IURA approves temporary HODAG loan commitment to free CDBG funds for INHS 'Lucy' project
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Summary
The IURA voted unanimously March 26 to approve a temporary HODAG loan commitment of up to $78,968.40 to substitute for prior CDBG funding for INHS’s 209 West State Street ("Lucy") project, freeing CDBG dollars for the 2026 application round while preserving a local funding commitment for the developer’s state tax-credit bid.
The Ithaca IURA on March 26 approved a temporary substitute loan commitment using HODAG funds to replace previously allocated CDBG dollars for the INHS 209 West State Street project known as "Lucy," a move intended to free slower-moving CDBG funds for the current 2026 grant competition.
The board’s motion, moved by the chair and seconded by Carl, authorizes a loan commitment of up to $78,968.40 and carried unanimously. Staff framed the measure as a short-term accounting approach that preserves a local funding pledge for INHS while allowing the agency to reallocate CDBG resources to projects that can spend funds more quickly.
"One way to address the timeliness issue and still keep the INHS application strong would be to basically temporarily commit HODAG funds in place of the CDBG funds for this project," staff member said during the meeting, explaining that the move would free roughly $79,000 in CDBG that could be awarded in the current cycle.
Staff told the board the substitute would be structured as a low-interest loan commitment. If INHS secures state funding through the New York State 9% low-income housing tax credit (LIHTC) round, the expectation is to convert or substitute back to CDBG or HOME funds in a later action plan; if the state award is not received, the HODAG commitment would remain—structured as a friendly long-term loan under the terms described by staff.
Board members asked about timing risks and the impact of the state DRI (Downtown Revitalization Initiative) announcement; staff acknowledged that the timing of state awards and HUD entitlement allocations affects the practical spend-down calendar and noted the proposal preserves options for next year’s action-plan allocations.
The resolution carries procedural follow-ups: the board approved the commitment and directed staff and committees to incorporate the swap into the 2026 action plan and any required program amendment. Staff also noted the final funding availability will depend on the federal entitlement allocation the agency receives from HUD and on next steps in INHS’s state application timeline.
What happens next: the IURA will place the substitution in next month’s agenda as needed, committees will consider project allocations informed by the freed CDBG block, and staff will maintain the loan-commitment paperwork tied to INHS’s application to the state LIHTC process.
Resolution text and financial details are published in the IURA agenda packet; the board record shows the approved commitment amount as up to $78,968.40. The action was taken during the same meeting that concluded a public hearing on the 2026 HUD entitlement grant action plan.
