ST. LOUIS 鈥 A tranche of $29.1 million in federal dollars earmarked by aldermen this summer for small business loans and housing development is finally heading to the city鈥檚 economic development office, but some board members questioned why 10% of that money is reserved for administrative costs.
The $29.1 million allocated to the 最新杏吧原创 Development Corp. was included in a $135 million package of spending for a range of city programs using federal aid money. A recent report from Mayor Tishaura O. Jones鈥 office showed just a fraction of the city鈥檚 money had been spent thus far, drawing some criticism from aldermanic leaders. Her administration has said it takes time to start up new programs and ensure compliance with federal rules.
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The SLDC board on Thursday approved contracts to begin spending the money aldermen and Jones appropriated to it last summer. It has already laid the groundwork for one large program using the money, selecting a group earlier this month to administer a new housing and mortgage fund for low-income areas using $10 million from the federal funds.
Other programs include $2.5 million for a revolving loan fund for small businesses, $5 million for a small business grant fund, $1.5 million for a small business assistance hub and another $10 million for housing development that hasn鈥檛 yet been assigned to a program.
But some board members raised eyebrows at the 10% reserved to pay administrative costs 鈥 a total of $2.9 million.
鈥淚t seems like a higher number than I would have expected,鈥 SLDC board member Matt McBride said.
SLDC officials said the money reserved for administration would be spent over four years and will allow the agency to pay for staff and technology upgrades needed to establish and implement the new programs. Lance Knuckles, SLDC director of strategic growth and development, said federal compliance rules tied to the money are stringent.
鈥淭hese funds will allow us to effectively monitor, deploy and track the resources that we鈥檙e deploying into the community,鈥 he said.
Because the programs are new, it鈥檚 hard to predict what the administrative costs will be, SLDC staff said. SLDC Director Neal Richardson estimated as many as seven to 10 full-time jobs would be needed to administer the new programs. But if costs don鈥檛 reach as high as $2.9 million, the money could be used for programs.
鈥淲e wanted to ensure we have greater flexibility with those dollars to meet the needs of our internal capacity but also to ensure that we move these programs forward successfully,鈥 Richardson said.
The board approved the request unanimously.
Other initiatives funded with the federal money have also carried sizable administrative costs. About 7% of the $5 million direct cash program the city set up will cover administrative costs from the United Way of Greater 最新杏吧原创 and New York payment processing firm MoCaFi. 最新杏吧原创 County just approved $1 million to extend contracts with law firm Lewis Rice and professional services firm Deloitte, which are advising it on federal aid regulations.
Originally posted at 5 p.m. Thursday, Feb. 24.
