HUD blasts city over misuse of anti-poverty funds
Buffalo continues to ‘misuse’ block grants and anti-poverty aid, housing report states
Buffalo, the nation’s third-poorest city, continues to mismanage anti-poverty aid from the federal government, a scathing audit has found.
Among the problems: too much spending on bureaucrats, questionable financing for upscale housing developments and sloppy fiscal management.
“Less than 50 percent of every [block grant] dollar spent results in projects that directly benefit low-and moderate-income residents,” said the report by the U.S. Department of Housing and Urban Development.
City Hall gets about $22 million a year in Community Development Block Grant funds — which total more some $670 million since the program began in 1974. Federal audits dating back to the era of Mayor James D. Griffin have identified chronic problems that the latest review shows continue under Mayor Byron W. Brown.
The monitoring report identified 19 serious problems with the program. The report covered operations as they were last summer and found “an overall management system did not exist to carry out the . . . program.”
City Hall, according to the HUD review:
• “Misused” block grant funds to pay $3.1 million in salaries and benefits of some 80 employees without adequately documenting that they perform tasks eligible for block grant funding.
• Made questionable use of $2.6 million to help underwrite two market-rate housing and commercial projects, Granite Works at 800 Main St. and Warehouse Lofts at 210 Ellicott St.
• “Failed to produce any records” to show the use of $1.5 million to demolish 50 buildings was permissible under federal regulations.
• Diluted the impact of block grant funds by earmarking their use in at least 13 target areas. The city then compounded the problem by spending the lion’s share on citywide projects and soft costs, resulting in less money to spend in distressed neighborhoods.
• Failed to document that it met requirements to consult with key stakeholders — including poor people — in developing a plan to spend anti-poverty funds.
• Failed to retrieve $608,000 in money and other assets from neighborhood housing organizations that stopped making loans in 2000. The money is sitting “idle” in bank accounts, the report said.
• Spent $1.1 million to buy, sell or maintain commercial properties in a manner that doesn’t appear to meet federal requirements.
The city has 45 days to either challenge HUD’s findings or submit a plan to correct the problems.
Mayoral spokesman Peter K. Cutler declined to comment on the report.
“It’s a draft report,” he said “and we don’t comment on draft reports.”
Stephen Banko, regional director of HUD’s office in Buffalo, said the report was not a “draft,” but he declined further comment.
However, in an interview he gave to Artvoice this week, Banko harshly criticized the Brown administration’s management of the program. No federal program in New York State has ever had as many as 19 findings of fault, save for the city’s HOME program, which HUD eventually removed from city control.
“This ought to be astonishing to anyone who cares how the money is spent,” Banko said in the interview.
HUD for years has criticized Buffalo’s block grant program for poor management of projects, deficient accounting systems, inadequate monitoring of agencies, insufficient citizen participation and faulty planning.
The Common Council on March 13 approved a $23.8 million block grant budget for the coming fiscal year. The approval came despite complaints from some members that the program lacks transparency and accountability and that the administration withheld key spending data.
Council members changed less than 1 percent of Brown’s proposed budget before approving it. The city’s control board must still approve the budget, which is then forwarded to HUD for final approval.
A Buffalo News investigation in 2003 found Buffalo received more block grant money per capita than all but one city in the nation. But City Hall had squandered much of the funding through parochial politics and bureaucratic ineptitude, The News found.
More than half went to “soft costs” that included covering bad business loans, paying City Hall salaries and subsidizing an overblown network of neighborhood agencies, The News reported.
While the city under Mayor Anthony M. Masiello instituted some minor reforms, the HUD audit indicates most of the problems remain.
Meanwhile, the Brown administration has yet to deliver on a promised anti-poverty plan.
A year ago, Brown appointed a deputy mayor to craft an anti-poverty plan. The hire, Donna Brown, was immediately assigned other responsibilities that she said gave her little time during her first six months to concentrate on poverty. A plan that she said would be delivered in January has not been released.
News Staff Reporter Brian Meyer contributed to this report. jheaney@buffnews.com
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