Eugene: Federal grant freezes put about $30 million of projects at risk; city shifts $8 million in airport work to local funds

City Manager Sarah told the Eugene City Council at a June 11 work session that federal funding pauses and new grant-language requirements have put roughly $30 million in city projects at immediate risk, and that the city will use about $8 million in airport revenues to keep two airport projects moving.

The update explained which projects are immediately affected, why some grants are paused, and how the city and partner jurisdictions — including Lane County, Lane Community College and the University of Oregon — are experiencing related freezes and staffing or program risks. Councilors asked for ongoing updates and clarification on community impacts.

Sarah said four airport projects slated for construction this summer were tied to federal grants and are currently on hold. "We had 4 projects this summer that were slated for construction, all really important projects, probably about $14,000,000 worth," she said. Two airport projects the city characterized as urgent — the Concourse A asphalt apron and a drainage project for the airport's Runway 34 — will proceed using airport-generated revenues rather than federal funds. Sarah estimated the shift to local airport revenues would be roughly $8,000,000.

She said the Concourse A expansion is on hold "indefinitely related to requirements in the grant agreements that we can't comply with." The city is reviewing every affected contract with department budget managers, the intergovernmental relations manager and the city attorney to determine whether language can be clarified or compliance achieved.

On the broader impact, Sarah said the city is "at about a $30,000,000 pause right now across all projects" and that more projects planned for future federal funding face uncertainty. She described three categories of federal-funded activity: funds already received and in use, awards made but not yet drawn or signed, and projects planned for future federal applications.

The Amazon Creek restoration project, funded through FEMA via the state and currently mid-construction, is an example of a smaller but material risk. Sarah said the city may need to absorb approximately $2 million to $3 million locally to complete the work if state or federal partners cannot extend or pass through funds. Public Works Director Rich (on the call) said city crews plan to continue construction on Amazon Creek and are working with the state on a FEMA extension; the main risk is whether the city will be reimbursed.

Sarah outlined other city projects and smaller grants that are being reviewed for compliance with newly emphasized grant-language, including provisions related to diversity, equity and inclusion and immigration enforcement. Catherine (staff) explained that the legal review focuses on whether local policies could conflict with federal anti-discrimination law (Title VII) or create exposure under changed grant conditions. Sarah said some grant language is vague, citing an example that funding could be terminated if an award "no longer effectuates the program goals or agency priorities," a formulation she said requires clearer definitions before the city will sign agreements.

Councilors pressed on downstream effects for contractors and timing. Sarah warned of a "trickle down" effect: local contractors who prepare to do the work may not be able to hire or pay crews while projects are paused. She said staff are trying to expedite reviews where possible but cannot sign agreements until language and compliance questions are resolved.

Sarah next summarized impacts to partner jurisdictions. She said Lane County lost access to an EPA award it had partnered on with United Way to create community resilience centers, a grant the county estimated at about $20,000,000; county officials are challenging the pause. She listed other paused or at-risk county projects including a Mapleton water storage tank (~$3,000,000), a countywide transportation investment (~$5,000,000) and hazard mitigation funding (about $23,000,000) that she described as at risk. She also reported that Lane County is eliminating three senior public-health positions for which it lacks general-fund backfill.

On higher education and workforce impacts, Sarah said Lane Community College lost a $1,600,000 community-initiative grant intended to equip its new industry and trade education center. She said KLCC public radio could lose about $600,000 in funding, and the Lane County senior companion program faces roughly a $200,000 shortfall because of federal funding changes. Sarah said the University of Oregon has seen year-over-year grant awards decline (she characterized the drop as "down 42" versus the prior year) and that the university had received notices terminating about 27 research grants from agencies including the National Institutes of Health, the National Science Foundation and the National Endowment for the Humanities.

Sarah cautioned about higher-uncertainty but potentially high-impact items such as changes to federal financial-aid programs (Pell Grants) and other federal supports that could materially affect access to education and hospital/health systems; she said the city was avoiding speculation and focused on known impacts.

Councilors asked how the city would communicate pauses and delays to the public. For the Amazon Creek work, Rich said the project will continue and staff are coordinating with the state on an extension; the primary risk is reimbursement. Sarah said the city will notify interested parties and explore communication options but hesitated to publish a comprehensive list of at-risk projects while negotiations and reviews are underway.

On public safety and anticipated demonstrations related to federal immigration actions, Sarah said she was "pretty nervous about the weekend" and that the city has planning and staffing in place, relationships with community organizers and coordination with police. Chief Skinner (Police Chief) was referenced as having plans and intelligence on identified bad actors; Sarah urged lawful, peaceful protest and said staff were preparing for unknown external participants.

Councilors requested ongoing briefings. One councilor asked for weekly or biweekly high-level updates on federal developments affecting local grants; Sarah said staff would consider a cadence and noted that Ethan Nelson, the city's intergovernmental-relations manager, is tracking developments and partners.

The work session contained no formal votes. City staff said they will continue contract- and legal-review work and provide further information to council as elements become clearer.

The council closed the work session after the update and discussion.