Originally published February 2, 2011 at 6 a.m., updated February 2, 2011 at 11:53 a.m.
Despite reporting a projected budget deficit of more than $46 million on Tuesday, San Diego has an unusual problem -- too much money in a federal bank account.
SAN DIEGO Federal officials say the City of San Diego is in danger of losing millions of dollars in Community Development Block Grant (CDBG) funds and has put local leaders on notice. The money is supposed to be spent on community projects, but some of those projects have been slow to get going.
“So we’re going to be working very closely with the City of San Diego to accelerate the pace of their program so these funds ultimately get to where they need to be,” said Brian Sullivan, a spokesperson for the Department of Housing and Urban Development, (HUD) in Washington.
The city currently has a $30 million balance in its federal line of credit. That money is for things like parks, broken sidewalks, and the improvement of libraries.
HUD gives cities like San Diego CDBG grants every year to improve poor neighborhoods.
Last year the city got more than $16 million --but it didn’t spend it.
Some of the grant money has been sitting on the books for nearly 20 years. Monday night, San Diego City Council voted to take $11 million of it to pay debts.
But decisions like that have consequences in certain neighborhoods. For example, the Language Academy, a public elementary and middle school in the College Area, nearly lost its playground because of the council's decision.
The school was awarded $1 million in CDBG money in 2007 to convert its gravel play field to artificial turf. But red tape delayed the project.
Council member Marti Emerald successfully lobbied her colleagues to remove the grant from the "reallocation" list, so the school will get its field.
Emerald said the council is making changes to streamline the process.
“We need to get this work done on behalf of the taxpayers who are paying the tab,” Emerald said.
The city’s administrator for the Community Development Block Grant program, Angela Nazareno, said her department has been working to clear the books of old projects.
Nazareno said the city used to require neighborhood groups to raise seed money for the improvement projects before it received a grant. That stalled many projects.
Nazareno said that requirement is gone.
“It’s either fully funded or not funded at all and this will help us move funds along,” Nazareno said.
Meanwhile, Mayor Jerry Sanders reported Tuesday that the city’s projected deficit for the coming fiscal year has been lowered by more than $25 million from earlier projections, to $46.5 million. The improved financial picture is due to higher tax revenues than expected and a smaller obligation to the pension fund.