Local organizations house the homeless, feed the hungry, and assist the poor with help from federal Community Development Block Grant funding, but not all of the CDBG money Toledo receives annually goes toward charitable groups.
In fact, a Blade investigation shows the city has consistently spent more CDBG dollars on city staff salaries than on community programs, something the new Kapszukiewicz administration says it wants to change.
“Looking at the CDBG numbers that we have inherited makes it clear to me that the city’s priorities have been upside-down for the last several years,” Mayor Wade Kapszukiewicz said. “It is something that is indefensible, and it is something that neighborhood groups and CDBG recipients should be up in arms about.”
The federal funding is intended to help cities “ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses,” according to the U.S. Department of Housing and Urban Development’s website.
HUD figures show the department distributed $3.2 billion in CDBG funding nationwide in fiscal year 2017. In the last five grant cycles Toledo has received between $6.7 and $7 million annually.
Records from the city’s department of neighborhoods, which allocates the grant dollars, show that in 2013 Toledo spent about $6.07 million in CDBG money. Of that, about $3.7 million — or 61 percent — went toward staff versus $2.2 million — or 36 percent — that went toward programs.
In 2014, 32 percent of the total CDBG money spent went toward programs. In 2015 it was 33 percent, in 2016 it bumped up to 39 percent, and in 2017 it rose to 43 percent.
In the past five years about $950,000 in CDBG funding has been paid toward rent in One Government Center and more than $20,000 was spent on parking for city employees, according to city figures.
“There is a certain amount of overhead and staff that will have to be paid for by CDBG. I think everyone understands that,” Mr. Kapszukiewicz said. “But a majority of CDBG money has to be spent on programming, it has to be spent on neighborhoods, and it has to help try to lift people out of poverty. It is not supposed to be spent on salaries, parking, and overhead.”
Toledo City Council Member Sandy Spang for several years has been pushing to reform the way the department of neighborhoods spends CDBG funds. She has watched the U.S. Conference of Mayors praise leadership in Cincinnati, Dayton, Youngstown, and Lorain for their effective use of CDBG money and wondered why Toledo isn’t on the list.
She argues the bulk of CDBG dollars needs to go toward programs that fit each neighborhood’s master plan, which are developed in conjunction with the Toledo-Lucas County Plan Commission.
“This is some of the only really creative money that comes into the community,” Ms. Spang said.
As an example, Ms. Spang said she would like to see a program developed where small-business owners could apply for a grant to help pay for code upgrades such as new plumbing and electrical systems. She said a project like that — something that would help someone launch a business and breathe new life into a Toledo building — has the potential to benefit a neighborhood for years.
Her hope is that as public money is invested across Toledo, private investment will follow.
“This is the only money in our community that could really be leveraged for larger, more meaningful projects. But it’s been diluted so much that we don’t see those meaningful projects,” she said. “If every year we’d been pumping $4 or $5 million into neighborhoods, where would we be today?”
Ms. Spang also worries about the impact to the general fund budget should the federal CDBG funding abruptly shrink, as has been said will happen. The city relies year after year on CDBG dollars to pay for staff salaries, and those funds have become increasingly unpredictable, she said.
“We put ourselves into a very precarious situation here,” she said. “This money needed to be looked at as one-time money, rather than operational dollars.”
Bonita Bonds, acting director of the department of neighborhoods, said her department has never received any general fund money for salaries and therefore relies solely on grant dollars to pay for the staff necessary to run the CDBG program.
“Running federal programs is not an easy task, and with having federal money comes a lot of responsibility,” she said. “There’s reporting, there’s fiscal responsibility, there’s planning responsibility, there’s monitoring responsibilities, and so you have to have the staff to make that happen.”
Ms. Bonds added the department has always spent the bulk of its dollars on wages since she started working there in 2010. In the last five grant cycles, between 11.5 and 7.5 percent of CDBG money set aside for wages has been spent on employees outside of the department of neighborhoods, according to data provided by Ms. Bonds.
“We of course would like to spend more money on programming, but it’s a balancing act,” she said. “If we spend more on programming, then the general fund has to kick in more money for those costs, and I don’t know if the general fund can support that.”
Ms. Spang acknowledged employees are needed to monitor how federal money is being spent, but she proposed moving away from the practice of giving out a couple of dozen small grants and instead awarding fewer, larger grants as a way to cut costs.
“You essentially have to monitor the $500,000 grant the same as the $30,000 grant,” she said. She emphasized funding for the city’s homeless shelters would be safe should the city start to award fewer, larger grants.
Ms. Spang also proposed not filling any open positions typically paid for with any CDBG funding.
When Mayor Kapszukiewicz took office in January, he had just under three months to amend the 2018 spending plan proposed by the Hicks-Hudson administration in November. He formed a joint-budget task force between city council members and his administration to go over the numbers.
Councilman Tom Waniewski, who served on the task force, said one of the group’s three goals was to “see if we could really untangle the CDBG monies.”
The 2018 budget passed March 27 puts $65,649 back into the department of neighborhoods for programs by using general fund dollars to pay for economic development positions that previously received CDBG funding. It’s a start, but there’s still a ways to go, Mr. Waniewski said.
Mr. Kapszukiewicz has also talked about partnering with the Lucas County Land Bank, of which he is chairman, to shift costs elsewhere.
“Going forward I can see some of the duties that in the past were performed by the city of Toledo’s department of neighborhoods being performed by the land bank in a way that would allow us to free up some of those CDBG dollars, take them away from staff, and fold them into programming,” he said.
He acknowledged the possibility that city jobs could be cut, or that the general fund would take a hit if more CDBG money was spent on programming instead of salaries. Solving the problem will take structural change, and the status quo is “unacceptable,” he said.
“Sweeping change is what is needed, and the best time to make sweeping change is at the beginning of an administration,” Mr. Kapszukiewicz said. “Otherwise inertia takes over, bad habits take over, and I think that’s probably what happened in the past.”
Historic South Initiative, which is working to renovate homes in need of repair in the Old South End, hopes to be the newest addition to the city’s list of CDBG recipients.
President Chris Amato said he supports the efforts by city council and the Kapszukiewicz administration to free up more funding for projects because it means organizations like his are more likely to receive funding, and possibly larger amounts.
He is asking for $50,000 in the next grant cycle, which he estimates would benefit up to 10 households.
“It will allow us to do more housing rehab in the Old South End. It will directly impact citizens and families and certainly that neighborhood,” he said. “The need is incredible.”
The department of neighborhoods is in the process of collecting public feedback on the city’s “action plan” for how it will use its next round of CDBG funding. At a public hearing Monday, Ms. Bonds told the audience that HUD notified her that the money for the upcoming program year, which begins July 1, will be delayed and possibly reduced from past years.
The city typically knows how much CDBG money it will have to distribute by June or July, but Ms. Bonds said it is unclear when HUD will announce its allocations for the 2018-19 grant cycle.
“We don’t know what those dollars are going to look like this year,” she said at Monday’s hearing. “We’ve been told for the past two years to expect substantial cuts or possibly no funding at all, so we’re all sitting in my office, fingers crossed, hoping that we at least receive our level funding.”
Contact Sarah Elms at selms@theblade.com, 419-724-6103, or on Twitter @BySarahElms.
First Published April 8, 2018, 3:09 a.m.
