Q: When is $2 billion both "a drop in the bucket" and "too much?" A: When the $2 billion in question is for neighborhood redevelopment, and the stimulus package drastically changes how such funds are allocated. Here's the back story: When Congress allocated $3.9 billion last summer for a neighborhood redevelopment program, the idea was simple. Local cities and towns were facing a glut of foreclosed properties. The federal government would help municipalities tear down rotten buildings, buy abandoned homes and apartments, and refurbish them, preventing neighborhood blight. By any measure, the size of the program was inconsequential in comparison to the size of the problem. Florida, for example, will see $541 million from the first round of payments, and must spend it within 18 months. That amount of money would pay for only about 4,328 homes, a drop in the bucket if you consider Florida's 385,000 foreclosures. But many of the cities receiving the most money from the program are Sun Belt locales with little experience in planned community development. Without an established network of CDCs (non-profit community development corporations) or sophisticated urban planning agencies, they are simply unprepared to deal with any influx of cash targeted toward neighborhood redevelopment. So in crafting the stimulus package, the Obama administration and Congress attempted to both increase the funds available for neighborhood redevelopment and target the money toward agencies with the capacity to spend it wisely. The House proposed doubling the program's size; in the final draft of the bill, $2 billion are allocated. But there is a significant -- and unusual -- new aspect to the program: non-profits are now able to apply directly to HUD for the money, which no longer has to be funneled through cities or states. "I love the concept," says Alan Mallach, a non-resident Brookings Institution fellow focused on housing issues. Mallach also served as director of housing and economic development for Trenton, N.J. from 1990 to 1999. "But if I were going to try and break ground with a new federal government to CDC relationship, I'm not sure this is the way I would have started." Barack Obama has promised to innovate on government's relationship to the entrepreneurial non-profit sector. He is a fan of charter schools, for example. The challenge in the housing sector is that the neighborhood redevelopment program exists within the larger community development block grant process, which is designed for interactions between the federal and local governments. "On one hand, if I were at HUD, it would be really nice to deal directly with some high performing CDCs," Mallach says. "But the non-profits have to account, document, and process this money as HUD requires." That is a long, bureaucratic process, one that may not be suited to the smaller staff sizes of non-profits, especially considering the legislation's requirements that projects be up and running relatively quickly. In other words, this new program represents a baby step toward government-non-profit cooperation, a test case of what is possible. But the rushed quality of the stimulus process means that new systems for dealing with NGOs haven't been set up. I'll be keeping my eyes peeled for how non-profit-government relations change under the Obama administration. --Dana Goldstein
