Schumer Compromise Ends 10 Year Game of Tug-of-War Between The Fed Economic Development Admin & Dept. Of Housing And Urban Development; The Bureaucratic Issue Has Prevented Erie County from Using Funding for Critical Economic Development Projects
Schumer Intervention Means a Number of Local Projects including Remediation of Bethlehem Steel Site, Lead Paint Abatement and Blighted Building Demolition and Dozens of Other Projects Can Now Move Forward
Schumer: Unlocking Frozen Federal Funds Will Help Energize Redevelopment in Erie County
New York – (RealEstateRama) — U.S. Senator Charles E. Schumer today announced that, following his push, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Commerce’s Economic Development Administration (EDA) have agreed to a plan that would unlock significant funding – currently frozen due to a more than 10-year tug-of-war between the two agencies.
The Schumer brokered compromise between the two agencies will allow Erie County to jumpstart critical local economic development projects by freeing up nearly $3 million in direct federal grant funding and unfreezing nearly $14 million in revolving loan funds that can be used on projects throughout Western New York.
“After a decade-long bureaucratic tug-of-war, I’m thrilled to announce that we have succeeded in bringing HUD and the EDA to the table so we could develop a plan to unfreeze these critical funds. Unlocking nearly $17 million in federal funds means we can finally energize potential job-creating development projects in Erie County once again,” said Schumer. “This agreement to a path forward is a real breakthrough and has the ability to transform Erie County – and I will not stop pushing until Erie County residents and businesses can see this money put to work in their community. I appreciate HUD and EDA’s joint efforts in helping to bring this long-time issue to a positive resolution.”
Schumer explained that, since 2005, Erie County officials have been unable to fully utilize money it invested in the Regional Development Corporation (RDC) Revolving Loan Fund because of a bureaucratic dispute between HUD and the EDA. Both HUD and EDA have differing rules and were stuck in a bureaucratic log-jam about how the funds are spent, and because of differing requirements, the effectiveness of the loan fund, as well as ECIDA’s ability to make loans, had been drastically reduced. Schumer intervened in the decade-long dispute by bringing both agencies to the table, including hosting a meeting in his DC Office with the EDA Administrator and Deputy Secretary at HUD, and encouraged both agencies to work with Erie County officials in order to develop a plan that would allow the county to access the frozen funds. EDA and HUD then took action, and working collaboratively with Senator Schumer helped to resolve the issue in a way that benefited all the parties involved. As a result of Schumer’s intervention in the dispute millions in funding will now be able to flow to critical projects throughout the region. Some of the projects that will now be funded include:
$500,000 for the remediation of the former Bethlehem Steel Site to help make the site shovel ready for new development.
$325,000 for the Town of Evans – Kennedy Avenue Greenway Improvements.
$872,000 for Community Revitalization Projects that will be selected during the fall 2016 application process.
$400,000 for Lead Paint Remediation Program – This has been deemed a reasonable, although aggressive dollar amount for the cases which may be identified in Consortium Communities. These cases will be primarily owner occupied units with rental needs handled under the Rental Rahab Program.
$470,000 for Local Municipal Plan Assistance Program – This program could provide assistance to 6 – 8 communities to update their existing Comprehensive Plans/Master Plans.
In addition to freeing up the federal funding to be used for these projects, Schumer’s intervention also unfroze the $14 million in revolving loan funds that can be used for projects throughout Western New York. Projects that will benefit from this loan fund include those like the former Gates Circle site, which is one of the few projects that had benefitted from the Revolving Loan Fund during the bureaucratic tug of war. Schumer said that other projects like the Gates Circle project, will now have access to this funding as a result of the resolution reached between the agencies.
Schumer was joined by Erie County Executive Mark Poloncarz and union leaders.
“Many years of frustration, unrealized dreams and wasted opportunity can finally be put behind us now that the green light has been given to access funding that will spearhead tremendous economic development throughout Erie County. We will see the birth of projects that will instantly create jobs and also establish long-term careers in a number of different business sectors. Senator Schumer’s persistence and leadership in unlocking this funding will allow for countless companies in our region to evolve into businesses that will help reinvent Erie County as a destination for unlimited economic growth,” said Erie County Executive Mark Poloncarz.
“On behalf of the ECIDA, we thank Senator Chuck Schumer and Erie County Executive Mark Poloncarz for straightening out what has been a decades-long frustration for the ECIDA. We look forward to putting this money to work now as it was originally intended– for economic development– and helping more Erie County businesses grow,” said Steve Weathers, ECIDA President and CEO.
Schumer explained that in 1979, Erie County established the RDC Revolving Loan Fund to make loans to businesses and support local economic development. This fund is a combination of federal and local money that would be loaned to businesses for various purposes. The businesses who benefited early on paid back their loans to the loan fund with interest, increasing the fund and its ability to make loans to other businesses. The fund originally included $7 million in EDA funds, and $4 million in funding from Erie County and the City of Buffalo that they originally received from HUD.
Over time, however, HUD changed its interpretation of its own rules and claimed that the Erie County and City of Buffalo contribution to the fund is actually HUD money and is therefore subject to HUD rules. The result of that interpretation is that the funds in the Revolving Loan Fund became subjected to the conflicting requirements of both HUD and EDA. These two different sets of requirements have greatly reduced the effectiveness of the fund and its ability to grant loans, and have rendered both the EDA funds and the local funds virtually useless. Given the importance of this funding, Schumer pushed both agencies to develop a creative solution because inaction was not only prevented projects from moving forward but also resulted in taxpayer dollars not being used for their intended purpose.
Therefore, in July 2014, Schumer initially proposed a two-pronged effort to resolve the differences between the EDA, HUD and Erie County. First, Schumer asked the EDA to allow Erie County to withdraw the HUD funds it previously contributed. The money could then be repurposed to pay for development projects, like those announced today including the redevelopment of the Bethlehem Steel site. Second, Schumer urged the EDA and HUD to resolve the outstanding regulatory issues with the fund to ensure it could get back to its original purpose of helping fund local economic development projects, opening up the $14 million in revolving loan funds. Following a number of meetings and letters, Schumer brought all the parties together in his DC Office and argued that local economic and community development efforts should not suffer because of bureaucratic red tape and regulatory disputes between the agencies. Today Senator Schumer joined Erie County Executive Mark Poloncarz in announcing that both agencies had heeded his call and agreed on a solution that will address this long-standing issue and allow the funding to finally be fully utilized.
A copy of Senator Schumer’s initial letter to HUD and the EDA appears below:
Dear HUD Secretary Castro and Commerce Department Assistant Secretary Jay Williams:
As you may know, Erie County has been unable to fully utilize their Buffalo & Erie County Regional Development Corporation (RDC) Revolving Loan Fund since 2005 due to a bureaucratic issue between the U.S. Department of Housing and Urban Development (HUD) and U.S. Economic Development Administration (EDA). This has led to increasingly intractable problems that cannot be solved without the cooperation and flexibility of both EDA & HUD. I urge your offices to work together and with Erie County and RDC to fix this problem so that the revolving loan fund can once again be used for its original purpose, to support new and growing businesses in Erie County.
The RDC Revolving Loan fund was established in 1979 with a combination of funds from EDA and HUD funds allocated by Erie County, and the City of Buffalo. At the time that the fund was established federal rules allowed for the HUD money to serve as the non-federal match for the EDA funds. Over time this interpretation has changed, and as a result the funds in Erie County’s Revolving Loan fund have been subjected to the requirements and stipulations of both HUD & EDA funds. These two different sets of requirements have greatly reduced the effectiveness of the fund. Furthermore it has caused the unintended consequence of stymieing potential projects from benefiting from both the federal and local funds currently entangled in the Loan Fund.
I urge your respective agencies to work together to resolve this issue as quickly as possible and allow Erie County leaders to put these important economic development funds to the best possible use. First, I urge you to allow Erie County to withdraw excess local funds that were originally contributed to the loan fund. When the loan fund was established, the City, County, and ECIDA all voluntarily contributed a total excess of $2.3M to further bolster the fund and make additional loan funding available. The County should now be allowed to withdraw these funds, as well as the interest it has earned, and put those dollars immediately toward an economic development project in Western New York. Secondarily, I urge you to resolve any outstanding regulatory issues with the fund, beyond the withdrawal of excess local funds, so that the fund can get back to functioning properly for its intended purpose. Given the complicated history of the fund and corresponding federal requirements, in resolving both of these issues I urge both of your agencies to avoid taking any punitive actions against Erie County or the loan fund.
Allowing Erie County to withdraw these local funds and resolving the regulatory issues with the fund will allow the remaining funds to again assist with key economic development projects, creating jobs and bringing investment into the region.
I appreciate your attention to this issue.
Sincerely,
Charles E. Schumer
United States Senator
