River Hills draws scrutiny for trying to sell federal block grant

July 20, 2011

River Hills, Milwaukee County's richest suburb, has found little use for what has become an annual allocation of about $20,000 in federal community development block grant money.

So village leaders instead have cut deals with other suburbs to lend or transfer the grant money and have even sought unsuccessfully to sell the River Hills block grant allocation to another community.

Those practices have drawn increased scrutiny by the county and the U.S. Department of Housing and Urban Development, the agency in charge of the block grant program.

HUD spokesman Brian Sullivan said this week that the agency would review the River Hills practice "to see if it violates any rule or law. . . . It just strikes us as a bad idea." Sullivan, based in Washington, D.C., questioned why the county wouldn't simply transfer the money earmarked for River Hills to some other suburb or allowable use if River Hills itself had no need for the funds.

Sometimes the suburbs cut side deals, in effect borrowing from another suburb's HUD allocation.

The block grant program provides money for a range of uses, including building new sewers and streets, fixing homes and making public buildings accessible to people with disabilities. The program is aimed at helping families with low to moderate incomes.

Assistant Corporation Counsel John Jorgensen said selling the HUD allocation wouldn't break any rules or laws, as long as the grant money is used for allowable projects. In a memo to county supervisors, Jorgensen said his opinion matched advice he'd gotten from local HUD officials.

But Sullivan said the Milwaukee field office had questioned the practice in the past. Officials from the Milwaukee office of the Department of Housing and Urban Development declined to comment.

Some supervisors remain skeptical about the appropriateness of selling a HUD allocation.

"I find it offensive," said County Supervisor Theo Lipscomb. "These are funds for low-income communities. For them to even attempt to get other dollars (in exchange) is offensive." Lipscomb said he would introduce a measure to ban the practice if county lawyers don't take steps to ensure no block grants are sold.

"Just because it's permissible doesn't make it right," he said.

Grant sale offered

River Hills lists "sale of block grant funds" prominently on its 2011 grant application to the county. In other parts of the village's application where more details on the proposed use of the federal money should be listed, it states only that: "Grant will be sold to a community for use meeting a specific objective of the county's consolidated plan." Similar language was included in River Hills' applications for 2008 and 2010.

How much River Hills was seeking in compensation for transferring its HUD allocation wasn't spelled out in the applications, though one village official said it was less than the block grant amount.

In 2009, the village said it wanted $20,277 from HUD for a study on how it would meet a state planning requirement.

Milwaukee County applies for the HUD money for all municipalities in the county except the cities of Milwaukee, West Allis and Wauwatosa, which run their own community development programs. The county allocation for 2011 is $1.5 million, down some $332,000 from 2010 because of a federal budget cut.

Although River Hills officials wanted to sell the village's piece of the county's community development grant, that's never happened, said Village Manager Tom Tollaksen.

"That's been our plan on various occasions," Tollaksen said. "We have explored that with other communities," he said. But the village couldn't find any willing buyers, he said. Instead, River Hills has transferred several years' worth of money to other communities.

For example, in 2007 River Hills transferred nearly $100,000 - four years' worth of its HUD allocations - to Glendale for an elevator project at Glen Hills Middle School. River Hills also kicked $21,702 in HUD money to Bayside for a library improvement. Bayside was to return that sum to River Hills this year. And Franklin is seeking some of River Hills' HUD pot to install a sidewalk linking the Clare Meadows Senior Apartments at 7700 S. 51st St. to a nearby shopping mall.

Despite the apparent lack of need for the HUD money in River Hills, by tradition about half the county's allocation is divided among all of the 16 smaller municipalities using population and other factors. The money also can pile up for several years.

For the wealthier communities, "it's like getting flood money when there is no flood in your community," said Supervisor Lynne De Bruin. She said the county should consider prohibiting communities from stockpiling annual HUD allocations for several years or selling their allocation to another community.

Because of River Hills' high average income, the village is allocated relatively little from the county's HUD pot and has had few eligible uses, said River Hills Village President Bob Brunner.

In 2009, median family income in River Hills was $220,000, almost four times the county's $55,244, according to U.S. Census figures.

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