A $9 Million Grant with Unknown “Strings” Attached

Guest Post by J.T. Johnson – Lakewood Ward 4

If you missed the last two Lakewood City Council meetings, you missed… Well, let’s put it this way, if my Mom had caught me doing what I saw at the meeting, I would have been sent to my room without any dinner.   Let’s start with the February 12 meeting: 

Perhaps the most disconcerting and substantive financial part of the meeting came about as a result of questions posed by Councilor Rein to the City Planning Office and the State’s representative providing the grant.  According to the City Planning Office, the taxpayers are on the hook for $2M – $2.5 of operating expenses each year.  (The City’s own financial documentation indicates the operating costs will be much higher, but let’s use the Planning Office numbers for now.)  He went on to say that any decision of the Council to accept the $9M grant would “not be binding on future Councils.”  I believe most legal scholars would disagree with the City Planner and state that future Councils will be bound by grant conditions and the “strings” attached to the grant.  A future Council could elect to breach – but that always comes with a price tag.  Query:  Where was the City Attorney while the City Planning Office was providing legal advice to the Council?  She sat there and didn’t say a word.

Following the Planning Office comments, the grant representative from the State said that a contract would be negotiated with the City identifying the City’s obligations.  This contract would only be negotiated AFTER the City accepts the $9M grant.  She pointed out that the contact obligations would be for a 30-year period of time.

YIKES!  The City will not know its contractual obligations with the State until AFTER it accepts the money. 

What entity takes $9M without knowing what “strings” are attached??  The answer to that probing question is, your City Council.  A simple remedy to this problem would have been to negotiate the terms of the grant contract PRIOR to accepting the money.  Finalization of the contract could have been contingent on the City accepting the grant.   At least the citizens of Lakewood would have known what their City Council had signed them up for if the terms had been negotiated in advance.  But, No!  The councilors were so eager to get their hands on more of your money that they apparently didn’t even want to know what the additional strings would be.  And don’t forget, “he who controls the purse controls the “strings.”   Other than the two councilors from Ward 4 (Olver and Rein), no councilor expressed ANY concern over the uncertainty of the “strings” attached to accepting the $9M. 

Now, fast forward to the February 26 Council meeting.  The issue consuming the most time at this meeting dealt with the Head Start program in Lakewood.  Due to possible overlapping resources and the very high per capita cost of the program, Lakewood wants to eliminate the Head Start program from its provided resources. The City favors passing this opportunity to Jefferson County or a private entity.  All of the councilors seemed to agree with eliminating the program from the City’s budget.  However, there was some uncertainty over which entity (if any) might take on the Head Start responsibilities so as not to have a disruption of services. 

NOW, here’s the dichotomy – because of the “uncertainty” the Council would not move forward to allow the City to notify the Federal Government (DOE) that the City of Lakewood would no longer be responsible for the Head Start program.  The councilors wanted the City to informally probe other Head Start providers (private entities and Jefferson County) to ascertain their interest. 

Here’s the problem:  the councilors were told by the City representatives that the Federal Government cannot seek other providers UNTIL the City removes itself as the Head Start provider. 

Only one of the councilors expressed an opinion that acquiring another provider would not be a problem, given the City’s support for the program.  Nevertheless, because of the uncertainty (though likely small), the Council voted to delay notifying the Federal Government.  Apparently, the councilors – even if they are well-intended – have little knowledge about Federal Government contracting.  They may think that the Federal Government can move at light speed and such delay would have no impact on continuing the Head Start program.  In reality, the timeframe between now and the City’s proposed schedule to withdraw from the Head Start program may be insufficient to allow the Federal Government to meet its contracting requirements.  Council’s failure to allow the City to give timely notice to the Federal Government may result in contracting deadlines being missed.

Later in the meeting, one of the councilors recounted some of the events from the February 12 meeting.  He specifically stated that the February 12 meeting included a “robust” discussion relating to the finances at the Navigation Center and the $9M grant.  I must have attended a different City Council meeting because I heard no “robust” discussion about funding.  Unfortunately, he misses the bigger issue.  While there were brief comments about the current finances and how a portion of the grant could fund some of the operating expenses, there was no discussion about how the City would fund the long-term operating costs and no discussion about how to fund any of the “strings” the State will attach to the grant… and how could there be any discussion about those “stings” since the City Council has no idea what they will be.  We heard no discussion about contents of the thirty-year contract required by the State, when those contract negotiations would occur and whether the Council would even review/approve the contract.

Editor’s note: Email received 2/29/2024 from Lakewood states “The contract you are referring to has not been drafted or finalized at this point.  Planning expects that this will take place over the next couple of weeks.  Thank you.“

Bottom line – Uncertainty over “strings” attached to $9M and saddling taxpayers with $60M – $100M+ of future obligations is not a problem for this council.  ($60M if you use the Planning Office low number and likely more than $100M if you use the City’s internal numbers.)  But a bit of uncertainty over the Head Start program caused the Council to delay timely, Federal notification and potentially destroying the Head Start program. 

Even if you assume the Councilors are all well-intended, both meetings were a display of naivety and inexperience.  In fact, Councilor Olver may have made the most poignant and accurate observation:  He said the Council is suffering from “self-inflicted” wounds.  That statement is indisputable!  With the exception of Councilor Olver, maybe they should all be sent to their rooms without any dinner.