Miami stands to lose $5.8 million in federal funding for affordable housing, infrastructure and anti-poverty programs, according to a stinging memo from the U.S. Department of Housing and Urban Development to Mayor Tomás Regalado.
The reason: City officials have failed to spend some $13.3 million in Community Development Block Grants they have received from the federal government over the past three years.
The feds have strict guidelines for using the dollars on schedule — and are now threatening to withhold some, if not all, of the city’s 2013 allocation.
“Pursuant to a review, HUD has determined that Miami is not carrying out its CDBG program in a timely manner...” HUD Deputy Assistant Secretary Yolanda Chávez wrote. “HUD has a longstanding policy of reducing the future year’s grant of a grantee that continues to be untimely.”
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HUD is offering Regalado the chance to explain why Miami has not spent its money. If the reasons are deemed “beyond the city’s control,” Miami could get a reprieve. If not, it will mean fewer dollars for things like street repairs, senior centers and services for the disabled.
Roberto Tazoe, assistant director of community development, said the money accrued partly because Miami had only six months to draw down about $8 million in 2010, after, for accounting purposes, it shifted its fiscal year for CDBG funding. Money started to go unspent — and continued to build up in 2011 and 2012 when new allocations weren’t spent, either.
In addition, the amount that HUD permitted Miami to keep in its fund balance shrank.
Tazoe said city leaders were working on a plan to spend the remaining funds as quickly as possible.
“The director is confident that we will be able to work with HUD to resolve the issue,” he said. “It’s not just us. Other municipalities are in a similar situation.”
But Commissioner Francis Suarez blamed high levels of turnover in the city’s Capital Improvements department. The department has had four different leaders over the past three years: Ola Aluko, Alice Bravo, Albert Sosa, and current chief Mark Spanioli.
Suarez said about $800,000 in CDBG funds have been designated for projects in his district, including renovations to Southwest Eighth Street between 27th and 32nd avenues. Another project seeks to alleviate flooding in the Silver Bluff neighborhood, he said.
“I’ve had dollars allocated for months that haven’t been touched by the capital improvement program,” Suarez said. “The turnover has had a profound effect on the quality of life in our city, especially for the poorest members of our community.”
Neither Regalado nor City Manager Johnny Martinez returned calls seeking comment.
City officials declined to provide details on which projects have been approved, but not funded, late Wednesday. CDBG dollars support a range of services in Miami, from the Allapattah Community Action Center to the after-school and daycare programs at the Centro Mater child care center in Little Havana.
Despite the city’s inability to spend all of its CDBG money, Regalado crusaded for additional funding just last year.
When the federal government announced that Miami’s CDBG dollars would be slashed by 34 percent to just under $5 million, Regalado held a press conference criticizing President Obama. The mayor also lobbied for federal legislation that would increase the percentage of CDBG money that could be used for social services. He was not able to change the current formula, which requires cities to use 85 percent for economic development and 15 percent on social services.
Miami’s spending has been called into question in the past. In 2009, the city had to reimburse more than $4 million in CDBG money that federal authorities said had been improperly used to support Miami’s downtown business district.
The latest controversy stems from federal guidelines allowing grant recipients to keep up to 1.5 times the amount of their annual allocation on reserve, in a HUD line of credit.
Last year, Miami received just under $5 million in funding, meaning the city’s fund balance could be as much as $7.5 million. But as of last month, Miami’s balance topped $13.2 million.
The possible penalty, $5.8 million, is the amount the actual fund balance exceeds the allowed fund balance.
It is too soon to know how much money Miami stands to receive under CDBG formulas this year, regardless of questions about its unspent balance. But Chávez said the size of Miami’s penalty would not be larger than its total share of funding from the program.
Miami has until March 5 to schedule a meeting in Washington or hold a teleconference with HUD on the matter.
“Should Miami decline to participate in the informal consultation, the city’s 2013 entitlement award will be reduced,” Chávez wrote.
Commissioner Frank Carollo said he plans to ask questions at a City Commission meeting Thursday.
“Whenever there is a threat of losing dollars, it’s a concern,” he said.