Budget cut could hit Newport Beach

June Casagrande

NEWPORT BEACH -- City officials say they’re not too concerned about

the local effects of a federal budget proposal to cut grant money to

wealthy cities.

Under President Bush’s proposed budget, the city could lose about half

of the $500,000 it receives each year through the Community Development

Block Grant Program.

Bush’s budget calls for cutting back these funds to a handful of the

nation’s richest cities. Federal government data shows Newport Beach tied

with Greenwich, Conn., for the highest average incomes in the nation.

“The federal government’s actions threaten this kind of thing all the

time,” said Mayor Tod Ridgeway, whose district includes the Balboa

Peninsula, where the majority of the grant money is earmarked to help pay

a portion of the $8 million in improvements now underway on the

peninsula.

The city has applied for a loan from the federal government against

the grant money it will receive in the coming years. If approved, that

loan will help pay for peninsula improvements and will be paid back with

future block grants.

The loan process does make provisions for cities that lose a portion

of their grant money. The provisions could mean extended repayment terms

or partial debt forgiveness for the city if future grants don’t come

through.

“The first phase of the peninsula improvement is already well-funded,”

Ridgeway said. “If we lose the grants, it could mean cutting back on

phases two or three, or possibly finding other funding sources.”

Because the grant is designed to create jobs rather than housing for

lower-income workers, Ridgeway said the president’s budget does not

threaten his goal of building affordable housing in the city.

In past years, though, the grants have paid a portion of some new

housing, Assistant City Manager Sharon Wood said.

Apartments at 1530 and 1538 Placentia Ave. were paid for partly with

grants. Newport Seacrest, Newport Seashore and Newport Seaside apartments

on 15th Street, also got funding from the grants.

“The implication is that cities like Newport Beach who have higher

income levels overall don’t have a need for this money,” Wood said. “But

we do have people with lower incomes, concentrated in the peninsula. We

wouldn’t be getting the grant at all under [the] federal program if we

didn’t meet its program requirements.”

Wood said the city has not received any notice from the federal

government about potential changes to the grant program.

“It’s too soon to know what will happen,” she said.