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Staff warn CDBG spend‑down shortfall; homeowner rehab and ED loans drive the gap
Summary
Staff told the committee the city is about $330,000 short of the annual CDBG spend‑down test, citing slow drawdowns in homeowner rehab and economic development loan categories, and noted prior HUD practice of granting a one‑year extension before requiring a corrective plan.
City staff reported to the Economic Development Committee that the city is approximately $330,000 short of the Community Development Block Grant (CDBG) annual spend‑down test that is reviewed in May.
Staff said the largest unexpended balances appear in the homeowner rehabilitation and economic development (ED) loan categories. An ED loan was recently issued that staff expects will reduce the unexpended balance once drawdowns occur, but staff cautioned that construction and contracting timelines often delay federal draws and that many 2024 contracts were executed late in the year.
Staff outlined how federal budget timing and seasonal program schedules can slow expenditure. They said the federal funding calendar delays some grant receipts and that some programs — notably housing rehab and cohort‑based workforce programs — may not spend funds within the 12–15 month window HUD uses for its annual assessment.
Historically, staff said, the U.S. Department of Housing and Urban Development (HUD) has offered a one‑year extension after a failed spend‑down test and then, if the city still fails, requires a corrective plan that can include stricter oversight or withholding of funds.
Staff highlighted several program‑level clarifications discussed in the meeting: about $200,000 in homeowner rehab activity is behind schedule; the ED loan portfolio had roughly $200,000 unexpended but a $100,000 loan was just approved and will take time to draw down; the Beacon project has been withdrawn by its developer and staff reported they have returned the roughly $6,000 previously earmarked for that project to the funding pool; HODAC funds remain conditional on project advancement; and one month’s rent is past due on the RIBS facility lease, which has expired and the city is taking over that property for a pump station project at Buffalo and North Meadow Street.
Staff also confirmed that Home ARP administrative funds may only be drawn down for activities directly related to Home ARP projects.
Why it matters: failing the HUD spend‑down test can lead to increased oversight and potential withholding of federal funds that support local housing rehabilitation, loans and workforce programs. Committee members asked for clearer project‑level spending summaries so they can prioritize projects that are likely to expend funds within HUD’s timeframes.
The report closed with congratulations from staff to Mayor Graham, Director Glos and the city team on winning this year’s BRI competition; staff said they will continue to pursue investment opportunities to support downtown revitalization.
