Atlanta officials scramble to avoid losing $30M in federal aid

By D.L. Bennett

The Atlanta Journal-Constitution

Atlanta officials hope the city’s credit union can be used in a last-minute effort to avoid returning as much as $30 million in federal aid.

The idea, floated by Councilman Kwanza Hall, could keep a federal program created to help the city’s poorest residents from expiring Dec. 31 with little impact on communities and heavy spending on administration.

The legal, financial and other details are being hastily investigated as the city heads toward the deadline. The board of the city’s credit union has not discussed the plan.

“It sounds to me like this might be a route to pursue,” said Hall Tuesday. “This could be a strategy toward helping everybody.”

Officials said Tuesday there is no backup plan, other than to push hard on the various nonprofits, city agencies and other entities now set to spend the money and provide services. And, everyone agrees that won’t be productive.

“In order to have a Plan B, we’d have to go back to Congress for an extension,” said Peggy Harper, a member of the nonprofit board overseeing the program. “That’s not going to happen.”

The money came from the city’s Renewal Community program, which began six years ago with $53 million. The group managing the program, the Atlanta Renewal Community Coordinating Responsible Authority, or ACoRA, so far has spent about $7.5 million on administration and an equal amount on services. The administrative spending covers the life of the program.

Program officials say they are confident at least $8 million more will be spent before Dec. 31. That leaves about $30 million Atlanta’s desperate to get used by year’s end.

“Our primary responsibility at the city of Atlanta is to draw down the money,” said James Shelby, city planning director.

Nonprofit, social service providers have been up in arms for weeks since learning about the impending crisis through a story in The Atlanta Journal-Constitution. They’ve used words like “tragic” and “criminal” to describe the idea of returning $30 million in federal aid at a time when so many communities are suffering and local nonprofits short of cash.

Nonprofit organizations say the money has flowed so slowly because of mounds of red tape required to get approval. And, once approval is given, ACoRA only reimburses. So, an agency must first spend the cash and then wait, often months, to be repaid. That’s put a hurt on many small nonprofits which once hoped to provide services under the Renewal Community program.

ACoRA, facing that roadblock, has approved $45 million to go to various service providers only to see most of it still sitting in the bank and little work done.

“That’s where the holdup is,” said Harper, a longtime community activist, “in the capacity of these nonprofits to operate when they are waiting for draw downs.”

Hall’s idea works like this: the credit union would be designated as the recipient for about $40 million – money that now is designated to reimburse dozens of nonprofits, city agencies and other recipients.

The credit union would bank the money and provide lines of credit to each agency so it would have the money to deliver the promised services. Then it would repay them with money when the work was done.

The credit union’s risk would be minimal and its fees covered by interest, Hall said.

Harper said ACoRA has been unsuccessful in finding anyone willing to set up a loan fund the nonprofits could use and be reimbursed by the Renewal Community money.

“We have gone everywhere to find someone who will advance some money to these nonprofits,” she said.

Councilman C.T. Martin said the city might need a group of lenders to handle such a large transaction. He suggested the participation of a foundation at Morehouse School of Medicine.

“People can read,” Martin said. “And they can understand. There’s an election coming up. At some point people are going to question the competence of the government.”