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Federal Way gains control of federal grant money

Federal Way will gain more control over its Community Development Block Grant funding — money provided by the federal government to be applied toward developing viable communities — beginning in 2012.

The city is seeking to receive its Community Development Block Grant (CDBG) funding directly from the U.S. Department of Housing and Urban Development (HUD). CDBG funding is meant to strengthen communities by providing decent housing and suitable living environments, and by expanding economic opportunities, primarily for low- and moderate-income residents.

The funding may go toward a range of actions including property acquisition, relocation or demolition; construction or improvements of public facilities; activities relating to energy conservation and assistance to businesses engaged in economic development and job creation, according to HUD’s website.

Federal Way usually receives an annual allotment of roughly $770,000 in CDBG dollars. Because the city is part of a King County consortium, which manages and monitors its member cities’ CDBG awards, Federal Way does not control how nearly $286,000 of the $770,000 is spent. The city won’t receive more CDBG money through direct entitlement, but will have a say in how the entire funding is used.

“By having control over the decision making process, and ultimately the decisions, we can be accountable to our local residents,” said Lynnette Hynden, human services director.

City staff believe direct entitlements will strengthen relationships between the city and local private partners, thus putting more CDBG funding to work in Federal Way. Hynden would like to see the funds

used for housing repairs and job creation. At least 25 percent of Federal Way’s housing stock is 20 years or older and in need of repair.

One private partner that has utilized CDBG funding is the Multi-Service Center. The organization has used the funding to leverage other money to build and rehabilitate housing in Federal Way. It will soon undertake a project to construct housing for military veterans.

Manuela Ginnett, MSC housing program director, said the city’s decision to seek direct funding is wise and will make more money available for local use.

“It’s a good thing because the more direct it is, the less that is taken off the top,” Ginnett said.

Joint agreement

Becoming a direct entitlement city requires Federal Way to discontinue a joint interlocal agreement it has held with King County for at least 12 years.

Under the agreement, the city contributes a portion of its CDBG funding to a county consortium, which uses some of the funding for administrative costs and pools the rest to be used countywide.

Each King County city gets CDBG funding from the federal government. Funding to cities with fewer than 50,000 residents is automatically administered by the King County consortium. Larger cities, such as Federal Way, may choose to be part of the consortium if they do not receive enough funding to make a significant community impact on their own and wish to have access to pooled money. Under the consortium model, the county makes sure the CDBG money is allocated as the law allows and tracks the progress it has had on communities.

Being part of the consortium is not free. Annually, Federal Way pays 10 percent ($77,000 of its CDBG money) to King County to administer the funds. Another roughly $124,000 goes into a countywide minor home repair pool. Roughly $70,000 is set aside for countywide homeless prevention and $15,000 is put in a capital project management pool.

Doling out money

The remaining funds, roughly $484,000 a year, are doled out to local groups by the City of Federal Way. Up to five local agencies are usually awarded money, Hynden said. In the past, money has gone to Highline Community College’s Small Business Center and homes have been purchased for FUSION (Friends Uniting to Shelter the Indigent Oppressed and Needy).

The city has had a difficult time bringing the consortium’s pooled capital project management funds to Federal Way. Cities that are part of the consortium submit capital project ideas to a Joint Recommendation Committee in hopes that the committee will vote to match the dollars the city is willing to invest in a proposed project. The committee, comprised of 12 seats with one held by a Federal Way representative, votes on which projects receive the pooled money.

The funding rarely finds its way back to Federal Way. The last major capital project in Federal Way that was constructed with assistance from pooled CDBG funding was Senior City, the senior housing facility near the downtown transit center. Federal Way has proposed other projects, but they were not supported by the Joint Recommendation Committee, Hynden said.

For the price the city is paying for the consortium’s services, it’s not getting a worthy return.

“We have not had much luck blending our funding regionally to pull needed resources to the city on a regular basis,” Hynden said.

Managing costs

Switching to a direct entitlement recipient will require the city to spend up to $50,000 upfront. It will be reimbursed from HUD after the first year. Start up funds will come from the city’s year-end fund balance. Federal Way will sustain a direct entitlement status for at least three years. The city does not anticipate needing to hire additional staff to manage the direct entitlement workload.

Federal Way was the last large King County city involved in the county consortium, Hynden said. It will look to cities such as Kent and Auburn as it moves forward in receiving direct entitlements.

“There are models that are close to us that we can emulate. It’s not starting from scratch,” Hynden said.

 

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