JOSEPH KRIESBERG
Proposed program ‘biased’

Local government officials and community development groups are scrambling to save federal programs that have provided funding to cities and towns in the Bay State and throughout New England to create affordable homes, support small-business development and pay for a variety of social service programs.

Under President Bush’s budget proposal, several funding mechanisms including the Community Development Block Grant, a 31-year-old program that provides money to cities to improve neighborhoods and foster economic development, would be eliminated.

If the grant program is slashed, New England cities and towns would lose more than $234 million, according to the National Community Development Association’s New England division. Massachusetts alone stands to lose $123 million.

The Community Development Block Grant, or CDBG, has been a consistent and reliable source of funding that enables communities to determine how to best utilize the federal dollars, said Larry Casassa, deputy planning coordinator and housing program director for the city of Fitchburg.

Casassa said communities like Fitchburg, which received $1.4 million in block grant money last year, have used block grant money to leverage private financing. In Fitchburg, between 200 and 300 low- to moderate-income homebuyers have been assisted with the help of grant money, said Casassa.

Under Bush’s plan, Fitchburg would lose all of its funding. The administration wants the CDBG program – which this year will distribute $4.7 billion to cities and towns throughout the country – to be combined with 17 others into one $3.7 billion initiative called the Strengthening America’s Communities Grant program, which would be administered by the Department of Commerce. Currently, the block grant program is under the control of the Department of Housing and Urban Development.

A Devastating Effect

The Bush administration argues that the move would create a more targeted and unified program that sets strong accountability standards in exchange for flexible use of federal funds. The funds would be targeted to high-poverty areas, provide greater incentives and increase accountability so federal development money actually makes a difference in distressed areas, according to HUD.

But advocates say the administration has not been clear on how the funds in the new program would be spread or whether housing activities would be part of it.

“We don’t even know what mechanism would be available to apply for funding from the program,” said Casassa.

The president’s proposed cuts will have a devastating effect on community development corporations in Massachusetts and throughout the country, according to CDBG supporters. Joseph Kriesberg, executive director of the Massachusetts Association of Community Development Corporations, said every single real estate project that’s been completed by a community development corporation in the Bay State probably has some block grant money associated with it, either directly or indirectly.

The block grant program has helped fill a critical gap when it comes to financing commercial real estate projects in Boston neighborhoods, according to Jeanne Pinado, executive director of Madison Park Development Corp.

Madison Park Development Corp. combined CDBG money with other financing to rehabilitate two commercial buildings in Dudley Square in Boston’s Roxbury neighborhood: a 45,000-square-foot building with offices and ground-floor retail on Washington Street, which had been vacant for years; and Hibernian Hall, an old Irish dance hall with 24,000 square feet of space that’s being converted into office and retail space and a two-floor ballroom and performance center.

Pinado said the cuts would leave a big hole in budgets that local governments will be unable to fill.

“I think that [cutting CDBG] would really prevent a lot of important commercial development projects in the neighborhood from going forward,” said Pinado.

Urban Edge, a CDC that operates in Boston’s Roxbury and Jamaica Plain neighborhoods, has utilized CDBG money for affordable housing and jobs programs. The organization also used grant money with other resources to build the Egleston Youth Center and develop Egleston Center, a key commercial building in Roxbury’s Egleston Square.

“It’s a key piece of the overall funding that allows projects like the youth center and Egleston Center to happen,” said Mossik Hacobian, executive director of Urban Edge.

In addition to funneling money to CDCs like Madison Park, the city of Boston has used grant dollars for its Main Streets program, a city effort to promote neighborhood-based business districts.

Boston, which would lose more than $23 million, also has used much of its grant money for affordable housing. At a meeting and press conference organized by the National Community Development Association New England division last Monday, Charlotte Golar Richie, director of the city’s Department of Neighborhood Development, said Boston’s efforts to create more housing will be “severely hampered” by the proposed cuts.

Boston Mayor Thomas M. Menino met with service providers and community leaders a week ago to discuss the impact of the budget cuts. “The mayor is going to champion this cause because we understand what it is going to do to us,” Richie said.

U.S. Rep. Barney Frank of Massachusetts, who also spoke at Monday’s meeting, said years of tax cuts and the cost of funding the war in Iraq are behind the reduced budget spending. Just last week, the president asked Congress for an estimated $80 billion in additional funds to pay for continuing military operations in Iraq and Afghanistan, while at the same time tightening spending on a variety of government programs.

But Frank urged community development officials in New England to contact members of Congress to oppose the cuts.

It’s not just the CDBG program that’s in jeopardy. Calling Bush’s proposal outlandish and draconian, MACDC’s Kriesberg noted that almost every federal program that community development corporations rely on is either being consolidated or eliminated under the president’s budget.

And since the Strengthening America’s Communities Grant program that’s being proposed will be targeted to states with high poverty levels without taking into account a state’s cost of living, Kriesberg maintains that Massachusetts will lose out.

“Massachusetts stands to get very little funding because [the consolidated program] will be heavily biased against states with high costs of living,” said Kriesberg.

While Kriesberg said he thinks the proposal “is so beyond the realm of reasonableness that it will collapse,” he worries that even if Congress rejects Bush’s idea, states will still see significant cuts in funding.

“We need these programs to be increased and strengthened. If we see 10, 20 or 30 percent cuts, then the president will have succeeded in dismantling a lot of what we’ve built over the last 10 to 20 years,” he said.