You asked if the process for a town to receive funding for an affordable senior housing project favors larger municipalities because rural and suburban (small town) senior housing projects do not have water and sewer infrastructure (like larger municipalities) and must build that cost into proposals.

SUMMARY

The Department of Economic and Community Development (DECD) uses specific criteria to evaluate applications from towns that apply for funds to develop affordable housing under two federal Housing and Urban Development Department (HUD) programs: (1) Small Cities Community Development Block Grant (Small Cities CDBG) for towns with fewer than 50,000 residents and (2) Home Investment Partnerships Program (HOME) funds. The criteria include project need, marketability, and feasibility (i. e. , if the project is in a “ready to go status”).

It appears that project feasibility criteria could be a disadvantage to small towns without infrastructure because of (1) the readiness level required and (2) the consideration of cost under the department’s project feasibility criteria. But project feasibility is only one of the several factors DECD uses to evaluate applications. Additionally, DECD has provided Small Cities CDBG and HOME funds to various small towns according to its records.

DECD APPLICATION EVALUATION CRITERIA

DECD administers the federal Small Cities CDBG and HOME programs for affordable housing development. It accepts applications for the programs throughout the year.

When a town applies for Small Cities CDBG or HOME funds for an eligible activity, DECD looks at the following criteria:

Project Feasibility

DECD evaluates a project’s feasibility by examining the infrastructure condition and needs and the total cost per unit (among other factors). It must expend federal funds in a timely manner in order to demonstrate need to HUD. It therefore gives priority to projects for which necessary approvals (e. g. , permits, funding, certification, etc. ) are in place, according to its “Action Plan. ”

A small town without infrastructure could be at a disadvantage (in terms of readiness) because it does not have readily available water and sewer infrastructure that larger municipalities have and must add into the total cost the cost of creating infrastructure.

Projects in Smaller Towns

According to DECD, the department funds projects in small towns of all sizes. For example, it has funded a senior housing project in Burlington and a housing rehabilitation in Hampton (which administers a multi-town program). A DECD list of committed HOME funds (generated on January 30, 2004), shows that while larger municipalities have received a majority of the federal program funds, several small towns have also received funding. (Attachment 1 is a copy of the list. )

Additionally, DECD noted that no funds are currently available under the Small Town Economic Assistance Program (STEAP), which was temporarily a source for funding projects in smaller towns. STEAP passed as part of PA 01-7, June Special Session, which authorized $ 20 million in bonds in both FY 2001-02 and FY 2002-03 for economic development grants up to $ 500,000 per year to towns with populations under 30,000 that did not qualify for federal Urban Act funds or meet distressed municipality criteria.

BACKGROUND

Action Plan

In 2000, DECD completed a report, the “2000 Consolidated Plan for Housing and Community Development,” that addressed the state’s housing and commuity development needs. DECD annually submits to HUD an update of this plan to be eligible to apply for federal funding. The 2003 Action Plan, which covers July 1, 2003 to June 30, 2004, listed $ 12,979,000 in HOME funds and $ 15,537,000 in Small Cities CDBG funds expected to be available for use. (Attachment 2 is a copy of the plan. )

Eligible Projects

The project for which a town requests Small Cities CDBG funds must (1) be an eligible activity, like land acquisition and site work, but not actual construction of new housing and (2) meet one of three HUD national objectives: (a) benefit low- and moderate-income people, (b) prevent or eliminate slums or blight, and (c) meet urgent needs. At least 70% of a town’s CDBG funds must be used (over a particular time period) for activities benefiting low- and moderate-income people, according to HUD.

A town (or towns that apply together as authorized) requesting HOME funds must create housing for low-income families where 90% of benefiting families have incomes 60% or less of the HUD-adjusted area median income.

(Attachment 3 lists Small Cities CDBG eligible activities and national objectives and HOME requirements. )

Rejected Applications. DECD does not maintain a list of rejected applications because of the open application process. Towns frequently ask the department about the eligibility of a project and whether it would meet national objectives (for CDBG funds) before applying. If DECD does not accept an application, it informs the town(s) in writing, explaining the reason(s), according to DECD staff.

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