Handling of aid effort pits St. Paul against feds
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City won't get $18 million in foreclosure relief money until it agrees to improve its management of a federal program for low-income people and businesses.
By CHRIS HAVENS, Star Tribune
Last update: January 28, 2010 - 9:26 PM
A federal agency is withholding $18million in foreclosure relief money from the city of St. Paul until the two sides resolve an issue over how the city manages a longtime program intended to help low-income residents and businesses.
That resolution could come soon if negotiations scheduled Friday between U.S. Department of Housing and Urban Development (HUD) officials and city leaders go well.
Social justice groups, however, say the city has denied low-income residents economic opportunities and should have to make money available for restitution. The city says it was trying but didn't report its efforts the way HUD wanted.
In August, HUD determined that the city wasn't complying with so-called Section 3 rules. Those rules require agencies that receive certain HUD funds to make an effort to "the greatest extent possible" to provide job training, employment and contract opportunities for low-income residents and businesses.
The city received about $41 million in applicable HUD money between 2006 and 2009. Various percentages of that yearly money are to be used for the Section 3 program.
In its review, the federal agency found that St. Paul:
• Hadn't submitted an annual report of its Section 3 dealings in several years.
• Wasn't notifying contractors about the requirements.
• Didn't enable the training and employment of low-income people or the awarding of contracts to low-income businesses.
"We believe we were in compliance," said Cecile Bedor, director of the city's department of Planning and Economic Development. That said, the city did not appeal the HUD findings. "We don't have an interest in fighting HUD, we have an interest in moving forward," Bedor said. She said the city has since made extensive efforts to improve its Section 3 management.
The HUD review is part of a larger, nationwide crackdown. "We're making a special effort to make sure communities across the country comply with their obligations under Section 3," said HUD spokesman Brian Sullivan. "My limited understanding is this department hasn't made a forceful effort to get communities to comply -- and now we are."
A draft of the St. Paul agreement says the city would put $300,000 per year for up to four years into Section 3 programs. The city would also have to submit a plan detailing how it would comply with Section 3 requirements and come up with a plan to improve training for Section 3 businesses and residents.
Meanwhile, social justice groups are demanding that HUD officials require the city to pay restitution. "After years of diverting money intended to go to the low-income community, it is not enough to simply ask the city to start following the law," said Lonnie Ellis, social justice minister at St. Thomas More Catholic Community.
HUD did not mention any financial misdeeds in its review.
Chris Havens • 612-673-4148
This is an ongoing problem that every city faces in using Federal funds.
On the one hand you are required to pay prevailing wages to all people working on jobs using Federal Funds and at the same time you are required to hire, minority, women and low income people.
What happens is that if you have low income people go through union training programs and get on the bench and get hired on these jobs, then they aren't low income people any more.
If you take section 3 to the extreme then it would mean that everytime we have a city project and we contract it out, the company doing the work would need to make sure that they were checking the people that they put on the jobs that a certain percentage of those now making union scale wages had not worked enough hours that year to keep them under poverty levels.... and you think it is hard to get a City contract now, imagine the compliance costs trying to figure that out.
What the City has tried to do to comply is to keep up on going training program working with the trades. They also require that 15% of each contract go to targeted venders of minority and women owned businesses.
JMONTOMEPPOF
Chuck Repke
Tough shit! They knew what the rules were when they took the money and they knew they would have trouble complying. Maybe they should not have taken the money rather than go to the corruption handbook and figure out what scam they can perpetuate to get and keep the money. Might be raketeering but I suppose chuck would not consider 18 million a profit or benifit.
At least the Fed's care about the poor, not saying that St.paul doesn't cares.
Look who is in control of St.paul's HUD money.
Here's another nice fix you got us in Mr Thune
Chuck, Chuck, Chuck... You need to read and not just listen to your DFL buddies... Your wrong.
HUD says St. Paul's requirements are:
Section 3 Reporting and Compliance Determinations
Absent evidence to the contrary, the Department considers recipients of covered funding to be in compliance with Section 3 if they meet the minimum numerical goals set forth at 24 CFR Part 135.30. Specifically:
a. 30 percent of the aggregate number of new hires shall be Section 3 residents;
b. 10 percent of the total dollar amount of all covered construction contracts shall be awarded to Section 3 business concerns; and
c. 3 percent of the total dollar amount of all covered non-construction contracts shall be awarded to Section 3 business concerns.
*new hires* Chuck. It doesn't matter if they make prevailing wages after that. Click on the link I provided above and read... Then post thoughtful comments.
Don't get too technical......Chuck does not do well with a lot of facts.
"New hires" is the issue. When the City gets these dollars its for a project and either the City hires a contractor or a developer hires a contractor, that hires subcontractors, that all have people on their payroll that work with them on a regular basis. So, there aren't that many new hires from the poverty ranks into construction jobs. Which is why they have tried to recruit new hires into union training programs.
And, again what is a low income business and how do you both pay someone prevailing wage and have the business be a "low income business?" Its impossible to be both. What the City has done is to have target vender programs at small businesses, but they still have to pay prevailing wages.
The toughest issue is that with all of the compliance issues it takes forever to get reimbursements and because of the that there is a dificult time getting small and minority businesses to bid on a lot of the projects.
If you have to float payroll while the City has to have you fill out paper work to meet many of these requirements, you may decide to not to bid on a project.
JMONTOMEPPOF
Chuck Repke
9:29 - Let's try it this way if the City contracts with someone like Kruase Anderson to build something, how many "new hires" do you think they have?
They will sub out a good portion of the job to subcontractors that already have people.
The Fed's will require that some of those subs be minority, women owned or small businesses... and all of them will have people that regularly work for them.
And for the one's that are union contractors, they are obliged to take the next man on the bench to fill short term needs.
So, you can have a multi-million dollar construction project with few "new hires," which is what section 3 talks about.
Anyway, not as simple as it seems to assume that the City is somehow out of compliance and what the Fed determines will stimulate more low income hires.
JMONTOMEPPOF
Chuck Repke
The Bridges Project
Ask Don Luna!
Bill Dahn
Meanwhile, social justice groups are demanding that HUD officials require the city to pay restitution. "After years of diverting money intended to go to the low-income community,
Who pays this back?
The Dumb TAX PAYERS of St.Paul,MN.
:)
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