In the informational packet for this week’s Lowell City Council meeting, the following item caught my eye. It’s a response from the city manager to a motion made by Mayor Murphy at the August 27, 2013 city council meeting that requested a report on “the use of CDBG funding for senior center lease.” CDBG or Community Development Block Grant funding comes from a Federal program administered by the Secretary of Housing and Urban Development that’s been around since 1975. CDBG funds are intended to provide financial support to local community development projects such as affordable housing, anti-poverty programs, and infrastructure development.

The city manager’s response to the motion states that the Senior Center was constructed by private developers with the understanding that the city would lease the structure for 20 years after which the developers would turn ownership of the facility over to the city. The lease included not only rent but also a portion of the annual operating expenses and the amortized cost of equipment and furnishings for the facility. Thus far, all of the $3.5 million in rent paid by the city since 2003 has come from CDBG funds.

The packet also contains a breakdown of how the approximately $2 mil in CDBG funds received by the city for the current fiscal year (FY14) are being used:

Senior Center Lease – 17%
Municipal Capital Projects & Programs – 16%
Manager’s Neighborhood Impact Initiative – 14%
Public Service Activities – 13%
Program Administration – 13%
Non-Public Service Grants to Subrecipients – 10%
Boott Mills Section 108 Loan Debt Service – 9%
Planning/Economic Development – 7%

The manager points out that current conditions in Congress make it likely that CDBG funds will be reduced substantially in the coming years which will require the shift of the source of funding for some of the above programs, such as the Senior Center, to the general city budget. Presumably some of the items could be eliminated.

The Senior Center has certainly been an asset to the city and I doubt anyone would question the wisdom of continuing to fund it. While I’m hopeful the other uses of CDBG funds are equally beneficial to the city, the above list other CDBG funding is a bit ambiguous. Hopefully at the upcoming council meeting or at a future meeting, there will be a detailed discussion of the strategy for using CDBG funds so informed judgments can be made about what to shift to the city budget or what to eliminate in the face of possible Congressional cuts.

Below is the full text of the City Manager’s response to this motion as contained in this week’s city council info packet:

C. COUNCIL MOTION OF 8/27/2013 BY MAYOR MURPHY:

“Request the City Manager report on the use of CDBG funding for senior center lease.”

When the City executed an agreement to sell the former City Barns property to a private developer, the deal included a commitment on the part of the developer to construct a senior center for the City, lease it back to the City for a period of 20 years beginning upon completion of construction, at the conclusion of which it will be deeded to the City as a condominium for a nominal dollar. The then City Manager elected to fund the lease entirely using Community Development Block Grant (CDBG) funds. In addition to the rent, the lease incorporated repayment of expenses incurred for the purchase and installation of furniture, fixtures, and equipment at the center for a period of five years, and the Senior Center’s share of the property’s operating expenses for the entirety of the lease term. All of these costs have been paid using CDBG funds. The twenty-year lease term began in April
2003 and will conclude in April 2023. To date, the City has spent more than $3.5 million in CDBG funds on this lease.

The House Transportation (HUD) Subcommittee approved a 2014 funding bill that would cut the CDBG program allocation to half of its 2013 levels (which have consistently been reduced from roughly $2.8 million in 2002-2003 to current levels of just over $2 million). Although the Senate THUD committee has passed a more favorable funding bill, it remains to be seen the extent to which the ultimate budget reconciliation will reverse this cut. Under the House budget, the City’s allocation for the 2014-15 program year would be approximately $1 million, which would mean that the Senior Center’s share of the total CDBG funding would be 30-35%, which is not likely sustainable between other required expenses like the Section 108 Debt Service and other compelling projects that do not have alternative sources of funding. The Administration intends to review use of CDBG monies in FY15 as grant funds become tighter, and expects to appropriate more Senior Center funding through the general fund.