CDBG Economic Development Guidelines

1. ECONOMIC DEVELOPMENT WITH
COMMUNITY DEVELOPMENT BLOCK
GRANT (CDBG) FUNDS
Economic Development Department
February 11, 2016

2. FY 2016 Grant Amounts
CDBG: $1,002,441
$1,002,492 last year
HOME: $349,208
$401,912 last year

3. 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

4. CDBG Investment in Northgate

5. 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

6. Low and Moderate Income
Persons
2015 Income Limits – 80% AMI
Household Size Income Limit
1 $34,100
2 $39,000
3 $43,850
4 $48,700
5 $52,600
6 $56,500
7 $60,400
8 $64,300

7. 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

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

9. 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

10. 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

11. 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

12. 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

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

15. 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

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

17. Example 2: Houston
• Flexible guidelines
• Allow any type of economic development project
that meets requirements
• Managed by Houston Redevelopment Authority