Delaware City Council gave the first reading Monday to an ordinance that would spend down nearly $500,000 of a total $600,000 in a federally sponsored revolving loan fund, responding to pressure from the state of Ohio to put such funds to use in the community.

Delaware City Council gave the first reading Monday to an ordinance that would spend down nearly $500,000 of a total $600,000 in a federally sponsored revolving loan fund, responding to pressure from the state of Ohio to put such funds to use in the community.

Shannon Hamons, city economic development coordinator, said the high balances result partly from previous loans being paid back.

"This money is basically available to us because previous loans made to companies for local job creation have been paid back for this year and previous years," Hamons said. "Subsequently, we have a large balance. The state is requiring all communities to have balances spent down."

The money involved is federal funds administered by the state of Ohio Department of Development as Community Development Block Grants.

Hamons said the city would face a similar decision about excess fund balances next year, as loan payments are again put into the revolving loan fund.

"After the first of the year we will be getting more payments in as we move forward for 2011, so it's quite possible by the end of next year we may have another $250,000 to look at other projects," Hamons said.

Council member Andrew Brush said some businesses are reluctant to apply for the funds because of red tape. Hamons said the city expects to formalize its application process and make some effort to reduce paperwork requirements associated with the program.

"The paperwork requirements to apply for a revolving loan fund loan are fairly onerous, and I suspect that's why we've had limited interest from the business community in using these dollars for what the state originally intended them for," Brush said.

"It's a matter of educating the business community about what could be available for them next year," Hamons said. "It is extremely time consuming. The process we're undergoing has a huge amount of paperwork, a lot of checks we have to do."

Among projects that would be approved under the ordinance read Monday are $50,000 for rehabilitation of the Strand Theatre, added to $150,000 already approved from a similar fund maintained by Delaware County, $50,000 toward downtown facade rehabilitation, $150,000 toward downtown streetscape work, and $25,000 for a study in conjunction with Ohio Wesleyan University for Sandusky Street upgrades and planning.

Mayor Gary Milner asked why the city's facade program was limited to the area between Central Avenue and Spring Street. Hamons said consultants had advised the city to adopt a more compact area initially to create a greater impact from concentrated upgrades, and then expand the program at a later date.

"I kind of understand that, but to me that is still part of the core of downtown," Milner said. "I wouldn't necessarily take it all the way to Lincoln, but there are buildings on North Union and North Sandusky both that are actual businesses that are part of downtown."