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Funding Criteria–Economic Development

Community Development Block Grant Program

For the Economic Development Allocation, the review factors consist of: the community need for economic development assistance; the demonstrated business need (or "gap") for CDBG funds to ensure the project can be completed; the market need for the product or service; the number and types of jobs that will result; the schedule of employment; evidence of firm financial commitments; the ratio of private funds leveraged; the ratio of CDBG funds to the number of jobs created or retained; evidence of site control; the provisions of any leases or encumbrances that could affect completion of the project; the security offered for the CDBG funds; the extent of the applicant's effort in support of the proposal; the urgency for assistance; extent of compliance with federal and State objectives for this component of the CDBG program; the effect of any intrastate relocation on the community; environmental impacts; the applicant's proposed cost of administering the program; and the applicant's performance with any prior CDBG grants from the State. Applicants may file applications at anytime, and the Department will make funding awards continuously.

Applications for the Economic Development Allocation will be review for completeness. Complete applications will be evaluated using the following criteria:

1. Percent of county-wide unemployment relative to the statewide and national averages. A maximum of twenty-five points.
2. Ratio of CDBG funds per job. A maximum of fifteen points.
3. Ratio of private funds to CDBG funds. A maximum of fifteen points.
4. Quality of applicant's past performance for CDBG contracts. A maximum of fifteen points.
5. Percent of funds allocated to applicant's general administrative costs (for this purpose, general administrative costs do not include funds budgeted for planning studies.) A maximum of ten points.

Applications which have received 50 or more points under the above criteria shall be reviewed for funding using the following factors:

1. The extent of the applicant's need for CDBG funds,
2. the market feasibility of the proposed activities,
3. the feasibility of the proposed activities,
4. the financial feasibility of the proposed activities,
5. the capacity of the applicant and its borrower, subcontractors or subrecipients to manage the proposed activities,
6. the appropriateness of the terms proposed by the applicant,
7. the ownership or control of any real estate needed for the proposed activities,
8. the extent to which the proposed activities involve intrastate relocation of jobs or business, and,
9. the extent of recruitment, training and promotional opportunities for targeted income groups.

Within the Economic Development Allocation, the Department has created a California Community Economic Enterprise Fund activity. This activity will allow eligible jurisdictions to apply for, and receive blanket funding commitments for economic development loans to businesses. Under the Enterprise Fund, underwriting for smaller economic development loans will be performed at the local level; the Department will review projects involving more than $50,000 in CDBG funds prior to approving release of funds. Eligible uses of funds are loans to businesses as authorized in Section 7058(q) and detailed in subsection 7062.1(e)(2) of the State CDBG regulations.

During the 1992 funding year, under the California Community Economic Enterprise Fund activity, the Department released a Notice of Funding Availability (NOFA) for $1,000,000 of 1992 Economic Development Allocation CDBG funds limited to jurisdictions which are adversely affected by announced military base closures or reductions. Pursuant to Section 7062.1 (d) of Title 25, California Code of regulations (as amended by Emergency Regulations adopted September 1992) eligible applicants must propose using CDBG funds to obtain federal funds to mitigate the economic effects of the base closure through local revolving loan programs to provide loans to businesses. No funds were set aside for base closure affected communities in 1993 or 1994. For 1996/97 and 1997/98, assistance for base closure activities will be based on availability of other federal sources available to mitigate effects of base closures.