Friday, December 05, 2008

The Problem With Government Money

Giving away government money to jump start the economy, help victims of the housing crisis, bail-out employers, etc. may be necessary. But, as with all government money, it doesn't always get spent wisely.

We were struck by this in a Wall Street Journal page one article on how the limited grant funds available from the $4 billion Neighborhood Stabilization Program, authorized by Congress in July, is forcing cities to make tough choices.

The lead to the article focuses on Avondale, Arizona, one of those unfortunate booming exurbs that went bust in the housing meltdown. Avondale, which has about 2600 homes in--or about to be in--foreclosure, has received $2.5 million in fed funds to ease the crisis. (That's about $1000 per foreclosed home.)

So what is the town doing with it? The Director of Neighborhood and Family services wants to spend a quarter of the money refurbishing two abandoned townhomes , filling up an empty, graffiti covered swimming pool, and "build[ing] two additional rental units for low-income families."

Whoa! The swimming pool is pretty iffy--people are losing their houses--but the part about building NEW housing with the money made us see red. The town has more than 2000 properties that are either abandoned or close to it. They hardly need NEW housing. You'd think if they need low income housing, they could easily RENT some of the foreclosed units, thereby helping stabilize the neighborhoods the way the program is supposed to work.


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