Agenda - Council - 09/08/1981 - Laserfiche WebLink

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I I I I I I I I I I I I I i I I i I State CDBG cominued from page I The primary difference between these demonstration projects and the proposed State Small Cities Block Grant program was that Wisconsin and Kentucky handled only thc pre-application phase of the program and when finished, gave it back to HUD Area Offices for administration. Thc new State Small Cities Block Grant program would include thc transfer of the entire program to :;late govcrnmct~ts and they will handle all thc application, aciministrativc, and coltllactua] tasks. I'rcsidcnt Reagan began to press for the State Small Cities Block Grant Program in February of 1981 and by June 28 both ttouses had passed needed bills. ~ere were, however, s-mc imt~ortam di/tcrcnccs bcp,','ccn thc House and ~enale- p::?;:d Ltatz ~;m; ~I ~'~ti~:. i.i!]:~ v. hicl~ required co~fcrcncc i:s v:ork on Juh 21 a~lt'J i:nal action is expected in early August. Major provisions in the conference submommittee bill and a comparison with the existing HUD Small Cities CDBG Program arc summarized below: State Block Grants for Small Cities The bill provides for state administration of the Small Cities CDBG Program for non--cnlitlcmcnt communities at the option of individual states. If a state chooses not to participate, or does not meet eligibility requirements, the Department of Housing & Urban Development will administer the program. Amount For Small Cities Program The bill provides that 30% of the state's total CDBG allocation be earmarked for thc "Small Cities" program and 70% for Entitlement Cities and Urban Counties. Existing legislation earmarks 20%of the state's allocation for Small Cities not in SMSAs and 80% for Entitlement Cities, Entitlement Counties, and small cities within SMSAs. This means that approximately $23 million will be available for the Minnesota Small Cities Program in FY82 as compared with $19.7 million in FYgl. State Eligibility The bill requires that states submit a statement of projected use of Small Cities funds and a method by which the state will distribute the funds. The Governor must also certify that the state; provides technical assistance to local governments; engages in community development planning; has consulted with local officials on the method of distributing Small Cities funds; and, is providing funds for community development activities which is at least 10% of the amount received from HUD. Application Process The application process by which small cities may apply to the state for grants is to be determined by the state. A-95 Reviews will be eliminated: citizen participation requirements modified and other pre-application and application procedures streamlined or eliminated. Other Programs: Section 701 Plmaning Section 312 Rehab Loans Solar Energy Conservation Bank Low Income Weatheriz~tton Urban Homesteading Neighborhood Self-Help Development Some of these programs will be terminated and activities made eligible for State Small Cities CDBG. Others will be modified. UDAG Funding: The conference bill provides $500 million for LIDAG grants in' FY82 compared with $675 million in prior.years. It is anticipated that 2:5% of this amount will be earmarked for small cities under 50,000 population. Application Procedures: The UDAG program will continue to be handled by thc ItUD Washington office. Application process and documentation will be simplified and streamlined. Criteria: Distress criteria {similar to existing)will include: --Age of housing --Growth of per capita increase --Ext nt of poverty --Extent of unemployment and job lag --Population lag While the idea of a state-run Small Cities CDBG program has received enthusiastic support by some, it has met with skepticism by others. The facts are clear--no single government agency or program, state or federal, is going to solve all the problems of local governments. However, a coordinated effort involving local, state and federal participation looks promising; and a Community Development strategy based on state and local prioritiesas well as national objectives (as proposed in the State Block Grant concept) offers some grounds for optimism. New Community Development strategies in the past have involved little more than a few procedural changes and a continuation of the same program for another year. Communities in Minnesota are too vital to depend on "more of thc s~;mc". Thcp, ....... ~voa~-,d State Small r-;~;~.~.~_.~.,.,~> Block Grant new partnerships between state and local governments on community and economic development issues. Waseca Sank Forms Community Development Corporation. On March 11, 1981, the First National Bank of Waseca became the sixth and smallest bank in the nation to be granted approval for owning and operating a community development corporation (CDC). It is the only bank in a rural area, and the only bank in the 9th Federal Reserve District, to have such authority. Just over three years ago, the Comptroller of the Currency issued Interpretive Ruling 7.7480 authorizing a national bank to establish a wholly owned CDC as a subsidiary. The ruling outlined broad powers for bank CDCs along with some protective restrictions. Generally,- they: may acquire, own, lease, rehabilitate, and mortgage real estate as well as conduct surveys, research, and technical, assistance for government or private entities. CDCs must be oriented to civic or public concerns, with the majority of their board of directors from the community at large. Bank investments are limited to no more than 2% of capital and · surplus for any one CDC project, and no more than 5% of capital and surplus for all projects. Profits cannot be "UPstreamed" to the parent bank for a period of at least three years. The Waseca CDC, capitalized with $25,000 to $40,000, will undertake commercial and residential rehabilitation projects throughout this southern Minnesota town of 8000. According to bank vice president Walter G. Bruns, "We anticipate cooperating with city government, developers, and the Waseca Development Corporation through joint ventures to acquire and renovate older housing stock or yeplace it with new housing stock for resale. The CDC would work with city government on tax-increment or tax-exempt bond projects that benefit Iow and moderate income' families and that improve existing commercial facilities, and would be' a catalyst to secure federal, state, and local funds." For more information on the Waseca CDC, contact Walter G. Bruns,.Vice President,-First National Bank, Waseca, MN 56093 (507/835-2740).