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Policy Statement: Moving the Neighborhood Development Assistance Program Forward
Stan Jackson, Acting Director, Department of Housing and Community Development
November 13, 2001

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GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
801 North Capitol Street, N.E., Washington, D.C. 20002 (202) 442-7200 Fax (202) 442-7078

POLICY STATEMENT

Subject: Moving the Neighborhood Development Assistance Program Forward

The Community Development Corporations (CDCs) have played a key role in the revitalization of our neighborhoods and commercial corridors. They have been at the forefront of development in areas of the District long before others found it in vogue to do so. CDCs have assisted the Department of Housing and Community Development (DHCD) in meeting goals for affordable housing for low and moderate-income households. CDCs have also promoted small business formation and job creation and developed community facilities benefiting some of our most disadvantaged neighborhoods.

It is clear that there has been a vital role for these organizations in the past and clearer still that the role will be vital in the future as we partner in moving the District to the crown jewel status it rightfully deserves as the Nation's Capital.

NDAP: The Current System

In the past, CDCs were primarily funded through the Neighborhood Development Assistance Program (NDAP) to carry out a variety of Community Development Block Grant (CDBG) eligible activities. NDAP was not open to all community-based organizations even though inclusion was permissible under CDBG regulations. It was designed for the CDCs. NDAP funded general administrative expenditures ("core funding"), as well as project/activity specific costs. Some of the project/activity specific costs related to residential and commercial real estate development were also projects funded through the Department's Development Finance Division (DFD). While the NDAP grant agreements contained language regarding neighborhood revitalization and development activities, in many instances the language was not specific to projects, costs, or expected outcomes.

HUD's Requirement for Change

The Department of Housing and Urban Development (HUD) initiated a monitoring review of NDAP and indicated in a formal exit conference and in their written report dated November 2, 2001, that the agency cannot use CDBG dollars to fund "core administrative costs" of CDCs as was done in the past. In addition, HUD stated that the Department must add specificity to its giant agreements to ensure that the Department is better able to monitor the spending of CDBG dollars for CDBG eligible project costs. HUD further stated that many of the project/activity specific costs disbursed under NDAP for real estate development projects were really "project delivery" costs that could have been funded along with the amounts disbursed by the Department's Development Finance Division. In essence, the Department must redesign NDAP, as we have come to know it.

Support for CDCs during Transition to New Program

I recognize the time invested in revamping NDAP will create a gap in the funding tradition the CDCs have come to rely on. Further, several CDCs have expressed concern that this gap will undermine their ability to continue their operations while they regroup in response to the change in funding. We share their concerns and want to contribute to their transition by providing some funding during this period.

As a result, DHCD has taken the following steps to ease the burden of implementing the required program changes during this transition period:

Obtained authority from Natwar Gandhi, District Chief Financial Officer to use the Department's appropriated dollars to fund the CDCs for the 1st quarter of fiscal year 2002 — CDCs received the first allotment for 60 days on October 29th;
Agreed to continue funding CDCs current brick and mortar projects and related costs for which a letter of commitment has been issued through project completion;
Eligible CDBG activities other than bricks and mortar projects that were funded under the previous grant cycle and are consistent with the redesigned NDAP funding priorities for FY2002 will be reviewed as part of the FY 2002 NDAP Request for Application (RFA) process. If CDBG eligible activities were conducted in FY 2001 that are not related to bricks and mortar or those activities described in the FY 2002 NDAP RFA, and you wish to continue those activities, submit a detail proposal to Vanessa Akins. Upon approval or disapproval, you will receive a written response;
At the request of the Mayor, I established a working group with the CDCs and non-profit coalitions and will continue to engage these organizations input as we move forward to revise and design the NDAP for future years; and
Consulted with representatives of the CDCs regarding the boundaries of the proposed target areas, and forwarded those recommendations to the Office of Planning. The Addendum to the Request For Application will reflect the expanded targets based on the District's implementation of the Neighborhood ?action Strategy objectives for FY 2002.

NDAP FY 2002: The New System

The working group meetings consisted of open and frank dialogue that centered on the key issues facing the Department and the non-profit community. Now that we have reached consensus through our discussions, the fiscal year 2002 NDAP will:

Be open to all community-based organizations as defined by CDBG regulations.
Focus on projects/activities in CDBG eligible priority areas established by the District (i.e. target areas). These target areas were derived in conjunction with the Mayor's Neighborhood Action planning process. By concentrating funding in target areas, we hope to better coordinate and leverage limited government resources to achieve significant results more quickly than the current scattered -shot approach. The activities included in the RFA were among the top priorities requested by citizens during the strategic neighborhood action planning process.
Fund project/activity specific costs that directly relate to the CDBG eligible project or activity being undertaken. These costs may include labor, supplies, equipment, and space costs as it relates to projects or service delivery, as well as some indirect cost based on the non-profits negotiated indirect cost rate prepared in accordance with OMB Circular A-122 (for non profit organizations). Indirect costs are those that have been incurred for common or joint purposes. A cost can not be allocated to the CDBG program as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to the CDBG program as a direct cost. DHCD will no longer provide core administration funding, formerly utilized to support CDC administrative functions and operations.
Establish performance-based contracts with defined performance measures with expected outcomes. Grant agreements and financial reports will be written to ensure DHCD's ability to effectively monitor, as well as account for the expenditure of CDBG dollars. As part of the application process, the Department will require a submission of an itemized budget which not only identifies the various tasks for a specific project, but a cost estimate for each individual task. Once an application is approved, all budget information will be included in the written agreement between DHCD and the community- based organization. In addition, we will increase the level of monitoring on all sub-recipients to ensure that they are in full compliance with District and federal regulations.
Focus on public service activities. Funding for bricks and mortar development projects is not a part of this Request For Application. Request for funding brick and mortar projects should be directly submitted to the Development Finance Division of DHCD. As part of the submission each entity should submit a detailed proposal for all related costs to carry out the activity (i.e. planning, labor and construction costs).

I have assigned Carlynn Fuller as the point of contact for real estate development projects. I am committed to providing you with a written response that we have received and are reviewing your project. In addition, upon approval or disapproval you will receive a written response.

The FY 2002 NDAP will be the beginning of a new and improved relationship that will benefit the District's low to moderate-income residents for years to come.

In addition to the FY 2002 NDAP, the Department of Housing and Community Development in cooperation and collaboration with Office of the Deputy Mayor for Planning and Economic Development, has undertaken the administration of commercial revitalization initiatives. Applications for the Commercial Revitalization Initiatives will be made available at the NDAP RFA Pre-Bidders conference for your convenience.
The Department remains committed to work with each CDC during this transition period, we are steadfast and unwavering in our commitment as partners in revitalizing District neighborhoods. I look forward to your cooperation as we continue to create affordable housing opportunities and increase community development activities for the citizens of the District.

Stan Jackson
Acting Director

Date: 11/13/01