Sunday, January 20, 2008

City Hall sitting on aid money, critics say

As an assortment of do-gooders, church ladies and nonprofit agencies provide the city's homeless with meals, services and furniture, City Hall is sitting on federal money desperately needed by social service providers.

Just before Christmas, UNITY, a consortium of agencies serving the homeless, whisked the last squatter from Duncan Plaza, across from City Hall. Since Nov. 20, UNITY and its partners have spent nearly $650,000 on hotel rooms, casework and services for Duncan Plaza's former residents. Half of them have been placed into apartments.

UNITY's involvement is based on a public and private partnership: UNITY provides the expertise and the caseworkers to help find permanent housing for the homeless -- saving the government from having to set up a bureaucracy to do the work -- while taxpayers help financially.

UNITY is living up to its end of the deal, but its cash coffers are nearly empty. That's partly because of delays by the city, which has not delivered $264,000 it promised for UNITY's efforts.

On Thursday, Mayor Ray Nagin said the city will make good on its obligation.

"All UNITY has to do is submit the invoices and they will get their reimbursement," he said.

According to mayoral spokeswoman Ceeon Quiett, UNITY had submitted all of the necessary paperwork as of Wednesday. The mayor said he wasn't aware of that, and that he has instructed his staff to expedite the process.

The city's $264,000 portion is slotted to come from federal Community Development Block Grant money, said mayoral spokesman James Ross.

That money is already in the city's line of credit, $15.5 million in 2007 alone, said Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development, which oversees the block grant program. Moreover, Sullivan said that once the city and UNITY have finished the required paperwork, City Hall can draw down on the money simply by punching account numbers into HUD's secure phone line, he said.

A severe cash crunch

At this point, UNITY has such a severe cash shortage that its director is going without a salary, its bookkeepers are paying only essential bills, and it has had to borrow money to pay for hotel rooms and make payroll.

"It's a nail-biting exercise every day to figure out how we're going to do this," UNITY director Martha Kegel said.

The agency hoped to secure a bridge loan that could give them some breathing room, she said.

Sullivan said HUD hopes to convene a meeting as early as this week with the city, UNITY, the city's recovery office and HUD.

In the past, UNITY has occasionally bailed out its member agencies, most of them small nonprofit groups, by giving no-interest bridge loans when a small nonprofit group runs into a cash-flow crisis.

"But now we're feeling the pinch ourselves," Kegel said.

The homeless people UNITY helps, many of them mentally ill, are aware of the situation, and they fear they'll get kicked out of temporary lodging provided by the agency, Kegel said.

"Their stress has been unbelievable. They're not sleeping at night, and so it's difficult for them to focus on getting apartments and jobs," she said.

Former Duncan Plaza residents have asked Kegel to assure them that they won't end up back on the streets.

"What I told them is that we would do everything in our power to make sure that didn't happen. But I can't guarantee anything," she said.
The biggest problem, Kegel said, is that nearly all the government money used for this project is reimbursement-based, so UNITY must front the cash, then submit receipts for its work. While not an unusual practice in hurricane recovery financing, it can create hardship for the city's financially lean social service agencies, Kegel said.

"We've seen that nonprofits are key to this recovery," she said. "But there's a limit to how much they can do, particularly in this city, where nonprofits are so often inadequately financed."

In this project alone, one of the subcontractors pulled out because it was financially squeezed, she said
The concerns may sound familiar to city officials, who also fretted about having enough capital for all of the city's infrastructure repairs. This summer, the Legislature created a revolving fund, financed by state bonds, that provides the city and the Sewerage & Water Board with a total of $300 million in upfront money to repair storm-damaged city buildings, streets and other infrastructure while the city waits for FEMA reimbursement.

Others waiting too

UNITY isn't the only agency waiting while the city sits on money.

"I'm sympathetic, but UNITY has only been waiting two months," said Don Everard, who heads up Hope House, a social service agency. Everard has a letter from the city awarding Hope House's transitional-housing program $40,000 in federal homeless-assistance money for 2007. To date, Hope House hasn't been paid or been given a signed contract, which it needs to bill the city.

"We know the money is there," Everard said.

It was part of a federal McKinney-Vento Emergency Shelters Grant given to the city every year by HUD. In 2007, the city received $667,000 specifically for that purpose, said Sullivan, the HUD spokesman.

Everard wrote several letters to the mayor without response, he said. He now despairs of ever getting the money. "We go into these contracts with the city, saying, 'If you supply the money, we'll supply the work.' But we can't do the work if they don't give us the money," he said.

For its work at Duncan Plaza, UNITY and its agencies have been reimbursed for roughly $61,000 of expenses, all of it from the state Department of Social Services.

Last week, the City Council asked for testimony from Kegel and other homeless-service providers about homelessness in the city and the growing colony camped under the interstate overpass near Claiborne Avenue and Canal Street.

But expanding UNITY's housing efforts to those on Claiborne Avenue apparently is too much to ask at this point. In recent weeks, as the cash got tighter, UNITY began paying only the most urgent bills. It currently is paying rent for its offices only, staff salaries and hotel bills for Duncan Plaza clients.

Everard and other emergency-shelter providers are also unable to expand their work with the homeless because of lagging payments. "The city is going to lose its partners because people just can't wait forever," he said.