ECONOMIC DEVELOPMENT WITH COMMUNITY DEVELOPMENT

BLOCK GRANT (CDBG) FUNDS

Economic Development Department

February 11, 2016

FY 2016 Grant Amounts

CDBG: $1,002,441$1,002,492 last year

HOME: $349,208$401,912 last year

National Objectives• Benefit low/moderate

income persons• Elimination of slum and

blight• Meet an urgent need

While CDBG funds may be used for a variety of community development activities, HOME funds may only be used for affordable housing activities.

Cooner Street Rehab

CDBG Investment in Northgate

Program Overview• There are many types of economic development

activities possible under CDBG • Purpose - expand employment opportunities for

Low and Moderate income (LMI) people • Mechanism - provide “gap financing” with favorable

terms

Low and Moderate Income Persons

2015 Income Limits – 80% AMIHousehold Size Income Limit

1 $34,1002 $39,0003 $43,8504 $48,7005 $52,6006 $56,5007 $60,4008 $64,300

Ways To Be Eligible• Create or retain one or more full time equivalent

(FTE) job(s)• Job retention - job(s) would be lost or business

would close but for the CDBG funds • At least 51% of created or retained jobs must be

people at or below 80% AMI• Project must comply with Federal Regulations

Eligible Projects• Business Incubators• Public Facilities• Commercial/Industrial Rehabilitation• Job Readiness, Skills Training, and Job Replacement

Programs• Etc.

Example 1: Texarkana• Loaned $100,000 to Pecan Point Brewing Co. to

improve their vacant Main Street property (new venture) • 10 year term• Interest rate - 1% over the rate for 10 year Treasury

notes (adjustable by City) • Jobs Created - 15

Example 2: Houston• Loaned $1.7 million to Pyburn’s Farm Fresh Foods

for predevelopment, land acquisition, construction, and equipment• $3.2 million from other sources• Made healthy food available in “food desert” • Created 47 jobs, 95% live within two-mile radius of

store• Jobs created - 47

Example 3: LA Tech Business Incubators – Port Tech • PortTechLA – maritime tech incubator • 2012 - Awarded $1.5 million in CDBG funds• Operated by a coalition consisting of the City , Port

of Los Angeles and Chambers of Commerce• Funds used to purchase and renovate facility for

office space• Purchase price of building paid back within specified

time period• 72 jobs created

Example 4: LA Tech Business Incubator – Clean Tech• Clean Tech “focused” Business Incubator • 2012 - Awarded $3 million in CDBG funds • Part of City’s Clean Tech Corridor • Funds used to renovate and lease office space,

provide coaching and mentoring services, and financing assistance for businesses• Provides flexible office space for venture firms and

startups

Future Next Steps• Direction to Staff• Guidelines – February 25th, 2016 • Tool for Job Creation

Job Creation Requirements• One FTE (1,750 staff hours per year) created or

retained for each $35,000 of CDBG investment• Provide payroll documentation to show creation• Minimum of 51% of jobs created or retained in City

portfolio must be LMI

Example: Texarkana• Loan of up to $100,000• Terms up to 10 years• Loan recipients must be located in target area

Example 2: Houston• Flexible guidelines• Allow any type of economic development project

that meets requirements• Managed by Houston Redevelopment Authority