City Commissioners approved several agreements for federal Community Development Block Grant funds during their March 4 meeting.
The first is an agreement for CDBG and HOME funds with the U.S. Department of Housing and Urban Development that allocates this year’s funding to the city.
The total funding through both programs is $1,009,019.10, of that $777,762 is CDBG and $231,257.10 is HOME funds.
HUD uses statutory formulas to calculate the allocations to government entities, which are required to submit planning documents that must be approved by HUD before local governments can accept and receive the funds.
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The city was required to submit its annual action plan and a plan for timeliness compliance.
For the 2022 and 2023 CDBG program year, the city did not meet HUD’s timeliness requirements and staff were required to develop a plan detailing steps the city would take to return to good standing.
On May 5, 2023, the city received a letter from HUD providing notice that the city was not in compliance with federal timely use of funds requirements.
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A CDBG recipient is considered timely if its total CDBG line of credit balance is less than 1.5 times its annual allocation or less as of 60 days before the end of the program year, according to city staff.
A recipient that is found to be untimely has 12 months to spend down its balance and regain compliance, according to staff.
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The line of credit includes any CDBG award funds and any revolving loan funds from the program or program income, Tom Hazen, city grants manager, told commissioners in 2023.
If a grantee’s line of credit balance exceeds the 1.5 threshold, it’s considered newly untimely and given a year to achieve compliance. If it remains untimely the next year, the grantee is invited to an informal meeting with the U.S. Department of Housing and Urban Development’s office to demonstrate factors beyond its reasonable control that affected its timeliness, Hazen said in 2023.
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HUD recognized the challenges of COVID and issued temporary guidelines that if a grantee was timely in 2019, and then found to be untimely in 2022, the grantee would be given an additional one-year grace period and if it was found untimely again in 2023, it would be considered newly untimely.
The city was timely in 2019, but was found to be untimely in 2022 and again in 2023, Hazen told commissioners in 2023.
City staff developed a timeliness plan that prioritized public facility projects that could be completed quickly and benefit many city residents, including the 7th Street Northwest and 32nd Street South ADA improvements that were recently approved by commissioners.
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Hazen told commissioners during their March 4 meeting that those projects will make the city “comfortably compliant” with the timeliness requirement and HUD had approved the city’s timeliness plan.
Hazen also said that the city was shifting their program year.
The Electric reported that change in late February when Sylvia Tarman, city project manager, said that the city is adjusting their program to run October through September, aligning with the federal fiscal year, to allow for the completion of big construction projects during the summer. The city’s fiscal year runs July 1 through June 30.
During the March 4 meeting, Commissioner Rick Tryon asked if HUD was willing to work with the city on such changes, to which Hazen said yes, the federal agency was happy to work with the city and that staff has regular communication with the regional HUD representatives.
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Commissioner Susan Wolff asked if the timeliness issue was related to the construction window in Great Falls.
“There were a ton of factors,” Hazen said.
Among those factors was the Cambridge Court renovation project for which commissioners approved $1.2 million in CDBG revolving loan funds but rescinded those funds in September 2023 when it became clear the project wouldn’t be completed in time to meet the timeliness requirement.
Hazen detailed the timeliness issue during the Sept. 19, 2023 commission meeting at which Wolff was present and motioned to rescind the funding. Commissioners voted unanimously.
At the time, city staff said they believed the property owner would move forward with the plan to renovate the Cambridge Court building into apartments, but the property was listed for sale in 2024.
Hazen said that when the finance department took over administration of the CDBG program from city planning in 2023, the balances were high coming off COVID, nonprofits hadn’t been fully operating and contractors were tied up with ARPA projects.
If the city is found untimely, HUD can reduce the city’s annual allocation of funds, so “it’s in our best interest to be underneath that threshold,” Hazen told commissioners during their March 4 meeting.
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Hazen said staff is working to develop a multi-year plan for internal capital improvement projects and work with local agencies to identify projects that CDBG funds can support to ensure the city continues to meet the timeliness requirement.
HUD also approved the city’s annual action plan, which commissioners approved in August 2024 and includes a mix of internal city projects and funding agreements with community partners that will fund down payment assistance programs for new homeowners and public facility improvements among others.
During their March 4 meeting, commissioners approved two CDBG funding agreements for street and sidewalk projects.
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The first is $569,812.50 to the city Public Works department’s 7th Avenue Northwest street reconstruction project.
Commissioners already approved the construction contract to United Materials for the project during their Feb. 18 meeting.
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In that agenda, city staff said that the contract would be funded by CDBG.
The project is to improve pedestrian and automotive traffic and accommodate Americans with Disabilities Act federally mandated criteria and will connect to a street reconstruction and sidewalk project completed last year, according to city staff.
The project will provide an ADA compliant pedestrian corridor along 7th Avenue Northwest, which is the northwest bus route, according to the city.
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Public Works staff submitted a CDBG application for the project and it was approved by the city’s internal review committee.
Commissioners also approved $870,085 of CDBG funds for Public Work’s 32nd Street South ADA upgrade project.
That construction contract was also approved at the Feb. 18 commission meeting.
Using CDBG funds for both infrastructure projects will allow Public Works to direct street assessment or gas tax funds toward other projects, according to city staff.
If commissioners deny the CDBG funding agreements, Public Works will have to postpone both projects to find other funding sources, according to city staff.
Hazen told The Electric that both projects were always intended to be paid with CDBG funds up to a certain point, but the public works and finance departments agreed that if bids came back too high, the streets budget would likely have to contribute funds.
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Hazen said in the future, city staff would put CDBG funding agreements on the same commission agenda as the construction contracts for city projects.
During the March 4 meeting, Tryon said he didn’t understand how the total of the two projects exceed the city’s CDBG allocation this year.
Hazen said that unspent CDBG funds can rollover and the city has about $2 million in the account with their acceptance of this year’s allocation, so the two projects combined will help spend down those funds to meet the timeliness requirement.
