Feds hold back $2.2M from Paterson's community development funds. How and why it happened

PATERSON — Federal officials are holding back more than $2.2 million in Paterson's community development block grant (CDBG) funding for 2024 because of the city's failure to spend funds from previous years.

Municipal officials are warning community groups applying for CDBG money for 2025 that Paterson may get far less money from the U.S. Department of Housing and Urban Development for the program “due to the city’s past challenges in expending these funds in a timely fashion.”

Mayor Andre Sayegh’s chief of staff, Habib Kader, said HUD has decided “to step in and provide guidance to bring the city into compliance.”

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“HUD is organizing a workshop meeting, which a city representative will attend to ensure timely use of funds,” Kader added.

Local officials provided Paterson Press with a list showing programs approved for funding for 2024 that HUD has not yet released to the city:

• $150,000 for Chosen Generation, Tier1Recovery’s outpatient substance abuse treatment program.
• $120,000 for a senior activities program run by Catholic Families and Community Services.
• $100,000 for the Junior YouthBuild summer cleanup program run by the New Jersey Community Development Corporation (NJCDC).
• $100,000 for NJCDC’s Youth Center on Front Street.
• $1,119,000 for city government facility improvements and contingency funds.
• $519,000 for the homeowner rehabilitation program run by city government.
• $104,000 for the city fire department ongoing lease for demolition equipment.

Bob Guarasci, New Jersey Community Development Corporation's executive director, said his organization already has spent the money earmarked for the YouthBuild summer program and has started spending the money that’s supposed to go toward the youth center.

Guarasci said he expects Paterson eventually will reimburse his group when the city gets the money. “I think the city will find a way to make good on its obligation,” said Guarasci, head of one of Paterson’s most prominent nonprofit organizations.

Willie Moody, the director of the Tier1Recovery group, also expects Paterson to reimburse his program for the money being spent on the treatment services.

“I’m confident that it will flow,” he said of the money the city owes his program.

Money not spent from 2022 and 2023

Paterson has about $1.3 million in CDBG money from 2023 and $812,000 from 2022 that has not been spent, which has caused HUD to hold back the 2024 money.

Most of that unspent money is for city government projects:

• $640,000 from 2023 that was supposed to go toward a recreation area behind the Lou Cosetello Pool.
• $529,000 from 2023 for the homeowner rehabilitation program.
• $407,000 from 2022 for the renovation of the bathrooms at the South Paterson branch of the city library.
• $205,000 from 2022 for the renovation of the security office of the main library branch on Broadway.

The list provided by City Hall shows two private groups with unspent CDBG money from 2022. The Boys & Girls Club of Paterson and Passaic has not spent $138,000 for a boiler room upgrade that has been delayed and the YMCA $200,000 for parking lot improvements. Officials said the YMCA parking lot project is not moving forward.

In announcing the start of the CDBG application process for 2025, city officials warned they expect Paterson would get a reduction in its funding for the program.

A spokesperson for HUD said the federal agency has not made any decisions on its 2025 funding allocations.

This article originally appeared on NorthJersey.com: Feds hold back $2.2M from Paterson's community development funds. How and why it happened