The Crescent City Council has approved changes to the allocation of Community Development Block Grant funds intended for projects at the harbor, the airport and Beachfront Park.

State officials have determined that $40,000 in CDBG Program Planning and Technical Assistance Program funds cannot be used for the airport expansion project due to a miscalculation in the number of jobs the project would create or retain, according to Lorie Adams, a consultant with Adams Ashby Group, a Sacramento firm the city hired in April to administer its grant funding.

The Council on Monday unanimously approved allocating $17,500 of that $40,000 to the development of the Beachfront Park master plan.

The city applied for and was awarded $105,000 in CDBG Program Planning and Technical Assistance funds in 2011. The funds were intended to help pay for planning and technical studies related to CDBG-eligible activities, according to City Manager Eugene Palazzo.

The city had planned to use $10,000 of those funds for a seafood processing facility at the Crescent City Harbor, according to the city's staff report, while $50,000 was allocated to the Beachfront Park master plan and $40,000 for the airport expansion project. The city had planned to use $5,000 for general grant administration.

The seafood processing plant project and the airport project were being funded under the state Department of Housing and Community Development's Economic Block Grant program, Adams said. Because the Beachfront Park project is being funded with general CDBG funds, $17,500 is the maximum amount of money that can be reallocated from the airport project, she said.

The maximum amount of Planning and Technical Assistant Program funds allowed for general CDBG-eligible projects is $67,500, City Finance Director Ken McDonald said.

"We put the maximum amount to it," he said, referring to the Beachfront Park project.

Under the state department's guidelines, the funds could only be used for projects that would create or retain at least 14 positions, McDonald said.

But because a lot of the retention and creation of jobs at the airport would be connected with the airline that serves Crescent City or the Transportation Security Administration, the state Department of Housing and Community Development considered the expansion project ineligible for CDBG funds, Adams said.

"The city and state just would not come to an agreement that those were actually true retention for the city of Crescent City," she said, adding the Border Coast Regional Airport Authority participated in discussions with the state and city.

Mayor Rich Enea, a former Airport Authority Board member, pointed out that if the expansion didn't happen and the airport closed, any employees connected with United Airlines or the TSA would be transferred to other airports.

"I understand what they're saying," he said, referring to the state Department of Housing and Community Development.

In addition to asking the state if the city can reallocate its CDBG Program Planning and Technical Assistance funds from the airport project to the Beachfront Park project, Adams said she would also try to obtain more funding for the harbor's seafood processing plant project.

"We're working with (the state) to vet out employment numbers and get the application put in place," she said. "We have six months left. Our goal is to get the application completed. If (the $40,000) isn't used it will be returned to the state which will recycle that into the program."

The city has until Dec. 31 to submit grant allocation changes to the state.

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