Federal funds suspended for Providence housing nonprofits

PROVIDENCE, R.I. (WPRI) - Federal funds for affordable housing in Providence have been suspended for more than a year as city officials continue to address “program deficiencies” uncovered by the Department of Housing and Urban Development (HUD), WPRI.com has learned.

The funds, which come in the form of community development block grants (CDBG) and through HUD’s HOME Investment Partnerships Program, were first frozen in Jan. 2012 when the department discovered “a lack of documentation to show compliance with eligibility and national objective requirements,” from the city’s planning department, according to HUD spokeswoman Rhonda Siciliano.

HUD detailed its findings in a letter issued on Jan. 26, 2012 and a follow-up report issued last February. Siciliano said the department also found several housing projects that were complete but unoccupied, which triggers an automatic suspension of the HOME program. She said HOME dollars will remain on hold until the city can prove that the units in question are occupied by low-income households or the city repays HUD. 

“The city has been receiving intensive technical assistance since September of 2012 to get the housing programs back up and running,” Siciliano told WPRI.com.

But some nonprofit leaders whose organizations depend on the federal funds said they have received little information from the city about status of the programs and warned that neighborhoods are suffering because of the holdup.

“We were told they should have it solved in four to six weeks and that was a year ago,” Carla DeStefano, the executive director of Stop Wasting Abandoned Properties (SWAP), told WPRI.com. “There’s no light at the end of the tunnel.”

Records analyzed by WPRI.com show SWAP received approximately $171,000-per-year in CDBG funds between the 2004-05 and 2010-11 fiscal years, the most of any community development corporation in the city. Providence awarded more than $4.6 million in CDBG dollars to 14 organizations during that time span.

But that doesn’t include money from the HOME program, which DeStefano called the “lifeline to the development of affordable housing in Providence.” Records show the city distributed more than $2.3 million through the program in both the 2010-11 and the 2011-12 fiscal years.

DeStefano said the HOME program has provided more than $4 million of the $90 million SWAP has invested in South Providence over the last 15 years to refurbish foreclosed homes and build new properties. She said her organization can’t operate without the help of federal funds.

“It has pretty much stopped the development of affordable housing in South Providence,” DeStefano said. “We’re pretty much dried up.”

Despite the freeze in funding, the City Council earmarked more than $481,000 in CDBG funds and another $1.3 million from the HOME program for city nonprofits for the 2012-13 fiscal year.

The reason? They didn’t know the money was suspended, according to Councilman Nick Narducci, who serves as chairman of the Committee on Urban Redevelopment, Renewal and Planning (URRP).

“It was like a slap in the face to us,” Narducci told WPRI.com. “We pass the budget and that’s money they rely on.”

Both Narducci and Councilman Kevin Jackson, another member of the URRP committee, said they were aware that HUD raised questions about the city’s housing programs, but they weren’t told funds were suspended until last month.

“Whoever had this information did not share it with myself or the council,” Jackson said.

But Gary Bliss, the city’s director of community development, said the planning department has not withheld information about the suspension of the federal funds. Bliss said HUD’s concerns are related to both policy and administrative issues and that the city hopes funding will be restored in the coming months.

He said the city’s housing nonprofits play a “vital role in our community” and that he has spent a “tremendous amount of time” working to implement any changes HUD has requested.

“It’s very frustrating, but we need to fix these practices,” Bliss said.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan