AGO 1989-060.

• Case Date: May 16, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-060. May 16, 1989ATTORNEY GENERAL OPINION NO. 89-60Harland E. PriddleSecretary Kansas Department of Commerce 400 West 8th Street 5th Floor Topeka, Kansas 66603-3957 Re: Constitution of the State of Kansas--Corporations--Cities' Powers of Home Rule Synopsis: Moneys emanating from the federally funded Community Development Block Grant Program, which is administered (as to non-entitlement cities) by the Kansas Department of Commerce, may be loaned by a city to a private business which invests capital and creates new jobs in the city's economy. Such loans, which are regulated by the state (through approval of the local revolving loan fund plan), do not violate the Kansas Constitution or any state statute. Cited herein: K.S.A. 9-702; Kan.Const., Art. 12, § 5. * * * Dear Mr. Priddle: You request our opinion as to whether moneys emanating from the federally funded Community Development Block Grant Program, which is administered (as to non-entitlement cities) by the Kansas Department of Commerce, may be loaned by a municipality to a private business in order to stimulate economic development and create jobs. Such loans would be regulated by the state through approval of the local revolving loan fund plan. The Community Development Block Grant Program is governed by Title I of the Housing and Community Development Act of 1974, and you provide the following overview of the allowed utilization of the funds: 1. Funds passed from HUD to the State's Small Cities Program. 2. State grants the funds to a municipality. 3. Municipality loans the funds to a private business. 4. Business repays the loan to the municipality. 5. Municipality may or may not be allowed by State to capitalize local funds with repayment of loan by business. 6. If not allowed by State to capitalize local fund, loan repayments made by business to municipality return to State program and is redistributed by State. 7. If allowed by State to capitalize local fund, loan repayments made by business to municipality are placed in the local revolving loan fund. 8. If the Local Revolving Loan Fund Plan is disapproved by the State, it is returned to municipality for change. 9. If Local Revolving Loan Fund Plan is approved by State, the municipality may keep the loan payments made by the business. These monies are regulated by the State...