Empty

Palm Beach Post - Sunday, July 23, 2000

Palm Beach County's use of grants attacked
By Trebor Banstetter

Palm Beach County plans to shift millions of dollars' worth of federal grants from the poor neighborhoods they were meant to boost in order to prop up county and city budgets, outraged housing advocates say.

And, they say, most counties across the country will do the same thing.

Federal officials, meanwhile, say there's room for interpretation in the 30-year-old law.

Money the county receives from the federal Community Development Block Grant program -- nearly $7 million this year -- is supposed to be invested in low-income neighborhoods. The law creating the program directs local governments to use the money to improve housing in poor areas, create jobs, reduce homelessness and boost income levels.

But almost one-third of the cash that will be granted to county coffers for the financial year beginning Oct. 1 is slated for roads, sidewalks and similar improvements in those neighborhoods.

That relieves cities and the county of paying for the work themselves and frees money for the general fund, benefiting all taxpayers, argues the South Florida Community Development Coalition.

"It's called the substitution effect," said John Ise, who heads the umbrella coalition of housing and anti-poverty nonprofit agencies and has studied Palm Beach County's grant program.

"They use the grant money to pay for basic government services in poor areas, which frees up money they can spend anywhere else.

"It defeats the entire purpose of the program. The poor are basically getting ripped off," Ise said.

But county officials like Remar Harvin argue that without the grant money, projects such as sidewalks and sewers just wouldn't get done in many poor areas.

"Certainly the cities should be paying for it," said Harvin, head of the county's Housing and Community Development department, which oversees the block grants. "But the reality is these are areas that have been neglected for years, and improvements just aren't going to be made without it."

When county commissioners hold a public hearing on the grants Tuesday, they'll hear county staffers like Harvin say that there's nothing wrong with the way the grants are being used.

"You can build beautiful houses, but without sewer or sidewalks, you've got a problem," Harvin said. "We're dealing with long-neglected areas."

The federal law creating the block grants is fuzzy. It allows local governments to use the block grants on things like parks and roads. But it also says the money should not be substituted for local cash that would otherwise be going to poor areas. And it doesn't spell out what the grants cannot be used for.

Marlene Kocher, of the U.S. Department of Housing and Urban Development's Miami office, said the agency does not specifically monitor whether the grants are being substituted for county tax money.

"We have very specific guidelines on how the grants are spent," she said. "As long as they're within the guidelines, its considered an approved project."

But Ise maintains that the county is breaking the spirit, if not the letter, of the law.

"The point is, both rich and poor people pay taxes to local government," Ise said. "That money should provide services across the board, regardless of whether the neighborhood is poor."

Congress created the grant program in the early 1970s with the goal of rebuilding America's distressed neighborhoods. This year, the federal government will dole out $4.7 billion nationwide.

"This is a program with a tremendous record for improving poor areas," Harvin said. "It's very important money."

For example, Palm Beach County plans to spend $200,000 next year to demolish old and unsafe commercial buildings on the private property of poor owners.

And $700,000 will be marked for loans or grants to homeowners to fix up dilapidated houses.

Palm Beach County receives money annually on behalf of itself and 26 of its cities, and uses a formula to decide how to spend it.

The county will take $1.1 million for administrative costs, just a hair under the federal limit of 20 percent.

About $1.2 million will go directly toward improved housing. Although it's the major goal of the overall program, it amounts to less than one-fifth of the county's allotment.

Another $2 million, or almost a third of the entire amount, is slated for projects such as sidewalks, sewers or parks in poor areas -- the kind of spending criticized by the community development coalition.

Some of those projects include:

* $100,000 for sidewalk improvements along Flemming, Jennings, Perry and Martin avenues in Greenacres.

* $202,000 for street improvements in Riviera Beach.

* $100,000 for drainage improvements in Lake Park.

* $68,145 to build alleys in Lake Worth.

"These kinds of projects really should be paid for out of the county and city budgets," Ise said.

But Gary Dernlan, head of the county's water utilities department, said the program is allowing some poor residents to hook up to public water. For example, $250,000 will be spent on installing water mains to 54 homes in the poor Schall Circle neighborhood near West Palm Beach.

County rules prohibit the water department from using county money to expand the water system.

"Without that (grant) money, we'd have to levy a special assessment against the property owners," Dernlan said. "Most of them can't afford that."

But Ise says more of the money should be used for economic development, education and housing.

On the other hand, the county has to start with basics like water lines if it really wants to boost struggling neighborhoods, Harvin said. And the federal cash jump-starts those efforts.

Harvin also points out that most counties, including Broward and Miami-Dade, distribute the money in a similar fashion, with a large portion of their allotments going toward streets, water lines and playgrounds.

Ise acknowledges that Palm Beach County is hardly unique. In fact, he said, it's a national trend.

"You'll find a lot of places where it's even worse," Ise said. "There are governments that see these (grants) as one of their top sources of money.

"But the bottom line is that it really subverts the spirit of this program."

trebor_banstetter@pbpost.com