City staff proposing major changes to CDBG process; HUD looking at additional potential conflicts

After years of staff, public and some commission concerns related to the city’s Community Development Block Grant allocation process, city staff is proposing major changes.

Last month, the city was notified by the U.S. Department of Housing and Urban Development, which administers the program, that the agency was declining to fund Paris Gibson Square and wanted a review of funding for NeighborWorks Great Falls for the last three years.

HUD declines funding for Paris Gibson Square in controversial CDBG process

The concerns with PGS centered around City Commissioner Tracy Houck who is the executive director of the art museum. Some have raised concerns about Commissioner Bill Bronson’s ties to NWGF since his wife works for the agency.

On Monday, the city received another letter from HUD regarding additional complaints that have been made to the Denver regional office concerning other issues in this year’s CDBG grant process and some from 2012.

HUD has asked for a response within 30 days showing that a conflict did not exist; work to remedy any conflict of interest violation through an exception, if possible; or other corrective action the regional office deems necessary and appropriate.

“Some of the conflicts appear to be based on the status of city council members and Community Development Council members as volunteers or employees of certain CDBG applicants or awardees. Others appear to be based on the status of family members of the city council or CDC as employees or volunteers of grant applicants or awardees,” HUD regional manager Aaron Gagne wrote in his letter to the city.

Gagne wrote that he’s aware the city is revamping the conflict of interest policies, which were adopted earlier this fall, and the city is proposing major changes to the CDBG process.

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Staff gave City Commissioners their first look at the proposed changes during Tuesday’s work session.

Maria Porter, the city’s CDBG administrator, told commissioners that the current process includes an annual action plan with specific projects, which are identified by the applications received from nonprofits.

The proposed process would use an annual action plan with overall community goals identified through outreach, neighborhood council meetings, public meetings, etc.

Currently, the CDC reviews, scores and makes recommendations on funding requests. That council’s members are appointed by the City Commission from applications for open seats, but traditionally, nonprofit workers have applied for that board since that’s the arena they work in.

City retains independent accountant for CDBG review

The proposal is to eliminate the CDC altogether. It would also bring the city’s revolving loan fund back in-house. In 2016, commissioners approved a plan to have NWGF administer the program in an effort to reduce the legwork for applications, but the arrangement hasn’t cut as much work from city staff as anticipated.

Adding more administrative work back to the city would require the addition of some staff. Mot of the proposed staff positions already exist, like the fair housing specialist, and the proposal would renew their involvement with the CDBG process. The proposal would add a loan specialist, which the city had until about a year ago.

The CDBG budget is roughly $1.5 million and Porter said the proposed staffing would be less than the $280,000 cap on administrative items. The proposal includes about $227,000 for staffing, leaving about $1.3 million for community services, programs and facilities, Porter said.

Conflict of interest concerns plague this year’s CDBG allocation decisions

Right now, the city process is defined with lots of formal public meetings and tight deadlines for applications. Staff is proposing to accept applications year-round to “meet needs as they arise,” Porter said. It’s a model that’s used in Billings.

Staff would review and score the applications, as Missoula does it.

Applications for affordable housing and economic development would also be reviewed by the Housing Board and the Great Falls Development Authority. That review is already part of the process, but Porter said it would be streamlined.

Another major change would be to eliminate public facility grants to external agencies and instead put that money into Public Works and Park and Recreation to serve low to moderate income areas of the city.

Porter said it lowers the risk to the city since the public facility grants have strict federal requirements that can be daunting for nonprofits that don’t typically deal with the program.

The staff proposal is also to only fund public service grants to new or expanding services since the program isn’t used to sustain existing agencies or programs.

It’s “supposed to be a catalyst,” Porter said.

Currently, the city is using just its congressional allocation, but is proposing to couple that with the city’s revolving loan fund to build a sustainable program, Porter said. The CDBG program is always in danger of being cut from the federal budget and as it’s currently operated, the city program would disappear quickly if that happened.

In 2013, the city’s allocation was $744,000. This year it was $700,000.

“It’s not a dramatic impact, but each year it’s decreasing,” Porter said.

The city currently allocates grants to local agencies that use them to make loans and keep the interest on the payments. The city is proposing to instead make loans directly and keep any income generated off the loans in-house to be reused for future loans.

The city would be “able to be flexible with the fund,” Porter said, “and put it where the needs are and create a sustainable program.”

Commissioner Bill Bronson asked if nonprofits had been notified of the proposed changes and Porter said they’ve spoken with some of those who would be most affected, but are continuing discussions with other past and current applicants.

Craig Raymond, city planning director, said the proposal would allow staff to focus on the goals in the five-years plan.

The city would “be more proactive in attacking these goals” instead of relying on community partners to address the goals, Raymond said.

One of the goals in the current five-year plan, which has two years left, is transitional housing. Raymond said the city made some progress by assisting Grace Home for veterans through CDBG, but overall progress on the goal of creating more transitional housing has been minimal.

Houck said she’s working with nonprofits for years and that this is a major shift. She said the community has had lots of opportunity for input and was concerned about changing course midway through the 5-year plan.

Porter said the 5-year plan is general, allowing the city to make this kind of direction change. She said there’s also typically low pubic participation in the CDBG hearings and meeting process so the proposed plan would include staff being more proactive in gathering public input in venues other than commission meetings.

Raymond said he understood Houck’s concern, but “to put it bluntly, HUD is demanding that we make changes.”

Over the years, the city has tweaked the process in an effort to address issues, Raymond said, “but I think it’s become obvious…that maybe some major changes are in order.”

City staff asked for feedback from commissioners to help them refine their proposal and include the policy changes in the next annual action plan or put together a formal recommendation for a commission vote if needed. Raymond said they’re continuing their outreach to local nonprofits and wouldn’t make these major changes without public meetings.

Commissioner Fred Burow said “I think you’re moving in a good direction. I think you’re on a good track.”