Community Development
6:53 pm
Tue June 5, 2012

City looking to spend federal money more efficiently, quickly

It seemed like a simple enough question: How much of a $25 million annual federal allocation did Mayor Mitch Landrieu’s administration spend last year to help struggling residents and address blight?

The precise figure is hard to decipher, city officials said. On the one hand, the city spent more than $25 million because of money rolled over from previous years. But it didn’t spend all of its 2011 money, citing project delays.

As they do annually, the feds are letting the money roll into this year, so the city hasn’t lost any funding.

But taken at face value, the report on the grant money raises questions about the city’s oversight and ability to promptly draw down the federal money.

In particular, the report says the city:

  • barely helped one-third of those it planned to get into new houses through a first-time homebuyer plan;
  • provided less than half of the minor home repairs to residents that it projected;
  • helped just more than half of those planned for in providing housing services to people with HIV/AIDS.

It is “absolutely not true” that the city didn’t come close to maximizing the available money last year, said Brian E. Lawlor, the city’s director of Housing Policy and Community Development.

He said that the city’s report just doesn’t reflect reality.

First drafted months ago, he said it doesn’t take into account a flurry of updates that show most of the money was spent and that city goals were met.

“As it is every year, many of the accomplishments that are chronicled in the report are from projects that initiated before the reporting year of 2011” Lawlor said, “and much of the 2011 activity may not be completed but will be reflected in the 2012 … report.”

The report admits that the city doesn’t have a strong record of spending money on time, but that officials are working to correct that.

City officials involved in writing the report said they disclose only the finished projects reflected in their computer system when the federal report is drafted. That means the report is skewed in part by contractors who are late in filing required paperwork, Landrieu administration officials said.

HUD officials wouldn’t say whether it’s common for cities to report their achievement a year later, saying in a prepared statement only that the city is responsible for its contractors meeting all reporting deadlines.

The federal housing agency said that the city has the responsibility to “satisfy all timelines stipulated by each HUD program.”

Administration officials said they’re working to ensure closer reporting compliance this year, which will be the first year of a new five-year plan for the recovery and redevelopment of New Orleans.

Four major grants sent to city

The grant spending and reporting is overseen by the mayor’s Office of Community Development. Landrieu administration officials speaking on behalf of that office met with The Lens to explain the report, including Lawlor and Anthony Faciane, who heads the city’s Neighborhood Stabilization Program.

The city is required to detail this spending in what’s called the Consolidated Annual Performance and Evaluation Report, sent to the U.S. Housing and Urban Development Department, which makes the money available. A draft of the report was made available to the public March 15, though a Lens reporter had a bit of difficulty getting hold of it. A final report was submitted to Washington April 2.

The report offers great detail on proposed redevelopment goals versus completed goals.

The federal allocation of $24.8 million in new grants for 2011 was offered for four programs:

  • Community Development Block Grants, offered broadly to improve low-income communities: $14.9 million
  • HOME Investment Partnerships Program, to create affordable housing for low-income residents: $5.8 million
  • Housing Opportunities for Persons with AIDS: $3.4 million
  • Emergency Shelter Grant for homelessness: $734,728

The bulk of the money is funneled to contractors, both for-profit and nonprofit, rather than the city providing the services directly. Those contractors are required to provide regular monthly updates though a web-based federal tracking system.

Reporting vs. reality

City officials can only report what contractors have updated, Faciane said. As a result, the annual report gives a jarring appearance of failure at a few junctures.

For example: The report contains a chart that said the city planned to help 349 people through the Minor Home Repair grant last year. That’s a piece of the larger Community Development Block Grant designed for homeowners whose houses were damaged by Katrina or Rita.

But the report said only 159 people benefitted.

However, the city’s fourth-quarter report from 2011, called ResultsNOLA, said that it helped 339 people.

A ResultsNOLA explanation of the discrepancy noted that once additional contracts were signed in mid-2011, “the high demand for this assistance allowed Community Development to exceed their annual goal.”

Yet that information wasn’t reflected in this year’s federal report, which was made public in mid March.

City officials went to pains to explain the examples of apparent failures drawn from the report:

The city helped just over half of those it planned to getting into new homes through a first-time homebuyer plan. The program is targeted at homebuyers who purchase homes damaged by Rita or Katrina.

The ResultsNOLA report confirms that the goal was not met for 2011: 31 people received funding in 2011 and the goal was 50. But the report explains that it’s due to developers waiting for the city’s highly anticipated $52 million soft-second mortgage program to kick in – which only happened last month.

“Many developers elected to delay projects utilizing funds from the First Time Homebuyers Program so that they could leverage them with resources from the Soft Second program,” the quarterly report reads.

The city helped just more than half of those planned for in providing housing services to people with HIV/AIDS. And yet it rolled $3.5 million forward to 2012.

The ResultsNOLA report confirms that the goal was not met for 2011. While 530 people with HIV/AIDS were assisted, that fell well short of the annual goal of 900. ResultsNOLA reported that federal regulations and a “mismatch of local and federal budget cycles caused delays to contract awards to nonprofit service providers.” City officials insist that the mismatch has been addressed.

Millions moved into current year

City officials reported that Housing and Urban Development dollars are left on the table every year, for a variety of reasons. At least $20.7 rolled into the current year, said Landrieu spokesman Ryan Berni, who provided the following amounts:

  • Community Development Block Grant: $16.3 million rolled over from 2010; at least $5.2 million rolled over to 2012, said city officials;
  • HOME Investment Partnership Program: $5.9 million rolled over from, 2010; $11.5 million rolled over to 2012;
  • Housing Opportunities for People with AIDS: $900,000 rolled over from 2010; $3.5 million rolled over into 2012;
  • Emergency Shelter Grant for homelessness: $680,000 rolled over from 2010; $500,000 rolled over to 2012.

Officials said it is a priority for the city to have an exacting metric to measure its redevelopment initiatives.

The priority is well-placed. The report admits that the city hasn’t always spent the federal money expeditiously.

The Office of Community Development “is taking steps to ensure that certain program requirements such as the expenditure of CDBG funds will be undertaken in an efficient and timely manner,” the report reads. “The CDBG and HOME expenditure rate had been a problem for the City but is constantly being addressed. The expenditure rates will be closely monitored by OCD’s Fiscal and Neighborhood Stabilization offices throughout the year.”

The city is on the hook to Housing and Urban Development should any recipient fail to achieve the grant-funded objective. There are hundreds of recipients spread across the four grants. In 2011, said city officials, they pulled their commitment to some of them, citing non-performance. In those cases, the money was redirected to other contractors to accomplish the work, officials said.

“The city must alter plans as appropriate to insure that all program commitment and disbursement deadlines are met,” Housing and Urban Development officials said in a statement.

City officials also said the federal government gives the city up to two years to allocate grant funds, and recipients are given five years to spend down the money. An annual report to the federal government, they said, can’t be fairly used to judge failure or success on the city’s part to enforce the outcome demands of a grant.

In its statement, HUD said its deadline vary, but the city is responsible for meeting them.

Though the report runs through the end of 2011, more than a year and a half after Landrieu took office, city officials said that “virtually everything” in the report reflected contracts and allocations dating to when former Mayor Ray Nagin was in office.

Taking money from non-performing contractors

City officials said they spent most of 2011 reviewing and assessing those deals, some of which were voided. The idea, they said, was to continue working with grant recipients whose projects were in line with the Landrieu administration’s priorities.

One contractor that predated Landrieu, nonprofit housing developer Jericho Road, “took on the contract but got caught up in the decline in the housing market — and was unable to spend its share of the grant,” Faciane said.

Landrieu signed two contract extensions for Jericho Road, dated April 1, 2010, though he didn’t take office until the next month.

The city reclaimed $1.2 million set aside for Jericho Road’s home-construction program and rolled it into 2012, Faciane said.

Another, First Evangelist Housing, won a $230,000 grant to build six homes under the HOME program.

“They performed well with the rental program,” Faciane said, “but had trouble with the home ownership grant.”

The money was made available to other applicants, he said.

City officials were insistent in rejecting any attempt to read municipal failure into the report’s findings. Even when goals were unmet in a particular calendar year said Faciane, “that doesn’t mean we’ve lost the money.”

Officials conceded that there’s often a lag between the procurement of grant money and its expenditure on a particular project. The factors are many but include environmental reviews and other bureaucratic impediments to speedy use of the grant money.

“Our priority is to remediate blight and vacant properties,” Faciane said, “but we have to be strategic about it.”

Lawlor said, though, that the city has room for improvement.

“We have a ways to go,” he said, “but we’ve made progress in the last year to establish guidelines, policies and priorities.”

City officials said they are up to date on expenditures, commitments and filings with the federal agency.

Community Development Block Grants

At nearly $15 million in 2011, Community Development Block Grants comprise the largest share of the federal housing grant funds available to New Orleans. This money is used for a range of services, including home repairs, rental assistance, and youth and senior services.

It also finances the city’s aggressive blight initiatives –Durr Heavy Construction and the city’s Office of Code Enforcement are dominant line items in the city’s breakout of how this money was spent.

The $14.9 million grant was 18 percent below its 2010 allocation.

HOME Investment Partnerships Program

The HOME program provides rental, first-time homebuyer, and minor-repair programs. The entire $5.8 million HOME grant was used toward this end. According to the report, $3.4 million in Community Development Block Grant was disbursed under the HOME grant for a total expenditure in 2011 of $9.1 million for those programs.

The 2011 money received from HUD was received in late 2011and will all be spent by the fall 2012, Lawlor said, reiterating that the city has two years to spend it.

The HOME grant was slashed by almost 12 percent from 2010, but city officials noted that after the annual report was issued, additional money was made available through HOME – but detail on how much and how it was spent wouldn’t be reflected until next year’s report.

Housing Opportunities for Persons with AIDS

The bulk of this grant was divided among a half-dozen local HIV/AIDS service providers.

  • NO/AIDS TaskForce: $810,000
  • Concerned Citizens for a Better Algiers: $780,000
  • Project Lazarus: $690,000
  • Shelter Resources, Inc: $613,737
  • Brotherhood, Inc: $290,000
  • Responsibility House: $90,000

The total grant for Housing Opportunities for Persons with AIDS was $3.4 million – a 14 percent cut from 2010.

Emergency Services Grant

The Emergency Shelter Grant provided $734,728 for helping homeless people transition to housing and general self-sufficiency. The grant was funded to cover 785 homeless persons. In New Orleans, 5,174 homeless-assistance efforts were made in 2011, which includes individuals seeking assistance more than one time.

The report notes that the city was “hamstrung” by a spending cap on the Emergency Shelter Grant. According to Housing and Urban Development regulations, only 30 percent of the Emergency Services Grant can be used for direct payments used to keep people off the streets. The grant provides funds for security deposits, first-month’s rent and other direct assistance.

Absent the cap, “more clients, who could conceivably be assisted, are forced into eviction and homelessness, exacerbating an already out-of-control problem.”

The Emergency Services Grant was cut by about 1 percent from 2010.

The five-year plans

New Orleans embarked on a five-year plan in late 2005 for the four housing-related grants. At the time, Mayor Ray Nagin identified a number of general priorities:

  • Increase the supply of decent affordable rental property to extremely low-income and low-income families;
  • Rehabilitate owner-occupied housing units according to Housing Quality Standards to low-income and low-to-moderate income households;
  • Assist extremely low-income and low-income homeowners with minor repairs;
  • Assist low and moderate-income renter households become homeowners;
  • Provide infant and toddler childcare services for low- to moderate-income families;
  • Provide transportation accessibility, nutrition services, and access to recreation, cultural and civic activities for seniors;
  • Increase the supply of accessible, least-restrictive living opportunities with integrated support services for needy households and persons with special needs;
  • Assist homeless families in moving to self-sufficiency through the provision of a continuum of care.

Those guidelines drove the grant implementation process through 2010. The latest report emphasizes that New Orleans has realigned its priorities toward a targeted neighborhood approach to recovery, under a rubric of “holistic” redevelopment.

After meetings in late November 2010 with consultants working for Housing and Urban Development, the city moved to better sync its consolidated plan for spending the federal money to the city’s long-range master plan, and new proposed zoning ordinances now being hashed out by the City Planning Commission.

Landrieu’s housing team worked to align the federal spending with the mayor’s priorities this year.

The city’s new plan provides the framework for how New Orleans would implement the grants, and gives a blueprint of its priorities moving forward. The Consolidated 2011 Draft Action Plan, written in July, indicates that 60 percent of the newly available grant funds would be targeted at the following neighborhoods:

  • Mid-City
  • B.W. Cooper
  • River View
  • Landry
  • Hollygrove
  • New Orleans East
  • 7th Ward
  • Lower 9th Ward
  • Pontchartrain Park
  • Central City
  • St. Roch
  • Gert Town

The draft action report states that “by encouraging applicants to invest in these areas … the city of New Orleans is confident that successful applicants will develop projects that will lead the way for greater public and private development.”

The Landrieu team will draft a five-year plan for 2012-16 that reflects the intersecting policy initiatives and funding sources — and continues to emphasize redevelopment on a holistic basis, targeting the whole package of chronic problems in a given neighborhood, and using federal funds to fix them.

Part of the plan, too, is to get these reports to sync up to the extent possible. Lawlor said it was a priority to try and achieve “consistency across the reports” in time for next year’s report to the federal housing agency.