November 8, 2010; Source: Atlanta Journal Constitution | If you look at the “news” button on the website of Progressive Redevelopment Inc., Georgia’s largest nonprofit housing developer, you won’t find any articles dated after late 2009—for good reason. The once high-flying PRI, a well-respected nonprofit CDC, is being foreclosed on left and right.
Six of its subsidized apartment complexes are in default. The result: some 1,000 lower income households may be displaced from their apartments as the properties are vacated and boarded up. All told, PRI and its partners owe north of $74 million on various projects and are in default on 10 loans. The state’s Department of Community Affairs cut off PRI’s funding early this year, and some state officials think that PRI is only moments from going out of business.
PRI’s founder and CEO, Bruce Gunter, acknowledges that the organization is out of money, but he contends, “We’re fighting for our survival.” PRI was long considered a top flight CDC, so this news is more than surprising and probably distressing in the CDC community. Now that PRI is near the end of its run, nonprofits should be analyzing what should have been seen as the indications of its likely demise a year ago, two years ago, or even three years ago, when corrective actions might have been taken.
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One indication of trouble was that despite developing $100 million worth of properties, PRI never accumulated a reserve fund, meaning that the organization couldn’t cover operating costs and repairs when the economy turned bad (Gunter said things started getting bad for PRI in 2007). Having no reserves should have been a reason for PRI and its partners to sound the alarms. Or how about in 2008 when an audit showed PRI annually spending $1 million more on operations and maintenance than the income generated by its properties.
PRI may have been a victim of the housing markets and the economy, but other CDCs have weathered the same conditions that PRI is succumbing to. The challenge now is not for PRI to fight for its existence, but for the city, the state, and the nonprofit sector to come together to see how they can protect the housing of PRI’s tenants, including the many PRI tenants who were once homeless and living in supported housing.
The bulk of PRI’s development activity is in its home city of Atlanta. On PRI’s top-notch board of directors are experts who were or are associated with national nonprofit intermediaries such as Enterprise Community Partners and NeighborWorks America. As national intermediaries, they should be called on to bring their top talent to Atlanta to see what they can do to save the housing of PRI’s tenants – on the assumption that they can’t save PRI itself.—Rick Cohen