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Failing to work with the feds may cost NM crucial jobs and money

July 23, 2013, 12:00 am
For the past few weeks, headlines have dogged the governor’s office in its struggle to handle key federal funding for New Mexico’s most underprivileged residents.

Now, the latest in a series of dustups with the federal government has hit the state Department of Finance and Administration, which manages federal Housing and Urban Development money for low-income housing. As a result, DFA may lose funding for staffers critical to low-income housing—in part, according to HUD, because the agency won’t answer its phones.

Each year, HUD sends the state roughly $8 million for low-income housing programs. DFA’s Local Government Division divvies up this money among communities across the state, funding the programs that help house some of New Mexico’s poorest residents.

For a long time, the relationship worked relatively well. But recently, things took a turn for the worse.

“HUD has enjoyed a very good working and professional relationship with DFA/LGD staff and management during the past 15 years,” Frank Padilla, HUD’s state Community Planning and Development director, wrote to DFA on July 8. “Only recently with the change in management has HUD encountered issues with non-compliance with inquiries and requests made by the department.”

That management change came shortly after Gov. Susana Martinez tapped Tom Clifford as the agency’s new head in August 2011. Soon after that, Clifford put Ryan Gleason in charge of the Local Government Division.

Padilla wrote that DFA had “lost most of its management staff that has knowledge and experience with HUD programs,” naming three employees with a combined 39 years of experience in HUD grants.

The tensions between state and federal officials date back to May, when Padilla sent a previous letter outlining four key failings by DFA:

     • Failing to return unspent federal funding

     • Failing to distribute HUD grants to local organizations in a timely manner

     • Failing to properly communicate with HUD

     • Prompting 23 citizen complaints for alleged mishandling of federal grants.

In that letter, Padilla gave DFA an ultimatum: form a “plan of action” within the next month, or HUD would cut off all administrative funding until the state responds.

Now, more than two months later, HUD is on the verge of cutting that funding, which could jeopardize the salaries of 14 DFA employees and impact federal housing programs across the state. If DFA doesn’t respond appropriately, the funding will be suspended Aug. 1.

Last week, Clifford responded to Padilla’s July 8 email, claiming DFA wasn’t duly notified about the findings and requested a hearing with the feds. (Padilla’s letters, however, indicate that HUD did notify DFA about the findings, and that hearings aren’t required when administrative funding is suspended.)

In his letter, Clifford emphasized the importance of HUD funding.

“Without this funding, DFA (i) will not be able to fill vacant positions and (ii) may have to consider undertaking a reduction in force,” he wrote, “that is, potentially lay off employees in filled positions paid with [Community Development Block Grant] and [Neighborhood Stabilization Program] administrative funds.”

When asked if he could explain Clifford’s letter, DFA spokesman Tim Korte replied, “No.” Korte asked for emailed questions but didn’t respond to them before press time.  

Reporters aren’t the only ones struggling to get a response. Even the low-income housing organizations that depend on the agency for funding have experienced similar issues. Earlier this month, Debbie Davis, the programs and initiatives manager at the New Mexico Mortgage Finance Authority—a state organization that helps low-income residents become homeowners—complained to HUD about the lack of communication.

In her letter, Davis says DFA had promised to extend her organization’s NSP contract. NSP grants are dedicated to redeveloping homes in areas with a high number of foreclosed or abandoned properties; Davis explained that she had two homes dependent on NSP funding and another “in limbo” until the contract was renewed. But the contract had expired on June 20, and as of July 8, Davis hadn’t heard a word from DFA.

“DFA staff are very non-responsive…” she wrote. “In fact, they will not return phone calls made to them.”

The Kaspia Group, an Albuquerque community development corporation, has aired similar concerns.

“Kaspia is now facing potential liability and the buyers are left without homes in many cases,” Kaspia President and CEO Aaron Lohman wrote to Padilla in June. “Two of our contracted homebuyers are scheduled to close this week! These families will literally be left homeless since they have already given notice at their current residences, and Kaspia and the State will be in violation of the purchase contracts in place. We are at a total loss as to why this is happening.”

In the end—as with the funding snafus in Medicaid and special education programs across the state—it’s the poorest New Mexicans who have the most to lose.

“The State has sent written approval for these buyers,” Alison Shafer, a broker at Omni Village Realty who sold one of the HUD-funded homes, wrote in June. “How can the buyers be made to understand that now, after all they have done to purchase these homes, the deal may fall through because of bureaucratic complications?”


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