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Page 2 of 3 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />portion of the loan, the Service League owes $57,000 ($30,000 in principal and $27,000 in interest). The <br />total loan payoff amount is $104,500. <br />ANALYSIS <br />In June 2024, City staff contacted the Service League to make them aware of the upcoming loan maturity <br />date. At that time, the Service League requested the City and County to consider forgiveness of the loan <br />or a further deferral since the Service League is unable to make two large lump sum payments, totaling <br />$104,500, at this time without reducing current programming. Since it is a joint loan, the City and County <br />met to discuss options, and expressed an interest in coming to a mutual recommendation on how to <br />proceed. Recently, the County notified the City that it intends to forgive the original loan and all accrued <br />interest as a loan deferral would allow interest to continue to accrue and increase the financial burdens <br />for Service League. Furthermore, a further loan deferral or amortization would mean the loan would <br />remain a financial liability on the Service League’s financial ledger and could hinder the organization from <br />securing additional financing for future projects. <br />The CDBG program allow for loan forgiveness or reversion of assets in certain circumstances. The Service <br />League has used the City’s original investment of CDBG funds in accordance with the CDBG program <br />regulations and meets all regulations regarding the reversion of assets found at 24 CFR 570.503(b)(7)(i). <br />Because the County of San Mateo intends to forgive their loan, the Service League qualifies for loan <br />forgiveness under CDBG regulation, and requiring loan repayment immediately would reduce services to <br />the community, City staff is recommending the City Council to also forgive the City’s portion of the <br />loan. While the City could postpone repayment, this would increase future obligations and could also <br />result in negative impacts to services provided in the community. <br />FISCAL IMPACT <br />If the City required loan repayment by the Service League, the City would receive $47,500 in CDBG <br />program income to be used on a CDBG-eligible project(s). While this loan repayment could provide <br />additional funding for the CDBG program, forgiving the loan would reduce the Service League’s ability to <br />continue their services and programing in the community. There is no impact on the General Fund with <br />this action. <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA <br />Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably <br />foreseeable indirect physical change in the environment. <br />6.B. - Page 2 of 7 <br />13