Community Development Grants on the Chopping Block

A proposal to cut federal money for local communities could make it harder for west metro cities to serve the most vulnerable residents and provide affordable housing.

The proposed cuts target Community Development Blocks Grants, a 36-year-old federal program that funds local development activities with a particular emphasis on housing.

The budget that Pres. Barack Obama presented earlier this week recommends scaling back the program by 7.5 percent or $300 million in 2012. A House Appropriations bill would cut the program by 60 percent this year.

Hopkins expects to receive about $122,500 from the program in the upcoming year, while Minnetonka should get about $189,000. Both amounts are preliminary and could change.

Federal rules only allow cities to give a maximum of 15 percent of their grants to nonprofits, but local organizations say that money is essential at a time they’re already struggling under a tough economy. In all, Hopkins expects to give $11,000 to local nonprofits, while Minnetonka plans to give $28,300.

ResourceWest Executive Director Judy Elling said a loss for her organization, which is scheduled to receive just under $10,000 total from Hopkins and Minnetonka, would inevitably lead to reduced programming.

The money makes up just over 4 percent of ResourceWest's budget. But the recession has already forced the organization to cut back over the past two years. Its annual giving campaign .  With donated rent and utilities and just four employees—only two who work full time—there simply aren’t that many more places to scale back.

“It doesn’t leave us much wiggle room at all,” she said. “People are still leery about the economy and want to hold things close.”

Elling said she’d likely put her own hours on the chopping block if ResourceWest loses its block grant money. Although administration is a popular target for people looking for cuts, these functions are a vital part of ResourceWest's mission, a large part of which involves connecting people in need to the services that can help them. 

Minnetonka would also give money to the Intercongregation Communities Association (ICA), HOME Line, Community Action Partnership of Suburban Hennepin and H.O.M.E. Senior Community Services. Hopkins, which doesn’t give the maximum amount to nonprofits in order to put more toward housing, also plans to give money to ICA and HOME Line.

The bulk of block grant money goes toward affordable housing. Hopkins plans to direct $111,500 of program money to the city’s Housing Rehabilitation Loan and Grant Program, which helps low- and moderate-income residents improve their homes. Minnetonka would put $125,000 to its Emergency Housing Rehabilitation Program and $23,600 to its Owner-Occupied Housing Rehabilitation Program.

The Hopkins housing program should prove fairly resilient—even with cuts. Much of the money is used for loans that are paid back, and each year’s allotment of federal money is used to expand the program to help more people, said Community Development Coordinator Tara Beard. A cut would stop that growth but probably wouldn’t halt the loan program altogether.

Grants, on the other hand, don’t get replenished. And with the recession, the city has given more out more money in the form of grants—about three or four grants a year compared to one or two loans, Beard said.

Minnetonka Community Development Director was more pessimistic about her city’s programs. She said it’s possible that the Minnetonka’s rehabilitation program could disappear if the entire amount was cut.

But Wischnack also cautioned that the block grant money fluctuates regularly. There are also competing block grant proposals that leave uncertainty about what will happen at the federal level.

“It’s always a wait and see,” Wischnack said. “I hate to overreact at this point. It’s hard to understand what’s going to happen. We have to monitor and watch and deal with it as best we can.”