Subsidies For Job Center Raise Doubts

Some Say Developer, A Political Activist, Had Unfair Advantage

`It Smacks Of Favoritism'

Power Behind Project Says She's Providing A `Valuable Service'

April 27, 1997|By JoAnna Daemmrich | JoAnna Daemmrich,SUN STAFF

In an East Baltimore shopping district that had fallen on hard times, Marie Washington saw an opportunity to transform a shuttered haberdashery into a gleaming job center.

She called it Fair Chance.

But some neighborhood and City Hall critics say Washington, a longtime political activist turned developer, had an unfair advantage.

To them, the restoration of one building on a half-vacant block east of downtown reflects more than Washington's vision. To them, it is an example of how people with political influence can amass public subsidies far more easily than people with just a good idea.

The building being rescued at taxpayer expense is the Sam Glass & Son menswear shop, which closed in 1994. Washington's small development group bought it at auction the next year for $198,000 and is refurbishing it with a $500,000 bank loan and at least $1.05 million in government grants and low-interest loans. If she gets everything on her wish list, the renovation could cost taxpayers $2.63 million.

When it reopens in the next few months, the turn-of-the-century building at 301 N. Gay St. will have sleek new offices for a state agency and The Chance, a job training program for high school dropouts.

"We feel we can add a valuable service and package that for the business community," Washington says. "When you take into context what's happening with welfare reform, really we're ahead of the curve."

Her undertaking has a laudable public purpose: a one-stop office where chronically unemployed young people will be able to find tutoring, job training, resume guidance and referrals for child care.

The city and state routinely give private and nonprofit groups subsidies for such projects in the name of neighborhood redevelopment. Competition is fierce.

But Washington, 47, an East Baltimore power broker who rose through the ranks of an entrenched political club, quickly obtained much of the assistance she wanted.

In the past two years, she has been helped by a state senator whose campaign she managed and an East Baltimore renewal coalition whose board includes many of her allies, among them a state delegate for whom she was campaign treasurer.

Much of the aid she has secured is for the renovation, although a portion will be spent to create a parking lot at the site of two nearby empty buildings that Washington bought for $35,000.

But the government assistance goes beyond grants and loans. Washington's chief tenant, besides the grant-funded job program, happens to be the state government.

Rent from state

The state has agreed to pay $280,000 a year for the next decade to lease space for a field office for social workers. The rent -- higher than average for first-class offices in downtown Baltimore -- will guarantee enough cash flow to cover the mortgage and loans.

Mitchell Henderson, 60, a skeptical East Baltimore community leader, has watched in astonishment as public dollars have flowed into the project. In contrast, he says, it took him several years of persistent lobbying to get a $5,000 grant for an after-school program.

"We need so much help here. We got so many vacant houses; our streets are all broken up," he says. "People watch all that money go to one place, and they get discouraged and walk away."

The Gay Street building will be home to three interlocking groups run by Washington:

East Baltimore Community Corp. (EBCC), a nonprofit organization that provides drug treatment, housing and community services. It has run the employment program with a federal grant for 2 1/2 years.

The group is an offshoot of the Eastside Democratic Organization, former Mayor Clarence H. Du Burns' political club. Established in 1969 by Burns and Robert L. Douglass, now a city councilman, EBCC parlayed its control of Eastside politics from the 1970s to the mid-1980s into government contracts and grants. Washington, a Burns protege, is the paid director.

Fair Chance Inc., a nonprofit entity that will be responsible for the day-to-day management of The Chance employment program.

East Baltimore Enterprises Inc., the for-profit development arm of Fair Chance. The corporation will make money from leasing the building and any redevelopment projects. Profits will go into The Chance's treasury or toward repaying loans, Washington says.

Washington compares the arrangement to those of other tax-exempt groups, such as the Johns Hopkins Institutions, that have profit-making subsidiaries.

"We're no different than anyone else," she says.

City Council President Lawrence A. Bell III disagrees. He calls it "highly unusual" to have city and state elected officials from the same political club involved in a nonprofit organization whose project they are supporting with government money.

"I believe it smacks of political favoritism that is very troubling," Bell says.

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