SANTA FE – A federal housing agency has backed off on a threat to cut off administrative funding to a New Mexico state government division over perceived problems with the management of federal grants.
In a letter sent July 8, the state director of the U.S. Office of Housing and Urban Development told state Finance and Administration Secretary Tom Clifford the administrative funds – totaling roughly $279,000 – would be frozen starting in August.
However, Clifford said Thursday that HUD officials have since softened their stance, after he warned that the action could force state workers to be laid off. The funding in question is used to pay all or part of the salaries of 14 state government positions, according to the state Department of Finance and Administration.
Clifford told the Journal he is optimistic the two sides can resolve the issues in the coming weeks without the funding freeze, which he said would effectively halt the federal grant programs his agency oversees.
“I would not argue we’ve been perfect,” he said Thursday. “We realize we do need some improvement, and we’re taking steps to do that.”
Earlier this year, HUD officials began raising concerns that the state finance department was, among other things, taking too long to process grants. A HUD report sent in May claimed state DFA officials had shown a”lack of responsiveness” and “insolence.”
In one case, it took the state more than two years to return $13,534 in unused grant funds to the federal housing agency.
In his July 8 letter in which he announced the administrative funds would be frozen, Frank Padilla, the director of the state’s HUD office, said the DFA had not adequately responded to the concerns.
But Clifford said Thursday that his office has recently implemented new procedures to ensure the state pays back unused grant money in a timely manner. Also, a new staffer is being hired to help with program oversight, he said.
He also defended his office’s management of the HUD grant programs in other areas, saying, “We were being found at fault for things there was no standard for.”
The DFA’s Local Government Division is tasked with managing several HUD grant programs. Those programs include the Community Development Block Grant program, aimed at paying for affordable housing and other types of public works projects, and a neighborhood stabilization program intended to prop up areas hit hard by foreclosures.
In addition, the state agency oversees an economic development loan program that is an offshoot of the HUD block grant program. However, just two loans have been approved to date, due to what Clifford described as concern over failed loans.