Published: Jan. 16, 2019
County committee votes to join state closeout program
Involvement helps county likely inherit $1 million for
projects
By Nicholas Dettmann
ndettmann@conleynet.com 262-306-5043
WEST BEND — In all likelihood, Washington County is about to
get a free $1 million.
During the Washington County Executive Committee meeting
Tuesday morning at the Herbert J. Tennies Government Center, the committee voted
unanimously to allow the county to enter the state’s Community Development
Block Grant Closeout program.
Committee members Kristine Deiss and Mark McCune were
absent.
The other committee members thought it was a slam dunk to do
what they wound up doing.
“It makes perfect sense,” Don Kriefall said.
County Administrator Joshua Schoemann led a presentation
about how the county sets up to benefit from the federal government’s desire to
end its involvement in a grant program.
According to Schoemann’s presentation, in 1974, Congress
created a program called the Housing and Community Development Act, Title I. It
is governed by rule set forth in the Code of Federal Regulations (24 CFR Part
570). Community Development Block Grant programs are governed by the federal
Department of Housing and Urban Development and administered at the state level
by the Department of Administration. It essentially gave local governments $1
million to use as a pot for local development. The county, for example, could
issue the loan, based on the federal regulations and then send loan repayments
back to the federal government, while holding onto the interest.
The interest, in Washington County’s case, was paid to the
Economic Development Washington County to maintain the fund.
After 45 years of administration by thousands of CDGB
revolving loan fund programs throughout the country and widely varying degrees
of fiscal accountability, HUD is urging state administrators to close out such
programs. Schoemann’s presentation said the state has determined that the best
source of action is to liquidate the remaining funding and to ultimately close
all RLFs. The liquidation can happen in one of two ways:
■
Washington County may buy out all outstanding loan balances;
■
Washington County retains all outstanding loans and sends cash payments to the
DOA until federal money is fully reimbursed.
According to Schoemann’s presentation, the CDBG RLF balance
is $1,056,255. He also said the county and EDWC have done a great job in
administering the program. Other local governments haven’t done the same,
losing touch with the loans issued and will be forced to come up with the
money.
For Washington County, being fiscally responsible means it
could take advantage of other counties’ mismanagement. It’s that mismanagement
that has helped lead the federal government into shutting down the CDBG
program.
Schoemann presented two options:
■
Option A: Washington County buy out all outstanding loan balances and then
issue a check to the state for $1,056,255. But that check would be on standby
for when the county wants to apply for a grant to go toward a development
project. Among the examples Schoemann listed was the University of
Wisconsin-Milwaukee at Washington County or Samaritan or the Old Courthouse
Museum.
■
Option B: Washington County retains all the loans and sends cash payments to
DOA until all loans close out. This option would eliminate $1 million from the
county.
When talking about Option B, Schoemann said, “the risk is
much higher.”
“If one of the loans would default, that’s on us,” he said.
“Let’s say we have a $250,000 CDGB loan out there and it defaults and they owe
$200,000, that’s on us. We’ve got to come up with that $200,000 and we’re
S.O.L.”
The committee unanimously approved going with Option A,
which also means about $19.5 million will be in the operating fund/revolving
loan fund by April 2021.
Before approval, it was asked what role would the new state
administration might play in the execution of the plan, seeing that the
governor is a Democrat and Washington County is heavily conservative.
Schoemann said while it is possible, it’s not likely that
the state would play that kind of game. The risk is too high, he said, because
Washington County is not the only county reviewing this plan. Jefferson County
was one example Schoemann cited. “We’re one of many which makes me feel
comfortable,” Schoemann said.
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