03/06/2012 12:42 pm ET Updated Mar 06, 2012

Detroit Community Development Block Grant Funding Piles Up; City Tries To Spend $20 Million By May

This story has been updated.

As the management of the federal dollars sent to Detroit is scrutinized across the board, the city is now in danger of losing funding that can be used for home repair, demolition, new development and other community services.

According to the Detroit Free Press, for the third year in a row the city is behind in spending its estimated annual $33 million in Community Development Block Grant funds, allocated by the U.S. Department of Housing and Urban Development. The accumulated money is in excess of $70 million, and the city should spend $20 million of that by May 2.

Detroit's administration is also under fire from the state's Department of Human Services for alleged criminal mismanagement in Detroit's own Department of Human Services, which doles out money for federal programs for weatherization and Community Service Block Grants. Michigan's DHS is attempting to move control of the CSBG funding to a non-profit entity. Last year, the city relinquished control of $9 million for weatherization after not spending the money quickly enough.

The City of Pontiac has also struggled with its CDBG program. Earlier this year, the city almost voluntarily forfeited control of CDBG funds. Emergency Manger Louis Schimmel sought to transfer the city's program to Oakland County's control in order to eliminate the administrative cost burden to Pontiac. But the shift would have resulted in less money coming directly to the city, and the plan fizzled.

Detroit Mayor Dave Bing's administration places blame for Detroit's slow CDBG spending on the legacy of a poor system and outdated technology, the Free Press reports. Since Bing took office, the Planning and Development Department has been working to update the program, which had 2,000 open contracts dating back to 1994.

UPDATE: 2:20 p.m. -- Brian Sullivan, spokesman for the U.S. Department of Housing and Urban Development, said the agency is working with Detroit to make sure programs are better-managed. While the city has had chronic problems spending its Community Development Block Grant funding, according to Sullivan, Bing's administration has picked up the pace.

That means Detroit wouldn't necessarily lose any funding at all.

"We would not recapture $20 million from the city without first working with them very closely to accelerate their drawdown," Sullivan said. "We are very confident that the city of Detroit is going to correct this timeliness problem that the city has lived with for quite some time."

Community Development Block Grant funding has been down nationwide, dropping 25 percent in the last two years as HUD faces a smaller budget. But a city's past handling of federal funding won't affect its future allotment, which is determined by a formula.