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The CDBG Shoe Drops

We know a little more this morning about the potential impact to the City of Trenton’s private community-based service organizations of Mayor Eric Jackson’s potential Voluntary Grant Reduction (VGR) plan. This plan, reported in this space on Wednesday, calls for a massive reduction over three years in funds that normally would be expected to be granted to the City from the US Department of Housing and Urban Development (HUD) under its Community Development Block Grant (CDBG) program.

The VGR has been proposed, in Mayor Jackson’s own words, “in lieu of repayment in the amount of $3,322,313.00 for disallowed expenditures determined during the 2010 and 2014 monitoring visits conducted by Housing and Urban Development staff for the program years 2007-2013.”

This annual reduction of $1,107,437 in the project years of 2018, 2019, and 2020 will dramatically impact the CDBG program in Trenton. To put that number into context, for the program year 7/1/15 to 6/30/17, Trenton received $2,371,985 for the CDBG program (see page 9 in this report). The VGR will whack close to 50% off these funds, if it is implemented as Mayor Jackson as proposed.

From the City’s CDBG funds, about $600,000 annually (page 93 of this report) has been sub-granted to local community organizations to help support their public service programs. Among these organizations have been the Trenton Area Soup Kitchen, The Crisis Ministry of Mercer County, NJ Tennis & Learning, and the Shiloh Community Development Corporation (page 22 of this report). Altogether, each year the City receives applications from over fifty organizations, with proposals totaling over $2 Million Dollars. Out of those applications, only $600,000 or so is awarded. Competition is keen, and the City’s selection and award process has been the subject of some controversy over the last few years.

That competition will likely become much more cutthroat after the VGR kicks in. In a memo yesterday emailed to likely attendees of a grant technical assistance workshop being held this afternoon at Trenton’s Council Chamber (forwarded to me by one of those attendees, thank you!), beginning the application process for next year’s CDBG application process, City Chief of Housing Production Marc Leckington announced,

“Due to a voluntarily grant reduction (VGR) the City expects to receive approximately $1.1M less in CDBG funds per year for the next three years. The VGR is the result of negotiations with the Department of Housing and Urban Development to address findings identified in a 2014 monitoring visit. This will, in turn, reduce the Public Service allocation to approximately $100,000 annually.  The final figures are dependent on Federal budget allocations for the CDBG Program.” [Emphasis mine - KM]

The VGR will reduce funds available to these community organizations by about $500,000 per year for each of the next three years, about $1,500,000 in total. The rest, $1,800,000 and change, will reduce the City’s direct expenditure on a wide variety of projects such as: providing home improvement assistance grants directly to eligible homeowners helping them to cure code violations; help operate the city’s Senior Centers and pay for programs there; demolish vacant and abandoned buildings; and help removal of lead in city homes (pages 23-52 of this report).

The potential loss of about half of the City’s CDBG grant for three years – that is, IF Mayor Jackson’s proposal is approved by HUD, and IF the CDBG program survives during the next three Federal budget years – will definitely impact the city and its services. How significant this impact will be is unknown. We may get some taste of it if any report comes out of today’s grant workshop at City Hall. The meeting is in Council Chambers at 1:00 PM, and it’s open to the public, if anyone is interested. If you go, let me know what happens.

Earlier this week, we found out that the Mayor’s VGR proposal, dating to December of last year, and the disallowed program expenses that led to the proposal, even existed. We also found out about another $2.4 Million in CDBG grant funds that were left unspent over the last ten years.

Today, we start to find out what the impact of the Grant Reduction will mean to the future of social services in this City for the next three years. As I’ve attempted to describe above, we won’t know for sure for some time to come, but it’s a good bet it ain’t gonna be good.

Next, this space will start to explore how we came to this sorry situation in the first place. Stay tuned.

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