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Council reallocates CDBG and HOME funds to meet HUD timeliness and fund demolition for proposed Habitat project
Summary
Council approved reprogramming $749,254 in CDBG funds and $340,000 in HOME funds to avoid HUD timeliness sanctions, including $225,000 proposed for demolition of a PHA property intended for a 14‑unit Habitat for Humanity for‑sale project. Residents urged more transparency and asked that some funds be retained for small businesses and park projects.
City staff told the council the city faces a HUD timeliness test that requires jurisdictions to spend down CDBG balances to avoid heightened oversight or loss of future funding.
"Our current balance is $2.8 million; we are exceeding the 1.5 [times allocation] and we need to spend a little over a million dollars very quickly in order to meet this particular goal," consultant Anna Lenu said, explaining the IDIS timeliness rule and the risk of a HUD workout plan if the city remains over the cap.
To comply, staff proposed a package of reprogramming across several fiscal years that would reallocate $749,254 in Community Development Block Grant funds and $340,000 in HOME Investment Partnership funds to complete projects already in the queue, to consolidate small balances so to allow eligible activities to proceed, and to fund a demolition and clearance project for a city‑owned parcel at 901–919 Long Beach Boulevard.
Community Development Director Gabriel Perez said demolition would clear the site for a future affordable housing development. "There is an opportunity to build affordable housing on the site for 14 home ownership town homes that would be developed by Habitat for Humanity," Perez said. Staff described the demolition as an enabling step to reduce public‑health risks (possible asbestos/lead abatement), reduce blight and to position a site for future construction and leveraging of additional funding.
Public commenters urged the council to retain funds for small‑business assistance, commercial facades, and parks, and to ensure the community advisory commission (CAC) and other commissions are more engaged in reprogramming decisions. "We need to revisit what's continuing to create those shortcomings for these types of projects as we move forward," resident Jimmy Jose said during public comment.
Council members debated alternative reallocations; some proposed moving more funds to streets and small‑business grants. Staff and public works warned most new street projects could not be designed and constructed quickly enough to meet HUD's immediate timeliness deadline, and staff said delaying reprogramming risked escalating HUD oversight.
After discussion, the council adopted the recommended substantial amendments, authorizing the city manager and community development director to implement the amended annual action plans. The vote passed with Council member Avalos opposed and Vice Mayor Rios and Mayor Baron in favor.
Staff said the reprogramming preserves funds for projects already advanced and creates the demolition funding that city staff and partners say will accelerate an affordable‑housing project; staff also committed to continued community outreach and to explaining reallocation choices in greater detail to residents and commissions.
