Explanation
BACKGROUND: The City receives annual grant allocations for the Community Development Block Grant Program (CDBG) from the United States Department of Housing and Urban Development (HUD). In acceptance of this funding, the City is required to comply with the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), as well as requirements for meeting National Objectives according to 24 CFR 570.208). Grant funds are regularly reviewed by City staff and by HUD staff to monitor compliance with applicable regulations, and address any ineligible grant expenditures.
The City operated a revolving economic development loan program beginning in 2004, funded in part with CDBG funds. Ordinance 1053-2015 authorized the continued contracting of loan underwriting and servicing, and ordinances 1811-2015 and 0960-2015 authorized the contracting of administration of revolving loan services with Finance Fund and Economic & Community Development Institute (ECDI), respectively. Small business loans were issued by these agents to four businesses, Java Brava, LLC, Your Just Desserts, LLC, HJ Systems, Inc, and L & E Society Group, LLC, and funded using CDBG funds in fulfillment of HUD’s Low/Mod Jobs Benefit National Objective. This federal standard requires the creation or retention of jobs for low- to moderate-income residents in order to maintain cost eligibility.
Through the City’s regular management of the economic development loan program, it was determined that these four businesses did not meet the job creation requirements of the CDBG funding, making the expenditure of federal funds ineligible. In coordination with field office staff at HUD, City staff within the Department of Finance and Management, Grants Management Section, determined that the appropriate resolution of ineligible expenditures required a return of these revolving loan funds to the Grantee Local Account to make funds available for eligible CDBG expenditures.
This return of funds will be completed via transfer of $76,500.00 from the Department of Development’s Economic Development Division General Operating fund (Fund 1000) to the Department of Finance and Management’s local account for CDBG funds (Fund 2248). Following this transfer, these funds will be appropriated and expended for eligible CDBG activities in fulfillment of the City’s obligations to HUD.
FISCAL IMPACT: This ordinance authorizes the transfer of $76,500.00 from the General Fund to the City’s CDBG local account to correct ineligible expenditures for the CDBG program.
EMERGENCY DESIGNATION: Emergency action is requested to allow the financial transaction to be processed as soon as possible and to mitigate risk of potential penalties from untimely action.
Title
To authorize the Director of Finance and Management to initiate a transfer of funds to correct ineligible expenditures for the Community Development Block Grant Program (CDBG) program funded by the U.S. Department of Housing and Urban Development (HUD), in the amount of $76,500.00; and to declare an emergency. ($76,500.00)
Body
WHEREAS, the City received funds from the United States Department of Housing and Community Development (HUD) for the Community Development Block Grant (CDBG) Program; and
WHEREAS, ordinances 1053-2015, 1811-2015, and 0960-2015 authorized contracts to manage loan servicing and administration of a revolving economic development loan program funded with CDBG; and
WHEREAS, City review of the loans administered under this program identified four loans which failed to meet required job creation outcomes in compliance with federal requirements of CDBG funds; and
WHEREAS, HUD’s Instructions for Returning Funds to the Line of Credit and to U.S. Treasury guidance requires reimbursements of ineligible revolving loan fund expenditures to be made via deposit into the Grantee’s local program account; and
WHEREAS, funds are available in the Department of Development's Economic Development Division General Operating Fund to be appropriated and transferred to the local account for CDBG funds; and
WHEREAS, the transferred funds will be made available for eligible CDBG expenditures in fulfillment of the City’s obligations to HUD; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Finance and Management in that it is immediately necessary to authorize the Director to return $76,500.00 from the City's General Fund to the City's CDBG local fund account to correct ineligible expenditures for the CDBG program and to mitigate the risk of potential penalties from untimely action, all for the immediate preservation of the public health, peace, property, safety and welfare; and
NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Finance and Management is hereby authorized to initiate a transfer in the amount of $76,500.00 to return funds to the City’s local CDBG account (Fund 2248);
SECTION 2. That from the monies in Fund 1000, and from all monies estimated to come into said fund from any and all sources during the 12 months ending December 31, 2025 the sum of $76,500.00 is hereby appropriated per the attached accounting codes.
SECTION 3. That the transfer of $76,500.00, or so much thereof as may be needed, is hereby authorized from Fund 1000 to Fund 2248 per the accounting codes in the attachment to this ordinance.
SECTION 4. That the funds necessary to carry out the purpose of this ordinance are hereby deemed appropriated and the City Auditor shall establish such accounting codes as necessary.
SECTION 5. That the City Auditor is authorized to make any accounting changes to revise the funding source for all modifications associated with this ordinance.
SECTION 6. That, for the reasons stated in the Preamble hereto, which is hereby made a part hereof, this Ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after passage and approval by the Mayor or ten days after passage if the Mayor neither approves nor vetoes the same.