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Davis Street Family Resource Center 2 6, 2009 Another unlikely funding source is the approximately $196,000 in Community Development Block Grant (CDBG) funds from the recently enacted federal economic stimulus bill (American Recovery and Reinvestment Act of 2009). The CDBG funds made available under the stimulus (called CDBG-R funds) will have modified requirements from typical CDBG funds including the need to obligate the funds within about 4 months to a "shovel ready" project. Some cities and counties are interpreting "shovel ready" to mean capital improvement projects which will enhance local and regional infrastructure while retaining or creating jobs. However, HUD has not provided formal policy guidelines nationally on how CDBG entitlement cities and counties may use CDBG-R funds, including to which fiscal year they apply (and consequently which HUD Annual Action plan to amend) and to what activities (i.e., capital improvements, economic development, public services, housing, general administration). The City has currently allocated all of its CDBG funds under its current FY 2008-09 HUD Annual Action Plan so there are no existing CDBG funds available to provide $500,000. However, the most viable option which staff has discussed with HUD includes freeing up $500,000 in CDBG funds in FY 2009-10 by 1) allowing the City to borrow $300,000 from future CDBG funds in 2010-ll andlor 2011-12 (referred to as a "pre-award reimbursement award" under federal CDBG regulations) and spend it in FY 2009-10, and 2) gain an additional $200,000 by reducing the proposed $446,200 for City ADA (Americans with Disabilities Act) curb cuts under the draft FY 2009-10 Action Plan to $226,200. Consequently, the City ADA curb cut project could be made nearly whole by receiving the $196,000 in CDBG-R funds from the stimulus bill since it is a capital improvement project that is ready to begin. In order to achieve the "pre-award reimbursement" option, the City would need to amend the final FY 2009-10 HUD Annual Action Plan and undertake adequate public outreach via the City's HUD-required citizen participation plan. The citizen participation requires a 30 day public notice prior to an initial public hearing and then an additional 30 day public review/comment period prior to a final public meeting to review and approve the amended plan. The City cannot formally commit to $500,000 in CDBG funds until the final public meeting when the Council reviews and approves the amended plan. One key caveat regarding CDBG funds is that the City may not expend FY 2009-10 CDBG funds until the start of the fiscal year, July 1, 2009. Because DSFRC can wait to utilize City funding assistance after July 1, then staff recommends pursuing CDBG funding. The City intends to place a lien, in the form of a deed of trust, on the property as part of any future funding agreement with DSFRC. In the event the property is sold, transferred or changes use during the term of the funding agreement between DSFRC and the City, then the property would be returned to the City as DSFRC would no longer be providing benefits to the community at this location. Before final funding approval or release of the $500,000, staff recommends that DSFRC 1) meet with the current property owner to renegotiate the existing purchase price of $2.5 million as the property has likely decreased in value given the economy, 2) obtain a current appraisal of the property, and 3) provide the City with a realistic schedule to close on the acquisition including anticipated dates they will secure all financing. Current City Council Policy - NA Previous City Council Action(s)