NCPA - National Center for Policy Analysis

Urban Renewal Programs Waste Millions

April 12, 2002

Like most cities, Washington, D.C., supports Community Development Corporations (CDC) whose ostensible mission is to mix taxpayer money with private funds to build better neighborhoods. But a six month study by the Washington Post found the CDC block grants from the Department of Housing and Urban Development -- both its D.C. grants and others -- show the flaws in the system. HUD gives $4.3 billion to 3,600 groups nationwide yearly.

  • During the last decade, D.C.'s CDCs have blown through $100 million in taxpayer money -- with on 70 of 200 projects completed and only a few of those on time and within budget.
  • There is no government oversight -- $100 million was misspent despite the supposed oversight of Congress, HUD and the city -- and officials couldn't find the contracts for two-thirds of the CDC projects of the past decade.
  • Faith-based organizations did little better, as in Harlem where some were players in a scam that bilked millions by buying and selling dilapidated buildings -- and then allowing the properties to go into default.
  • In D.C., it's common for heads of non-profit CDCs to have ownership stakes in for-profit companies with which they do business, such as the CDC in Anacostia (one of the District's most blighted neighborhoods) which used taxpayer subsidies to make a $25,000 loan for a trip to Africa to buy gold -- which disappeared on the return trip.

The worst part, critics argue, is that government institutions are reform-resistant and can't be abolished because, without accountability or oversight, self-interested bureaucrats and their clients only have to please one audience: congressional appropriators.

Source: Mike Lynch, "Developmental Disability," Reason Magazine, May 2002.

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