Review of Allegations concerning a Local Public Works Program Grant in Detroit, Michigan

CED-78-25: Published: Dec 29, 1977. Publicly Released: Dec 29, 1977.

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Allegations were made that a grant awarded by the Economic Development Administration under the local public works program authorized by the Local Public Works Capital Development and Investment Act of 1976 was not in accordance with agency guidelines which state that the purpose of the grant is to fund facilities which could not have been constructed without the grant. It was also alleged that the grant did not conform to a section of the act which provides that the project should relate to existing approved plans of regional development. The act authorized $2 billion for a local public works program to make grants to States and local governments for projects to provide employment opportunities in areas of high unemployment and to stimulate the national economy and, as amended, authorized an additional $4 billion. A sports arena was among Detroit's projects selected for funding on the basis of the agency's scoring system.

According to provisions of the act and the agency's policies and procedures, a community's ability to fund a project did not affect eligibility for a grant. The agency required applicants to certify that Federal funds would not displace local funds or funds from a State or Federal agency already obligated for the project. This was certified by Detroit in its grant application. Also, the act did not require that projects conform to regional development plans but that States and local governments making applications should relate their requests to existing approval plans of local community development or regional development. This was included as a factor in scoring and, since Detroit certified in its grants application that the project related to a local development plan, it received credit for this factor. An allegation that construction of the arena by Detroit forced Pontiac to abandon its proposed arena was answered by pointing out the strict time frames imposed by the act on implementation of the program.

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