Durham, N.C. Housing Nonprofit Makes a Mess and Costs the City Money

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June 12, 2012; Source: The Herald-Sun

Durham, N.C. will have to front a repayment of $366,323 in federal housing program grants due to the alleged mismanagement of properties run by a nonprofit. Rebuild Durham Inc. is a nonprofit that bought and rehabbed 13 homes throughout Durham that are meant to be rented to low income people. The problem? Of the 13 homes the organization owns, four are reportedly vacant and “in no condition” to be rented and there were 15 additional properties promised that have never materialized.

It started 12 years ago when the city loaned Rebuild Durham $460,000 to buy and renovate 12 houses out of a federal fund set aside for community housing development organizations (CHDOs). It was to have followed up the first twelve with another 15. In 2003, Rebuild Durham’s total loan amount was upped to $810,000 and another $138,000 was added in 2007 when the organization finished its first 13 homes. While this was happening, the organization went through several executive directors, according to the Herald-Sun, and the next wave of homes was never started.

According a News and Observer blog post, there are “code violations, unkept records, a lot of money gone and loan repayments running behind.” Now, the city has to reimburse the U.S. Department of Housing and Urban Development (HUD) for the $366,323 in federal housing grants that remain invested in a project that’s more than a decade old. According to the News and Observer, the City of Durham is encouraging Rebuild Durham to sell off its properties to pay off some of its massive debt but Rebuild Durham’s current executive director, hired in 2010, says the group is “not the failure it appears to be.” The ED thinks, according to the Herald-Sun, that the organization “needs to restructure its debts, freeing up cash so it can maintain its properties to a standard that appeals to tenants.”

Proving that partnerships can be excruciating and expensive for all parties when one partner fails to perform on a joint commitment, earlier this year the City of Durham gave the organization an additional $8,000 to keep afloat as talks progress. Presumably, the City feels that there is some hope of recovering the money or seeing the project completed.–Kristin Barrali