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Show Me the Money

Last year, the city pledged $2 million to Community Development Corporations to redevelop neighborhoods. A year later, many of those organizations are



On October 9, 2001, leaders of 18 of the city's Community Development Corporations (CDCs) were invited to city hall. Members of the city council and Robert Lipscomb, executive director of the Memphis Housing Authority and director of the city's Housing and Community Development Division, presented each CDC leader with large Styrofoam checks valued at $50,000 and more, as if the organizations had each just won their own Publishers Clearinghouse Sweepstakes.

The city gave out over $2 million that day as part of what was called a "down payment" on the city. The festivities were also a sort of unofficial kick-off for the "decade of neighborhoods" Memphis mayor Willie Herenton had announced the previous year. Along with the continuing efforts at redeveloping the city's public housing, the nonprofit funding was supposed to strengthen the city's commitment to community revitalization.

Over a year later, the value of those Styrofoam checks is in question. Cheryl Forbes, the executive director of the Whitehaven Economic Development Corporation, wrote "VOID" on hers in black Magic Marker. It's stashed behind some signs in her office, and she says she keeps it around to remind her to be careful of promises.

Other groups haven't gone quite that far; the checks still hang proudly on walls, but they are referenced ruefully. The Glenview CDC got its first check from the city, dated October 14, 2002, just over a year after its funding was granted. The only reason that information is available is because the CDC staff was so excited about getting their first check that they made a copy of it for the Center for Neighborhoods staff to put in their file.

It's been over a year since the organizations got those Styrofoam checks, but the actual money is another story entirely. What happened to the $2 million? Up until a month ago, many of the organizations said they hadn't seen a dime of the funds they were expecting. When the Flyer asked how much of the money had been released, city officials were not able to tell us (see "You Want What Again?" next page). One thing is certain: This saga brings new meaning to the old saw "The check's in the mail."

Seven Signatures

The Center for Neighborhoods is housed in a beautiful Victorian home in the Greenlaw neighborhood, complete with molded ceilings, fireplaces in every room, engraved doorknobs, and antique locks. It seems the perfect place to discuss rebuilding neighborhoods one house at a time. The center's bright-eyed manager, Belinda Wilson, and three Community and Housing Development Organizations (CHDO) analysts administer HUD's federal HOME Investment Partnership Program funds. But the Center for Neighborhoods doesn't know or keep track of when that money is paid out by the city. It doesn't seem to concern them, though. One of the analysts said they always know when there's a problem with a CHDO not getting a check because someone from the organization will call them. Then the analysts will try to figure out what the holdup is.

Historically, it takes the Center for Neighborhoods over a year to distribute awarded money. A staffer at one of the more established CHDOs tells about an application the organization submitted in March 2000. They received an award letter that August but didn't receive their executed contract until the end of May or the beginning of June 2001. The executive director even had a bet with a city attorney to see if they'd get their contract before the city had to stop executing contracts at the end of the fiscal year.

"We've had reimbursement problems," says Wilson. "We've tried to correct the reimbursements. We hear about the contracts. We're trying to correct the contracts."

The contracts are about 18 pages, all basically the same format, and require seven signatures, two from the CDC itself. Time and again, people on the city side have explained the delay as a function of those seven signatures. "If you review the signature page of a contract, you will see that it goes through so many hands," says Wilson. "It could be a more rapid process and it should be and that's an issue we're looking at."

Wilson says her office is considering "walking" contracts through the various levels of city government -- the HCD attorney, Robert Lipscomb, the mayor's office -- to make sure they get signed and delivered quicker. "If I've signed it and I send it to you, you may hold it for who knows how long before you send it to the next person," says Wilson. "We know it should take, let's say, two weeks at the most to get something taken care of. We have to go from MHA to HCD to city hall to get the signatures."

Forget for a moment that the organizations are nonprofits or that the city is involved. If you operated a small business with a limited cash flow and your biggest client waited more than 30, 60, or even 90 days to pay, you would have problems. Even though the CHDOs are subsidized by the city, they still have utility bills, construction costs, and staff that need to be paid. It's hard for them to believe that seven signatures could take 10 months or longer. They wonder if the city is dragging its heels because it over-extended federal dollars and doesn't actually have the money or if it's incompetence, or politics, or both.

Super-Funding Snafu

On February 1st of this year, the city's CDCs applied for funding through a super-funding "round" called the SCIF (Strategic Community Investment Funds). CDCs could apply for different sources of funding, including HOME funds, capital improvement dollars, and emergency shelter grants, on one application rather than filling out several applications with the same basic organizational information. It was intended to make things simpler and easier.

In early September, Wilson came to a meeting of the CDCs and told them that the CHDO award letters would be out within a week. Other types of funds had already been awarded and the CDCs were anxious to learn how much CHDO money they received because there was another funding application due on November 18th, a little over a month away. They were trying to figure out which projects to put on their applications. If they had gotten all the funding for the project applications they had submitted in February, they would move on to something else. If not, they might want to reapply for those funds. But without knowing one way or the other, they were unsure what to do.

Wilson assured them they had nothing to worry about. The award letters would be out in a week.

They weren't. When asked on November 13th why the award letters were taking so long, Wilson said we would have to ask HCD's attorney. When asked what the CDCs were supposed to do, Wilson said simply: "Apply." Further pressed, she elaborated, "Apply. I think they know what to apply for. ... I can't hold them up from making applications because of something that's being held up here, so at this moment in time, they have the option to apply for the next funding round of dollars."

The award letters from the February 1st round went out November 19th, almost 10 months after the applications were turned in and a day after the next round of applications were due.

While this may be par for the bureaucratic course, the time lag presents special problems to those in the business of real estate. Steve Lockwood, once executive director of the Volintine-Evergreen Community Association (VECA) CDC, is the executive director of the Frayser CDC. Lockwood spent 20 years rehabbing old homes in Cooper-Young. He says he would look at a house, study it carefully, and then make an offer on it that day. That's not exactly how it works with the CHDO program.

"I'm going to go out and look at three houses with a real estate agent," says Lockwood. "I'm going to ask her to tell me what these three houses are worth fixed-up. Then I'm going to come back and put my numbers together and make an application. I'm never going to buy those houses. I'm going to put my application in in November. They're going to tell me yes or no in May and in a year from July I'm going to have some money. Those houses will be long gone. So then what happens? I do a "bait and switch," not because I tried to do a bait and switch, but because that's just how it works."

A Fine Line

The building that houses the VECA CDC still looks a little like the 7/11 it once was, but executive director Dr. Steve Gadbois is hoping to change that soon. After it was a 7/11, it was an election headquarters for a perennial city council candidate, then a sports bar "where they sold beepers back when beepers only meant one thing," says Gadbois. It's been the home of the VECA CDC since 1996. The VECA CDC is also one of the older and more successful CDCs in Memphis. It was the first CDC to own and manage commercial properties; they've done about 23-30 rehabs, built four houses, and are currently building six more.

In November, Gadbois told the Flyer his group had asked for about $40,000 and received some of it. "Some of that money [awarded] last fall was thrown in a hole, basically," he says. "Only time will tell exactly what of that money was well spent and what wasn't. That's not for me to judge. I do believe a few years down the road we'll see what happened with that money."

"It's a fine line," says Michelle Cowan, executive director of the Cooper-Young CDC. "They're giving us money, so we must be grateful. You don't want to make them angry with you, because they could decide not to give you money. And yet, as a businessperson running a nonprofit corporation, you have to worry about keeping your business running." It's a reason why many CDC staffers didn't want to comment for this story. Cowan says until very recently her group was owed about $70,000 from the city. They have since received it, but she says she was concerned they would have to end their fiscal year $70,000 in the hole.

A House Divided

The city has heard it all before.

"We're trying," says Wilson. "We're trying. Because some of our CHDOs have had to endure for so long before me coming here in '99, I can understand, but we're trying our darndest. We want to be on the same page. A house divided will not stand."

Wilson says that the CHDOs themselves are guilty of taking too long on things they need to do. But unlike some of the CHDO heads, she doesn't think there's a communication breakdown between the two groups.

"You don't understand how much we've asked our organizations, 'How can we help you?' We meet with our CHDOs all the time. This is how we're coming about with making these changes we're trying to do. It's how we can all make this thing work for the city," she says.

Through Sandra Mays (director of communications, marketing, and public relations for MHA and HCD), Lipscomb said the problems with payment and reimbursement led him to create the SCIF two years ago. "We're trying to get the allocation and the execution of the funds processed in the same billing year," says Mays. "That should help." Wilson has also instituted several workshops for the CDCs themselves and has a consultant working with the newly designated CHDOs. But she says the Center for Neighborhoods falls into bureaucratic black holes sometimes too. One of the CHDOs' complaints in dealing with the center is that there are no standard rules and regulations. Without them, they say, rules change from one funding round to the next with little or no notification. And when they ask to see the rules of the game they're trying to play, there aren't any.

Wilson says that's not the center's fault. "Our policies and procedures were written by our office two years ago. Why did it take two years to get it approved? We can only do so much through our office and then we come to a standstill," she says. "It has to go through our compliance department."

But while the heavy burden of bureaucracy is problematic, the much larger problem seems to stem from a disconnect in perspective.

Wilson says the more CHDOs there are, the better. The CDCs wonder if, with limited funding, the 54 in Memphis are too many. The HCD recently hosted a CHDO award banquet to boost morale. Some of the CDCs were grumbling because they were informed of it a scant two weeks before the event.

The city's goal, according to Wilson, is for the CDCs to become self-sufficient. In many of her analogies of how the program should work, the city is the parent to the CHDO children.

"You get them to a point," she says, "where they can go forward. You help them along if they need it. At some point in time, the umbilical cord is cut and that child decides, 'Well, I'm grown now. I want to be on my own.' Our purpose is to get them to that stage." She wonders what the CDCs would do if the city ever decided not to fund the CHDO program anymore.

"If they're selling their houses and they're revolving that money, they should be able to [stay solvent]," she says, and gives an example of how the program should work. You've been a designated CHDO with the city since 1994. Each year, you receive $150,000 in project money, giving you the capacity to build three $50,000 houses a year. "You build a house for $50,000 but a businessperson is going to sell it for more, right? That's the purpose of the program." In this hypothetical, the neighborhood's fair market value is $80,000, giving the CDC a profit of $30,000.

Over time, the profits should accrue to cover both the CHDO's administration and project costs. When asked what would happen if a CDC in the same neighborhood has to spend $100,000 rehabbing a house, she says, "Well, then, that's not feasible for them, is it? If the fair market value is $80,000 and it costs you $100,000, you shouldn't be in business then, should you?"

But it is in precisely these types of neighborhoods that the CHDOs are the most needed. And that's why they get a subsidy from the federal government.

Cooper-Young, for instance, is a vibrant neighborhood that 30 years ago people were desperate to escape. The Cooper-Young CDC was founded in 1992 and houses cost them on average $93,600: $37,000 for acquisition, $50,000 in rehab, and $6,200 in soft costs like realty fees. But the CDC sells its houses for a bargain $75,000, at a loss of $18,600 each.

"Our costs don't change just because we have more experience," says Cowan. "We could sell our houses for $90,000 or $95,000, but that wouldn't be providing affordable housing. We sell them for $75,000 so the people we're trying to serve can afford it."

She adds that with many of the CDC neighborhoods, making a profit isn't even an option. "If we could do that in these neighborhoods, then the private market would take over. We wouldn't be necessary. These are neighborhoods where the perception is nobody wants to live here."

You Want What Again?

A trip through the looking-glass world of city bureaucracy.

While researching this story, the Flyer got a dose of the city's bureaucratic medicine. We asked for a record

of any reimbursements made to CDCs or CHDOs on or before October 9, 2002, from funds pledged by the

city on October 9, 2001. Sound simple? Nope.

Early October -- The Flyer makes an informal request for the information. In a not-me gambit, one member of the HCD staff directs us to a co-worker; that co-worker directs us back to the original staffer.

October 16th -- The Flyer formally requests the information in a letter to Robert Lipscomb.

October 30th -- The Flyer receives a call from Sandra Mays and Belinda Wilson at the Center for Neighborhoods. A meeting with Wilson is set up to review the data the following week.

November 8th -- At the Center for Neighborhoods, the Flyer reporter is told by a receptionist that the meeting with Wilson has been canceled and a message was left with both the Flyer's receptionist and on the reporter's voice mail informing us of this. Neither message is found. The meeting is rescheduled for November 13th.

November 13th -- At the rescheduled meeting with Wilson, she asks, "What was it you wanted again?" and promises to get us that information on Friday.

November 18th -- Wilson e-mails a list of all currently open CDC contracts and the amount left on them. There is no data on how much money the CDCs have actually received, or when they may have received it.

November 19th -- The Flyer re-requests the information from Wilson. She says her staff is too busy planning the Friday awards banquet to comply. The reporter asks to go through the files. Wilson says to come the following day.

November 20th -- The reporter looks through CDC files, accompanied by two CHDO analysts. But records of the dates when the city paid the CDCs aren't in the files. One of the analysts says she will call their accounting department and get the Flyer the information by Friday, November 22nd.

November 22nd -- Wilson says staff is too busy with the CHDO awards banquet to have called the accounting department. The information is re-requested from Sandra Mays, who calls the accounting office. A staff member there says he can provide the information but not until Tuesday, because the city's computers are down until then for upgrades.

November 26th -- The CHDO analyst calls and apologizes for not getting us the information. Mays says it's ready, but could we fax her a copy of our original request so she can show it to the attorney? We ask if she still has her copy; she does.

November 27th -- Mays tells us the information had to be approved by the attorney but will be sent that afternoon. At 5 p.m., she sends an e-mail reaffirming that the attorney has the information packaged and that the request is being given "priority status." The e-mail says to contact Tangelo Flowers in the city attorney's office for additional information regarding the request.

December 2nd --Mays says the information now has to go through the city attorney's office because it concerns HCD. If it was only MHA data, she says, she could release it. Tangelo Flowers at the city attorney's office tells us she doesn't know what request we made, who Sandra Mays is, or what we're talking about. She tells us that all information requests must be made in writing and will then be processed. -- MC

The Down Payment

Amounts the city pledged to various CHDOs and CDCs in October 2001

Frayser CDC -- $50,000 for two years

Glenview CDC -- $50,000 for two years

Hyde Park -- $25,000 for two years

Nevets -- $25,000 for two years

New Chicago CDC -- $50,000 for two years

North Memphis CDC -- $50,000 for two years

Riverview-Kansas -- $50,000 for two years

Cooper-Young CDC -- $50,000

Douglass, Bungalow and Crump -- $82,000

LeMoyne-Owen CDC -- $180,000

Memphis Area Neighborhood Development Corporation -- $131,650

Neighborhood Housing Opportunities -- $232,950

Orange Mound CDC -- $100,000

Project HELPING -- $120,000

The Works Inc. -- $280,000

Vollintine-Evergreen Community Association CDC -- $50,000

Whitehaven CDC -- $100,000

South Memphis Alliance -- $100,000

How it works

The city of Memphis is a participating jurisdiction (PJ) with the U.S. Department of Housing and Urban Development (HUD). Through HUD, the city receives funds each year to spend on housing.

In 2002, for example, HUD allocated $5,629,000 to the city through the HOME Investment Partnership Program. The HOME program, which was first funded in 1992, is designed to help create affordable housing for low-income families. PJs can use the money to help renters, homebuyers, and existing homeowners, but 15 percent of it has to be designated to CHDOs.

In order to revitalize older neighborhoods, CHDOs rehab and build new, affordable homes, thereby allowing lower-income families a chance to build equity while gaining ownership of a community.

Once the PJ knows how much money it has for CHDOs, it should send out award letters based on the applications, sign a contract with the organization, and then disburse the money following requests for reimbursal. -- MC

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