Matching Assistance Grants Strategy/Rationale
Goals and Objectives
Every program or investment the City makes must be in the best interest of
the community as a whole. Programs that benefit select individuals or small
groups are typically a poor investment of public dollars. So in an
environment where public funding is tight and extremely competitive, each
program and expense must be evaluated and scrutinized for this test.
Residential Façade Renovation Grant Program Evaluation
Over the past five years, the City has allocated nearly $1,000,000 in various
funds for single family façade renovation grants. While this program has
generated over $3,000,000 in total investment into the properties of Whiting
homeowners, its success has been called into question. The primary issue is
that the south side of town did not generally benefit from this mass
investment. By and large, north side homeowners used the grant to
improve their properties, which were already of much higher value than their
south side counterparts before the program. In summary, the area in most
need of redevelopment did not significantly benefit from the program. For
this reason alone, if this program is ever reinstituted, the guidelines must be
significantly altered to compensate for this factor and to also provide needed
aid for senior citizens.
It is critical to note, that ordinary property tax dollars should not be normally
used for programs like this. With the implementation of the constitutional
property tax caps, general property tax revenue is currently not sufficient to
cover the day to day operations of the City. These day to day operations
include all public safety costs and nearly all other employee salaries and
benefits. With the rising cost of health care and the need to award cost of
living raises to the employees, these funds will be under constant pressure
for the foreseeable future. No benefit can be gained from reducing the
investment in public safety in lieu of granting homeowners assistance to
renovate their properties.
In all previous homeowner assistance programs, special “one-time” funds
were used to support the homeowner assistance grants. Examples of these
“one-time” funds include receipts from the sale of property to BP, Riverboat
Funds (casino revenue sharing ~$50,000 annually) and other settlement
funds. The only current acceptable exception to this rule is Whiting
Redevelopment Operating Funds. These funds are earmarked for any
redevelopment activity and homeowner assistance would be a qualifying
expense. Since these funds are extremely limited and are the only WRC
funds that can be used for personnel expenses, these funds are rarely used
for residential grants.
Another crucial factor in establishing a residential grant program is the
amount of available funds in the pot. For previous grant programs, several
hundred homeowners applied to receive assistance. The demand clearly
outweighed the available funding. Because of this extremely high demand,
a fund in excess of $250,000 is needed to ensure fair and equitable
distribution of the available funds.
Closing note: Most municipalities are hesitant to establish programs of this
nature. The primary concern is that even though the programs are clearly
defined and openly advertised as one-time programs using one-time funds,
the general public takes them for granted and expects the programs to be
funded indefinitely. This is true in Whiting, where City hall has received
hundreds of calls asking for why the program is no longer available and
when it will be re-established. The easy answer is never again, but the
Mayor is working very hard to identify a source of funding to offer one more
round of grant funding. While there are no guarantees that it will indeed
happen, the timeline will not occur before the spring of 2014.
Commercial Façade Renovation Program
Holding true to the goals and objectives listed above, the City is constantly
looking for opportunities to invest its limited funds into projects or programs
where the community as a whole would uniformly gain. The Commercial
Façade Renovation Program is one such program. The Whiting Downtown
Business District is the single most identifiable asset of the City. The
success or failure of the District will determine the success or failure of the
community. If the District succeeds, the entire community’s property values
will also rise and vice versa. Businesses in the District not only provide
needed employment for a broad cross-section of the community, but
improve the quality of life of our residents by providing local choices to shop
and eat. Also, investment made by commercial property owners fuels
additional investment in neighboring properties and attracts new business to
the District.
Also, since the property tax caps have been put in place commercial
property owners now pay a higher percentage of property taxes (3%) than
our residential property owners do (1%). Since the businesses now
subsidize the residential services provided by the City, a smart business plan
should focus on commercial investment to allow our tax base to grow at a
higher rate, thus returning more dollars to the City’s coffers than an
investment in residential property would.
Understanding these points, investment in the District is a wise business
decision for the community as a whole. It is also a great use of various
small pots of money that simply are not adequate for large scale residential
programs.
Municipal Finance 101 – Various Pots of Money
Very simply put, the City has 3 types of Funds where they both receive and
expend funds. They are:
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General Fund – Property tax revenue to be used for operating
expenses like; salaries, benefits, utility costs, etc.
Specialty Funds – Funds that receive various types of revenue like;
cigarette taxes, gasoline taxes, industrial TIF revenue, etc. These
Funds can only be used for specific or limited expenditures. None of
these can be allocated to projects or programs for private gain. This
means that these Funds largely cannot be used for grant programs.
“One-Time” Distributions – Sale of property, one-time settlement
distributions, grants, etc. These are funds that are not reoccurring
and are gone once the funds are expended. These monies for the
most part can be appropriated for any legal use by the appropriate
boards. In nearly every City in America, these funds are used to prop
up a municipality’s underfunded budget due to revenue pressures. In
Whiting, we have elected to reduce our expenditures and give a large
portion of this money back to property owners as grants.
Unfortunately, the pot of money is now depleted.
Administration of Grant Programs
The Whiting Redevelopment Commission acts as the approving or
administering body for all grant programs. This is done because they have
developed the process necessary to administer the grants, and are
experienced in handling the grant process. With the exception of
approximately $50,000 annually, all monies earmarked for grant programs
have been allocated via the Mayor’s Budget. Simply put, the decision to
establish a program or provide the funds necessary for a program is the
Mayor’s and not the WRC’s.