More Loan Drama

More Loan Drama

After taking a tour of the Laney-Walker/Bethlehem redevelopment area and visiting some of the individual properties, members of the commission-appointed Urban Redevelopment Agency voted on a $2.5 million bridge loan which they were told was necessary to keep the redevelopment project moving forward.

That approval eventually came, but what most likely would have been a rubber-stamp approval from the past board came only after more than an hour of hand wringing and expressed displeasure from board Chairman Bob Young, who as former mayor and former regional director of the U.S. Housing and Urban Development obviously had some weight to throw around.

In part, he didn’t seem to like being told that the sky was falling again. He said the last time the board was told that a project would grind to a halt if it didn’t receive bond approval involved the Municipal Building renovations.

“Well, the bonds didn’t get sold and the work didn’t stop,” he said. “The commission ended up stopping it.”

The Laney-Walker/Bethlehem redevelopment project, which has made laudable gains in the troubled neighborhoods with the purchase of more than 270 lots, a significant number of demolished properties and the construction of 24 homes, receives $750,000 every year, but of that, $550,000 goes to debt service. The bridge loan would effectively carry the project over until more bonds can be sold and the loan can be repaid.

In a somewhat testy exchange between Young and Housing and Community Development Director Chester Wheeler, Young questioned the basic premise that, without the loan, which the commission has already approved, the project would stop in its tracks.

“If we don’t get it, we can’t deliver on our portion of the project,” Wheeler answered, characterizing the need for money as a symbol of the project’s success. “If we didn’t have anybody wanting to buy a house and we didn’t have to build it, then we wouldn’t have [a need for money] because we wouldn’t have any activity.”

After that, Young took issue with the $560,000 in project management fees Wheeler had budgeted to pay for his consultants, APD Planning and Development and Melaver McIntosh, who are actually running the project.

“I don’t have any staff dedicated to this project,” Wheeler explained, “so my consultants play a role in helping us carry out the day-to-day operation of this project.”

That money amounts to $25,000 a month going to APD alone, which is down from the $45,000 a month they were getting from Wheeler before he made a $170,000 cut in its annual contract. Now, the number of full-time people working on the project has been reduced from seven to four. In spite of the cut, Young made it clear he still had issues with Wheeler continuing to pay consultants this far into the project. He said he felt the project should be transitioning away from consultants.

“Mr. Chairman, I can’t just drop it and stop and hire somebody,” Wheeler said. “It’s just not that easy.”

“We’re not suggesting that,” Young responded, apparently using the royal “we.” “But the chairman is just asking for some indication or evidence that we are moving in that direction, and what you’ve given us here doesn’t show that.”

Wheeler responded to the criticism by saying he had followed the recommendations of the Community Planning Assistant Team’s report in everything but the hiring of staff, though some of his actions seemed hastily executed — a meeting last week and a conference call next week discussing possible revenue streams for the project and creating a job description for an employee they might hire when they finally start that transition away from consultants.

Well over an hour into the meeting, Young seemed to have had enough, interrupting Wheeler with a suggestion to temporarily fund $500,000 of the $2.5 million loan.

“You’ve been dealing with this since 2008, we’ve been dealing with this for about an hour and a half,” he said.

More time would allow the new board greater time to understand what was going on, the thinking went, but no one else on the board would admit to being as confused by the numbers as Young, so that option, with its troubling potential of re-involving the commission, was ultimately rejected.

So in the end, the project got its money, but one thing was made abundantly clear by the struggle — this is definitely not your father’s URA.

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