Staff proposes substantial amendment to Consolidated Plan to reprogram slow-moving CDBG funds to faster projects

Staff presented a proposal to request a substantial amendment to the city’s Consolidated Plan so the city can reprogram unspent Community Development Block Grant (CDBG) funds from older, slow-moving projects into new projects that staff says can move faster and obligate funds quickly.

Why it matters: CDBG funds are federal entitlement dollars administered by the U.S. Department of Housing and Urban Development (HUD). Staff said the city’s unspent line-of-credit balance exceeds HUD’s recommended thresholds and the reprogramming would let the city spend those funds on projects that are ready to contract, reducing the risk that HUD could reclaim unobligated funds.

Staff described how pandemic-era grants and project delays left a backlog of unspent CDBG funds. The presenter said HUD expects jurisdictions to spend down lines of credit to a lower ratio and that the city is currently above that target. Staff told the commission it has identified roughly $613,482 in funds from prior program years that could be reallocated to projects that can move quickly.

Planned recipients and uses identified in the presentation include: economic-development activities to support small businesses and workforce development; predevelopment funding for the Pacifico site to make the property more attractive to developers; predevelopment and design work for a parks department “inclusionary playground”; and seed or training funds for a navigator program that would support outreach and peer navigators for low-income residents. Staff said some items — notably the navigator program — raise questions about whether they are eligible as public-service expenditures under CDBG rules and that HUD approval will be sought.

Staff emphasized speed and contract readiness: “We’re trying to get money out the door, and expend it, as quickly as we can,” the presenter said. The staff presentation listed program years and specific formerly planned projects that had not advanced because of pandemic-related delays, supply-chain and labor issues, or insufficient funding to complete large capital work such as septic replacements.

Commissioners asked how the reprogrammed funds would be governed and whether the projects are new or simply different uses of previously allocated dollars. Staff said the projects identified are primarily new or accelerated uses of the existing CDBG balance and explained the city intends to seek HUD’s approval through the substantial-amendment process and then bring contract-ready projects forward. The presenter said many of the candidate projects already have scopes that could be contracted quickly and that staff hoped to obligate a large portion of the reprogrammed funds by June to avoid funds being swept back.

Staff also discussed administrative and documentation issues: for some prior program-year amounts the city lacks backup receipts, which precludes charging certain administrative costs to past program years. The presenter said reprogramming is preferable to having funds remain unused and at risk of recapture.

Next steps: staff will take a formal request to city council to approve the substantial amendment and will coordinate with HUD on an agreed work plan. If council approves the substantial amendment and HUD concurs, staff expects to move quickly to contracts and expenditures on the projects identified. Staff will return with a draft Consolidated Plan for 2025–2030 at a future meeting.