ACTION REQUESTED:
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Communication from the City Manager and the Community Development Director with a Request to Approve the Allocation of $35,000.00 of CDBG ECONOMIC DEVELOPMENT FUNDS to THE CHEF AND THE BAKER at 106 E. MCCLURE AVE. (Council District 3).
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BACKGROUND: The City of Peoria is considered an entitlement jurisdiction by the US Department of Housing and Urban Development (HUD). As such, funds from the Federal government, through HUD are allocated to Peoria on an annual basis. The City of Peoria receives three (3) grants - Community Development Block Grant (CDBG), HOME Investment Partnership Program and the Emergency Solutions Grant (ESG).
On September 10, 2013, City Council approved the allocation of $250,000 of CDBG funds to an Economic Development Program. Additionally, on October 14, 2014, City Council approved the additional allocation of $163,860 of CDBG funds for a total of $413,860 to the Economic Development Program. On January, 27, 2015, City Council approved the Economic Development Program guidelines. The CDBG economic development program is focused on creating jobs for low-income people. For each full-time equivalent (FTE) job created, the applicant is eligible to receive $35,000 of assistance.
There is a pending request to City Council from staff to reallocate the available CDBG Economic Development Program funds ($278,860) to public infrastructure projects identified in the 2016 City of Peoria Capital Budget. The pending reallocation will not affect the available funding for this project as staff deducted the potential grant award from the reallocation amount.
Ian and Karen Hocker opened The Chef and The Baker at 1122 E McClure Ave in July 2014. Since opening, the community has embraced the East Bluff business and the eatery has thrived. Sales grew 30% in the second year of operation and are expected to continue growing in years to come. The Chef and The Baker have outgrown their current leased space and purchased the building at 106 E. McClure Avenue for expansion.
The new location is more conducive to the catering business and also provides more space for customer seating. The continued growth of the business requires The Chef and The Baker to hire additional staff. In addition to business owners (Ian and Karen), The Chef and The Baker only has one employee. After moving to the larger location, The Chef and The Baker plan to hire an additional full-time kitchen manager and a part-time front staff member immediately after moving.
The Chef and The Baker is investing approximately $210,000 in the purchase and renovation of the building at 106 E McClure Avenue. The $35,000 in CDBG funds would be used for a portion of the construction costs related to plumbing, electrical and HVAC systems. Workers in these trades will be required to be paid federal prevailing wage in compliance with the Davis-Bacon Act.
This facility will create 1.5 FTE employment positions, with pay ranging from $10/hour to $14/hour. By offsetting the development costs with CDBG funds, the business will have available working capital that can be used to immediately hire new staff.
FINANCIAL IMPACT: A total of $35,000 of CDBG Economic Development Program funds would be awarded to The Chef and The Baker for the renovation of their new location at 106 E McClure Ave. Per CDBG rules, the business must retain the additional job created for at least one year. Failure to do so would require repayment of the grant on a pro-rated basis.
NEIGHBORHOOD CONCERNS: The East Bluff residents and community have continually showed their support for the family-owned neighborhood restaurant.
IMPACT IF APPROVED: A total of $35,000 of CDBG Economic Development Program funds would be awarded to The Chef and The Baker for the renovation of their new restaurant at 106 E McClure Ave. City administration will execute a subgrantee agreement with The Chef and The Baker. Project construction is anticipated to begin in early 2016.
IMPACT IF DENIED: A total of $35,000 of CDBG Economic Development Program funds would not be awarded to The Chef and The Baker for the renovation of their new location at 106 E McClure Ave.
ALTERNATIVES: None.
EEO CERTIFICATION NUMBER: Will be obtained prior to receiving funds.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria: Businesses, Jobs, and Population
2. Attractive Neighborhoods with Character: Safe and Livable
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
2. Reinvest in neighborhoods.
DEPARTMENT: Community Development