People who deal in services for the poor and homeless don't like the city's idea to finance the Rolling Hills/Southside redevelopment with an advance against future federal grants.
That idea may have another reason soon to think again: the U.S. Congress.
The National League of Cities is warning its members that the federal Community Development Block Grant program, which is providing Durham $2.1 million for low-income housing and other services in the current fiscal year, could be at risk from budget cuts in Washington. (See link below.)
Current federal regulations allow cities to borrow money and dedicate future grants, to which Durham and some other cities are now entitled, to paying it back. Last year, city staffers suggested taking such a loan to cover $9.4 million needed to get construction started at Rolling Hills and Southside.
But if Congress trims or eliminates the CDBG program, that money will have to come from somewhere else.
"If the City Council continues on its course [of taking the loan], it could be in a very bad position," said Ryan Fehrman, director of the Genesis Home shelter. "They would have to figure out how they're going to pay that back."
The city has made a conditional commitment to provide the $9.4 million if the project receives $1.3 million in state tax credits, which may be sold on an open market. Durham won't know until late summer whether the N.C. Housing Finance Agency approves the credits; in 2010, the agency turned down a similar application.
In a report to its members, the National League of Cities describes the perceived threat to CDBG and urges local officials to lobby Congress against cutting or killing the program. Durham's community development department forwarded NLC's report to its mailing list Monday.
"Newly elected members of Congress, especially those with no background in local government and little understanding of the program, may be particularly susceptible to supporting CDBG’s critics," the NLC wrote.
"In the current deficit-conscious environment in Congress, this criticism could prove to be especially damaging to local efforts to preserve CDBG funds."
As yet, it's hard to tell how serious the threat is, said Larry Jarvis, assistant community development director.
"I don't think anyone knows just now," he said. "There have been proposals over the years to eliminate the program or reduce the funding. ... With the recent election, a lot of things are on the table."
Fehrman and others have claimed that tying up CDBG money for years with Rolling Hills/Southside would cripple nonprofit agencies to which the city has passed federal money along for services such as community kitchens, food pantries, credit counseling and emergency shelter.
Fehrman said he expects the federal government will keep CDBG alive, but "cuts of 5 to 15 percent could be coming down the pike pretty soon."