Saturday, June 18, 2011

Nonprofit Blue Ridge Housing Development Corp. to shut down

Blue Ridge Housing Development Corp. ran into problems three years ago with debt and a conflict of interest.

By Laurence Hammack - Roanoke Times

Photo by WSLS Channel 10
A nonprofit Roanoke housing agency that tangled with the city over money issues while its president was a member of the city council is going out of business.

Blue Ridge Housing Development Corp. is dissolving "due to poor economic conditions," its president, Alvin Nash, wrote in a May 23 letter to city council members.

"I feel lousy that this is happening, but I feel good about what we have accomplished," Nash said Thursday. "I think we've had a really good run."

Created in 1991 with the mission of providing housing to low-income Roanoke families, Blue Ridge became a well-known community development group that built nearly 100 houses and renovated another 50 or so.

Hard times came three years ago. At a time when Blue Ridge was already struggling with cash flow problems caused by the national housing slump, the nonprofit was informed it owed the city $261,427.
The funds involved federal grant money, funneled through the city, that Blue Ridge used to build houses. Rather than returning to the city revenues generated when homes were sold, the nonprofit invested the money in other programs, according to correspondence at the time.

Complicating the matter further was a conflict of interest raised by Nash's dual jobs as a member of the city council and the head of a nonprofit at odds with the city.

Nash, who resigned his council seat in February 2009 in the midst of the controversy, said Blue Ridge's debt to the city "was a factor, but not the only factor" in the demise of the organization.
In April, Blue Ridge's board of directors voted to dissolve the organization, effective June 30, because it no longer has the money to run an operation that has been relying on a skeleton staff working for no pay.

Part of the problem has been the Roanoke-At-Home program, which places low-income residents in apartments with the rent subsidized by the federal government.

Unlike with similar programs, the 43 single-room apartments are spread out over five housing units.
"This arrangement has been very difficult to manage and very expensive to operate," Nash wrote in the letter to the council.

Blue Ridge plans to shut the program by June 30 and sell the buildings to satisfy debts. Most of the apartment residents have received rent vouchers and have either already found new places to live or are in the process of moving, Nash said.

While the nonprofit dealt with that and other problems caused by the sluggish housing market, it also struggled to fulfill an obligation to repay the $261,427 in grant money to the city.

The grants in question, funded by the U.S. Department of Housing and Urban Development, were administered by the city. That meant that when the grants generated revenue, usually when Blue Ridge sold a home, the extra money was supposed to be returned to the city, which maintained the funds in an account for future programs.

But Blue Ridge kept the money and put it back into operational costs and programs, according to letters written by city officials. Blue Ridge took issue with the city's interpretation and argued that it owed less -- or perhaps nothing at all.

The city has since taken out a lien on some of Blue Ridge's properties to satisfy the debt. Other homes will be sold at a public auction under a dissolution plan approved by Blue Ridge's board of directors.
At times, the nonprofit's financial problems were complicated by Nash's dual roles.

After Nash was appointed to the city council in April 2008, Blue Ridge agreed to forgo federal housing grants administered by the city to avoid a conflict of interest while he continued to serve as its president.

In December 2008, when the debt dispute with the city was beginning to heat up, Nash resigned as president of Blue Ridge. Two months later, he stepped down from his public office in order to rejoin the housing agency.

Despite the controversy, those who work to provide housing to the poor in Roanoke say Blue Ridge's contributions will be missed.

Over the past five years, more than 150 renters bought their first home through Blue Ridge's mortgage programs, 870 people attended the agency's home ownership classes and more than $12 million in assistance was provided in total, according to Nash's letter to the city council.

"Certainly, the loss of a partner is going to be felt," said Glenda Edwards, executive director of the Roanoke Redevelopment and Housing Authority. "You don't lose a contributing partner in a city this size and not feel it."


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