After watching City Council last night, it is clear that we need to go over this again. The City of Worcester had three options to pay back HUD $3,400,000:
Option1: Ask the recipients who spent the money incorrectly to give it back to the City of Worcester and then they would return it to HUD.
Option 2: Do not ask the recipients to return the money and do not write a check from the General Funds to pay HUD. If we had done that, HUD would simply reduces the next year award by 3,400,000; for example, if it was calculated at the Federal level that we were due $4,000,000 in CDBG funds, we would have only received 600,000.
Option 3: Do not ask the recipients to return the money and write a check from the General Funds in the amount of $3,400,000 to HUD. Next year’s CDBG allocation then would not be reduced. This is what we have chosen to do.
In other words $3,400,ooo of CDBG grant monies next year will have in essence cost us $3,400,000 versus being an actual grant (FREE).
Take it one more step we just took $3,400,000 of General Fund money that we could have spent this year on things like; for example, police overtime, and converted them into HUD CDBG monies in future years, which will have various restraints, and most likely be awarded to the entities that just cost us $3,400,000.
