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WEDC no longer will run HUD program amid questionable practices

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EAU CLAIRE, WI (WTAQ) - A federal block grant program will no longer be run by the state public-private Economic Development Corporation, after officials in Washington raised concerns.

Walker Administration Secretary Mike Huebsch told the corporation’s board in Eau Claire Tuesday that his agency will handle the federal business grant funds.

That’s after the Department of Housing and Urban Development questioned the legality of letting the economic agency award the funds.

Among other things, HUD said the state failed to check the financial condition of two companies that got almost $1.5 million in federal money – a northwest Wisconsin industry got twice as much as the federal program allows – 11 block grant loans were deemed forgivable, in violation of federal policies – and the state never got required federal approval to spend almost $9 million for various projects at the end of 2011.

When this news first came out in August, board members were angry that they were not informed. Democratic state Assembly Leader Peter Barca said it’s unfortunate that the problem was not identified before the economic corporation was formed in 2011. 

Meanwhile, the corporation’s board also reviewed a second report on suggestions to create numerous checks and balances that have been missing in the agency.

A subsidiary of the Wisconsin Bankers Association said the agency need firm policies on tracking the loans it currently has with businesses – and collecting the ones that have gone bad. That’s after a report found that millions of dollars in state loans were never checked on after the old Commerce Department disbanded and the new agency started.

The board’s chairman – Governor Scott Walker – said the agency’s accounting failures are taking away from its mission of creating jobs. He also defended most of the corporation’s employees, saying they’re doing good work – but he says the problems need to be corrected. 

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