Nonprofit's Organizational Issues To Cost City Thousands

Organizational issues within a Durham, N.C. nonprofit have forced the city to transfer $366,323 into a housing program that is on pace to lose the same amount of federal funds.

Rebuild Durham, Inc. received a loan of $460,000 from the city in 2000 so the organization could rehab 12 low-income houses, according to a story in The Herald Sun. Only eight of those houses were completed three years into the contract, but the city council agreed to increase their loan to $810,000 so Rebuild Durham could complete 13 houses before moving on to another 15.

That's when the real trouble started.

The organization completed the 13 houses in July 2007 -- three months after the city had agreed to provide $138,000 to get to work on the next 15 houses. That money never went to work, however, as Rebuild Durham got rid of its interim executive director, and the deadline to using the loans passed by that time.

Durham's Community Development Department (CDD) urged the organization in 2009 to sell off its properties or give them to another nonprofit after the group ran into trouble paying back city loans and housing violations were found in its properties. Instead, the organization hired yet another executive director, Edythe Thompson, in fall 2010.

Four of the 13 homes that Rebuild Durham completed are in no shape to be rented out to low-income tenants, meaning the city will have to reimburse the U.S. Department of Housing and Urban Development (HUD) $366,323 in federal Home-program grants.

Rebuild Durham has already re-worked a deal it had with SunTrust Bank -- which holds mortgages on most of the properties -- in an effort to restructure its debts. The interim head of the CDD, Reginald Johnson, said it's not likely another nonprofit will step in to help without concessions from Rebuild Durham.

You can read the full story in The Herald Sun.