all neighborhoods to promote inclusion, diversity, equal opportunity and access.
  - Dedicate resources to acquire and rehabilitate vacant and/or foreclosed properties in order to promote infill, stabilize neighborhoods, and prevent decline.

Sustainable Economic Development: Provide a safe, healthy and attractive place to live and work; offer quality housing choices, accessible amenities and an environment that provides a desirable quality of life.
  - Dedicate resources to support homeownership opportunities through loan financing to low income households.
  - Determine the feasibility of creating a housing center to support potential and existing residents in their quest to obtain, retain and maintain stable housing. If feasible, create a strategic plan for implementation.
  - Support initiatives to alleviate poverty and promote economic opportunity through Welcome Home Billings, the city’s ten-year plan to impact homelessness and the AmeriCorps Volunteers in Service to America (VISTA) program.

Involved, United Community: Expand citizen participation in boards, commissions and other volunteer capacities to improve public understanding of and involvement in government functions.
  - Provide volunteer opportunities through the AmeriCorps VISTA and the Billings Metro VISTA Project.

City staff and the Community Development Board have made recommendations for CDBG and HOME budget allocations for FY2015-2016. The FY2015-2019 five-year Consolidated Plan and FY2015-2016 Annual Action Plan have both been drafted and are ready for Council adoption. The City Council is asked to consider public input received and make a final decision on the FY2015-2019 Consolidated Plan, FY2015-2016 Annual Action Plan and accompanying budget allocations.