Item 3F: Reprogramming of Community Development Block Grant Funds

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slums and blight. The program provides business loans to new and expanding local businesses that are unable to access complete project financing through conventional lending sources. The BDF has loaned almost $19 million to over 230 Eugene businesses, leveraging an additional $68 million in private investment. Since 1984, the BDF has helped to create over 1,300 new jobs. The BDF generates much of its funding through program income from loan repayments. The interest earnings help cover program administration costs and the principal returned to the fund is re-loaned. The current economic climate and tightened lending market has increased the need for business financing provided by the BDF. Given the loan volume and the cash-on-hand available in the BDF fund, it is projected that demand will outpace available funding. The Housing Rehabilitation Fund is overcapitalized compared to the BDF. Reprogramming funds from the Housing Rehabilitation Fund to the BDF Fund will ensure the fund has sufficient capital to meet the demand for business loans, and maximizing its job creation potential. Reprogramming will also facilitate compliance with HUD timeliness requirements and streamline grant administration for both loan programs. Both loan programs are sustained by program income generated from loan repayments with periodic injections of new capital through the annual CDBG allocation process. The BDF fund has a minimal amount of cash on hand relative to projected demand and is well- poised to expend these funds whereas the Housing Rehabilitation Fund has a large amount of capital generated through program income relative to demand and is in a poor position to expend these funds in the foreseeable future. Reallocating the $120,000 in past entitlement award funding used to capitalize the Housing Rehabilitation Fund will enable these funds to be expended in a more timely manner. The CDBG Advisory Committee advises the City on the use of CDBG funds. The committee held a public hearing and recommended approval of the proposals to reprogram funds for the Blair Streetscape Improvement Project and for the BDF fund at their meeting on March 12. To amend the One-Year Action Plan and reallocate funds to specific programs or projects, HUD regulations require a citizen participation process, including advertising a 30-day written comment period and a public hearing to be held at a CDBG Advisory Committee meeting, followed by City Council action. A legal advertisement was published in the Register Guard on January 28 providing notice of the comment period and public hearing. No written comments were received and no community members spoke at the public hearing. RELATED CITY POLICIES The recommended proposals support the City’s community development goals established in the Consolidated Plan 2010, which guides the use of federal CDBG and HOME funds through 2015. COUNCIL OPTIONS The City Council has three options: 1.Approve funding for both of the proposals as recommended. 2.Approve funding for one of the proposals as recommended. 3.Decline to approve funding both proposals. S:\CMO\2013 Council Agendas\M130408\S1304083F.doc