By Doug Harsany
It seems that the needs in our communities continue to grow, even as our means of addressing those needs is diminished. We need to shift our thinking in order to reach beyond the traditional methods of doing business. Early in the recent recession here in the United States, the federal government recognized that we were facing a crisis that demanded additional resources for housing and community development. Programs like The Housing and Economic Recovery Act of 2008 and The American Recovery and Reinvestment Act of 2009 were created to address this crisis. Those resources are now largely gone, but many challenges still face our states and communities, including a scarcity of decent affordable housing, a surplus of abandoned buildings, a crumbling infrastructure, and a shortage of good jobs.
The federal deficit, the war on terrorism, an aging population and other federal challenges are shifting priorities away from housing and community development. Government budgets at the federal, state, and local level are very tight. Affordable housing and community development funding resources continue to decline, sometimes precipitously.
In addition to these financial challenges, politics in many states and local communities play an increasingly pervasive role. The framing of a message is often given more importance than the housing and community development goals of the programs. We live in a world where a photo from a cell phone or a twitter message can sway public opinion, and there is increasing public scrutiny of everything that we do. All of this takes time away from the administration of programs.
Also, experienced staff are retiring from these programs in record numbers, and many of these staff will not be replaced. Even when they are able to make replacements, many program administrators are struggling to get and keep younger staff. In the beginning, many program administrators simply tried to absorb these changes with existing staff and with only minor adjustments to existing programs. However, as this barrage of challenges has continued to grow into what sometimes seems avalanche proportions, it has become increasingly difficult to avoid making major structural and programmatic changes.
This challenge is further exacerbated by humankind’s inclination to make things ever more complicated. Richard Branson is quoted as saying that “complexity is your enemy. Any fool can make something complicated. It is hard to make something simple.” As administrators of these funds, what can you do to mitigate the impact of this problem of diminishing resources? When I was a program administrator with the State of Ohio, my boss was always masterful at questioning any new program or initiative that we dreamed up. He understood that we couldn’t solve every facet of every problem with limited resources. So pick your priorities well, and keep things simple.
In this article I will share a few different approaches to addressing this problem of diminishing resources, and provide a few examples from my experience. I will focus today on solutions to this problem related to the restructuring of programs. I also have some suggestions related to the restructuring of an organization, which I will share with you another time. One overarching question that should be considered as you think about a particular challenge that you face in this world of diminishing resources is whether your need is primarily to reduce internal or external resources. Where is the bleeding? Are you burning up too much staff time in the office, or are your subrecipients wasting money because of policies that need streamlined?
There are a number of ways in which programs can be restructured. Remember as we go through this discussion that our goal in restructuring is to seek to stretch our diminishing resources so that they have as much impact as possible. So let’s dig into the topic of the restructuring of programs.
Program Streamlining or simplification
One fairly obvious way to make programs more efficient and to save resources is to streamline or simplify programs. In reality this is often not as simple as it sounds on the surface. This is partially true because change is difficult. Not only do we work in a political world where change can be viewed with skepticism, but staff and partners may also struggle to adapt to change. In addition, change takes extra effort, which puts already scarce resources under an additional strain. In my opinion, it is worth it in the long run. So have the courage to do the hard thing, and make those needed changes. By the way, do you know what courage is? It is not fearlessly moving forward. That great philosopher John Wayne defined courage this way. “Courage is being scared to death, but saddling up anyway”.
Let me begin with an example of streamlining efforts: I used to manage housing programs for the State of Ohio. One of these programs we called the Community Housing Improvement Program, which was a competitive program that allowed local communities to choose from a variety of housing activities.
Over the years we worked hard to build local capacity. Some of the things that we implemented to accomplish this were:
A. A requirement for local communities to do planning, which was much like the consolidated plans that entitlement communities and states do.
B. We embarked upon clearer policy development, and required local communities to develop their own comprehensive set of local policies, which we reviewed.
C. We implemented local targeting requirements.
D. We had a robust set of rehabilitation standards.
E. The application process was thorough, but time consuming.
In my opinion, creating this local capacity is very important. I have seen other places in the country where they truly struggle for the lack of it. I have also seen a correlation between the efforts of states and entitlements to work with subrecipients and build capacity and the amount of local capacity that exists.
So in Ohio, we desired to retain that capacity, but also recognized that our funding wasn’t going as far as it used to, and that these diminishing resources required a streamlined approach. Therefore, we embarked on an effort to make things simpler, and to cut down on the amount of time required both by our grantees and our staff. We did this by simplification in two primary areas:
We greatly simplified the local planning requirements. We still provided data and required the local housing organizations to coordinate, but eliminated the complicated forms and process, and our review. This saved both the local communities and our staff many hours.
We also somewhat streamlined the application process. In this case, we depended more on technology. We standardized many of the forms and made the submission electronic. This also saved time.
These changes were implemented just in time for the Neighborhood Stabilization Programs (NSP) to come along. Probably like you, our staff were now required to stretch existing resources to cover these new and significantly challenging programs. We did so without adding any additional staff. We would never have been able to accomplish this if we hadn’t done the streamlining to the other programs.
Remember that at the State level, a small change can have a great effect. I liken changes at the State to the turning of the Titanic. Creating change is difficult and slow, but the result can make a big impact. As resources have continued to diminish, the State has had to make additional streamlining efforts, including regionalization and a reduction in eligible activities.
Combining or consolidation of programs
The combining or consolidation of programs has on the surface some obvious potential for increasing efficiency. However, it is also often a difficult sale, as staff are frequently assigned to specific programs and take such a change quite personally.
It is also probably worth mentioning here that a cookie cutter approach will not work in designing our community development and affordable housing programs. Every State and community has its own special set of circumstances that determines what will work. It is equally important to recognize that what made sense in the past may not make sense today, and that what makes sense today may not work in the future, as these factors are constantly in flux.
I am often reluctant to discuss communities in which I have done consulting work, but the examples that I want to share with you today are all positive stories of good work done on the part of states and local governments. I have been doing considerable work in the City of Detroit over the past couple of years, and they have struggled with a huge number of vacant, abandoned, and blighted buildings. There was a ton of demolition work being performed, with funding from a variety of sources. This work was being done by several different public and private entities with little coordination. The resulting confusion led to such messy situations as one entity tearing down a house that someone else was planning to rehabilitate. In this case, combining all demolition programs under one centralized umbrella managed by one City Department, as Detroit has now done, made a lot of sense.
Elimination of programs or program elements
Eliminating programs or program elements is even more difficult than combining programs, as you will not only deal with the personnel issues as employees potentially face job loss, but you may leave organizations and recipients without necessary support. The extent of the ramifications, of course, may depend on the availability of other resources to help fill the gap. For example, if you choose to stop doing housing with Community Development Block Grant (CDBG) funds, then (if it exists) HOME Investment Partnership Program (HOME) will still likely be used to fund some housing activities, but individuals that are dependent on home repair may have no funding options, since that is not an eligible activity under HOME. This can create a real hardship on that elderly household with no heat.
If it comes to making this difficult type of choice, how do you choose between competing needs or priorities? I don’t think that there is any good answer to this, but we should arm ourselves with the reality that we have never, and will never, be able to meet every need. We should also recognize that splitting the money into a lot of grossly underfunded categories does little good for anyone. When we couple these realities with good data and planning, it will help us to make those hard choices.
Regionalization or reduction of program participants
The Michigan Economic Development Corporation, who is responsible for managing the CDBG funds for the State of Michigan, was struggling with the management and tracking of program income. This has always been a particular challenge for states, since their funds are disbursed over a wide geographical area with many communities involved in the process. I was asked to lead a team in assisting them to address this issue. What we devised was a regional approach, where program income generated within a community flows to a centrally located administrator who holds and manages the program income on behalf of the communities. This allows for the State to much more easily keep track of the available program income, and also allows for that program income to be used on projects that benefit the region, rather than pitting neighboring communities against one another.
More precise targeting of programs
I think the secret here is to have good planning at both the State and local level. Without a good understanding of your needs and an ability to prioritize those needs and to think about how these resources will work together to make an impact in the community, you are really just shooting in the dark.
I led a team assisting the City of Akron, Ohio with an assessment of their housing program, and one of the things that we did beyond looking at neighborhood and demographics data directly, was to conduct a comparison of their data and their use of funds with the data and use of funds from several similarly sized Midwestern cities. This served as a useful reference point, and I think that this sort of analysis could be useful in many communities. Spreading money around like peanut butter has little real and lasting impact on our neighborhoods.
Doing fewer & larger projects & leveraging other resources.
Once again, we must think both about the needs of individuals, and the needs of the community. Providing housing, a job, or heat to a household can make a real impact on their lives. Some programs such as home repair are best offered community wide. Other types of programs, where the goal is to also make an impact on the community may be better done through bigger, more targeted projects.
The City of Lima, Ohio, is a community that traditionally expends their modest HOME allocation on rehabbing a few homes. They recently chose to put a couple of years’ resources together, and brought me on board to assist them in putting together a project that will leverage low-income housing tax credits, federal and state historic tax credits, and private equity for a mixed income, mixed use development. The project that the City has selected will restore a historic bank building with beautiful architectural elements. This large building, which is an icon on the town square has been vacant and in a dilapidated condition for many years. This project will include commercial space and newly renovated rental units, both affordable and market rate. Through this effort, the City will be able to potentially make a much bigger impact on their community, and encourage economic growth and other private investment, while still providing affordable housing to their constituents. As resources become more scarce, we must think more strategically about how we invest.
Improving program efficiency.
Everything that we have talked about so far could be categorized as program efficiency, but sometimes inefficiencies are difficult to address for a variety of reasons.
I worked as a part of a consulting team to the City of St. Louis, who has a strong Ward system. For those unfamiliar with such a system, a ward is an administrative division of a city that elects and is represented by a councilor. Every year the City’s HOME program was split between the many Wards, resulting in barely enough funding to rehabilitate one house in each ward. This was exacerbated by stringent historic preservation requirements that drove up the cost of rehabilitation. Since these were elements that were outside of the control of the community development department, we worked with them to make the program more efficient in the areas that they could control. Even though the funding was divided in this way, the program functioned as if there were large developers involved in doing these rehabilitation projects, and requiring substantial upfront pre-development work. This resulted in high project costs and a lot of failed projects. We were able to assist them in their efforts to bring that pre-development work in-house and to simplify the process, improving program effectiveness. The message here is sort of like the old Alcoholics Anonymous Serenity prayer: “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference”.
The work that you do is difficult, and at times it may feel like the decreasing resources and increasing complexities will end your good work. Addressing these challenges will require adequate research in order to understand the problem and to choose the best solution (see my article on “So You Think You Have A Problem?”). It will also require good processes to be put into place. If you would benefit from assistance in researching your core problem or in the development of a good framework for program restructuring, please give us a call.