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Over the course of a year, Buffalo lost out on more than $10 million in federal housing money because of City Hall mismanagement.

Most of that money -- about $8 million -- is now coming to Buffalo, thanks to long-awaited reforms in how City Hall manages its housing and development projects.

The funding, which federal officials twice rejected but have now approved, will allow the city to move forward with new housing construction on the East Side, two housing rehabilitation programs and the conversion of a downtown school into apartments.

"I'm thrilled to get a clean bill of health," said Mayor Anthony M. Masiello. "This has not been a pleasant ordeal, but I think it strengthened us."

The restoration of funds followed a series of stinging criticism by the U.S. Department of Housing and Urban Development. HUD's reports to the city suggest Masiello and his staff were repeatedly told about the problems but failed to correct them.

In reversing its decision, HUD pointed to several recent management reforms adopted by City Hall. Among the improvements is new staff to oversee the city's numerous programs and projects.

The city also agreed to repay $2.2 million in federal funds used on two projects -- the downtown Sidway Building and School 62 on Urban Street. The money will come from HUD funds intended for the city last year.

"HUD is both pleased and gratified that the city has taken corrective action," said Stephen T. Banko III, director of HUD's Buffalo office. "We are pleased because the city is now poised to deliver housing opportunities to the people who need it most."

Banko said the city helped itself by relying on HUD's local staff for assistance. He also praised Timothy E. Wanamaker, the city's commissioner of strategic planning, and his staff for bringing about much-needed reforms.

Even before HUD's concerns became public, Masiello hired Wanamaker to overhaul the city's housing and development operations.

Wanamaker called the restoration of HOME funds a "milestone" in the city's efforts at improving its housing, development and anti-poverty programs.

"We have worked hard over the past year to restructure a troubled system into one that has the confidence of the mayor and the U.S. Department of Housing and Urban Development," Wanamaker said.

HOME, one of the government's premier housing programs, was started in 1992 to help cities build and renovate housing and promote homeownership among low- and moderate-income residents.

For years, HUD routinely approved the city's request for HOME funds, but federal officials took the unusual step of rejecting the city's request last summer and again this summer.

Much of HUD's criticism was directed at the city's Home Ownership Zone, a housing project on the near East Side. The project was supposed to result in the construction of 344 new houses, but only 125 were built.

The city already has allocated the $8 million in HOME funds to a variety of projects across the city.

The biggest chunk of money -- $2.8 million -- will go toward the building of new single-family homes, many on the East Side.

The city also plans to spend money on rehabilitation both for existing homes as well as vacant housing with the potential to sell.


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