AgdaPkt 2008-05-19 Spec - Laserfiche WebLink

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. . . ". - ....., II'EP' 0" 'R"'T . .. '.,. .....: ""...."." - .. ... . . ." .. .- . - .". . .; .', -..... '.: -.. '-.' .' : - - .... '. ". >. ".", . '- ", -' "." ," '" . ", .' -. --- . .. . . .,' ".". . .. . '.. . '.' ..... ..~t~i#.(f~~I~~I~!;~~~~~!;<<!~~i~.i~i::~~~:ri&il . . ..........>..... ........\'............. . ............>.......).:}.XF:.\.<.NEt9m.;tlj..'QJ~~."~ij,t 6.28 Page 1 May 19, 2008 SUBJECT Fiscal Year 2007-08 Amendment of the Community Development Block Grant and HOME Budget RECOMMENDATION Adopt a Resolution approving the amendment of the Fiscal Year 2007-08 Community Development Block Grant & HOME Budget and Annual Action Plan and a Plan to reduce cash and meet Timely Expenditure requirements by reprogramming Program Income and prior year funds. BACKGROUND The City is required to submit a Federal Cash Transaction Report (SF-272) to the U.S. Department of Housing & Urban Development each quarter. The purpose of the report is to disclose the amount of CDBG related cash the City has on hand every 90 days of the fiscal year. The source of the City's cash on hand consists of the Revolving Fund Account, which are principal and interest payments received on single family and multi- family housing rehabilitation loans, principal and interest payments earned from First Time Homebuyer loans, and rents received from the purchase or rehabilitation of real property. Interest earned on the cash account is not considered to be income and is returned to the U.S. Treasury each quarter. Statement of the Problem According to CDE3G regulations, any amount more than 1/12th the amount of the City's annual entitlement amount in a cash account must be expended before drawing down additional grant funds from the Letter of Credit, or the funds must be returned to the U.S. Treasury. Based on the City's last entitlement, the City should have no more than $89,000 above the Revolving fund balance. Instead, as of March 31, the City's Program Income balance was closer to $220,000. Program Income funds had previously been allocated to Habitat Uncoln Townhomes and the project did not proceed according to schedule. Because of this fact, the Cash Transaction Report showed that the City was out of compliance with HUD's spending rules. HUD had just received the City's Cash Transaction Report for January - March. On April 28, 2008, Council was asked to approve the Housing and Human Concern Committee's recommendations for reprogramming approximately $911,029 in prior year funding, which included program income allocated to Habitat and projects that had not proceeded. In early May, HUD staff contacted the City to resolve the problem or face the possibility of losing funding. Staff subsequently met with the Financial Management Staff of HUD regarding the City's latest Cash Transaction Report, HUD Staff advised the City to be reimbursed for expenditures incurred for the period of January through March from the cash account in order to immediately reduce cash on hand.