Housing agency has $52 million in unspent funds City, HUD blame delays on each other

February 05, 1993|By Joan Jacobson | Joan Jacobson,Staff Writer

An article in The Sun yesterday reported incorrectly that the Baltimore Housing Authority administers the Community Development Block Grant Program and the HOME Program. In fact, the programs are run by the city's Departmeht of Housing and Community Development. Robert W. Hearn heads both agencies.

) The Sun Regrets the Error

While Baltimore's housing commissioner blames the city's decaying housing stock on a stingy federal government, his agency is sitting on $52 million in federal money that could be used to fund anti-poverty programs, to make loans to developers and to renovate vacant houses.

The money comes from two programs administered by the U.S. Department of Housing and Urban Development -- and some of the cash has been accumulating for more than a year.

FOR THE RECORD - CORRECTION

In fact, Baltimore has so much unspent Community Development Block Grant money that HUD wants to know what's wrong. In November, HUD wrote Robert W. Hearn, executive director of the city's Housing Authority, and asked him to explain why it's taking so long to spend the money.

At the end of last month, the city had $42 million in unspent block grant funds -- money that can be spent for projects that better the lives of low- to moderate-income city residents, HUD officials said yesterday.

In addition, the city has yet to spend another $10 million provided by a new federal program called HOME. That money is to be used to build new homes and to renovate vacant buildings for poor tenants and homeowners.

The HOME money has been available since July, but none of it has been spent.

Meanwhile, some projects are in limbo while developers wait for construction loans from the HOME program. For example, Jesse Alfriend, development officer for St. Ambrose Housing Aid Center, is waiting for money to renovate 49 houses on behalf of seven other non-profit community groups.

"We have contractors who are waiting to start work," he said. "Some of us have used lines of credit to buy these houses so we're paying interest. The later we start, the later we'll finish. We don't want houses to sit during the holidays [next Christmas]. That's the worst time to market houses."

Another developer blamed HUD for the delay. While HUD has earmarked $10 million for Baltimore, the HOME program's arcane rules make it extremely difficult for the city to gain access to the money, said Jay French, president of the Jay French Development Co.

"The complexity of the [federal] regulations defy understanding," French said.

City officials also blamed HUD, complaining that the agency took a "hostile approach" in its dealings with Baltimore under the Bush administration.

"We hired a lawyer to fight HUD's overtly hostile approach to Baltimore City with regard to the block grant program," Mayor Kurt L. Schmoke said through a spokesman last night, when asked whether his administration and the Housing Authority had done all they could to make use of the federal money.

"They tied that program into regulatory knots that took an administrative law judge to unravel in favor of Baltimore City," Mr. Schmoke said. "And since that judge's ruling and the confirmation of Henry Cisneros [as President Clinton's HUD secretary], HUD's attitude toward the city is like the difference between night and day."

But other developers say the city hasn't worked hard enough to overcome the obstacles posed by federal rules. They also say the city lacks the expertise to handle the money if and when the city receives it.

Seven months have passed since the HOME money became available, but the city has yet to set up a cash management system for distributing and accounting for the money.

By contrast, Pittsburgh set up its cash management system in May and has already spent $1.1 million of its $4.4 million HOME money to rehabilitate houses for the poor, said Edward Henry, an official at the Pittsburgh Urban Redevelopment Authority.

News of the unspent funds in a city with 6,000 vacant houses came as a surprise to City Councilwoman Mary Pat Clarke.

"We could fix every vacant house in the entire city and be done with it," she said.

HUD's block grant allocation to Baltimore has averaged more than $20 million annually in recent years.

Housing Commissioner Hearn, who was said to be at a meeting, could not be reached yesterday by a reporter or the mayor's office.

But Deputy Commissioner Harold R. Perry blamed past conflicts between the city and HUD for the accumulation of the block grant money.

In the spring, HUD had ordered the city to stop spending block grant funds, he said. That prohibition remained in place until the city initiated a hearing several months later that allowed it to resume spending block grant money, he said. The fight over the money was settled in December, Mr. Perry added.

"In the interim we were denied funding, which caused a backlog," he said. "But we already have communicated with HUD and said that within six months we will be back on track with our funding."

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