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Gaithersburg officials are scrambling to overhaul an annual neighborhood matching grant program after money depleted early the past three years, to the detriment of larger and less affluent communities.

"The reason for that is that people are becoming familiar with the program and property managers have gotten somewhat savvy about it," said Assistant City Manager Fred Felton. "It's not unusual that we get five program applications on the first of the year from one program manager."

The city has not formally notified all homeowners associations of the program in the past several years, Felton said. City officials have notified some HOA presidents as needs have surfaced, he said.

Data shows that in the past three fiscal years, a majority of the $50,000 allotted annually went to Kentlands communities and other affluent neighborhoods, mostly for landscaping projects.

Program criteria say that the matching grant program, started in 1998, was designed to be available to all homeowners associations, condominium owner associations, citizen associations or other groups representing a majority of residents in a neighborhood. Grants of $5,000 or less can be used for lighting installation, landscaping, playgrounds or other physical improvements, such as sidewalk paving or fencing. The grants may also pay for neighborhood events and consulting or engineering studies for major improvements.

Communities must match grants, but the city will consider in-kind donations and volunteer labor towards the equivalent. Requests are sent for approval by the mayor and council until money runs out and approvals should be based on public benefit, according to program criteria.

"The bottom line is that all the communities in the City of Gaithersburg should at least have the opportunity to apply for a matching grant," JoAnn Schimke, president of the West Riding Citizens Association wrote in a Nov. 24 e-mail to Councilman Michael A. Sesma, who lives in West Riding. "And there should be clear understanding that funding for items that are not necessarily [capital improvement project] expenses will be considered."

According to program data, one-third of the 15 matching grants awarded in fiscal 2009, which began July 1, went to four Kentlands condominium associations (one received two grants totaling $4,917) and seven Kentlands condominium and townhome associations received eight of 17 grants in fiscal 2008. Together, the Kentlands groups received nearly half of the last 32 awards granted in the past two years. Each had only 24 homes. Lakelands Ridge received a $5,000 grant this year and Lakelands Homeowners Association received $5,000 last year.

According to data, 33 of the 50 awards granted in fiscal 2007-2009 went towards landscaping; the majority of the rest supported irrigation systems, fencing around tennis courts and benches.

Few of the city's poorer communities received the grants, according to the data and city officials. Felton said in October that the city denied a request to pay for a playground in a less affluent community because all fiscal 2009 awards had already been granted. This year, four large lower-income communities with 150 or more residents received grants, while the remainder went primarily to small communities with less than 50 middle-income or pricier homes.

During the first six years of the program, all grant requests that met criteria were approved and the fiscal year ended with money remaining, Felton said at a Nov. 24 work session of the mayor and council. In fiscal 2006, money was depleted near year's end. For the past three fiscal years, money has run out by Oct. 1 and "numerous communities that intended to apply for grants did not receive funds," Felton said.

Schimke wrote in her e-mail all communities, including those with no association, could benefit. She cited Deer Park, which may need to rent a facility for Crime Watch meetings and print fliers — and could match grants through volunteerism.

At the Nov. 24 work session, city leaders discussed changing the first-come, first-serve system with a 60-day application window; add a merit system emphasizing public safety; balance community means with requests and give new applicants higher priority, with phased projects in mind. They also said money should be recaptured if it is not used within 12 months.

"At the very least if we've moved away from the first-come, first-serve system, we've improved it," said Councilman Jud Ashman on Monday.