The Housing and Community Development Act of 1974 merged seven categorical programs into a "block" of flexible community development funds designed to allow Small Cities to address their own unique needs. Since States are in the best position to know and to respond to the needs of local governments, Congress amended the HCD Act in 1981 to give each State the opportunity to administer CDBG funds for non-entitlement areas. Non-entitlement areas include those units of general local government which do not receive CDBG funds directly from HUD as part of the entitlement program (Entitlement Cities and Urban Counties). Non-entitlement areas are cities with populations of less than 50,000 (except cities that are designated principal cities of Metropolitan Statistical Areas), and counties with populations of less than 200,000. Currently, the Community Development Block Grant Program (CDBG) remains one of the State's most important resources for funding community development needs in Low to Moderate Income areas.
Through the State CDBG Program, HUD provides an annual grant to Arkansas which is subsequently redistributed through the Arkansas Community and Economic Development Program (ACEDP) to various State programs. The funding percentages are determined according to public input during the 5-Year Consolidated Plan hearings. Each year the Arkansas Economic Development Commission, responsible for the overall administration of the ACEDP, allocates a significant percentage of all available funds to water and wastewater infrastructure improvement projects. The Arkansas Natural Resources Commission selects and administers these projects in conjunction with our other Water and Wastewater financing programs. CDBG categorical grants are made available to many types of projects throughout the State, but the Arkansas Natural Resources Commission administers only the Water and Sewer infrastructure grants program.
Who can receive State CDBG funds?
- There are some restrictions, both Federal and State, on CDBG grants.
- 51% of the project beneficiaries must be LMI households
- Only non-entitlement Cities, Towns or Counties may apply for the grant.
- Minimum customer base of 300 customers are required for a system
There are limitations on the number of open grants in a community
- Counties may have only TWO open categorical grants
- Cities or Towns may have only ONE open categorical grant
- There are rate structure requirements for new customers on CDBG Water or Wastewater projects
- At this time, grants are awarded only to provide new service or to extend existing service to new residential customers.
How does a community apply for a State CDBG Water or Wastewater Grant?
The CDBG application process for water or wastewater infrastructure improvement grants is very easy, but also very specific. Things must be done in a certain order; failure to follow the required sequence may result in project activities being ruled ineligible for CDBG funding, or even in the de-obligation of grant funds by HUD.
Step 1: Whenever a project is first considered, contact the Commission.
HUD does not allow any funds, from any source, to be expended on a project until a determination has been made that the project will not damage the environment. This seems very reasonable until an applicant tries to actually put it into practice. In order to clear the project for funding, and environmental review must be performed. But the very act of conducting the review expends funds on the project, which isn't permitted until the project has been environmentally cleared!
The Environmental Review and Engineering & Design work are classified as Exempt Activities in 24 CFR Part 58, Section 58.34. So far, so good - exempt activities, no environmental review required - you would think that's the end of it, but it isn't. HUD requires the issuance of a letter determining the activities to be exempt. So, whenever a project is first considered, contact the Commission. We will issue a letter authorizing the expenditure of funds on Exempt Activities, in compliance with HUD requirements.
Step 2: Conduct a public hearing and solicit input from the citizens.
The whole purpose of CDBG is to empower citizens in the determination of the use of federal funds on community development projects. The Commission wants to know that the citizens desire and support the project.
Step 3: Prepare the Preliminary Engineering Report and the Environmental Review.
Step 4: Submit initial Applications to the Water/Wastewater Advisory Committee (WWAC) for review.
Since this step isn't part of the HUD process, failing to submit applications to WWAC for review doesn't trigger any repercussions from HUD, but it is a State requirement and no project will be funded without first going through a WWAC review. The WWAC simplifies the method by which communities access State and Federal funding systems for water and wastewater projects. Review by all relevant agencies at one time effectively results in a single preliminary application process to multiple agencies. Once a project has been approved by the WWAC, unless the project scope changes, it may be resubmitted to funding agencies until selected, without requiring additional WWAC review. Click the "WWAC Forms" button to the left for additional WWAC information.
Step 5: Submit the CDBG Application by the April 01 deadline.