Worcester Housing Development In Jeopardy After Funding Freeze

Wednesday, October 03, 2012

Adam Joseph Drici, GoLocalWorcester Contributor

The Executive Director of the Main South CDC said the future of the organization is hanging in the balance after a federal audit of Worcester's housing development programs resulted in the freezing of funds to several of the city's non-profits.

A July report from the U.S. Department of Housing and Urban Development found that Worcester's Community Development Block Grants (CDBG), which fund affordable housing development through the city's five non-profit Community Development Corporations (CDCs), had not been administered effectively.

Several issues of non-compliance or use of funds for non-eligible purposes led HUD to put a hold on monies allocated to all five organizations pending further review.

Audit Issues

However, the Main South CDC's Executive Director Steve Teasdale contended that his non-profit has been fully compliant with HUD's regulations and is now being penalized for the mistakes of others.

"The lack of satisfactory reporting by the City is not the fault of our agency who has produced what it was contracted to do," said Teasdale in a letter to HUD's regional office.

The director said that representatives from HUD have not asked to meet with the Main South CDC or review its records, which would be able to address many of the findings in the federal audit regarding that particular non-profit.

In Danger From Funding Freeze

Now, the Main South CDC's current and future developments are in jeopardy because the funds it was counting on are no longer available.

Teasdale said the non-profit has a 22-unit project currently underway and is waiting on over $600,000 from the city, which has now been frozen.

"We cannot bridge this operating loss because lenders want a commitment letter from the City showing we will be receiving the CDBG funds and the City is now not in a position to do this."

Bill Breault, a member of the CDC's board of directors, said it would be a matter of weeks, not months, before the organization found itself in dire straits if the federal funds are not unfrozen.

"It is really putting a crimp in what we're doing," he said.

City Pushing for Progress

Worcester Chief Development Officer Tim McGourthy said the city is working with the five CDCs and HUD to comb through records and determine which CDBG allocations were eligible and compliant and which were not.

"Progress has been made," McGourthy said.

While he could not offer any concrete timeline for when the funds may be unfrozen, McGourthy said the city will be submitting its report to HUD by the end of this week.

"At that point, it's up to HUD."

McGourthy and the other members of City Manager Michael O'Brien's office are working to address the city's HUD-related issues as fast as possible, but it may still be several weeks before a decision comes back.

"We are pushing," said McGourthy.

In the meantime, Teasdale has requested a meeting with HUD's senior regional staff to present the Main South CDC's case and get its housing development work back on track.

"I would ask any of you or your staff to come to Main South and see the transformation of this neighborhood that has taken place over the last several years. It has been supported through CDBG funding and the product has been produced," he said.

"The economic climate is difficult enough at present without these added challenges."