Walker denies severity of Feds’ rebuke of DOA/WEDC…with spin and lies

Unedited audio of Scott Walker answering reporters’ questions after the Wisconsin Economic Development Corporation (WEDC) press conference Wednesday afternoon has been obtained by Badger Democracy. The press conference was supposed to be an unveiling of the new “In Wisconsin” campaign and re-branding of WEDC.

Instead, Walker was barraged with questions about the Federal Housing and Urban Development review of the DOA/WEDC administration of the Federal Community Development Block Grant program (CDBG). The story was first reported yesterday morning by the Wisconsin State Journal, albeit incompletely. Badger Democracy reported on the story shortly after, posting the full letter and a thorough investigation.

In his comments to reporters, Walker stated the HUD criticism surrounded issues that “…go back a decade,”  and the DOA “…is waiting to hear back from HUD…DOA is working with HUD, and we are waiting for more correspondence from HUD as to whether the DOA plan is acceptable.”

When pressed by a reporter on whether to WEDC Board should have been notified, Walker stated, “…it (the letter) didn’t require specific action by the board…there were no policy changes required by the board.”

Another reporter pressed Walker on the issue of HUD not recognizing WEDC as a state agency with authority to administer or make awards under the CDBG program. Walker replied, “…HUD is looking at a variety of things prior to our Administration…that is just one component. The focal point of the letter wasn’t that.”

The Walker portion of the press conference then came to an abrupt end.

The May 17, 2012 letter in question from HUD to the DOA puts Walker’s comments in a very bad light. While DOA may be “corresponding” with HUD, it is clear the letter in question is proof that Walker’s comments are at best, spin; at worst, an outright lie.

Regarding each of Walker’s points – First, the May 17 letter made clear the DOA “Administrative Agreement” was unacceptable and lacking. As of today, HUD maintains that WEDC is not an “instrumentality of the state.”

Second, the letter specifically references WEDC as a “subrecipient” under the CDBG program and cites sixteen specific reforms required to fulfill statutory requirements under the CDBG program. Eleven of the sixteen requirements specifically reference necessary WEDC reforms under state and federal statutes, and administrative rule.

Third, the focal point of the letter is most definitely the “instrumentality” of WEDC as a state agency. There is absolutely no reference in the May 17 letter to the old Department of Commerce; the previous state agency administering the Block Grant program.

Each of Walker’s points are addressed and proven false in the  paragraphs of the May 17, 2012 (full) letter.

First point (DOA awaiting acceptance of its “Agreement”):

In response, on March 14, 2012 DOA provided HUD an executed Administrative Agreement (the Agreement) for review. On April 12, 2012 HUD advised DOA that WEDC must immediately cease the award and administration of all CDBG funds until an appropriate…written agreement between the Wisconsin DOA and the WEDC is received and approved by HUD.

HUD had not, and has still not approved of the DOA plan. This has been ongoing since 2011.

Second point (the letter did not require action by WEDC Board):

Prior to the execution of the agreement, on February 21, 2012, Governor Scott Walker announced that the WEDC had awarded CDBG funds to the Wisconsin cities of Arcadia, Chippewa Falls…At the time of this award, WEDC had no legal authority under the CDBG program to award or administer CDBG funds 

An agency of the Federal Government has just informed a state agency that one of its “subrecipients” is in violation of federal law. And Walker denies it was necessary to inform the WEDC Board.

Third, that “the focal point” of the letter was not the “instrumentality” of WEDC as a state agency:

This correspondence is being provided to transmit the results of HUD’s review of the Administrative Agreement executed between the Wisconsin Department of Administration (DOA) and its subrecipient, the Wisconsin Economic Development Corporation (WEDC).

The function of WEDC was the very purpose of the letter.

Thus far, the fallout has been far-reaching. Rep. Peter Barca and State Senator Julie Lassa, legislative board members to WEDC issued a scathing statement late Wednesday.

“It’s inexcusable that this letter was not shared with the WEDC Board at its meeting last week,
even though the administration received it in August”

President of FluGen Paul Radspinner and WEDC Board Member has sent a letter threatening resignation from the board:

“If the WEDC leadership is not held accountable to proactively keep the board informed in a timely manner on issues affecting the future of this corporation and its reputation then I cannot fulfill my fiduciary responsibilities nor can I continue to serve as a member of the board”

Further confusing the issue is a Wisconsin community leader who spoke with Badger Democracy on Wednesday morning. This community is in the process of completing a CDBG contract for downtown revitalization. The grantor on the contract is WEDC.

A HUD spokesperson told Badger Democracy yesterday that at this time, the Federal Agency does not recognize WEDC as an authorized state agency.

Badger Democracy has arranged a press call with HUD officials on Monday morning, at which time the agency will update and answer questions regarding the CDBG program in Wisconsin.

All WEDC Board members and officers have been contacted for comment and have not replied.

Stay tuned…

Help keep independent, progressive journalism alive!


3 thoughts on “Walker denies severity of Feds’ rebuke of DOA/WEDC…with spin and lies

  1. No surprise for those of us who follow Wisconsin politics. Walker is the biggest crook this state has ever seen. I hope Walker (the Kochs) get what they deserve.

  2. Amazing work Scott. Way to catch this corrupt administration with their own words. Keep bringing it, because it seems like there’s a lot to be uncovered here.

    WEDC always seemed like a sketchy money-funnel, and you combine it with the Walker Administration pattern of disregarding federal rules and common sense (Family Care, trying to use train money for highways and not setting up Obamacare exchanges come to mind).

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