News
Jul 05 2006
Coburn: Block grant program misused
OKLAHOMA CITY – The best way to deal with cuts to the federal Community Development Block Grant program – which provides $20 million to Oklahoma each year – is to make sure the remaining funds are used to their best advantage, U.S. Sen. Tom Coburn, R-Okla., said last week.
“This is not about going after CDBG bond grants, it’s going after the waste in the CDBG bond grants and creating accountability and transparency,” said Coburn, chairman of the Senate Subcommittee on Federal Financial Management. On Thursday afternoon, Coburn held a hearing entitled “Community Development Block Grants: The Case for Reform.”
The CDBG program was created in 1974 to help communities and individuals with low-to-moderate income create jobs and improve the public infrastructure. But Coburn said the program has gotten off track.
“CDBG has been a great thing for lots of communities,” Coburn said. “The problem with it is the rich communities are getting more than the poor communities, and the program was designed for the poor communities. How is it that Marion, Pennsylvania, gets $45 per person and they have $50,000 per capita income, and Muskogee, Oklahoma, gets about $3 per person and we have income of about $12,000 per person? How does that happen?”
Some economic development specialists are getting nervous about the future of CDBGs since President George W. Bush has recommended a substantial reduction in federal funding for the program. Bush’s executive budget would allocate the program nearly $2.8 billion for the federal fiscal year that begins Oct. 1; the CDBG program was provided more than $3.7 billion last year.
The Washington, D.C.-based International Economic Development Council, as part of a coalition of 16 organizations that includes Habitat for Humanity, the Council of State Community and Economic Development Agencies, the National Association of Counties and the National League of Cities, successfully lobbied Congress last year to save the CDBG program, the council reported. This year, the coalition is fighting for continued funding.
“(The coalition’s) members expressed concern that the 25 percent reduction in funding will pose serious threats to their ability to provide important services and economic recovery for their citizens,” reads a press release from the International Economic Development Council.
“CDBG is an important tool used by local and state officials as they tackle their most serious community development challenges, providing funding for public works and infrastructure, decent affordable housing, public services and economic development,” reads the release. “Many of these activities are carried out at the local level by private companies, such as construction contractors, plumbers and electricians, as well as by non-profit community-based providers… Every dollar of the CDBG program invested in communities is leveraged by three dollars in private funding, bringing much-needed investment, jobs, and the chance for a fresh start to blighted communities.”
The Oklahoma Department of Commerce receives an average about $20 million in CDBG funds each year from the U.S. Department of Housing and Urban Development in the form of grants or loans. Since the state began administering the program in 1982, about 2,300 Oklahoma projects have been funded and completed, the Commerce Department reports.
A map of Oklahoma provided by Commerce shows a fairly even distribution of CDBG projects across the state, with the exception of the panhandle area. Funds are distributed among eight different kinds of projects, from water/wastewater infrastructure improvements to housing revitalization, industrial park development and more. Projects funded must meet certain requirements, such as they must benefit low- and moderate-income people, prevent or eliminate slums and blight, or aid in an emergency situation posing a serious and immediate threat to the health or welfare of a community.
In Oklahoma, at least 95 percent of the $17.2 million Oklahoma received for the current fiscal year will be used to benefit low- and moderate-income people, according to Commerce. The majority of this year’s funding has been allocated for projects to improve communities’ infrastructure, nearly $8 million of which is targeted for water/wastewater construction projects.
In the past, CDBG funds have been used in Oklahoma for a variety of projects, including $200,000 for the city of Jennings to improve the water system for less than 400 residents, and $500,000 for road and rail improvements to support a new production plant for Durant Biofuels, which expects to create 141 new jobs by 2008. In Oklahoma City, $6 million in CDBG funds were used in conjunction with $29 million in private funds for the Renaissance Hotel, and $3.5 million in CDBG funds were combined with nearly $4.8 million in private funds to redevelop the vacant Robberson Steel Plant, which helped create 119 new jobs.
But nationwide, there have been problems with the CDBG program, said Coburn. The Washington, D.C., area, for example, received $100 million in CDBG grants over the last eight years but has little to show for it, said Coburn. The program’s outdated funding formula has not been altered since the 1970s, he said, and grants are not consistently targeted for communities in need. There is no way for a community to “graduate” from the program, said Coburn, so no matter how rich a community grows it may still technically qualify for CDBG funds. Previous attempts to reform the program have been met with open hostility in Congress, Coburn said.
“I’m afraid that many of my colleagues view the program as an entitlement for their home districts,” he said. “Last month, HUD delivered the latest Community Development Block Grant reform proposal to Congress. I hope that Congress will take our responsibility to Americans seriously and finally make this program work for the needy communities it was created to help... As more and more accounts of waste and abuse surface, we simply cannot neglect our duty to the next generation in favor of the next election.”
Coburn teamed up with Illinois’ Democratic Sen. Barrack Obama to introduce legislation that would create a public, online database showing exactly how and where the government spends more than $300 billion in grants and contracts annually, including the money spent on CDBG projects. Shining the light on government spending would reduce the potential for waste and abuse of taxpayer funds, said Coburn. The effort has resulted in some unusual alliances, and garnered predictable opposition from contractors and grant recipients, he said.
“You have everything from gay rights groups to very conservative groups supporting this,” Coburn said. “Everybody realizes, no matter what your view of the federal government’s role, that in this declining financial pinch we’re in that we have to be good stewards. So if your view is that the government should do more, you know you can’t afford to waste any money anywhere. If you think the government ought to be smaller, you don’t want to waste any money anywhere…. Nobody wants the money to be wasted unless it’s the person that’s actually getting the benefit from the waste, and they hate it.”
“This is not about going after CDBG bond grants, it’s going after the waste in the CDBG bond grants and creating accountability and transparency,” said Coburn, chairman of the Senate Subcommittee on Federal Financial Management. On Thursday afternoon, Coburn held a hearing entitled “Community Development Block Grants: The Case for Reform.”
The CDBG program was created in 1974 to help communities and individuals with low-to-moderate income create jobs and improve the public infrastructure. But Coburn said the program has gotten off track.
“CDBG has been a great thing for lots of communities,” Coburn said. “The problem with it is the rich communities are getting more than the poor communities, and the program was designed for the poor communities. How is it that Marion, Pennsylvania, gets $45 per person and they have $50,000 per capita income, and Muskogee, Oklahoma, gets about $3 per person and we have income of about $12,000 per person? How does that happen?”
Some economic development specialists are getting nervous about the future of CDBGs since President George W. Bush has recommended a substantial reduction in federal funding for the program. Bush’s executive budget would allocate the program nearly $2.8 billion for the federal fiscal year that begins Oct. 1; the CDBG program was provided more than $3.7 billion last year.
The Washington, D.C.-based International Economic Development Council, as part of a coalition of 16 organizations that includes Habitat for Humanity, the Council of State Community and Economic Development Agencies, the National Association of Counties and the National League of Cities, successfully lobbied Congress last year to save the CDBG program, the council reported. This year, the coalition is fighting for continued funding.
“(The coalition’s) members expressed concern that the 25 percent reduction in funding will pose serious threats to their ability to provide important services and economic recovery for their citizens,” reads a press release from the International Economic Development Council.
“CDBG is an important tool used by local and state officials as they tackle their most serious community development challenges, providing funding for public works and infrastructure, decent affordable housing, public services and economic development,” reads the release. “Many of these activities are carried out at the local level by private companies, such as construction contractors, plumbers and electricians, as well as by non-profit community-based providers… Every dollar of the CDBG program invested in communities is leveraged by three dollars in private funding, bringing much-needed investment, jobs, and the chance for a fresh start to blighted communities.”
The Oklahoma Department of Commerce receives an average about $20 million in CDBG funds each year from the U.S. Department of Housing and Urban Development in the form of grants or loans. Since the state began administering the program in 1982, about 2,300 Oklahoma projects have been funded and completed, the Commerce Department reports.
A map of Oklahoma provided by Commerce shows a fairly even distribution of CDBG projects across the state, with the exception of the panhandle area. Funds are distributed among eight different kinds of projects, from water/wastewater infrastructure improvements to housing revitalization, industrial park development and more. Projects funded must meet certain requirements, such as they must benefit low- and moderate-income people, prevent or eliminate slums and blight, or aid in an emergency situation posing a serious and immediate threat to the health or welfare of a community.
In Oklahoma, at least 95 percent of the $17.2 million Oklahoma received for the current fiscal year will be used to benefit low- and moderate-income people, according to Commerce. The majority of this year’s funding has been allocated for projects to improve communities’ infrastructure, nearly $8 million of which is targeted for water/wastewater construction projects.
In the past, CDBG funds have been used in Oklahoma for a variety of projects, including $200,000 for the city of Jennings to improve the water system for less than 400 residents, and $500,000 for road and rail improvements to support a new production plant for Durant Biofuels, which expects to create 141 new jobs by 2008. In Oklahoma City, $6 million in CDBG funds were used in conjunction with $29 million in private funds for the Renaissance Hotel, and $3.5 million in CDBG funds were combined with nearly $4.8 million in private funds to redevelop the vacant Robberson Steel Plant, which helped create 119 new jobs.
But nationwide, there have been problems with the CDBG program, said Coburn. The Washington, D.C., area, for example, received $100 million in CDBG grants over the last eight years but has little to show for it, said Coburn. The program’s outdated funding formula has not been altered since the 1970s, he said, and grants are not consistently targeted for communities in need. There is no way for a community to “graduate” from the program, said Coburn, so no matter how rich a community grows it may still technically qualify for CDBG funds. Previous attempts to reform the program have been met with open hostility in Congress, Coburn said.
“I’m afraid that many of my colleagues view the program as an entitlement for their home districts,” he said. “Last month, HUD delivered the latest Community Development Block Grant reform proposal to Congress. I hope that Congress will take our responsibility to Americans seriously and finally make this program work for the needy communities it was created to help... As more and more accounts of waste and abuse surface, we simply cannot neglect our duty to the next generation in favor of the next election.”
Coburn teamed up with Illinois’ Democratic Sen. Barrack Obama to introduce legislation that would create a public, online database showing exactly how and where the government spends more than $300 billion in grants and contracts annually, including the money spent on CDBG projects. Shining the light on government spending would reduce the potential for waste and abuse of taxpayer funds, said Coburn. The effort has resulted in some unusual alliances, and garnered predictable opposition from contractors and grant recipients, he said.
“You have everything from gay rights groups to very conservative groups supporting this,” Coburn said. “Everybody realizes, no matter what your view of the federal government’s role, that in this declining financial pinch we’re in that we have to be good stewards. So if your view is that the government should do more, you know you can’t afford to waste any money anywhere. If you think the government ought to be smaller, you don’t want to waste any money anywhere…. Nobody wants the money to be wasted unless it’s the person that’s actually getting the benefit from the waste, and they hate it.”
