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Peduto says Pittsburgh willing to put in place plan for proper use of housing grants

Bob Bauder
| Friday, Feb. 21, 2014, 12:03 a.m.

Pittsburgh Mayor Bill Peduto said on Thursday that he is willing to talk about ways to ensure the city spends federal grant money on low- and moderate-income housing as intended.

Four housing groups claim in a federal lawsuit filed in November 2012 and unsealed this week that the city defrauded the federal government for six years by putting the money toward street paving, parking garages, bridge and building repairs, streetlights and traffic signals.

Their attorney, Donald Driscoll, said the money comes to at least $29.5 million, but his clients are not seeking to harm the city financially and would like to work with the new administration to resolve the dispute.

“We don't have $29 million,” Peduto said, “so I think what could be taken from this more so than a financial penalty to the city of Pittsburgh are new policies in place that guarantee that CDBG funding is used as it is intended.”

The plaintiffs in the lawsuit — Freedom Unlimited Inc., the Northside Coalition for Fair Housing Inc., the Hill District Consensus Group Inc. and the Fair Housing Partnership of Greater Pittsburgh — want a promise that Pittsburgh will commit Community Development Block Grant funding to housing in neighborhoods such as the Hill District and North Side.

Councilman Ricky Burgess, who represents depressed East End neighborhoods, said he has been arguing for years that Pittsburgh does not spend block grant money correctly. Last week he introduced legislation that Peduto supports to provide money to plan for neighborhood improvements.

“I hope that they settle the lawsuit and provide more money for these troubled communities,” he said.

Peduto said he objected while he served on council to how the city prioritized what projects got block grant money. But he would not say whether he thought the city misspent any of the money, saying he had to consult with Solicitor Lourdes Sanchez Ridge.

She was unavailable for comment.

Councilwoman Darlene Harris said she always made sure projects were eligible for block grant money before voting to approve them.

Pittsburgh isn't the only city under fire for how it uses such money.

Mike Wallace, program director for community development at the National League of Cities, said leaders across the country are hearing the same argument from community groups as federal funding becomes more scarce.

He said Congress reduced block grant funding in 2010 from $4 billion annually to $3 billion. It's forced a crunch, forcing officials to “make tough decisions” on where the cash is spent.

Some cities spread the money around to each neighborhood. Others use it on several big projects as a way of leveraging more money.

The other problem is that more counties and cities now qualify for the grants.

“Naturally that is going to make some stakeholders pretty upset, especially stakeholders who have been receiving CDBG funding and suddenly find out they're no longer going to be receiving the grants,” he said. “It's not surprising that some groups would be considering lawsuits.”

The U.S. Attorney's Office filed notice that it would not intervene in Pittsburgh's case, leading legal experts to speculate that the federal government does not believe the city was guilty of fraud.

In Westchester County, N.Y., the government intervened in a similar case, forcing the county to pay more than $53 million in penalties, reimbursements, attorney fees and investments in affordable housing.

“Moving forward, these communities need additional resources above and beyond what they have been receiving,” said Pittsburgh Councilman R. Daniel Lavelle, who represents the Hill District.

Bob Bauder is a staff writerfor Trib Total Media. He can be reached at 412-765-2312 or

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