(Some) Community Development Corporations still screwing up

The Post has an investigative series on misuse of federal housing funds ("Million-Dollar Wasteland") with two published pieces so far in the Sunday ("A failed promise of better public housing") and Monday papers ("Speculators score, District loses in housing deal").

The Monday story focuses on a local egregious failed project by the East of the River CDC, the Sunday story is a litany of failures across the country. According to the City Paper, HUD respectfully disagrees ("The Post’s HUD Investigation: How Damning?").

This only seems to be news to people who don't remember absolutely anything, because federal programs in housing and urban development have been misused by various rapacious elements since the 1970s.

For example, does anyone remember the scandals during the Reagan Administration? Even what should be considered scandalous behavior, the sell off of properties at sweetheart rates to people affiliated with nonprofits who convert their interest into a for profit corporation. Such has even involved people like Rev. Floyd Flake, of whom I previously had a great deal of respect for, because of his urban revitalization work (see "Deal Shows How Floyd Flake Can Gain From Ministry" from the New York Times).

The Deal to Buy a Queens Housing Project. How the Rev. Floyd H. Flake and his partners used public money in 2006 to buy control of a lucrative Queens housing project from Mr. Flake’s church, the Greater Allen African Methodist Episcopal Cathedral in St. Albans. New York Times graphic.

The thing is that we are learning the wrong lessons about this kind of stuff. Most people look at this as a failure of the government, when really it's a failure of various actors, including for profit corporations, to be ethical.

Growing up, I fell into the "they just can't keep up their property" trope handed down from my parents with regard to housing projects. But I never suspected that maybe the builders would take advantage, and build the property with exceptionally cheap materials--and apartments should be constructed more robustly, because they get more use than a typical single family house.

But plenty of builders and other actors in the real estate industry took advantage and the public was left holding the bag.

Not to mention that nonprofit and government officials aren't always the most skilled at business-like activities. That doesn't mean that there aren't plenty of good operators out there, but there is a limited pool of particularly able nonprofit managers in the housing arena.

Anyway, in some respects, my involvement in urban revitalization is a kind of blowback to the H St. CDC and the urban renewal plan for H St. Most all of the projects envisioned in the urban renewal plan were realized (go back into the Post archives and read the glowing review of the Hechinger Mall for example), but the commercial district still sucked. And I tried to figure out why.

Those of us working for better practices were hopeful when the Post published an exposé of "bad CDC practices" in 2002. But it had no effect. And I submitted testimony to local agencies or testified before DC City Council on various CDC issues for a number of years from 2000-2005. See the blog entry from 2005, "Falling up -- Accountability and DC Community Development Corporations."

And relatively speaking, the H St. CDC and the renewal plan were successful. Most of the projects were achieved, and of the city's CDCs, the H St. CDC built more projects successfully than any of the others (realized $18MM in profit off the sale of the two office buildings on the 600 block of H Street NE, etc.).

But yep, the particularly unskilled CDCs are going to get their clocks cleaned, because the industry is full of people who will take advantage. And the skilled CDCs (and other community development nonprofits) seem to have plenty of opportunities for self-dealing too, although fortunately not all of them avail themselves of it.

Still, the director of the Anacostia Economic Development Corporation had a Mercedes leased for him by the corporation (but hey, so did the chair of the United Planning Organization at one time too, and how is it that the well connected like David Wilmot end up "owning" nonprofits with contracts with the city and paying themselves well to manage these entities) and the then director of the H St. CDC had business interests in organizations with the CDC (I think the janitorial services company cleaning buildings owned by the CDC).

So in 2002, when I went to a conference in Cleveland, I was shocked to discover that comparatively speaking the city had good CDCs doing good work.

It was because the local foundation community forced onto the organizations a rigorous accountability regimen in order for the groups to get $, and a bunch of the groups merged because there were too many.

While DC doesn't have too many CDCs necessarily, we don't have the accountability mechanisms in place to ensure good work, and CDCs haven't been forced to update their urban revitalization missions to today's realities and opportunities. Here, some funders, such as the then extant Fannie Mae Foundation, supported what I would call bad projects and disconnected CDCs with little opportunity for citizen input.

Just as some CDCs are better than others, it is also the case that some LISC offices--the Local Initiatives Support Corporation, a kind of capacity building and technical assistance operation for CDCs created by the Ford Corporation--are better than others. DC has failed in both categories.

The CDC mission for the most part is to build better housing for poor people. While that is important, it doesn't revitalize communities in terms of improving economies at the submarket level. More has to be done and that has typically been beyond the capability of CDCs as revitalization organizations.

In fact this was discussed in a New York Times Sunday Magazine IN 1994, in one of the first exposés about the problems with the community development mission, in a piece by Nicholas Von Hoffman, who had worked with Saul Alinsky, in the article, "The Myth of Community Development."

Responses within the community development community were fierce ("Toward Comprehensive Approaches for Strengthening Communities" from Shelterforce and "Reviving Community Development" from American Prospect), and the reality is that there has been a great deal of successful work too.

Some CDCs, such as Bethel New Life CDC in Chicago or the Famikos Foundation in Cleveland, the portfolio investments of the Abyssinian Development Corporation in Harlem, those of the Community Preservation and Development Corporation in DC, or the various efforts involving Mihalio Temali in Minneapolis-St. Paul are particularly impressive.

That being said, CDCs have a tough environment to work within, a lot of barriers, etc., as this paper by Randy Stoecker (now at U Wisc.) from the late 1990s illustrates THE COMMUNITY DEVELOPMENT CORPORATION MODEL OF URBAN REDEVELOPMENT: A POLITICAL ECONOMY CRITIQUE AND AN ALTERNATIVE.

When I read it the first time, it explained a lot.