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Federal budget unknowns may affect local program

WOODBURY -- In an effort to increase resident awareness of where Woodbury's federal dollars go, the annual action plan comment period is now under way, with a public community meeting held last week.

Housing Specialist and Associate Planner Karl Batalden, however, did not receive citizen feedback on the plan that provides a strategy for the use of funds allocated to the city by the U.S. Department of Housing and Urban Development (HUD).

The city will use HUD money through the Community Development Block Grant (CDBG), for its 2011 budget year, which starts in July and ends in June of next year. The problem with budgeting for it though, is that the federal government has not yet finalized its own budget for this year, which makes it difficult for city and county officials to determine how much money will be available to them locally.

"From a budget perspective, we're put in a very awkward position," Batalden said Tuesday.

The 2011 annual action plan with the CDBG funds must be adopted by May of this year and the public comment period ends on April 8.

Woodbury now qualifies for CDBG money because its population is at more than 50,000. The flexible program allows the city to handle the money in various ways, including infrastructure, but this year it's used to fund housing loans for qualified residents.

CDBG funds are allowed to help the city in case of an emergency disaster, as well as to assist moderate to low-income households borrow money in the foreclosure purchase and first time homebuyer programs.

Because of the demographics and the relative wealth of Woodbury's residents, the use of CDBG is best put toward affordable housing initiatives like the foreclosure purchase with deferred $25,000 loans at 3 percent interest rates, Batalden said.

The total dollar amount available this year is not a big amount, but $278,776 helps bridge the financial gap for some eager homebuyers.

"I think the use of HUD funds are really, tremendously effective," Batalden said, adding, "Our loan programs are unique."

City officials are planning for a zero percent change in funding from the previous year, but that number could very well decrease judging by the federal budget outlook which has yet to be finalized.

"I think that number - when the budget is passed or adopted - will go down," Batalden said.

In the event it does decrease, the city will then reduce administration costs to make sure loans are $25,000 each.

Riham Feshir
Riham Feshir is a reporter and photographer for the Woodbury Bulletin. Her coverage includes Woodbury City Hall, Washington County Board of Commissioners and business news.  Follow Riham on Twitter @RihamFeshir for the latest updates.