City suspends funds for nonprofit firm

Officials fault its fiscal management

March 18, 2000|By Eric Siegel | Eric Siegel,SUN STAFF

The city has suspended its funding of an East Baltimore nonprofit lauded for putting unemployed and drug-addicted men to work boarding up abandoned houses because the group is more than two years late in producing a required audited financial statement.

The suspension of funds to the Riker McKenzie Human Development Center Inc., which was effective Jan. 31, is the culmination of the city Department of Housing and Community Development's concerns about the center's fiscal management, according to interviews and documents.

The suspension comes with $48,194 in unspent money from a $240,000 city contract, approved in November 1998, for the center to board up buildings and to clean vacant lots in the East Baltimore neighborhoods around Johns Hopkins Medical Institutions. An additional $135,000 in public funds was set aside for the group for this year, but a contract was never signed because of the financial problems.

The center has provided jobs for dozens of men, and has boarded up and cleaned hundreds of properties, including 276 in the past fiscal year, documents show.

Because of the suspension, the center, which receives nearly all its funding from the city contract, had to lay off all but a couple of the dozen workers earning $8 to $10 an hour, a year ago.

Housing officials had considered suspending the center's contract last August, they say, but agreed to hold off after Riker McKenzie, 51, the center's founder and president, promised to provide the delinquent audited financial statement by January.

"When it wasn't forthcoming, I said this just wasn't tenable," said Steven Janes, director of the department's Community Development Block Grant program, which disburses federal funds to a variety of community groups. "Effectively, we've frozen his contract."

Founded in 1992 by McKenzie, a longshoreman and former heroin addict, the center received $1.24 million in CDBG funds and $890,000 from a special federal program to offer counseling, education and job training to high school dropouts.

When Baltimore was seeking a $100 million urban revitalization grant in 1994, it listed the center as one of the entities that would help make the effort a success.

McKenzie, who began the program as a way to help rebuild the neighborhood he grew up in, said he is "frustrated" and "extremely disappointed" by the housing department's action. "It's been a nightmare," he said.

Among those laid off is Clyde Harrington, 43, a crew chief who said the center has given him a way out of drug addiction in the six years he has worked for it.

"It's a shame," said Harrington, married and the father of a 5-year-old girl. "It was about being part of the solution, not the problem. It was a stepping stone. Now, there's no more step or stone."

In suspending payments to the center, Janes said that the problems involved record-keeping, not the quality of the work. "They're not performance issues, they're financial issues," he said.

They're also not the only financial issues McKenzie and the center face.

The center, in the 1700 block of E. Eager St., faces state and federal tax liens of $103,138.97 for unpaid employee withholding taxes, interest and penalties, according to court records.

McKenzie filed for personal bankruptcy in November 1998, court records show. The case was dismissed in July without approval of a plan to pay creditors; McKenzie said he may refile.

McKenzie acknowledged that his audited statement for the center for 1996, required of groups receiving large amounts of federal money and due Feb. 1, 1998, is delinquent and said the center does not have the money to pay for it.

But he blamed the center's fiscal problems -- as well as his own financial woes -- on the city's failure to reimburse his organization for expenses incurred boarding up properties outside East Baltimore in the mid-1990s.

But city housing officials said they had paid the center $49,397 for the extra boarding work in 1997.

They said McKenzie has not produced any documentation that additional payments are due to the center, and said that as president of a nonprofit, he cannot by law receive money for his work.

"We feel we owe Mr. McKenzie zero," said housing department spokesman Zack Germroth.

Despite the city's suspension of payments, McKenzie plans to expand the center, including a 32-bed drug treatment center for teen males; a multipurpose skills center offering computer training; rental units; and a neighborhood retail outlet.

Bond bills seeking $750,000 for construction of the treatment center have been introduced in the General Assembly by state Sen. Nathaniel J. McFadden and Dels. Hattie N. Harrison and Talmadge Branch, who represent East Baltimore.

McFadden said he was unaware of the city's suspension of payments to the center until asked about it by The Sun. "That's unfortunate," he said. "That may have some bearing."

McFadden, who was challenged by McKenzie in his re-election bid in 1998, said, "I have a lot of respect for him."

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