Federal officials have decided to hold Glendale liable for a $240,000 grant made to the now-bankrupt New Horizons Family Center — ensuring the demise of the once-stalwart nonprofit will be felt among other social service providers for years to come, officials reported this week.
That’s because Glendale will be paying the U.S. Department of Housing and Urban Development back by relinquishing a cut of its normal community block grant allotment each year for three years, meaning there will be even less money to spread around to other nonprofits that provide social services to the city’s low-income residents.
The HUD determination was a hit to the city, which had not expected to be held liable for the financial failings of the New Horizons.
“I feel very sorry about the funds we’re going to pay for New Horizons,” Housing Authority member Laura Parazian said during a meeting Tuesday on the federal grants.
New Horizons — which had provided child-care services to low-income families in Glendale since 1994 until declaring bankruptcy last year — had planned to build a child-care center in the 1200 block of South Maryland Avenue, spending the federal housing funds allocated by the city for an expansion that never panned out.
The City Council apportioned New Horizons about $300,000 in federal funds even though the nonprofit had faced financial problems, spurring a new vetting process for nonprofits seeking aid from City Hall.
The HUD pay-back plan will pull Community Development Block Grant money away from social service and capital-improvement programs that have already been coping with fewer available grant dollars during the protracted recession.
After including another round of federal cuts and the loss of about $79,000, the city now expects a 19% drop in grant funding for fiscal year 2013-14, putting the available pool at $1.97 million. That comes on top of a 35% decrease in funding this year.
The funding for next year could drop even more if the federal government dives off the “fiscal cliff” — a mix of deep spending cuts and tax hikes that will be triggered unless Congress comes up with an alternative plan by the end of the year.
The city plans to spend $1.1 million on code enforcement, a federal loan leftover from the development of a homeless shelter and two park improvements.
The Community Development Block Grant Advisory Committee had unanimously recommended that Glendale free up more of its share of the grant funds for nonprofits, particularly in the wake of the HUD pay-back plan, but that idea was nixed by the City Council on a 3-2 vote.
Efrain Olivares — a longtime member of the committee — said that every year the city withholds a large chunk of money for its own projects.
“At the rate you’re going…you won’t need any committee to review community proposals,” he told the council.
Community Services and Parks Director Jess Duran said some safety improvements at Palmer and Maple parks could be delayed, freeing up some of the $525,000 predesignated for those projects.
But Mayor Frank Quintero said the number of people who use the parks outweighs any capital improvement at a nonprofit.
“Nonprofits are totally capable of providing these improvement projects themselves” through fundraising efforts, Quintero said.