Tuesday, January 12, 2010

HUD Monitoring Disaster CDBG Funding More Closely?

For more than a few weeks, American Zombie and I have been wondering aloud Mayor Ray Nagin administration's interpretation of laws governing money outside the parameters of the regular city budget, as well as City Council's oversight of that money.

Of particular concern is the "revolver fund" that the Louisiana Recovery Authority established to advance cash to parishes to pay for projects that will eventually get FEMA reimbursement. Nagin wants to use some of that money to buy the Chevron Building and convert it into a new city hall - even though the council has already rejected such a move.

A statement from Nagin spokeswoman Ceeon Quiett makes it clear the administration believes it has discretionary power over funding streams like the revolver fund and that the council has no legal oversight.

"The matter before the City Council was the appropriation of funding from one capitol [sic] account to another ..not an approval of the acquisition. Funding appropriation –Legislative Branch authority per the charter, Purchases –Executive Branch authority per the charter."

To clarify, Quiett is saying that the proposal to buy the Chevron building that was shot down by City Council over the summer involved the city budget. Because the most recent proposal only uses money from state and federal sources, such as the revolver fund, there is no formal oversight process through which the administration must seek City Planning Commission or City Council approval. Whether that is accurate is debatable, but it is the administration's position nonetheless.

Presumably, that position extends to the city's use of the Disaster Community Development Block Grant money, for which the LRA is the local administrator of federal funds from the U.S. Housing and Urban Development Department. The City Council had obligations when it comes to this money in that the LRA required a recovery plan with community buy-in, including Council approval, before the agency would release the HUD funds.

However, when it comes time to allocate real capital to a specific project, the modification of the original plans accepted by the LRA, or the reallocation of surplus money from a specific project, it would appear that the Mayor has vast powers.

Once the Council approves a framework for yearly DCDBG expenditures, only the LRA or HUD would be in position to block funding for a specific project submitted by Nagin on the grounds that it deviates from the original recovery plan, anticipated expenditures were vaguely documented or if HUD regulations are otherwise violated.

Since the Obama administration took office and Shaun Donovan was sworn in as the new secretary, HUD has been more proactive about cracking down on dysfunctional projects. HUD's receivership of the Housing Authority of New Orleans, for instance, has been totally reshuffled amid widespread allegations of graft and waste.

There is also evidence that HUD is taking a fresh look at its role in the hurricane recovery process both in New Orleans and elsewhere.

In November, AP reported that a HUD review had discovered over 11 million in unaccounted disaster money at the New Orleans Redevelopment Authority (NORA) that had fallen victim to poor record keeping or a failure to follow HUD regulations.

That same week AP also reported that HUD had rejected Texas' recovery plan for rebuilding areas badly battered by Hurricane Ike in 2008. The notification letter from HUD, which you can read here, suggests that Texas' plan was denied for failures to comply with federal citizen participation requirements.

Are these recent actions highlighting regulatory compliance issues in New Orleans and Texas indicative of a much more widespread concern on the part of HUD administrators that processes governing the efficient use of recovery money were poorly constructed, inattentively followed or even explicitly violated?

What effect will increased federal scrutiny have on controversial local projects, such as the Municipal Auditorium renovation and the purchase of the Chevron Building, for which the Nagin administration claims the City Council has no stipulated oversight authority?

To what extent does the council concede or dispute the administration's interpretation of their oversight authority over irregular DCDBG and revolver funds? How does that effect their ability to halt the mayor from spending money on major developments should they wish to do so?

While the upcoming elections have clearly taken center stage, the dispute between the outgoing administration and the City Council over the discretionary use of federal and state recovery dollars is the most important subplot for engaged citizens to closely monitor. It is this fundamental interpretation of City Charter and of HUD rules and regulations that looms over the individual development controversies that grab headlines - from Municipal Auditorium to Lower Mid-City and the proposed medical complex.

When news broke that the Chevron Building purchase was revived, City Council members expressed surprise and confusion. Yet since the New Year, there appears to have been no follow-up. It should be very interesting to watch what happens as specific projects begin to initiate expenditures.


mominem said...

I got an email from my council member essentially stating that sine there weren't enough votes of the council to sue the Mayor, there was nothing the Council could do.

Giovanni said...

Still holding out hope that more structure and details can be provided by HUD on the use of CDBG disaster assistance funds so that everyone (state govt/federal/citizens) is clear on it. May not happen though until the new administration has been in place for awhile. Katrina CDBG funds might be gone by then.

Anonymous said...

One wonders what funds and grants have been sought and/or applied within Renewal Community "49" which is bounded by South Claiborne, South Broad, Banks and St. Louis. This zone overlaps the LSU and VAMC footprints, excluding Tulane Avenue and the former hotel at 1732 Canal.