TO: ADAM PIRRIE, CITY MANAGER
FROM: BRAD JOHNSON, COMMUNITY DEVELOPMENT DIRECTOR
DATE: SEPTEMBER 24, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
COMMUNITY DEVELOPMENT BLOCK GRANT JOB CREATION AND BUSINESS INCENTIVE PROGRAM FOR UNO TRE OTTO (FUNDING SOURCE: COMMUNITY DEVELOPMENT BLOCK GRANT FUND)
Body
SUMMARY
Uno Tre Otto (Applicant) has applied for $50,000 in funding through the City’s Community Development Block Grant (CDBG) Job Creation and Business Incentive Program to expand its restaurant’s gross floor area by more than fifty percent. The funding will be used for working capital and the purchase of equipment.
In exchange for the $50,000 forgivable loan, the Applicant must create and maintain two full-time equivalent (FTE) income-eligible jobs for persons with extremely low- to moderate income for a period of two years. This loan would be partially funded by allocating $10,000 of the unallocated CDBG balance.
RECOMMENDATION
Recommended Action
Staff recommends the City Council:
A. Approve the 2024-25 Community Development Block Grant amendment to reallocate $10,000 from the Community Development Block Grant unallocated balance to the Job Creation and Business Incentive Program; and
B. Approve the funding request in the amount of $50,000 and authorize the City Manager to enter into a forgivable loan agreement with Uno Tre Otto for $50,000.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
A. Do not approve the request.
B. Approve the request with a different funding amount.
C. Request additional information from staff.
FINANCIAL REVIEW
The proposed budget amendment will increase the 2024-45 CDBG fund allocation from $206,723 to $216,723 utilizing unallocated CDBG funds. If the budget amendment is approved, there will be $50,000 in available CDBG Job Creation and Business Incentive Program funds for 2024-25, sufficient to fund the request for Uno Tre Otto.
The staff cost to prepare this report and administer this program is estimated at $1,500 and is included in the operating budget of the Community Development Department.
ANALYSIS
The CDBG Program is a Federal Block Grant Program that began in 1974, which provides funding to cities and counties to carry out programs and projects designed to benefit low-income persons. As a member of an Urban County Agreement, Claremont receives its CDBG funding from LACDA. LACDA performs many of the administrative tasks required to comply with the Federal regulations of the CDBG program.
Proposed 2024-25 CDBG Budget Amendment
LACDA has requested that its Urban County Agreement members allocate their unallocated CDBG balance to current programs and projects designed to benefit low-income persons. As a member of an Urban County Agreement, Claremont receives CDBG funding from the Los Angeles County Development Authority (LACDA). LACDA performs many of the administrative tasks required to comply with the Federal regulations of the CDBG program.
The unallocated CDBG balance includes the rollover funds from previous years and program income from Housing Rehabilitation loan payoffs.
|
Program |
Approved Budget |
Proposed Amended Budget |
|
Housing Rehabilitation Program |
$ 149,740 |
$ 149,740 |
|
Senior Case Management Program |
$ 17,603 |
$ 17,603 |
|
Job Creation & Business Incentive Grant Program |
$ 40,000 |
$ 50,000 |
|
Total |
$ 207,343 |
$ 217,343 |
|
Unallocated CDBG Balance |
$42,618 |
$ 32,618 |
Application
The City has received an application from Uno Tre Otto for CDBG Job Creation and Business Incentive funding. Based on the existing availability of the CDBG funds and the number of jobs created, $50,000 in assistance is recommended. The funds may be used for working capital, marketing, employee development, business expenses, and equipment purchases. If approved, Uno Tre Otto will expand its gross floor area by more than fifty percent.
Applicant
Uno Tre Otto is an Italian restaurant located in the Claremont Village at 114 North Indian Hill Blvd Suite P. It is known for its farm-to-table approach, featuring a seasonal menu highlighting locally sourced and organic ingredients. The restaurant offers a warm and rustic ambiance, providing a cozy and intimate dining experience.
Their menu includes handmade pasta dishes, fresh salads, and a selection of meats and seafood. Uno Tre Otto is increasing its seating capacity through a rooftop expansion. However, due to the unexpected requirement to install an ADA-accessible lift, Uno Tre Otto faces a shortfall between the funds it can provide and the total project cost.
The Applicant has extensive experience in the restaurant industry, having previously opened and operated multiple restaurants in the Claremont Village.
The Applicant’s financial background is sound and represents good business acumen as described below:
1. The Applicant has sufficient collateral, which is available for security for the funding, and personal guarantees by the owners.
2. The monthly projected cash flow statements have been provided and indicate that the proposed restaurant and tasting room are viable within the established business plan.
3. A review of the submitted documentation disclosed no undesirable credit applications.
4. The Applicant meets the criteria in the Program Policy and will achieve several of its objectives.
Eligibility
The proposed project falls within the program’s list of eligible projects and is categorized as a new sales tax-generating business. Priority is given to projects that create income-eligible jobs for extremely low- to moderate-income persons, generate sales tax for the business and surrounding businesses, and fulfill a need within the community. Specifically, Section VIII, Subsection B of the program policy lists quality food establishments as eligible projects. Working capital, including marketing, employee development, business expenses, and equipment purchase, is considered an eligible use of the funds.
Job Creation
In exchange for the $50,000, the Applicant is required to create two FTE income-eligible jobs during the first year of operation. The jobs must be filled by persons from extremely low- to moderate-income households as established by the Los Angeles County CDBG Income Guidelines.
The income-eligible jobs must be maintained and reported to the City for a minimum of two years. The business is expected to create approximately five additional permanent FTE jobs. The creation of these jobs and the additional sales tax generated from the business will aid the City in its economic development efforts. To meet reporting requirements, the Applicant will submit a quarterly report to the Program Administrator, which will document the jobs by employee name, job title, hours worked per week, and hourly pay rate for qualifying income-eligible employees.
Evaluation of Application
Staff conducted a thorough review of the Applicant’s eligibility for funding. The Applicant’s request meets the following goals outlined in Section X of the Program Policy, which is to:
1. Fulfill a need within the community.
2. Create income-eligible jobs for persons with extremely low-to moderate-income persons.
3. Generate increased sales tax for the community.
4. Create opportunities for recruiting new businesses to fill commercial vacancies.
5. Encourage additional foot traffic and social activity within the proposed business location.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Economic Sustainability Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by: Prepared by:
Brad Johnson Alex Cousins
Community Development Director Senior Management Analyst
Attachment:
CDBG Job Creation and Business Incentive Grant Policy