Rapid City could lose nearly $500,000 in federal low-income housing and service funds as early as next year, the city's Legal and Finance Committee learned Wednesday.
Community Development Division Manager Barbara Garcia said the city received $466,188 from Housing and Urban Development in 2013, about $200 more than in 2012.
Next year, she said, the allocation might be eliminated altogether due to federal sequestration cuts and an increasingly limited HUD budget.
HUD block grant money is used to assist low-income residents with housing issues; help fund public programs like Head Start; provide counseling and education services; bolster economic development in low-income sections of town; and support blight-improvement projects and emergency-disaster relief in Rapid City, Garcia said.
"There is a danger we could lose our entitlement altogether,” Garcia told the committee, adding it's a relatively small amount of money that goes a long way.
The proposed cuts impose thresholds where funding is eliminated if a city's allocation doesn't surpass a certain dollar amount. If the cuts come down the pike in 2014, a $500,000 limit would have to be met. Rapid City would lose out because its allocation would be under the minimum allowed level of funding, Garcia said.
"These (changes) are proposed. We don't know what is going to happen," Garcia said after the meeting. "What they're putting forth makes sense, so it makes it hard to fight against. It will just not be something we want to see happen for our own sake."
She said the changes are meant to funnel HUD's funds to cities with the greatest need. Money that is received would have to be used to address the cities’ most pertinent low-income issues.
Garcia said another state coffer has already taken a hit. South Dakota's Continuum of Care program was slashed from $600,000 to $400,000 this year. The program funds emergency housing issues that include getting homeless immediately into housing.
Committee member Amanda Scott questioned whether more affordable housing would be made available through current tax-increment financing projects. Garcia said more would be available, but subsidies are still needed to make those rents more affordable, especially for the poorest of residents, and the waiting period for government help spans more than two years.
With 2014 budget talks on the horizon, committee member Bonnie Peterson said the city may have to assess funding needs that would surface if the cuts happen.
"It's going to be tough for all of our non-profits," Garcia said.
The Legal and Finance Committee passed its recommendation to refinance a roughly $5 million civic center bond at a reduced interest rate.
The Rapid City Council will have the final say Monday. The bond's interest rate will drop from 4.217 percent to 2.628 percent, saving about $257,000 for the facility, according to city Finance Officer Pauline Sumption.
The civic center issued about $5 million in bonds after its ice arena opened in 2008. The money was used to finance upgrades over the next three years, civic center General Manager Brian Maliske said Tuesday.
Those upgrades included $2.6 million to revamp LaCroix Hall and the center's theater and another $1.5 million for its Fifth Street parking lot. The remaining roughly $1 million was spent on heating and ventilation upgrades, security updates and roof replacements at the facility.