Wayne County is changing how it doles out millions of dollars in federal grants to smaller cities, after years of complaints that it was squandering money intended to help the poor.
One year after a federal report slammed Wayne County’s handling of $5 million in community development block grant funds, the county is reforming how it distributes the money from the U.S. Department of Housing and Urban Development.
For 40 years, the county divided grants through a formula that was partially based on suburban population. That gave richer, larger suburbs a disproportionate share of the grants intended for the poor.
Starting next year, cities will be required to propose projects - such as parks, demos or housing rehabs - and compete for the money.
Smaller cities with many needs such as Hamtramck and Inkster are expected to get a bigger share of the funds, while larger, upper-income areas such as the Grosse Pointes will likely get less.
That means less funding for senior citizen shuttles in upscale Plymouth and more money for blight removal in needy Highland Park, after the county commission approved the change by a vote of 13 to 1 last month.
“It’s likely more resources will go to communities where there’s more poverty,” said
Khalil Rahal, an assistant county executive and director of economic development.
“(So that) we’re putting it into areas where it’s needed most.”
The county also expects to save about $450,000 in administrative costs that can be put toward projects.
Last year, Wayne County communities funded 143 block grant projects for a total of about $5 million. In some cases, administrative costs exceeded those of the project, Rahal said. Last year, the county wrote a check for a project that cost $1,000, far less than what it cost in manpower to monitor and evaluate the project, he said.
“We were wasting money,” he said. “We hope to not issue another check under $20,000.”
Under the new policy, each community will get $20,000 per year that can be saved and taken as a $100,000 lump sum at the end of five years.
Atop that money, a total of $3.4 million in block grants will remain, which communities can compete for with requests for proposals, assuming the federal budget funds the program at the same level.
Ecorse, a city of about 9,000 residents west of Detroit where a third of residents live in poverty, has used its block grant money in recent years for housing demolitions.
Last year, it received about $130,000. Officials hope for far more money under the new program for in-fill housing and other big projects that wouldn’t have been possible under the old process.
“Under the old way, we were the ones getting stiffed. The low- to moderate income communities were losing and the communities that don’t need the money were winning,” said Mayor Lamar Tidwell. “Now the playing field is even.”
The community development block grant program, commonly called CDBG, started in 1974 during the Nixon administration to fight slums, blight, health and environmental threats in low-to-moderate income areas.
Cities with a population over 50,000 people like Detroit get community block grants directly from the federal government, and are not impacted by Wayne County's changes.
Grants for smaller cities are administered through county governments.
Among so-called entitlement federal government programs, the CDBG money has the widest variety of uses, Rahal said.
More affluent communities in Wayne County often use the money on transportation services to take senior citizens to doctor appointments or shopping. Meanwhile, the poorer areas are in need of more money to combat threats such as blight.
County Commissioner Al Haidous, D-Wayne, said Wayne County has had one of the nation’s worst CDBG programs for years.
The old process often led the county to take back unused money from the richer communities that couldn’t find eligible projects. Over the years, millions of dollars have been taken from richer cities and redistributed to poorer areas, said Haidous, who was previously on the advisory board for the CDBG program for two decades.
This year, the county received notice from HUD that communities have to spend up $2 million by May or the 2020 funds will be reduced by that amount, Haidous said.
That wasn’t the first time. The HUD threats typically have led to a flurry of officials in upper-income areas looking for something to spend the money on before it gets taken back, he said.
“In the end, I voted for the change because the old system is not working,” Haidous said. “I represent seven communities and most of them need that money.”
In 2018, an audit from HUD’s Office of Legislative Auditor General of the CDBG found the county’s process was full of problems including “incomplete documentation of activities; poor communication between the County, participating jurisdictions and sub-recipients; and potential violations of HUD requirements and Federal regulations in the administration of program funds,” according to a report conducted for the county last summer by the Clark Hill law firm.
The county responded by taking a look at large counties that do a good job administering grants, such as Harris County in Texas and Los Angeles County in California that use a bid process.
‘Like herding goldfish’
The city of Plymouth, northwest of Detroit, is an upper-income enclave of about 8,000 people where the median household income is about $80,000. The city got about $44,000 in CDBG funds last year, down from about $70,000 about 15 years ago.
The city last year used the money to install curbs that are compliant with Americans with Disabilities Act recommendations to help sight-impaired people cross the street.
John Buzuvis, community development director for the city of Plymouth, said the CDBG process is cumbersome, costing untold amounts in administrative time and money.
“It’s like herding goldfish,” he said.
Plymouth stands to lose CDBG money to the new process, but didn’t fight the change partly because the new process will reduce administrative costs.
“It frees us up to really design and compete for a meaningful and well-thought out project,” he said.
And if poorer areas win all the money, it’s good for the county, Buzuvis said.
“If Wayne County gets better, everybody gets better. All boats rise.”