TO: Mayor and Members of City Council
THRU: Jodi Phelps, Assistant City Manager
FROM: Christopher Cauley, Director of Economic and Community Development
Derrick McArthur, Economic Development Manager
DATE: May 4, 2026
RE:Title
Economic Development Program Modernization and Priority Redevelopment AreasTitle
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COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal II: Responsive City Government Supporting a Diverse and Viable Economy.
• Strategic Objective 2.1: Ensure a diverse City tax base.
• Strategic Objective 2.2: Invest in community places to ensure revitalization and increase the quality of life.
• Strategic Objective 2.3: To leverage partnerships for job creation and retention, with a focus on the local and regional workforce to increase per capita income
• Strategic Objective 2.4: Sustain a favorable development climate to encourage business growth.
Goal IV: Desirable Place to Live, Work, and Recreate
• Strategic Objective 4.5: Ensure a place for people to live in great neighborhoods.
Goal VI: Collaborative Citizen and Business Engagement.
• Strategic Objective 6.2: Ensure trust and confidence in City government through transparency and high-quality customer service.
• Strategic Objective 6.3: Inform and educate about local government by enhancing public outreach and increasing community dialog, collaboration, and empowerment.
Executive Summary:
Council is asked to •receive an update and provide consensus direction to enact proposed changes to the City’s economic development programs and priority redevelopment areas. The proposed updates modernize longstanding Community Development Block Grant (CDBG) and locally funded programs, with CDBG funds focused primarily on creating job opportunities for low- and moderate-income individuals. The changes would expand eligibility, increase flexibility, support private reinvestment, and maintain appropriate review for larger or higher-risk projects.
Background:
The City has operated CDBG-funded economic development programs for more than 25 years. These programs were originally created to support downtown redevelopment and have evolved over time to serve low- and moderate-income areas of the city and respond to inflation. Through this current effort, staff has reviewed the programs against applicable federal and state requirements and identified opportunities to modernize the City’s policies and program design. For CDBG-funded economic development activities, the primary objective is to create or retain job opportunities for low- and moderate-income individuals.
While U.S. Department of Housing and Urban Development (HUD) regulations and state law establish the legal framework for these programs, many of the City’s current limits are the result of local policy choices and program design rather than outside legal requirements. As currently structured, the programs limit eligible locations, eligible applicants, maximum assistance amounts, and the types of projects the City can support. These restrictions can prevent the City from assisting otherwise eligible projects that could advance job creation, business reinvestment, and commercial redevelopment goals.
In 2019, City Council approved a locally funded corridor-focused façade program to support smaller exterior improvements. That program has provided a useful tool, but it now overlaps with portions of the City’s CDBG-funded programs. Staff recommends aligning the CDBG-funded and locally funded programs into a clearer structure that expands flexibility, supports priority redevelopment areas, and maintains appropriate review by staff, the City Manager, or City Council depending on project size, risk, and funding source.
Outside of activities supported through the Fayetteville Cumberland Economic Development Corporation, the City’s direct economic development programming is primarily supported by CDBG funds, one grant-funded Full-Time Equivalent position, and a portion of the Director’s time. The proposed changes are intended to make better use of existing tools and staff capacity while allowing the City to say yes to more eligible and impactful redevelopment projects.
Issues/Analysis:
The City’s current economic development programs are more restrictive than required by applicable federal and state requirements. Current policy limits eligible locations, eligible applicants, maximum assistance amounts, and the types of projects the City can support. As a result, the City may be unable to assist otherwise eligible projects that could create or retain job opportunities for low- and moderate-income individuals, which is the primary objective of CDBG-funded economic development activities.
The current program structure also relies heavily on geography-based eligibility. This can create inconsistent outcomes where one business may qualify because it is located within an eligible low- and moderate-income area, while a similar business located nearby may not. The proposed changes would allow the City to evaluate a broader range of eligible projects while still ensuring compliance with CDBG requirements, state law, and local approval procedures.
The proposed updates would modernize the City’s program structure by expanding eligibility, increasing flexibility, and creating enhanced benefits within priority redevelopment areas. Smaller, routine projects would continue through staff-level review, while larger or higher-risk projects would require review by the City Manager or City Council depending on project size, funding source, risk, and policy impact.
While the primary purpose of CDBG-funded economic development assistance is job creation and retention for low- and moderate-income individuals, the proposed changes would also support related redevelopment goals. These include encouraging private reinvestment, improving aging commercial properties, strengthening priority corridors, expanding access to capital, and improving the City’s ability to partner with lenders and other community development organizations.
Budget Impact:
The City receives an annual allocation of CDBG funds, with the upcoming allocation including approximately $428,000 designated for economic development activities. The proposed program changes do not require an additional appropriation at this time but are intended to improve the City’s ability to use existing CDBG and local economic development funds more effectively. Larger projects may require advance planning, future budget consideration, or use of additional tools such as Section 108 financing or partnerships with outside lenders.
Options:
Council may elect one or more of the options below:
• Receive an update and provide consensus direction to enact proposed changes to the City’s economic development programs and priority redevelopment areas.
• Do not receive an update and provide consensus direction to enact proposed changes to the City’s economic development programs and priority redevelopment areas.
• Direct staff to take another action as determined by Council.
Recommended Action::Recommended Action
Staff recommends that Council receive an update and provide consensus direction to enact proposed changes to the City’s economic development programs and priority redevelopment areas.
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Attachments:
Presentation on Economic Development Program Modernization and Priority Redevelopment Areas