Bluffwalk’s Fallout Hurts the Nonprofits

The News & Advance
Published: May 18, 2008

A variety of nonprofit, community-focused organizations throughout the city are feeling the pain brought on by the precarious financial situation of Bluffwalk Center.

Back in 2002, the city agreed to back the developers’ $3.2 million Housing and Urban Development loan, promising to use Community Block Grant Development monies to make the payments if Bluffwalk defaulted. Those CDBG monies are the same dollars groups as diverse as Amazement Square, Camp Kum-Ba-Yah, Miriam’s House and the Jubilee Family Development Center have come to rely on for various programs and services.

A year ago, the first shoe dropped when Bluffwalk developers notified the city they would be unable to make a $250,000 payment later in August; the city had to step in and pony up the dollars. This year, City Council decided to put close to $325,000 in CDBG monies in reserve, just in case Bluffwalk can’t pay either its full August payment or the interest-only payment in February 2009.

As a result, community-service agencies and nonprofits found themselves out in the cold financially, either partially or totally. Just ponder this list of some of the programs and initiatives that the Community Development Advisory Committee, which pores over the applications each year, cut:

w Jubilee Family Development Center sought $100,000 for job training program for inner-city kids;

w Lynchburg Area Council for Independent Living requested $45,000 for a job training program for developmentally challenged adults and

w Diamond Hill Resource Center sought $75,450 for center renovations.

They all got nothing. Nada. Zilch.

Then, there are the community groups that only got a fraction of their requests funded, groups such as Miriam’s House (a shelter for battered and abused women, asked for $40,000; got $14,500) and Greater Lynchburg Habitat for Humanity (requested $20,000; it $10,000).

It’s not these community groups’ fault that Bluffwalk couldn’t meet its financial obligations last year, forcing the city to prepare for a repeat worst-case scenario this year.

But they’re the ones paying the price, and it’s a steep one for the community.

Council needs to find a way to ease their pain during this year’s funding cycle; going forward, now might be the perfect time to rethink the entire CDBG process in the city.

Many cities keep their entire CDBG allocation, using it on municipal projects in targeted areas; some members of Lynchburg’s council have made it abundantly clear that option is open to Lynchburg in the future.

Perhaps what Lynchburg should do is to ponder carefully the February 2008 recommendation of retiring Councilman Joe Seiffert to wean the vast majority of community nonprofits from these CDBG dollars. Part of his report to council advocated using CDBG monies for programs and agencies that work to increase the assessed value of taxable properties in the targeted areas through programs such as blight abatement and property renovation.

CDBG monies, as the councilman pointed out in his report, have been declining for some years. In the current fiscal year, Lynchburg received just over $1 million from Washington; in the fiscal year that begins July 1, only $875,000 in CDBG money will be coming to the Hill City.

It’s not a set-in-stone amount of money the government doles out each year, and the city needs to get the biggest bang for its buck.

Directing future monies into housing and infrastructure programs might be the way to go, but that path needs to be undertaken gradually, with a concerted effort to slowly wean community groups from this unstable source of funding.

This year, however, something needs to be done to alleviate their fiscal pain, brought about by circumstances beyond their control. It’s only fair.