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Commissioners reallocate CDBG carryover as 5th & Leavenworth waterline delays threaten sprinkler deadline
Summary
After staff warned HUD flagged excess CDBG carryover and the 5th & Leavenworth waterline project was delayed, commissioners approved shifting funding to park/playground work to avoid losing future allocations; staff said there is a risk they cannot draw $950,000 by April 1, 2027.
The Manhattan City Commission voted unanimously to approve the consent agenda, including a reworked allocation of Community Development Block Grant (CDBG) funds after staff reported delays to a waterline/intersection project at 5th & Leavenworth.
Commissioner Fox raised the concern that delays to the 5th & Leavenworth project were affecting a required sprinkler installation in a high-rise and asked for an update. Stephanie Peterson, director of planning and development, said the city has been working on the waterline project since 2021 and "there is a decent chance that we're not gonna be able to spend $950,000 by April 1" — meaning the city might miss HUD's draw deadline and risk future allocations if the carryover remains high. Peterson and a colleague explained staff plan to use CDBG for the public portion of the project and are "flipping the projects" so parks and playground work can proceed while final bids and funding for the waterline are completed.
Peterson said the city can only carry over about 1.5 times its annual allocation; with a 2026 allocation around $515,000 that limits the permissible carryover and prompted HUD to notify the city that it had "too much carryover." Staff estimated roughly $750,000 would be needed for playground equipment for two projects, leaving funds to apply later to the 5th & Leavenworth work when it is ready to proceed.
The commission approved the consent agenda excluding item f, later approved item f after the discussion, and the roll calls in both votes were unanimous, 5 to 0.
