The City Council is scheduled to hold a public hearing on the allocation of the City of Billings CDBG and HOME funding and annual Action Plan for FY2011-2012. 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 FY2011-2012 Action Plan and budget recommendations in preparation for HUD’s submission deadline for the annual Action Plan on May 15 (see Attachment A). This Action Plan represents the second year of the City's overall five-year Consolidated Plan covering FY2010-2014. An additional informational presentation was made during an April City Council Work Session.

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 prospectively); Public Service Caps (up to 15% of new CDBG funding); and Community Housing Development Organizations (at least 15% of new HOME funding).

Changes within funding requirements are allowed within certain categories. Affordable Housing and Neighborhood Project funding amounts can be exchanged. A change in the Public Services category should result in an equal change in the same category. Changes made out of compliance with federal spending requirements would place the City’s entitlement 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 applications for housing and neighborhood activities are consistent with this focus. The Community Development Board reviewed the proposed projects and analyzed various alternatives for funding.

The Congressional budget for CDBG and HOME has not been set to date for the City's 2011-2012 fiscal year. Therefore, budget projections and recommended allocations were based on a 7.5% decrease in CDBG and 10% decrease in the HOME program. In preparation for deeper budget cuts than what has been projected, the Community Development Board has prioritized each activity in order of funding preference and has offered guidance to Community Development staff for implementation.

Based on budget projections utilizing the above-mentioned decreases, the City would receive allocations of $714,502 in new CDBG funding and $484,307 in HOME funding. Program income and funding remaining from completed projects brings the totals projected for allocation for this fiscal year to $798,590 for CDBG and $646,518 for the HOME program.

Federal revenues projected for the CDBG and HOME programs are provided through HUD (see Attachment B). The Community Development Board recommendations are attached (see Attachment C) and comply with funding limitations.

INTRODUCTION
The Community Development Board has completed the recommendations and public input process for the allocation of CDBG and HOME funding for FY2011-2012. Also considered during this process is the City’s FY2011-2012 Action Plan, which addresses needs identified through the Housing Needs Assessment (2010) and the Analysis of Impediments to Fair Housing Choice (2007). The drafted plans can be viewed online at www.ci.billings.mt.us/CDreports.

The five-year Consolidated Plan for FY2010-2014 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 Action Plan 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 held budget hearings on the use of the CDBG and HOME resources on March 17 and prepared preliminary recommendations on April 5.

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 25 and extending to April 25. The City Council is also scheduled to act on the CDBG and HOME programs during the April 25 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
The City is required to provide no more than 20% of its CDBG funding for administration and planning type activities ($157,305), and no more than 10% of HOME funding for administrative purposes ($48,431). The City must also provide at least 15% of its annual HOME allocation for activities carried out by Community Housing Development Organizations (CHDOs). This year, homeWORD’s CHDO allocation of $459,000 in previous year’s funding meets this requirement. The City can allocate up to 15% of CDBG resources ($124,011) to nonprofit organizations or other projects classified as public service activities, ranging from daycare to crime prevention activities. The City received three total applications for public service funding; therefore $90,000 has been recommended for allocation.

ALTERNATIVE FUNDING RECOMMENDATION
Should the budget allocated to CDBG and HOME be decreased below projections, the following recommendations have been made by the Community Development Board in order of priority:

1. Fund CDBG and HOME administration to the highest level possible within established caps (20% for CDBG and 10% for HOME) in order to administer funded programs.

2. If the allowable amount for CDBG administration funding exceeds $175,000, the remaining funding would be allocated to Professional Services. This line item may be used for mandatory HUD studies, such as the Analysis of Impediments to Fair Housing Choice and AmeriCorps*VISTA project support.

3. Property Management should be funded to accommodate projected expenditures to maintain land purchased with CDBG / Neighborhood Stabilization Program funding.

4. The Affordable Housing Development program is the next highest priority for funding for specific use for infrastructure development in Kings Green - Phase IV. If funding amounts cannot cover full development of planned infrastructure, estimated at $350,000, $100,000 (if available) would be allocated to complete engineering, surveying, and soil disposal. Should funding remain following project completion (either full development of infrastructure or engineering / soil disposal), it will be allocated to the First Time Homebuyer Program.

5. The Housing Rehabilitation Loan program is the next highest priority for funding, as this program is the only substantial rehabilitation program in Billings and has been noted as contributing to the affordable housing stock supply in Billings.

6. The First Time Homebuyer loan program is the next highest priority, followed by the Minor Home Repair Program (minimum of $15,000 for emergencies only is recommended), Special Assessment Grant program and Paint program.

7. The next highest priorities are, in order: Yellowstone County Council on Aging; Section 8 Deposit Assistance to the Housing Authority of Billings; Rebuilding Together Yellowstone County; and Housing Authority of Billings - Whitetail Square Park / Community Garden.

8.  Public service activity priorities are, in order: Tumbleweed Runaway Program, Inc.; Southside Senior Center - Kitchen Equipment; and Tree Planting & Removal Program.

APPLICATIONS
The City received 14 applications for housing and neighborhood (bricks and mortar) activities and three applications for public service funding (social services). Application summaries for activities proposed this year are included as Attachment E. 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 Action Plan for FY2011-2012.

Stakeholders for the CDBG and HOME programs include:

Applicants for funding - The City receives applications from a variety of organizations which apply for public service funding or for housing funding, such as, Living Independently for Today and Tomorrow and Interfaith Hospitality Network. A summary of the applicants is included as Attachment D and applications are available online: www.ci.billings.mt.us/communitydevelopment.

Neighborhood Task Forces – The task forces communicate neighborhood needs and solutions to those 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 first time homebuyer programs.

The Community Development Board - As an advisory body to the City Council, 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.

Projects proposed for consideration are consistent with the goals and objectives of the FY2010-2014 Consolidated Plan and the drafted FY2011-2012 Action Plan for the use of CDBG & HOME resources in Billings. The following strategies have been adopted by the City Council in the five-year Consolidated Plan to address Billings’ housing and community development needs:

Strategy A. Promote the preservation of the existing supply of safe, affordable housing in the community.

Strategy B. Promote new affordable housing opportunities.

Strategy C. Work as an active partner with non-profits, neighborhood groups, and others to address housing and community development specific to lower income and special needs households.

Strategy D. Promote the preservation and revitalization of the community’s older neighborhoods.

Strategy E. Provide assistance to agencies serving lower income households and special needs populations, particularly the homeless, public service activity funding to assist the homeless, the elderly, and those with disabilities.

Additional information regarding each strategy is located in Attachment A.


ESTABLISHING COMMUNITY NEED
Community needs have been primarily identified through the 2010 Billings Housing Needs Assessment completed internally by City staff and the 2007 Analysis of Impediments to Fair Housing Choice This assessments were undertaken utilizing focus groups, individual interviews, a community survey, and an examination of census and housing market data.

HOUSING NEEDS
Primary strategies are proposed in the Consolidated Plan to meet the diverse needs of lower-income households in the community. These needs have been identified through the Billings Housing Needs Assessment. The Assessment was undertaken utilizing focus groups, individual interviews, a community survey, and an examination of census, economic and housing market data. This work and input from neighborhood groups and community partners resulted in the identification of the following characteristics of the community that the City will attempt to address with housing and community development activities:

The Community Development Board has made recommendations for CDBG and HOME budget allocations for FY2011-2012. The annual Action Plan for FY2011-2012 has been drafted and is ready for Council adoption.

The City Council is asked to consider the input that is received and make a final decision on FY2011-2012 CDBG and HOME budgets and FY2011-2012 Action Plan.