While it is true that the City of Hollister has not had the
benefit of Community Development Block Grant funding since 1993,
the recent Free Lance article neglected to include all of the facts
regarding the issue. The article also includes some misinformation
and invalid assumptions.
While it is true that the City of Hollister has not had the benefit of Community Development Block Grant funding since 1993, the recent Free Lance article neglected to include all of the facts regarding the issue. The article also includes some misinformation and invalid assumptions.
In January 2005, when I was first seated on the City Council, I discovered approximately $1 million in the CDBG fund and made the issue a priority for me. Over the years I have been deeply involved with CDBG, having written the portions of the county applications that fund the Homeless Coalition. I have also spent a great deal of time researching the history of the City’s grants of 1984 – 1991 and attending CDBG workshops.
First, the reason the city has not been eligible for CDBG funding up until 2009 is the fact that one of the major requirements for funding is that the jurisdiction must have a Housing and Community Development (HCD) certified housing element in its general plan. Hollister adopted its general plan in 2005, but could not have its housing element certified until after the moratorium was over. Second, almost all CDBG grants have some type of requirement for targeting low income groups. The county generates their application through their Health and Human Services division and subcontracts with nonprofits such as Emmaus House, Homeless Coalition and Community Food Bank. Those organizations serve a population which meets the targeted income criteria 100 percent. While I mention these two criteria, there are many other federal and state requirements listed in the 173-page document referenced by the article.
As to the $722,000 mentioned in the article, there is a lot more to that story than was presented. In 1993 HUD and HCD adopted what is know as a “Standard Agreement”. That document defines program income (income received by a jurisdiction as a result of CDBG grants, primarily repayment of loans). It also specified restrictions and conditions for the reuse of those funds. All the city’s grants were awarded prior to the adoption of a Standard Agreement.
In the 90s Clint Quilter was not city manager and Billy Avera was not director of Development Services so neither of those staff members were involved in the old grants. In 2004 and 2005 Quilter was interim city manager and Avera was interim director of Development Services and both took in interest in CDBG. At issue was the monies in the CDBG fund and making the city eligible to apply for additional funding once the moratorium was lifted and the housing element certified. As a result, Billy Avera and Jeff Pyle were sent to HCD to discuss the issues with HCD staff. As a result of that meeting the city was instructed to adopt a reuse plan and it did so as mentioned in the article. To further clarify the issue, the city engaged the services of the Ashby Adams consulting firm, a firm that specializes in CDBG funding. Ashby Adams performed a comprehensive audit of both funding and program requirements. It has been the opinion of Ashby Adams that the funds received by loan repayment are not program income but, rather, miscellaneous income. That opinion is supported by a 9-page document published by HUD and based on the fact that the Hollister grants were issued prior to 1993. The city’s grants had not had conditions for reuse of funds generated by grant activities. The firm’s opinion and documentation was presented to HCD in writing in July 2010. To this date, HCD has not responded other than phone conversations and conversations in meetings initiated by the City, the consultant or myself.
In the past months, I have had attended a number of CDBG workshops and had the opportunity to discuss the city’s situation with HCD staff at one of those workshops in February. After exchanging a number of emails, a phone conference involving City Manager Quilter, Director Avera, myself, the head of CDBG and the San Benito County CDBG representative was held on April 7. We were informed that HCD still maintained that our funds were program income funds and must be spent according to HCD and HUD requirements. We were also told that we need to submit annual reports for the past five years. We asked that they state their requirements in writing and they agreed to do so within 2 to 3 weeks. To date, we have received no communication from HCD.
Applications for the next CDBG grants are scheduled to be released in January. The goal is, and always has been, to have all issues resolved this year so that the city can apply in January. Even if the $722,000 currently in the fund is deemed program income, it does not have to be spent in order to apply for new funds. Through a waiver process it can be committed to a CDBG eligible activity and the city may apply for additional funds at the same time. The city is required to submit financial reports for the past five years and those are complete. The advantage in spending the remaining funds as miscellaneous income is that the expense and project would not have to meet all the federal employment, environmental, wage, target income group and other state and federal requirements.
In summary, the city has not “bungled federal block grant funds.” While the process could have been cleaner, City Manager Quilter, Director Avera and I have focused on resolutions and solutions. With staff reductions and changes at HCD it has been very difficult to accomplish tasks in a timely manner. However, placing blame does nothing to solve problems. One way or another, the city will be eligible to apply for CDBG funding in January. I would be happy to discuss this issue further with anyone who wants – my contact information is published in the newspapers at on the city webpage.
Doug Emerson, Hollister councilman
Note: This letter will be published in the June 6 edition of the Free Lance.
