King County Community Development Block Grant (CDBG)

All agencies or jurisdictions that apply to the Community Development Program for a community facility project, public improvement project or human services project are applying for Community Development Block Grant (CDBG) federal funds. All projects that are awarded CDBG funds must comply with CDBG program regulations (24 CFR Part 570) and, where applicable, King County CDBG Consortium Procedures and Guidelines.

The King County CDBG Consortium was organized in 1975 as a HUD-designated "urban county" to receive CDBG funds. King County is the official grantee on behalf of the consortium, which consists of 34 cities and towns, plus the unincorporated areas of the county. The CDBG Consortium operates pursuant to an Interlocal Cooperation Agreement between King County and the participating consortium jurisdictions. The cities of Seattle, Bellevue, Kent and Auburn, receive CDBG directly from the federal government and do not participate in the King County Consortium.

The King County CDBG Consortium covers a large and diverse territory which contains very large urban areas as well as very small cities. The growth rate of the population in the consortium was very high in the last decade (18% at the 2000 census), with the percentage of the population that is racially and ethnically diverse doubling between 1990 and 2000. The region has a very strong housing market and there is a substantial gap between what very low to moderate-income households can afford for housing and actual housing costs. Many very low to moderate-income households and communities in the King County Consortium have benefited from the activities the consortium is able to provide through CDBG funds.

CDBG funds are awarded to nonprofit organizations and public agencies for:

• Community Facility Projects - funds are used for the acquisition, construction, and rehabilitation of health and human service facilities, including, but not limited to, senior centers, childcare centers, healthcare centers and food banks.
• Public Infrastructure and Improvement Projects - funds are used for activities that benefit low to moderate-income communities, such as the construction or reconstruction of storm water systems, water and sewer systems, streets, sidewalks, and park facilities, as well as accessibility modifications to public facilities for persons with a disability.
• Human Services - due to declining resources funds have been concentrated on activities that contribute to ending homelessness, such as emergency shelter services and emergency assistance, including vouchers, food distribution, and eviction prevention.
• Affordable Housing Development - funds are awarded for the acquisition of property that will provide affordable housing.
• Housing Repair - funds are used to provide interest-free, deferred loans for low to moderate-income homeowners for home repairs that increase the safety, health and comfort of the home; smaller grants are provided for certain emergencies and for important health and safety repairs in a mobile home.

CDBG award history in recent years:

• 2003: $7,440.000
• 2004: $7,164,000
• 2005: $6,774,405
• 2006: $6,209,982
• 2007: $6,200,622
• 2008: $6,200,622
• 2009: $6,685,327
• 2010: $6,893,139

About the CDBG Funds

National Objectives: Projects must meet one of two national objectives established for the Community Development Block Grant Program: 1) Area Benefit or 2) Limited Clientele. Please refer to the CDBG Capital Funding application for detailed information.

Eligible Activities: Eligible activities include, but are not limited to:

• Public infrastructure pre-development, construction, or improvements
• Acquisition, rehabilitation, improvement, or pre-development of public and private (including residential and non-residential) real property that serves low- and moderate-income residents
• Rehabilitation of existing community facilities in order to remove barriers to persons with disabilities (such barriers must be identified on an ADA/504 Corrective Action Plan)
• Rehabilitation of existing emergency shelters, transitional housing units and permanent low-income housing units for residents with special service needs
• Micro-enterprise programs - financial assistance and/or services to businesses employing five or fewer employees where the business owner is low- or moderate-income or jobs created from CDBG assistance are made available to low- and moderate-income individuals
• Special economic development activities that create jobs that are available to low- and moderate-income residents or provide employment services to low- and moderate-income residents and
• Relocation assistance for households or businesses displaced temporarily or permanently by a CDBG-assisted project (and in limited cases non-CDBG-assisted projects). Relocation assistance must be included in any application that may result in displacement of residents or businesses.

It is advised that you contact the CDBG staff if you need assistance in determining specific eligible costs or activities.

SPECIAL NOTE for Community Facility Projects: CDBG funds may be used to acquire and improve facilities containing both eligible uses (i.e. programs serving predominantly low- and moderate-income persons), as well as ineligible uses, provided that the portion of the facility containing the eligible uses is a designated and discrete area in the larger facility. CDBG funds can only be used to pay for costs attributed to the portion of the facility containing eligible uses.

Ineligible Activities: Funds may not be used:

• To pay off existing debt
• To acquire equipment or fixtures that are not permanently affixed to a structure
• For improvements to sanctuaries, chapels or other rooms used as the principal place of worship. Organizations that acquire or improve facilities with CDBG funds may not subsequently lease space to churches or other organizations using the space for religious purposes
• To pay for agency overhead, administrative costs or fundraising, nor to create or improve space used solely for administrative purposes
• To pay for portions of new construction associated with accessibility
• For maintenance and repair of publicly-owned streets, parks, playgrounds, water and sewer facilities, or neighborhood facilities.

Eligible Applicants: CDBG projects must be implemented by a nonprofit organization or public agency. Nonprofit organizations leasing a facility may request CDBG funds to improve the facility provided the property owner agrees to a restricted use of the property for a specified length of time. For such projects, the property owner must sign the application.

Applicant Authorization: Applications submitted by nonprofit organizations or special districts must be signed by an authorized representative and authorized by the board of directors. A copy of board minutes authorizing submittal of your application may be submitted after the application due date but are required prior to the official award of funds by the Joint Recommendations Committee (JRC).

Minimum Request and Award Amounts: Projects under $50,000 are discouraged.

Project Implementation: A successful project application will be one for which the project is ready to proceed, and has the capacity to be completed in a timely manner (i.e. by December 31 of the program year, but no later than May of the following year).

Federal Regulations (partial list):

Accessibility : Agencies awarded CDBG funds are required to conduct a self-evaluation to determine the agency's ability to provide reasonable accommodation in programs and services to persons with disabilities. As a prior condition to the agency receiving an authorization to proceed, the agency must complete a Certification of Compliance, a Disability Self-Evaluation Questionnaire, and if necessary, a Corrective Action Plan. These documents are required as exhibits in the Contract for funds.

Appraisals : An appraisal will be required when CDBG funds are used to acquire real property and when CDBG funds are used to improve real property leased from a private landlord.

Audit : Agencies receiving CDBG funding are required to submit an independent audit on an annual basis. Agencies that spend $500,000 or more in federal funds in a given year must meet federal financial auditing requirements, as documented in Circular A-133 from the federal Office of Management and Budget. Circular A-133 can be found at www.whitehouse.gov/omb.

Bonding: Construction contracts exceeding $100,000 will require a: Bid guarantee equivalent to 5% of bid price; 100% performance bond; and, 100% payment bond. Bonds must be obtained from companies holding Certificates of Authority as acceptable sureties pursuant to 31 CFR 223.

Change of Use Restriction, Promissory Note and Deed of Trust: CDBG awards over $25,000 shall be structured as a zero interest forgivable loan. The term of the loan will be based on the amount of CDBG funds awarded. The minimum term is 5 years from project completion and the maximum is 15 years for non-housing capital projects. The loan shall be forgiven in its entirety at the end of the term provided the facility is used appropriately throughout the term.

For projects using $25,000 or less in CDBG funds, a promissory note, deed of trust, and covenant are not required although the contract will specify a minimum two-year term from the completion of the project activity during which there will be a restriction on a change of use.

Competitive Procurement : Agencies that use CDBG funds to purchase goods or services, including consultant services and construction services, must select the vendor, consultant or construction firm based on a competitive process. Agencies shall take all necessary affirmative steps to assure that minority and women's business enterprises are used when possible.

Davis-Bacon Federal Labor Standards Provisions: Capital projects that utilize CDBG funds for construction may be subject to Federal labor standards provisions including Davis-Bacon wage rates. These regulations require that construction contractors paid with CDBG funds pay a required wage that is typically higher than those paid for projects that are not federally assisted. To see examples of these wage rates, refer to www.gpo.gov/davisbacon/. All construction work is covered even in instances where only a small portion of the work is actually paid for with CDBG funds. Please consider this when preparing construction cost estimates and consult with King County Housing and Community Development Project Manager Eric Wilcox at (206) 296-8638 if you need additional information. Some public agencies that use force account labor for construction work are not subject to Davis-Bacon requirements. Construction work performed by volunteers on CDBG assisted projects must be approved by U.S. Department of Housing and Urban Development (HUD) in advance.

Environmental Review : On the date the CDBG application is submitted, the entire project is subject to the federal environmental review requirements of the National Environmental Policy Act (NEPA). These requirements are in addition to any local requirements that may be imposed under the State Environmental Policy Act (SEPA). Costs associated with NEPA review are the responsibility of the applicant, even if the NEPA review results in a determination that the project is not eligible for CDBG funding. Environmental review costs are eligible CDBG expenditures.

From the date the application is submitted for consideration until the date the NEPA review process is complete, no activity can take place on the project that may have an adverse environmental impact, or limit the choice of alternatives available on the site. This may include, but is not limited to, property acquisition, clearing, grading or other site preparation activities, construction activities or rehabilitation of existing structures. Taking any such action after the date a CDBG application is submitted will make the project ineligible for funding.

Applicants should note that projects with certain characteristics may require a consultant study as part of the environmental review procedures and should budget for them accordingly and allow additional time in the project milestones for completion. Such characteristics include, but are not limited to limited to:

• Project is within a Federal Emergency Management Agency (FEMA) 100-year floodplain
• Project is, or is eligible for, local, state, or federal historic or landmark registers
• Project is located within 3,000 feet of a toxic site or solid waste landfill
• Project has exposure to significant airport or highway noise or
• Project affects endangered species that are listed or proposed for listing under the Endangered Species Act (ESA).

You are encouraged to consult CDBG staff prior to submitting an application to determine whether your project will require a consultant study. A portion of the funds awarded will be used to procure any required studies. Consideration for this expense should be given in the preparation of the project budget.

Environmental review of projects must be completed prior to a CDBG contract being executed and prior to any work being undertaken at the site.

Federal Relocation Assistance Requirements : CDBG funded projects are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as amended ("URA") and/or Section 104(d) of the Housing and Community Development Act of 1974, as amended ("Barney Frank Amendment"). Any agency considering a project involving a facility occupied by residential and/or business tenants must consult with the King County's Relocation Specialist. For currently occupied structures, provide proof of correspondence to determine applicable relocation assistance requirements with the King County Relocation Specialist Debra Grant (206) 296-8633.

Insurance Requirements : Agencies will be required to provide evidence of general liability and property insurance to the jurisdiction awarding funds, and King County when applicable, as an additional insured and as a loss payee under their policy. Minimum coverage amounts and additional insurance requirements apply.

Lead-Based Paint : Projects must comply with regulations regarding lead-based paint poisoning prevention. These requirements prohibit the use of lead-based paint and require elimination of immediate lead-based paint hazards in residential structures and notification of the hazards of lead-based paint poisoning to purchasers and tenants of residential structures constructed prior to 1978.

Local requirements : A CDBG award in no way affects or influences local land use or building permit requirements or processes.

Section 3 : Projects that are awarded $200,000 or more in CDBG and/or other funds from HUD may be required to comply with Section 3 regulations at 24 CFR Part 135. These regulations require that a minimum of 30% of new positions generated as a result of the project be filled by low- and moderate-income persons.

Use of CDBG-Assisted Facilities : During the term of the change of use restriction, a CDBG-assisted facility may be rented to another organization which serves low- and moderate-income persons provided the rent charged is below market rate for such space and is based solely on actual operating costs (for example, the cost of utilities, consumable goods, janitorial services). During the term of the change of use restriction, a CDBG-assisted facility may be used at times for ineligible activities, such as rentals for private parties or for activities having charges or fees, provided these guidelines are followed:

1. Such uses may not be scheduled so as to displace or conflict with eligible uses
2. Such uses must be given a lower priority than eligible uses when scheduling use of the facility
3. Such uses may not comprise more than 30 percent of the facility's regular operating hours during any single quarter of the calendar year and,
4. Fair market rents must be charged for use of the space.