Item 2D: Approval of CDBG Recovery Funds Allocation

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Approval of Community Development Block Grant Recovery Funds Allocation Meeting Date: May 26, 2009 Agenda Item Number: 2D Department: Planning & Development Staff Contact: Stephanie Jennings www.eugene-or.gov Contact Telephone Number: 682-5529 ISSUE STATEMENT The City of Eugene is eligible to receive a formula allocation of Community Development Block Grant Recovery funds in the amount of $371,021. In order to receive these funds, the City must complete and submit an amendment to its 2008 Consolidated Plan Action Plan. BACKGROUND The City of Eugene is eligible to receive a formula allocation of Community Development Block Grant Recovery (CDBG-R) funds in the amount of $371,021. The CDBG-R program was passed in to law in February 2009, as a part of the American Reinvestment and Recovery Act (ARRA). The purpose of CDBG-R is to carry out eligible activities on an expedited basis to stimulate the economy and create jobs. While any CDBG use is eligible to receive funding, the specific guidance for CDBG- R requires the City to enter into contracts for use of funds within 120 days of execution of the grant agreement with HUD. The City of Eugene must submit an amendment to its 2008 Consolidated Action Plan by June 5, 2009, in order to receive CDBG-R funds. The type of amendment the City will submit is classified as a ‘Substantial Amendment’ according to HUD rules. Through the City’s amendment, the City of Eugene must describe: 1) the proposed activities and their eligibility under CDBG; 2) the citizen participation and approval process completed by the City for allocation of CDBG-R funds; and 3) how the proposed uses will meet the specific requirements established for CDBG-R funds. Staff proposes to allocate CDBG-R funds for three uses: 1) Business Development Fund; 2) Foreclosure Counseling; and 3) Administration. A description of each proposed use is provided below. Business Development Fund - $318,919. The City’s Business Development Fund provides loans to new and existing local businesses for expansion and requires the creation of jobs for low-income persons. Loan repayments are restricted to re-lending activity within the revolving fund. Although the program is mainly focused on job creation, commercial revitalization projects that eliminate conditions of slums and blight are also eligible. The Loan Advisory Committee, a six-member citizen advisory committee, reviews all loan proposals prior to approval. Foreclosure Counseling - $15,000. There has been a significant increase in the number of homeowner households facing foreclosure proceedings in Eugene. Funding for foreclosure counseling would increase the availability of services to households to obtain much needed assistance. Funds Z:\CMO\2009 Council Agendas\M090526\S0905262D.doc