The present system-not serving the purpose Federal aid in urban development programs has been put together over the years by bits and pieces-often creating bureaucracies outside the control of elected local officials. The system has proved to be cumbersome, wasteful and fragmented. Up to now, community needs have had to be filled by a series of applications to a series of Federal officials for a series of grants. Each grant had to be made for a specified purpose-for nothing else. Coordination for comprehensive communitywide development has been extremely difficult. Local officials have been forced to pattern their own programs and projects around Federal requirements and preferences of officials far from the scene. The President's plan for Urban Community Development Revenue Sharing would take much of the control out of Federal hands, give it to local officials, cut red tape and expedite community projects when and where they are needed. Simplifying the system Urban Community Revenue Sharing would replace four programs: Urban Renewal, which includes the so-called "conventional" urban renewal, the Neighbor-. hood Development Program, code enforcement, interim assistance, demolition grants and rehabilitation grants; Model Cities; neighborhood facilities and rehabilitation loans. Where these programs are successful, localities can elect to continue the projects. Where they are not, the money could be spent-by local decision-where it can be better used in urban development. $2.0 Billion for community development That's the amount provided by the President's Urban Community Development Revenue Sharing for the first full year of operation. This includes $100 million, outside of the distribution formula for cities under 50,000 population, which might not be eligible for Revenue Sharing. The $2.0 billion represents a twenty percent increase in funds made available for all categorical grant programs for 1971. Spending where it is needed most Eighty percent of the funds available would be divided among the 247 Standard Metropolitan Statistical Areas which comprise seventy percent of the nation's population. Each area contains a city or cities with a total population of 50,000 or more and their surrounding counties. The formula for the distribution of funds to any given city would be created on the actual need of the city-its population, degree of overcrowding, extent of housing deficiencies, and the number of families living below the poverty line. Twenty percent of the funds would be used partially to assure that no major community would receive less from the Revenue Sharing formula than it had from the old categorical grant programs-in practice, most communities would receive more. This is called the "hold harmless" guarantee. Also this twenty percent would be used to assist communities which have special needs or special performance capabilities, to provide additional funds to encourage National growth objectives, to assist developmental activities in suburbs, small cities and counties, and to meet the needs of localities outside metropolitan areas with special attention to those with continuing community development programs. How "hold harmless" works Here's an example of how this safeguard provision would guarantee each city at least as much, if not more funds, than it has received in the past. Three metropolitan cities and a metropolitan central city lie within the same SMSA. The formula allocation for the SMSA is $11,162,000. The sum of the formula shares for the three metropolitan cities totals $1,466,000–$511,000 for city #1$498,000 for city #2-$457,000 for city #3. However, the central city formula share of $6,047,000 falls short of its "hold harmless" baseline which is $13,842,000. To make sure that the central city does not receive less than it would under the old categorical grant programs, $7,795,000 would be added to its share to bring its total revenues to $13,842,000. 66-842 O 71 pt. 1 --17 This added $7,795,000 comes from two sources: $3,649,000 comes from the balance of the SMSA formula allocation, or that remaining after the formula shares of all cities are deducted and they are held harmless; the remaining $4,146,000 for the central city "hold harmless" comes from the HUD Secretary's discretionary funds set aside for that purpose. METROPOLITAN CITY #1 Formula Share $51 lk TOTAL REVENUE SHARED $511k METROPOLITAN CENTRAL CITY Money to be spent locally on locally-designed projects All revenue shared funds would be spent on urban development activities chosen at the local level by locally-elected officials. They may include: • New projects to acquire, clear and renew land Supporting of activities for which Model Cities supplemental grants have been authorized Funding demolition activities Making relocation payments and assistance for those displaced by renewal. • Neighborhood facilities construction. Developmental activities now funded by categorical grants could be continued and expanded, if so desired, by the local community-but without the "matching" requirement that now strains local budgets. Restrictions are few Cities would merely have to state in advance how they plan to use their funds. There would be an end-of-year audit to determine how the money was expended and to insure the funds were used for the purpose of urban development. Discrimination in the use of funds would be prohibited. A smooth transition At President Nixon's direction, the Department of Housing and Urban Development has already begun to coordinate various programs, as well as decentralize decision-making under the current system of categorical grants. This helps lay the foundation for Urban Community Development Revenue Sharing. Federal support in urban developmental activities between now and the proposed effective date for the new program, January 1, 1972, would not lessen. All commitments and reservations for assistance would be honored. However, new applications for conventional projects would be discouraged; instead, greater emphasis would be placed on programs which provide a natural transition to a Revenue Sharing arrangement. As soon as the effective date of Revenue Sharing is announced, the Administration would work out transition arrangements with each community so that neither a funding gap nor a period of double funding would occur. |