City to cut funding for nonprofits

Schmoke borrowed against future grants, officials say

Repayment begins in July

Housing, reading programs among 100 facing reductions

June 23, 2000|By Gerard Shields and Kate Shatzkin | Gerard Shields and Kate Shatzkin,SUN STAFF

Baltimore nonprofit groups providing services from literacy classes to family shelters will lose substantial amounts of funding next year because, city officials say, the Schmoke administration borrowed against future federal grants - money that now must be repaid.

Among the agencies most threatened are the Housing Assistance Corp., which provides transitional shelter and helps low- and moderate-income people buy homes; the Community Law Center; the Eubie Blake National Jazz Institute and Cultural Center; and Baltimore Reads. All are appealing the proposed cuts.

The Housing Assistance Corp. has been told not to expect the $475,000 it received from the city last year. The corporation runs two long-term family shelters for 68 families, a 21-bed single-room occupancy building called the Harford House and about 300 low-income apartments for city renters.

"Without the operating subsidy, we can't do any of that," executive director Jennifer Williams said. "This will shut our doors."

City Housing Commissioner Patricia J. Payne delivered the bad news to more than 100 affected agencies at a recent housing budget forum. Over the next 10 years, up to one-third of Baltimore's largest federal grant - the Community Development Block Grant -will be needed to pay for housing acquisition, relocation and demolition that occurred under Schmoke, Payne said.

The amount owed is $73 million. Payne said the first payment of $9 million is due next fiscal year, which begins in July. At a recent hearing where agencies made budget requests, 121 groups asked for $14 million from the city, which granted $6.8 million, a 13 percent drop from last year.

Baltimore receives about $30 million annually through the block grants. Because of the debt, the department itself had to cut $700,000 from its budget, money earmarked for such programs as abandoned-house demolition and roof repairs for homes of the elderly.

"We're stuck now," Payne said. "It's like gone."

The department is working with the Fannie Mae Foundation hoping to restructure the debt, Payne said.

The money was spent through a U.S. Department of Housing and Urban Development program called 108 loans that allows cities to borrow on future grants. Schmoke and his former housing commissioner, Daniel P. Henson III, gained national accolades for making Baltimore the first city in the nation to demolish its high-rise public housing.

Much of the $73 million spent during Schmoke's tenure under the program also went to repair housing in city neighborhoods such as Sandtown-Winchester and Historic East Baltimore.

Henson defends the spending and objects to Mayor Martin O'Malley administration blaming the budget cuts on Schmoke. The borrowed money helped leverage an additional $172 million for city housing projects, Henson said this week.

"We funded projects that needed to be funded, we didn't blow it," Henson said. "It's time for this administration to come up with plans instead of blaming the past administration."

O'Malley, however, said the decisions have put him in a bind. The block-grant funding problems first surfaced two weeks ago when nine operators of city outpatient drug treatment received notice that they would lose 220 slots beginning July 1. The shortfall came as a result of a three-year city grant expiring.

Payne and O'Malley hoped to replace the $1.25 million needed with block-grant dollars but are unable to do so because of the debt. The city will use $250,000 from the city Health Department to keep the slots open in July but are still scrambling for future dollars.

"It makes it twice as hard to help nonprofits," O'Malley said. "The bottom line is that we don't have the flexibility that we once did because so much of our discretionary dollars are tied up in paying debt."

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