Politics & Issues
5:00 am
Tue December 24, 2013

On The Trail: New Block Grant Process Shifted Power, Stirred Tensions

When St. Louis changed how it divided out community development block grants, it marked a major sea change in how St. Louis government functions -- shifting power toward the mayor's administrative umbrella and away from individual aldermen.

The administration of Mayor Francis Slay sees the new reality as providing great opportunity – and demanding even greater responsibility. The mayor's staffers say the new process can reach out to new organizations and engage in bigger pursuits, including establishing a bank in north St. Louis and laying the groundwork to spruce up portions of Martin Luther King Blvd.

Credit via Flickr/Richie Diesterheft

“There are lots of ways in which chopping things up into 28 pieces ends up not producing real change,” said Jeff Rainford, chief of staff for St. Louis Mayor Francis Slay.

“And by change I mean helping low-income people become middle class and helping neighborhoods that are struggling become stable and stable neighborhoods become strong. You can divide things up politically in so many ways, but it’s like spitting into the ocean. It doesn’t make a difference.”

In the old process, the U.S. Department of Housing and Urban Development funds were divided by ward with individual aldermen influencing key decisions. The new application-based process made the Community Development Administration the prime decision-maker in splitting up the ever-diminishing federal funds. The CDA director is appointed by and reports to the mayor.

By Rainford’s own admission, this year’s process had its hiccups.

Some aldermen were furious that some previously funded community organizations were passed over this year. And there was some consternation over how a Board of Aldermen committee amended CDA’s initial recommendations.

Some long-time aldermen questioned the wisdom of the changes. That included Alderman Tom Villa, an 11th Ward Democrat who previously served as president of the Board of Aldermen. 

“Without trying to sound vain, I know where the need is,” Villa said. “And the fact that HUD has opted to change the system, that’s HUD’s business. But if I didn’t get up and be somewhat vociferous about the changes I thought were illogical, I wouldn’t be doing my constituents a bit of good.”

More changes are on the horizon for next year. CDA will be in charge of administering newly-centralized programs, including a pool of money for home repair.  And Alderman Fred Wessels, D-13th Ward, will be taking the helm of CDA, with many people optimistic that he’ll bring stability – and order – to a whirlwind of a process.

The HUD hammer

Ever since Slay captured an unprecedented four-year term, mayoral power has become an issue. The St. Louis Post-Dispatch reported recently how Slay’s administration would like more authority over things such as contracts and the city's budget. Those moves caused friction within the Board of Aldermen.

But the block grant changeover may be one of the more significant recent examples of the power shift from the city’s legislature to executive branch. Still, Rainford said that move doesn't necessarily allow the mayor's administration to tread without caution.

“The real challenge for the mayor and the CDA director – with oversight by HUD, which is not an insignificant thing – is that we have to make sure that the process is fair, that is as objective as it can be and that people feel like they’re treated fairly,” Rainford said. “Having that said that, there is an opportunity for the mayor of this city to be able to focus these investments to get the most return on the investment to help the most people.” 

HUD's block grant program gives local governments money to help with youth employment, services for senior citizens and building rehabilitation. It also funds community development organizations to improve housing quality, neighborhood beautification and community activities.

To be sure, HUD was the prime pusher behind this change. James Heard, HUD's regional director, said earlier this year that the process for dividing the block grant money should have been competitive, with public input and follow-up.

Since then, city officials worked with HUD to put together a competitive bidding process. (Click here to see the criteria in which the applicants were rated.)

The new process meant that the city’s home repair funds are now centralized under CDA, instead of being divided by ward. Starting next month, developers and organizations will have to apply for housing production funds through CDA. That, administration officials say, will ensure that those funds go to realistic pursuits and not dead-end developments.

In the opinion of both Rainford and deputy chief of staff Mary Ellen Ponder, the application process allowed for new organizations and new programs to have a chance for money, including:

  • $1 million recommendation for controlled demolition along Martin Luther King Jr. Blvd.,
  • $500,000 for the St. Louis Community Credit Union to help establish a branch in north St. Louis,
  • $200,000 to Justine Peterson for micro-lending and training to small businesses.

(Click here to see most of CDA's recommendations.)

“We did not go to them. They submitted an application,” said Ponder, referring to the credit union and Justine Petersen. “Perhaps through word of mouth and just the [request for proposal] being on the street, they heard about it and applied for the first time. There was not application process in the past.” 

This year, St. Louis is applying for about $16.7 million in block grants -- a fraction of what it got in the 1970s, during the program's peak. The city is also applying for $2.3 million in HOME Investment Partnership funding for housing to low- and moderate-income residents.

St. Louis Community Credit Union spokeswoman Dorothy Bell said her organization's Gateway Branch at Union Blvd. near Natural Bridge would serve as an alternative to payday lending or “instant cash” services. Bell added that the $500,000 would go toward the bank’s construction and development costs.

She went onto say that the branch – which is scheduled to open in late 2014 – would also be a resource for financial literacy and financing. And Rainford said the bank would partner with the city’s affordable housing commission to provide loans to homebuyers.

“It’s going to build the community. It’s going to strengthen an area that really needs it. The fact that we are they’re providing a service that no one else is offering at that time, it makes sense,” Bell said. “It’s part of our ‘give back to the community,’ so that people that come in are able to take advantage of lending opportunities, financial education, checking accounts and savings accounts – things that they might not get anywhere else.”

Galen Gondolfi, a senior loan counselor and chief communications officer for Justine Petersen,  said that his organization “has always had an interest in understanding how CDBG funding could be accessed.” He added “if anything, until this opportunity had arisen, there wasn’t necessarily clarity how we could access” the funds for the micro-lending program.

Both Rainford and Heard have emphasized that they wanted applicants that could attract other sources of funding and show tangible results.  Gondolfi said that $75,000 of the $200,000 would be used to leverage $750,000 from Justine Petersen’s Small Business Association micro-loan program. The rest of the money would be earmarked for technical assistance and training for 100 current and prospective businesses.

“These are candidates that cannot traditionally access credit from a traditional, mainstream lending institution,” said Gondolfi, adding that the emphasis will be on minority and women-owned firms. “These clients are unfortunately in situations where they perhaps can only access credit from capital that’s not safe and affordable, if you will.” 

Need for transparency

Todd Swanstrom, a political science professor at the University of Missouri-St. Louis, used part of his endowed professorship to support community development throughout St. Louis. 

"We wanted a transparent process with points scoring criteria which could be very objective and which groups would know where they stand. I think disappointment was the transparency and at the apparent objectivity the process was not made clear." -- UMSL political science professor Todd Swanstrom

Although emphasizing that he was not an "insider" to this year's process, Swanstrom said that this year  “was probably less traumatic of a change that people would thought it would be, even though the process changed.” Many of the programs that got funded last year got recommendations this time around, he said. (Rainford concurred with the view.)

Rainford also emphasized that "never once did I say ‘oh, who are the aldermen there?’ Or ‘oh, we like that guy, but we don’t like that guy.’"

Still, Swanstrom said, "Everybody’s nervous that this would just be politicized and the mayor would use it for his re-election organization as opposed to the aldermen using it for their re-election organization. At this point, I don’t see strong evidence that that was the way that the decisions were made. But the potential certainly exists there."

But there is a remedy, said Swanstrom.

"What I think we need is once again is a transparent and objective process,"  he said. "Which wouldn’t do away with politics, by the way. But it could certainly constrain it. Because if you can’t make a good argument that you’ve established, then you can’t fund something."

Ponder said next year there could be an advisory committee with university officials, community partners and nonprofit experts to provide guidance. 

"We will not be working in a silo with just city government," she said. 

During an appearance on the Politically Speaking podcast, Board of Aldermen President Lewis Reed said the old system did result in some inefficiencies. But he added “we need to make sure that we factor in some of the concerns of some of these residents and some of the alderpeople.” 

And Villa said that there need to be "infantrymen out the communities telling these people how these things were going to be assessed."

"I think that’s where the chasm developed. I really do," Villa said. "So there’s room for improvement. I’m sure HUD realizes that."  But Rainford said the changeover comes down to accountability.  He contended "if you want people who are visible in the community to make decisions, so that the community knows who to go to complain or who to go to pat on the back ... the most visible person is the mayor." 

"Anytime you have decisions made by human being, there is no perfect process," Rainford said. "But what we need to identify is the best process. I believe that we are on the road to do that. So are there going to be people who say ‘we’re giving the mayor too much power’ and that in itself is a bad thing? Yes. But generally those people are saying it because they themselves are giving up power. And they don’t want to."

Is new better?

Villa was one of a handful of aldermen who questioned whether the old system was really that bad. He and Conway contended that aldermen were better able to steer money to specific projects the community wanted. (Reed made a similar point, adding that projects he sought money for during his aldermanic tenure came his constituents' input.) 

"I don’t think it’s a bad thing if I get money for my ward," said Villa, who was critical of how a community development organization that serves his ward didn't get funding recommendations.

Alderman Stephen Conway, D-8th Ward, called the situation "a train wreck."

“The federal bureaucrats have no clue. They don’t live here. They’re not part of our neighborhoods,” said Conway earlier this year during debate over the CDA recommendations.

When last year's block grant was divvied up, 19 different community development organizations received about $2.1 million. Under the 2014 recommendations, only eight such groups are recommended to receive around $950,000.

But Alderwoman Marlene Davis, D-19th Ward, took a different view. She says she's doesn't see the changeover necessarily taking away power from aldermen. 

"When you think about it, we had 28 fiefdoms," Davis said. "We are in the processes of one of the true renaissances of this city. It’s kind of hard to do it when you got 28 different ideas and processes – everything going on at the same time. It’s kind of like having a hodgepodge effort as opposed to a collective planning effort."

Davis said aldermen can still have an impact on the CDBG process if they work closely with agencies to apply for funding. She also said the new process allows for more collaboration between engaged members of the board.

"I expect more aldermen coming together to do planning on behalf of their areas," Davis said. "Those who are very progressive in their development processes right now and the social service enrichment programs will work together. I really see that coming forward. And you just take a look at where I am in the middle of the city, I’ve got Joe Roddy on one side. Terry Kennedy on the other side. And I’ve got the two aldermen down there. It’s a natural fit to work together."

Some of the frustration stemmed from the fact that community development organizations funded in the past weren't funded this year. Ponder said that community development groups generally received low scores in the application process. Noting that this year was a “fast process,” she added that “we’re hoping in the next year to teach them how to be more competitive in the application process.” (Click here to read more about that change.)

“The process has to change, has to be different,” said Alderwoman Dionne Flowers, who was critical of how Riverview West Florissant Development Corporation didn’t receive funding. “But you should also look at making those decisions based on making sure everyone in the city is served.”

“I don’t really know what to tell my constituents,” said Flowers, who also expressed frustration on multiple occastions with how CDA handled this year's block grant process. “The numbers are based on the people that live in our wards in low-income areas. And … my ward is absolutely excluded.”

But Davis said she was “shocked” to find out 19 different community development organizations serve the city. 

Alderwoman Marlene Davis, D-19th Ward
Credit (City of St. Louis website)

“You can’t run a corporation and every department is failing. It’s not producing anything. You’ve got no outcomes,” Davis said. “You’ve got no bottom line that’s black. You’ve got to deal with that."

Both Rainford and Heard said some of those organizations may not obtain funding next year if they can't meet the application's criteria. 

" We’re looking for performance and results. They have to gain the capacity," said Heard, referring to community development organizations. "It’s a learning process this year. To be fair and open with everyone -- and to give them the opportunity to gain the capacity -- I think we did the best that we could and I think the city did the best that they could this year in this process this year."

Next: Committee action gains notice, while CDA braces for big changes.