It's Time to Abolish HUD's Block Grant Program

The unfolding scandal surrounding Lincoln Park Mayor Robert Heyer underscores the need to abolish the federal block grant program, administered by the U.S. Department of Housing and Urban Development.

In some respects, block grants resemble HUD's Urban Development Action Grant (UDAG) program that Congress defunded last September. UDAGs were dispensed to politically-connected developers; block grants serve as pork barrel for local public officials.

Some Oakland County officials have been using the block grant program to help themselves, instead of the poor. As noted by this author in a column for The Wall Street Journal (Sept. 19, 1989), Oakland Township officials spent a $14,775 block grant for "Downtown Revitalization." Trouble is, there is no downtown in Oakland Township, a rural community. "Downtown," in this instance, was a parking lot at the Oakland Township Hall. Officials also spent a $13,543 block grant to construct "barrier free improvements" at the Oakland Township Hall. In each instance, Oakland officials used the block grants not to help the poor, but to make their work environment more pleasant.

In Heyer's case, a private hotel development received an unsecured $250,000 loan from the City of Lincoln Park. The city, in turn, received $250,000 from HUD's block grant program. More importantly, Heyer invested $30,000 in the hotel development. He also failed to abstain from voting on the hotel's loan request.

Heyer told The Detroit News recently that he made a mistake by voting to approve the $250,000 loan. "I never in my wildest dreams knew I had voted on that," said Heyer, a former police chief. The City of Lincoln Park is suing Heyer and his business partners to recover the $250,000, and the FBI and Wayne County Prosecutor's Office is investigating the mayor's involvement in the episode. The irony is that Lincoln Park officials fought efforts by the Reagan Administration to abolish or cut fraudulent and wasteful HUD boondoggles like the UDAG and block grant programs.

In 1984, officials from Lincoln Park and the Downriver Community Conference (DCC), a public-sector organization whose raison d'etre is to lobby for more state and federal funding, unsuccessfully opposed abolition of HUD's UDAG program. "Our position is that we are adamantly opposed," Lincoln Park Councilman Frank Sall said at the time. "Those are needed funds because this is the way we are attracting new business to the Downriver area."

Lincoln Park and DCC officials also opposed abolishing HUD's block grant program, arguing that continued federal funding was necessary for economic development. Today, taxpayers are reaping the "benefits" that this welfare mentality has shown.

On another level, the episode illustrates the anachronistic thinking prevalent among officials in Downriver Detroit communities like Lincoln Park. The rest of the world is turning away from government to solve the problems of economic development. Downriver officials should be advocating free market solutions to economic problems, not more socialism and dependence on the federal government.

Economic growth does not result from securing more funding from agencies such as HUD; it results from decreasing economic disincentives and providing opportunity for entrepreneurship. Reducing Lincoln Park's exorbitant property tax rate, for example, would do more for economic development in the long-run than any amount of block grants from HUD. At 81.12 mills, that rate stands at 12.5 percent higher than the average for all 17 Downriver communities, and a whopping 28 percent above the statewide average!

The solution to the Heyer episode is not "tighter guidelines," but eliminating all opportunities for abuse. In short, nothing less than abolition of HUD's block grant program. The program has come to symbolize government fraud and corruption, and offers too many opportunities for waste and abuse. UDAG opponents include liberals as well as conservatives; the program was defunded by a Democratic-controlled Congress. Yet block grants are still being dispensed to Republicans and Democrats in locales as varied as Oakland Township and Lincoln Park. Abolishing the program would put an end to further abuse.