Mayor Justin Bibb wants to use federal block grants to push Cleveland’s community development corporations (CDCs) toward more substantial home repair work, but several City Council members are calling for a complete overhaul of the funding system.
CLEVELAND, Ohio – Mayor Justin Bibb wants to use federal block grants to push Cleveland’s community development corporations toward more substantial home repair work, but several City Council members are calling for a complete overhaul of the CDC funding system that’s been in place for decades.
The debate hit a crescendo last week during the city’s annual community development block grant hearings, as council members almost universally questioned the wisdom of continuing to pay for CDC staff using money from the U.S. Department of Housing and Urban Development, rather than from the city’s general fund. The federal funding, coupled with local regulations, presents just too many administrative hoops for CDCs to jump through, council members said.respond to all the needs in their communities, such as small home improvements, cleaning up illegal dump sites and countless other services that improve quality of life. Councilman Kerry McCormack noted that CDCs exist to do the work that city government has historically failed to do. “For once and for all, we need to change this system,” McCormack said. “It’s not working for these local non-profits.”Housing and Urban Development’s various grants to the city of Cleveland are expected to amount to $34 million in 2023 and have long represented the vast majority of money spent by City Hall on community development. At issue is a roughly $9 million slice of that funding, used year-after-year to pay for a large, crucial share of each CDC’s staffing costs. While Bibb controls roughly $1.2 million of it, the other $7.6 million is controlled by, and split equally among, City Council’s 17 members for CDCs in their neighborhoods. That federal money, targeted at improving low to moderate income areas, comes with strings attached in the form of goals, known as “accomplishments.” Cleveland has failed to hit all those goals, and in recent years, HUD has been cracking down, said Community Development Director Alyssa Hernandez and Assistant Director Michiel Wackers. Fearful that HUD will reduce Cleveland’s block grants if more of those goals aren’t met, City Hall, over the past seven or more years, has increasingly limited the kinds of work CDCs can complete using their block grant money, they said. It’s an attempt to help CDCs narrow their focus. And it’s a recognition that community development, Wackers said in a Jan. 31 committee hearing, has been “pulled in all kinds of directions and [is] not really doing any of them very well.”“We’re doing that, to be frank, because our accomplishments were low in several areas,” Hernandez said during last week’s council hearings, adding, “That’s my only goal: To ensure those dollars continue to flow through. In order to do that -- in a way where HUD continues to allow us to be the eighth largest entitlement -- we have to make sure we are accountable.” Joy Johnson, executive director of CDC Burten, Bell, Carr Inc., said the city’s changes are “really them responding to national pressure.” CDCs must and will adapt to the changes, Johnson said, just as they’ve had to adapt over the decades as funders dictate and shift their priorities.City Hall is currently looking to award the next batch of block grants to CDCs, with a greater focus on improving Cleveland’s housing. The city’s guidelines this year newly require CDCs to use at least half of their money for major home renovation, rehabilitation and maintenance projects. Economic development is another focus of this year’s policy change, which attempts to prioritize more assistance for small businesses, like help with expansions or relocations.In the past, CDCs could aim to perform several types of those services, such as security patrols for businesses, crime awareness and prevention, graffiti removal, neighborhood clean-ups, landlord-tenant mediation, financial literary for homebuyers, workforce development and community engagement. Going forward, CDCs are generally limited to picking just one such activity for federal reimbursement.“The actual money to pay for the hammer and the nails to rehab the house -- we’re getting that from other sources. But the city’s money helps us to put those plans together, to apply for grant applications, and engage the residents on what their needs are,” Johnson toldNow that there are greater limits on the use of that kind of “public service” money, Johnson said her organization may have to find another way to pay for community outreach, which she said the city encourages and often requires for different development projects. “So, if we don’t have that [staff], how do we know what houses to do? How do we know what businesses to assist? For us to do community-driven work, it’s kind of counterintuitive,” Johnson said.on the condition of anonymity, said it’s difficult to get “public service” activities, like addressing neighborhood safety, to count toward one of HUD’s goals. Another change this year sets minimums that CDCs must meet or exceed for home rehabilitation, or maintenance and repair projects -- at $5,000 and $1,000, respectively. Previously, much cheaper projects counted toward the HUD goals. The city says it’s making this change, and the others, to encourage more major housing repair and rehab projects, because Cleveland is aiming to improve its housing stock citywide, which is largely comprised of old homes that are increasingly in need of repairs.Councilwoman Rebecca Maurer, for example, lamented that the installation of a bathtub handrail, which can help seniors stay in their homes, costs far below the $1,000 minimum -- and therefore, CDCs wouldn’t be able to count that work toward their goals. “The type of work we want to see is more substantial than a handrail. It looks like a handrail and a roof... I’d venture that if a senior in your neighborhood needs a handrail, they probably also need something else in their home,” Hernandez responded. “With the level of disrepair we have across our city, a threshold of $1,000 for a repair is not unreasonable.”Hernandez, in council hearings, has acknowledged that the city needs to broadly revisit its community development strategies if it wants to substantially improve its housing stock. She said she’s implemented numerous changes to the department over her first year in office meant to improve its work and ease the burden of HUD requirements, such as new software and streamlining the CDC payroll process. The CDC restrictions do represent a change-in-approach, but the city, at least for now, is still relying on the same block grants that Councilman Kris Harsh, former housing director at Metro West CDC, said have been used to fund CDCs in Cleveland since HUD started the program in the 1970s. Cleveland is, and long has been, rather unique among U.S. cities in using block grants to pay for CDC staffing. Local CDCs obtain most of the money they use to actually complete repairs through non-city sources, such as non-profits and private donors. But the staffing money, carrying HUD- and city-imposed restrictions, is not the right fit for CDCs, council members say. The organizations are expected to be nimble in responding to community needs, and amount to jacks-of-all-trades in the services they deliver, which already go far beyond the types of things the CDBG money can be used for, Harsh told“The department is trying to get more and more restrictive on the activities that the CDC should be engaged in, which takes away the flexibility of neighborhoods to actually respond to the environment they’re in and actually be responsive to the people in their community,” Harsh said. “Not every community is the same.”The CDC director who spoke anonymously said block grant money “never quite aligned with everything we do.” The city-imposed restrictions, in addition to the federal requirements, were another source of frustration. On top of that, the director said the city often notifies CDCs of the changing restrictions too late. “They’ve never let us know, year over year, what is going to change…Instead, they do these incremental changes, and we find out about them about a month before we have to apply for the next funding cycle,” the director said. Late notification, the director said, means CDCs struggle to have the staff and money in place to meet the city’s changing directives. Ed Stockhausen -- of Cleveland Neighborhood Progress, which helps facilitate the work of local CDCs --agreed, particularly because CDCs must float their own expenses up front and wait for the city’s HUD money to reimburse them. Some CDCs have cash to cover the wait; others don’t, he said. The added restrictions “make it more burdensome, accelerate the change too fast, and still barely pay for the capital to do the work, which has to be raised in advance. And then you’ve got to make payroll. And then you have to wait on reimbursement, sometimes which comes months late,” Stockhausen said.Harsh, along with McCormack and several other council members, are calling for a re-thinking of the funding structure altogether. They propose the city swap out CDBG money, where appropriate, with general fund money, so CDCs can have more flexibility, and worry less about ticking all the administrative boxes required by HUD and the city. In one example from McCormack, the city could easily do that by using HUD money to pay for street repair, which is eligible for block grants and is currently funded by the general fund. Then, CDCs could receive much more flexible money from the general fund that previously went to street repair. McCormack said he intends to assemble a working group, who can use the next several months to determine how to improve funding for CDCs, in hopes of landing on a solution by this time next year. Hernandez last week didn’t rule out the idea of swapping the CDCs’ money, but she didn’t get on board with it either. She said doing so would require a larger conversation with Bibb and other higher-ups at City Hall, likely because it would mean big changes to the city’s overall budget.about the idea of potentially getting out from under some of the burdensome requirements that come with HUD dollars. “I think we’re moving in a good direction,” the director said, noting that they believe council’s increased focus on improving CDC funding is a product of new council members, who once worked in the CDC industry, such as Harsh. Stockhausen said the city’s CDC funding “is an old system that warrants a fresh perspective and reconsideration.”to be the pathway there, and more funding for community development overall will be key. Stockhausen sees the growing debate over a re-thinking of Cleveland’s community development strategy, and funding, in a positive light: “That is what’s so exciting about this moment -- that you’re seeing everybody say they want the same thing,” he said. “It feels like it should be adversarial but it’s not. We’re all actually figuring out that we’re pulling the rope in the same direction.” If you purchase a product or register for an account through one of the links on our site, we may receive compensation.
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