Redevelopment Economy Development CDBG Housing Public Finance

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
AFFORDABLE HOUSING COMPONENT

PROGRAM PURPOSE

The purpose of the Community Development Block Grant (CDBG) Program is to develop viable urban communities through the provision of decent housing, a suitable living environment, and expanded economic opportunities for persons of very-low and low income. All projects funded with CDBG funds must accomplish one of the following national objectives:

  • the project must directly benefit very-low and low-income households;
  • the project must aid in the elimination of slums and blight; and/or
  • he project must act to eliminate conditions which pose a serious and immediate threat to the community welfare.

CONTRA COSTA COUNTY CDBG PROGRAM PRIORITIES

Consistent with the national objectives and purposes of the CDBG program, the Contra Costa County Board of Supervisors has adopted the following objectives for affordable housing:

    • increase the supply of multifamily rental housing affordable to and occupied by very-low and low-income households;
    • maintain the existing affordable housing stock through the rehabilitation of owner-occupied and rental housing; o increase the supply of appropriate and supportive housing for special needs populations;
    • assist the homeless and those at-risk of becoming homeless by providing emergency and transitional housing; and
    • alleviate problems of housing discrimination.

    CDBG HOUSING ALLOCATION

    The County receives an annual allocation of approximately $3.5 million in CDBG funds from the U.S. Department of Housing and Urban Development . By direction of the Board of Supervisors, a portion of each year's allocation is reserved for affordable housing. The Department anticipates that approximately $1.4 million will be available for projects in the regular funding cycle, with the remainder allocated to the HDAF.

TARGET POPULATION

A. Urban County Population.
Contra Costa County participates in the CDBG Program as the Urban County, which includes all of Contra Costa with the exception of the Cities of Antioch, Concord, Pittsburg, Richmond, and Walnut Creek. The latter Cities are independent entitlement jurisdictions for purposes of participation in the CDBG Program and receive separate allocations of CDBG funds. In order to be eligible for Contra Costa County CDBG funds, projects must be located in the Urban County.

B. Low-Income Households.
CDBG affordable housing projects must directly benefit extremely-low, very-low and low-income households. The County Affordable Housing Program uses the following definitions for purposes of CDBG:

    • Low-income households are households with incomes at or below 80 percent of the Area Median Income for the Oakland PMSA as adjusted for household size and defined by the U.S. Department of Housing and Urban Development (AMI) .
    • Very-low income households are households with incomes at or below 50 percent of the AMI.
    • Extremely-low income households are households with incomes at or below 30 percent of the AMI.See www.ccreach.org for income current income definitions applicable to the County's affordable housing programs.
    C. Low-Income Special Needs Populations.
    In accordance with federal regulations and the County's Consolidated Plan, the following special needs populations are eligible for CDBG housing assistance. Note that assisted households must still qualify as low income.
    • seniors and the frail elderly;
    • large families with children;
    • disabled populations;
    • persons with alcohol or drug-abuse problems;
    • female-headed households;
    • farmworkers;
    • victims of domestic violence; and
    • homeless.

    MINIMUM OCCUPANCY AND AFFORDABILITY REQUIREMENTS

    Housing assisted with CDBG funds must be occupied by and affordable to extremely-low, very-low and low-income households.

A. All households must have incomes at or below 80 percent of AMI adjusted for household size.

B. For mixed-income projects which include units occupied by households with incomes above 80 percent AMI, the proportion of the total cost of the project to be borne by CDBG funds must not exceed the proportion of the units to be occupied by low income households.

C. Units must be affordable to the target population. Although the CDBG Program does not specifically define affordability, the generally accepted definition is that total monthly housing costs including an allowance for utilities must not exceed 30 percent of gross monthly income.

ELIGIBLE ACTIVITIES AND PROGRAM REQUIREMENTS

A. Acquisition and/or rehabilitation of public or privately-owned rental housing affordable to and occupied by low income households. May include renovation or conversion of closed buildings for use as affordable housing. Limited to non-luxury improvements. Eligible expenditures:

    • site and building acquisition;
    • labor, materials, and other rehabilitation costs needed to bring the housing into conformance with local building codes and provide safe, affordable housing;
    • energy efficiency improvements;
    • improvements required to provide access to disabled populations;
    • water efficiency improvements;
    • lead-based paint abatement; and
    • relocation assistance.
    B. Rehabilitation of housing owned and occupied by low income households (limited to non-luxury improvements). Eligible expenditures:
    • labor, materials, and other rehabilitation costs needed to bring the housing into conformance with local building codes and provide safe and affordable housing;
    • energy efficiency improvements;
    • improvements required to provide access to disabled populations;
    • water efficiency improvements;
    • lead-based paint abatement; and
    • temporary relocation assistance.
    C. Acquisition, rehabilitation, and/or new construction of emergency and transitional shelters for homeless and special needs populations (e.g., battered women, homeless, mentally disabled, runaway children, substance-abusing population, frail elderly, the disabled).
    • site and building acquisition;
    • actual construction and/or rehabilitation costs required to provide emergency and transitional housing consistent with federal and local building codes and the needs of the target population;
    • reasonable and necessary soft costs incurred by project owner/sponsor associated with the financing or development of eligible projects (e.g., architecture and engineering, permits, financing fees, environmental reports).
    D. Eligible activities which may be funded in support of new construction of affordable housing include the following:
    • site acquisition;
    • site clearance and demolition of existing structures;
    • site improvements to publicly-owned land to be used or sold for new housing; and
    • costs of disposing of real property acquired with CDBG funds to be used for new housing.
    E. New construction of permanent housing affordable to and occupied by very-low and low-income households may only be undertaken by Community Based Development Organizations. Eligible expenditures in addition to those listed under D above for projects undertaken by qualified organizations include:
    • costs required to construct non-luxury housing which meets applicable federal and local building codes;
    • reasonable and necessary soft costs incurred by the project sponsor associated with the financing or development of affordable housing (e.g., architecture and engineering, permits, financing fees, legal fees, environmental reports).
    F. First-time homebuyer assistance for lower-income households. Participating households must: not have owned a home in the preceding three years; agree to occupy the home as their principal place of residence; obtain a first mortgage in the maximum amount for which they qualify; and provide a minimum downpayment of 3 percent . Eligible expenditures include:
    • mortgage assistance, typically in the form of a deferred second loan;
    • downpayment and closing cost assistance.
    G. Fair housing activities designed to ensure equal access to housing for all populations without regard to race, color, age, religion, sex, national origin, family status, or disability.
    • Target population for fair housing activities not limited to low income households.
    • Eligible expenditures include fair housing services, outreach, education, and enforcement.

    INELIGIBLE ACTIVITIES

    A. Any activity not specifically authorized under CDBG regulations is not eligible for assistance with CDBG funds.

B. Ineligible affordable housing and related activities include the following:

    • new housing construction unless undertaken by Community Based Development Organization;
    • predevelopment expenditures associated with housing development cannot be funded by CDBG without a waiver from HUD;
    • land banking;
    • political activities;
    • purchase of construction equipment; and
    • purchase of furnishings and personal property which is not an integral fixture of the housing.

    MATCH REQUIREMENTS

    A. All CDBG affordable housing funds require a match contribution. The minimum match required depends on the type of organization applying for CDBG funds as follows:

    • non-profit organizations - 10 percent match required;
    • public agencies - 25 percent match required; and
    • for-profit entities - 100 percent match required.
    B. Matching funds may be from any source, including federal, state and local public and private resources.

REQUIRED TERM OF AFFORDABILITY

Although there are no specific requirements, the proposed term of affordability is a factor in evaluating project applications. The County encourages maintenance of the longest feasible affordability term consistent with the structure and financial requirements of the project. Typical terms range from 40 to 60 years.

ELIGIBLE FORMS OF ASSISTANCE

Contra Costa County affordable housing funds are generally made available in the form of a loan. Loan terms vary with the financial requirements of the project and may include amortized or deferred zero and low-interest loans. CDBG funds may also be used to guarantee loans.

ELIGIBLE APPLICANTS

Public agencies and the non-profit and for-profit community.

COMMUNITY BASED DEVELOPMENT ORGANIZATIONS (CBDOs)

A. CBDO definition and required characteristics:

    • organized under state or local law to carry out community development activities (including housing) primarily within the Urban County;
    • must have as its primary purpose the improvement of the physical, economic, or social environment of the Urban County by addressing one or more critical problems related to needs of very-low and low-income households;
    • may be non-profit or for-profit, provided that any monetary profits to shareholders or members are incidental to operations;
    • 51 percent of governing body must be representatives from the organization's geographic area of operations who are either: very-low or low-income residents; officers or senior officials of private establishments or institutions serving the area; or representatives of very-low and low-income neighborhood organizations;
    • may not be an agency or instrumentality of the County and does not permit more than one-third of the membership to be appointed by or consist of elected public officials, their employees, or officials of an ineligible entity;
    • governing body members must be nominated and approved by general membership of organization or its permanent governing body;
    • must not be subject to requirements under which assets revert to County upon dissolution;
    • must be free to contract for goods and services from vendors of its own choosing.
    B. Community Housing Development Organizations certified by the County for purposes of participation in the HOME Program automatically qualify as a CBDO if their geographic area of operation is limited to one neighborhood and they have received or are expected to receive HOME funds.

C. CDBG funds may be used for the new construction of housing affordable to and occupied by very-low and low-income households only when undertaken by a qualified CBDO.

MONITORING AND COMPLIANCE REQUIREMENTS

A. Uniform Relocation Act Requirements. CDBG projects are subject to relocation requirements under the Uniform Relocation Act (URA). URA requirements are triggered whenever displacement occurs as a direct result of rehabilitation, demolition, acquisition, or construction of a CDBG-assisted project.

B. Equal Opportunity and Fair Housing Requirements. No person shall on the grounds of race, color, national origin, religion, age, disability, or sex be excluded, denied benefits or subjected to discrimination under any program or project supported in whole or in part with CDBG funds. In order to help ensure equal access to CDBG-funded projects, all project recipients will be required to implement affirmative marketing procedures. In accordance with County policy, minority and women-owned business enterprises shall have the maximum opportunity to participate in the performance of contracts awarded under the CDBG Program. In addition, to the greatest extent feasible, opportunities for training and employment arising from CDBG-assisted projects must be provided to low-income persons residing in the project service area.

C. Environmental Requirements. All projects must complete required environmental reviews, including the federal National Environmental Protection Act (NEPA) review process and the state California Environmental Quality Act (CEQA) process, as appropriate. Special areas of concern for CDBG-assisted housing projects are:

    • noise abatement in new construction;
    • floodplains and wetlands in new construction;
    • lead-based paint abatement;
    • handling and disposal of asbestos; and
    • impact on historical resources.
    D. Flood Insurance.
    CDBG funds may not be used for acquisition or construction of housing located in an area which has been identified by the Federal Emergency Management Agency as having special flood hazards unless flood insurance is obtained.

E. Labor Standards.
Davis-Bacon wage compliance and other laws and regulations pertaining to labor standards apply to all housing projects with eight or more units involving the use of CDBG funds for rehabilitation or new construction. (Does not apply to projects where CDBG assistance is limited to site acquisition and other non-construction related costs.)

F. Procurement.
If you are entering into any contract, you must comply with federal procurement requirements. For contracts in excess of $100,000, and construction contracts, a competitive sealed bid process is required.

G. Use of Ineligible Contractors.
CDBG funds may not be used to employ, award contracts to, or otherwise engage the services of any debarred, suspended, or ineligible contractors.

H. Conflict of Interest.
Persons who exercise any responsibility with respect to CDBG-assisted activities or who are in a position to make decisions or gain inside information with regard to such activities may not personally benefit from the CDBG activity.

H. Special Monitoring Requirements - Subrecipients/Project Sponsors.

    • Quarterly progress reports describing progress in implementing project, with onsite monitoring as needed.
    • Annual compliance reports, including information needed to ensure that project continues to meet affordable housing objectives (e.g., income and rents paid by occupants of affordable rental projects, data on special needs populations served).

    APPLICATION PROCEDURES

    A. A notice of funding availability is sent to all interested parties annually in October. Applications will be reviewed by the Department of Conservation and Development and the Affordable Housing Finance Committee. Recommendations will be submitted to the Board of Supervisors for their consideration and approval in May of each year.

B. Review criteria.

    • Consistency with priorities identified in Consortium Consolidated Plan.
    • Eligibility under federal regulations.
    • Contribution to alleviation of identified, affordable housing needs in the Consortium area.
    • Degree to which project serves target population.
    • Feasibility and cost-effectiveness in meeting affordable housing needs.
    • Proposed match and ability of project to leverage other resources.
    • Experience of project team in affordable housing development, management, and related areas.
    • Proposed affirmative marketing program.
    • Project readiness.
    • Evidence of local support (jurisdiction, community).
    • Environmental, relocation and other regulatory issues