The last of Grand Forks' ‘flood money’ dries up soon
The federal government sent Grand Forks $171 million after the notorious flood of 1997. The city lent or spent some of that money via a program designed to provide affordable housing, fight poverty and develop infrastructure – the last of it is set to return in the next year or two.
Grand Forks’ Community Development Block Grant program doles out federal money to treatment centers, low-income housing blocks and more – all to help the city’s low- and middle-income residents.
Staff expect to see the program’s last big cash infusion in the next year or two.
“After that, it’s pretty lean years,” said Meredith Richards, Grand Forks’ community development director.
Here’s why: The city’s CDBG program received $171 million from the U.S. Department of Housing and Urban Development after the Flood of 1997. The city loaned a small percentage of that money and used more of it to buy flood-damaged properties.
The formal term is “disaster recovery assistance,” but informally, it’s referred to as “flood money,” and repayments on those no-interest loans and proceeds from the sale of those properties have supplemented the program’s annual federal appropriations for years.
The last significant portion of that decades-old cash is tied up in the city’s Corporate Center, which was built in 1999. Thirty-six percent of the building’s construction cost was paid for with program money. The city, which paid off the last of the loan it took out to help build the Center, plans to sell it in the next few years. When that happens, the program is entitled to 36% of the proceeds.
The city had the Center appraised in January, and the Center’s two buildings were valued at about $9.5 million, Richards said. That means the CDBG program would be in line for about $3.42 million, assuming the final sale price stays at the valuation.
When that money comes and goes, the program presumably will be left with its annual HUD appropriations for the foreseeable future. That cash flow is far from insignificant, but it’s stagnated since the mid-'90s. In 1995, HUD paid the city $470,000, according to city staff. In 2019, it appropriated to the city $430,000, a figure that’s 8.5% lower than the one 24 years prior, even before accounting for inflation. For comparison, $470,000 in 1995 dollars amounts to about $791,000 today.
The program’s flood money has been petering out for years, though, and at least one Grand Forks institution has started to reconsider its longer-term costs.
St. Joseph’s Social Care and Thrift Store has received CDBG money for “brick and mortar” projects, such as a remodeled basement in recent years, but hasn’t received money for day-to-day expenses, including funds to help people stay in their homes or prevent a utility disconnection, since 2016.
“Our outgoing client services are exactly what they’ve been in years past,” said Mickey Munson, the organization’s new executive director. “The biggest change would be when we’re able to chip away at our deferred maintenance.”
The St. Joseph’s budget fluctuates as grants and income from its thrift store ebb and flow (the rise of web-based thrifting on Facebook and Craigslist is a new challenge unto itself), but leaders there estimate that 8% to 10% of their annual spending typically comes from community development block grants.
Munson sold sponsorships for the Ralph Engelstad Arena for 16 years before he was hired at St. Joseph’s in August. Now in his new role, he said he’s looking for new funding sources or ways to enlarge existing ones. The plan is to advertise the store more and push for more donations from sympathetic businesses.
Munson and JoAnn Brundin, St. Joseph’s former longtime director who still helps regularly as Munson learns the ropes, said they would consider spending whatever the organization gets from the Corporate Center sale via the program on updates to the homes they maintain for people who were once homeless.
“CDBG absolutely eases the burden on some of the maintenance things that we need to do,” Munson said. “As it goes away, we’ll have to look at additional revenue streams and how we handle things internally because the need’s not going away, and it’ll always be there.”