NCPA - National Center for Policy Analysis

Case Study in an Urban Revival Failure

February 25, 2002

Some politically connected nonprofit groups known as community development corporations have been collecting millions of dollars from the federal government and local authorities to rejuvenate designated neighborhoods. But years after the money has been distributed, little has been done and the properties remain as run down as ever.

An investigation by the Washington Post provides an illuminating example of what went wrong with the process in some Washington, D.C., neighborhoods.

  • Over the past decade, the city has handed out more than $100 million in taxpayer dollars to the Development Corp. of Columbia Heights and a handful of other nonprofit groups -- with a mandate that they renovate structures, provide affordable housing, draw new businesses and create jobs.
  • The eight nonprofits have created only 70 of the 200 projects for which they received public funds over the last 10 years -- and of those 70, more than half have been delayed for years or triggered lawsuits from buyers or contractors.
  • Despite handing out a steady stream of federal funds each year, the city government has not done a sufficient job of tracking the money -- and the bureaucrats involved cannot locate contracts for nearly two-thirds of the projects they are supposed to oversee.
  • Meanwhile, officials of several of the nonprofit groups have broken conflict-of-interest rules by personally benefiting or helping their friends and board members benefit from projects, contracts and fees.

In four of the D.C. development organizations, officials cannot show how millions of dollars they received for projects have led to tangible results. For more than a decade, unfinished projects have lingered on the books -- receiving taxpayers' dollars year after year, but never reaching completion.

There are currently 3,600 community development organizations operating nationwide. They are said to be popular with many mayors and community development advocates.

Source: Carol D. Leonnig, Marcia Slacum Greene and Yolanda Woodlee, "D.C. Revitalization Promised, Not Delivered," Washington Post, February 24, 2002.


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