As referenced in a recent article appearing in the Omaha World-Herald, the State of Nebraska has instituted significant changes in its administration of the popular Community Development Block Grant (“CDBG”) program. Under the CDBG program, federal dollars have been earmarked for loans to businesses – to spur job creation and expansion. These loans have been made and administered by Nebraska city councils. Once those loans are repaid, cities were allowed to keep the money as a local fund which would make additional loans to other businesses.
The State of Nebraska, citing changes to federal regulations adopted this year, has recently called for changes to the administration of the CDBG program. The Nebraska Department of Economic Development has urged cities to end their local loan funds and transfer any unused money back to the State. These dollars would then be transferred to a number of regional development organizations for distribution. The regional groups could then ensure that the recipients meet the federal requirements for use of the funds, requirements which include environmental reviews.
If cities choose not to repay those funds, the Department of Economic Development will subject those cities to a compliance review to ensure the federal requirements are being met.
This change could have a significant impact on businesses that are looking to receive a CDBG loan for expansion. For assistance in navigating this new CDBG process, feel free to contact a McGrath North attorney.