The payback is tied to federal cash received in 2009 and 2010.

By Jim Hagerty
Reporter

ROCKFORD – Rockford leaders are considering repayment options for more than $300,000 in grant money the city received almost a decade ago.

The funds were part of a pool of federal cash marked for various local sub-grantees as part of the Federal American Recovery and Reinvestment Act under ex-President Barack Obama. About $600,000 of those funds were audited and more than half was found to have been inadequately documented.

Although the money wasn’t misused and was allocated according to city and state policy, Rockford is now on the hook to repay it out of the redevelopment and general funds.

There are currently two possible options. A one-time payment of $305,287 can be made to the Illinois Department of Commerce and Economic Opportunity. Or, the city could make installments over the next two fiscal years. If leaders choose the latter, the payments would come with interest, according to Mayor Tom McNamara.

“We know there is an interest rate of 10 percent,” McNamara said. “We just need to know when that interest rate kicks in and figure out if it’s wiser for us to just pay it all up front so we can avoid that interest or if it doesn’t kick in until later, pay a portion now and a portion next fiscal year. If it’s smarter financially to separate it over two fiscal years, that’s what we are going to do. But we will only do that if we are not going to be hit with interest.”

McNamara is the former Third Ward alderman but wasn’t on council in 2009 or 2010.

Human Services Director George Davis called the situation embarrassing last week as aldermen discussed the breakdown of which agencies received cash, including the Rockford Area Economic Development Council, which received $100,000. Other funds went to various agencies like Youth Advisory Council, Winnebago County State’s Attorney’s Office, and the nCenter.

McNamara said the city is also looking into whether payment can be made directly to the federal government. Staff expects to know which repayment option it will present to council in the next two weeks. R.