Madison Delays Decision On Forgiving Loan To Nonprofit
City of Madison leaders have delayed a decision to forgive a loan that would cost Madison more than $1 million in federal grant money.
In 2005, Genesis Enterprise Center, just off the Beltline near Park Street, received more than $1 million from the city of Madison in a federal Community Block Grant loan. The money was for building improvements and other services for the nonprofit.
The GEC was formed three years earlier, as incubator for small companies and startup businesses, with an emphasis on minority-owned businesses.
Six years after the city issued the loan, that money is nowhere to be found. Former board members said the operations and the accounting were mismanaged.
In a letter to Madison Mayor Paul Soglin, the president of Genesis Community Development Corporation, the Rev. Richard Jones, asked the city to forgive the $1.1 million loan.
“We feel we have been successful in meeting our goals to help initiate both minority business and job development in south Madison,” Jones said in the letter. “But unfortunately, due to the economic downtown, our financial goals have been lagging.”
The building now faces foreclosure.
“The city is out the money it loaned, there’s no question,” Soglin said. “So what we’re going to do at some point in the future is forgive the loan, so that hopefully the other creditors and genesis can go on.”
Soglin said the vote to forgive the loan was delayed so other lenders involved with GEC can take care of debt issues without facing penalties. The mayor said the vote will likely happen within the next three months.
Madison Common Council President Lauren Cnare said forgiving a debt like this is likely unprecedented for the city. She said she understands the city will likely never see the money anyway, but she’s disappointed in what that money could do for other projects, if repaid.
The city has millions of dollars in Community Block Grant funding from the federal government that it can re-circulate to projects once the money loaned is paid back.
“Every time you take that money out of the system, it does have an effect on the entire system and the things that we can do in the future,” Cnare said.
WISC-TV’s phone calls to Jones and Richard Harris, GEC’s executive director, were not returned Tuesday.
GEC is now being managed, through a court order, by longtime area property manager, Mary Feldt, of Park Towne Management. Feldt said she’s working to restore and maintain the building. She said it has 34 tenants now, and she hopes, as the banks work with GEC, that the nonprofit will survive.
Meanwhile, the Common Council on Tuesday also delayed debate on a plan to change how resale shops operate.
City leaders said they need more input from stores before making a decision on a plan requiring those businesses to pay higher licensing and transaction fees. Police said the fees would cover costs for tracking stolen goods. The ordinance will be taken up again in a couple weeks.