The Chamber of Commerce Bailout Was Wrong–But Didn’t Cost Local Social Service Agencies A Dime.

The lead article in the Sunday Post-Standard today was a good piece of reporting, up to a point. The Syracuse Common Council voted to write off a debt that the Syracuse Chamber of Commerce owed, perhaps as much as $360,000 on a National Grid bill for power used at the Technology Garden downtown, the Chamber’s business incubator.

During the time the Technology Garden opened in 2004 and the city got around to having a separate meter installed in 2009, all power was charged to the parking garage underneath the structure, owned by the city. Everyone seemed to know that the Chamber owed this money, but no one had the balls to call them out and have them fork over the dough.

Only when the Metropolitan Development Association (MDA) proposed a merger of the two organizations, conditional upon the Chamber dealing with this debt, did anyone act. With little-to-no accounting as to the actual amount owed, the Council gift wrapped the forgiveness of the debt. Councilor Bill Ryan, in a quip that is surely going to haunt him in any future campaign, even called it a “wedding present.”

Several questions are raised by this story:
1) how does a city’s Chamber of Commerce amass such a large debt that it can’t pay its own electric bills?
2) The problem was noticed in the first few months of the Technology Garden’s opening. Why was the problem allowed to fester for 5 years?
3) Why didn’t the city demand a strict accounting of the total amount owed?
4) Things are a little tight this month in my household, can the city pay my Nat. Grid bill, too?

The one false note in the article is the implication that forgiving the Chamber of Commerce debt caused a cut in funding to social service agencies like the Southwest Community Center.

1) The debt owed by the Chamber to the city is for bills the city has already paid–out of its city budgets for five years starting in 2004. The Chamber began paying the power bills in 2009. The city’s payments did not come out of current operating expenses.

2) The money cut from the budgets of social service agencies in March are for the current year (starting May 2010) of the Community Development Block Grant (CDBG) program. The city administers this program, but doesn’t provide any funding for the program.

3) The CDBG program has federal rules that regulate the distribution of funds in the program. One such rule is that the city may only distribute 15% of the total amount of available funds to groups providing social services. This is due to the program’s emphasis on spending CDBG funds on improving housing for low income families.

4) For years, the city’s Department of Community Development construed this limitation on the social service cap extremely liberally–pushing the amount spent on social services right to the 15% limit. The new Obama administration, prior to this year’s CDBG budget deliberations, informed the new Miner administration that the city had been too liberal with the 15% cap and that the city had better be more straighforward with its numbers.

5) The result of this pressure was an overall decrease in the amount of money available to spend on social services, compared to the prior year’s CDBG budget. The need to keep social service spending at a “real world” 15% of the CDBG budget, rather than using the creative accounting employed by past administrations resulted in cuts to all but seven of the 30+ social service agencies receiving funding under CDBG.

To sum up: It’s an abomination that the Chamber of Commerce gets to skate on a debt that everyday people would either have to pay or else find themselves in court. It’s even more of an abomination that the city knew, but did nothing about this problem for four years. The city even seemingly winking at the Chamber about their responsibilities for paying this debt when they offered to help them find grants for alternative sources of power.

But the city didn’t screw the Southwest Community Center or any other social service agency by forgiving the Chamber of Commerce’s debt. With the exception of Say Yes to Education, the city doesn’t directly fund any social service agencies–it administers money from state and federal sources–funds that have their own strings attached. The city screwed the city of Syracuse taxpayers by forgiving the Chamber of Commerce’s debt–that should have been enough for a shocking expose.

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2 thoughts on “The Chamber of Commerce Bailout Was Wrong–But Didn’t Cost Local Social Service Agencies A Dime.

  1. Tom Buckel

    Phil-

    I have mixed feelings about these transactions. Certainly, the debt resulted from incompetence on the part of prior city administrations. Unfortunately, the new administration inherited several failed and flawed transactions and has much debt cleaning to do. However, Mayor Miner has a much stronger management and financial team in place to clean the messes and avoid this kind of misfeasance in the future.

    As to this particular transaction, what looks questionable on the surface was a very shrewd move in the messy world of politics. On her first day in office, the Mayor assembled a team and devised a strategy to address the sales tax sharing agreement with the County. One of her key decisions was to enlist a wide range of business interests to help support the city’s position here. The MDA and Chamber, along with their members, turned out to be key, and maybe even decisive, allies in the negotiations leading to the eventual sharing agreement which protected the city. These negotiations almost went off the tracks in favor of the parochial suburban interests several times– there was even one member of my own democratic caucus who became unhinged and publicly expressed support for a plan that would have destroyed the city. The MDA and Chamber were vital allies to help get negotiations back on track, with a bi-partisan focus on the common good. Forgiving the utility debt was a small price to pay for the hundreds of millions in sales tax revenue that will help shore the economic future of the city- and of our entire region. Messy, yes- but shrewd, good politics in the end.

    Like

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