City Gives Preliminary Approval to Ujima CDC Development

Last Monday, the Winston-Salem City Council’s finance committee approved $2.5 million in loans to Ujima Community Development Corporation for its development project, Emmanuel Retirement Village. The matter will be brought before the full council tomorrow. Ujima is a CDC composed mostly of Emmanuel Baptist Church members. It formed in 2005. Ujima is one of the core principles of Kwanza. Ujima stresses collective work and responsibility and collective community betterment. Ujima CDC believes that 50 market-rate rental units (with rents ranging from $899-$950 per month) for senior citizens aged 62 and up off of Old Greensboro Road will better Northeast Winston. The total price tag of Emmanuel Retirement Village is estimated to be $5.4 million.

There are a lot of uncertainties about Ujima’s CDC’s plans. First and foremost, does Ujima have the capitalization and capacity to undertake such a large and expensive development? Ujima has a limited annual budget of only $20,000. Additionally, this is the CDC’s first development project. To top that off-we learned at last week’s meeting of the finance committee that Ujima didn’t take competitive bids on the project. And we don’t know if there is a market demand for $899-$950 senior citizen apartments in a food desert. Wouldn’t seniors want to retire near a grocery store and other complementary retailers? Despite multiple red flags Mayor Joines and the finance committee indicated their initial satisfaction with Ujima’s capacity to make good on its plans and eventually pay back the city.

I can’t get past how little capital they have on hand. It seems far too little capital for a $5.4 million project. Let’s take a closer look at how Ujima CDC plans to scrape together a 1-3% contingency, just a small fraction of the cost of the project. To do this, they’re going to have to get pretty creative. The land itself would be part of the contingency. Then they’re taking some of the funding that the city is planning on giving them and turning around and using those funds as working capital. They propose giving half of the developer’s fee back to the city. Ujima would also take its sales tax refund on the project (that it qualifies for as a non-profit) and use that money as working capital.

It’s hard to come away with any other conclusion than the fact that Ujima CDC is in over its head. If unforeseen costs arise, what are members of the CDC going to do? The City Council needs to put the project on hold until Ujima has significantly more capital on hand. If construction costs soar or the anticipated market demand for the apartments at Emmanuel Retirement Village isn’t there, the CDC would no doubt ask for additional funding and loan forgiveness from the city.

 

 

 

Even council members who support the Emmanuel Retirement Village have to admit that this project looks shaky at best. Councilwoman Denise Adams said, “I know some people would say, maybe the numbers don’t work.” Adams and Mayor Pro Tem Vivian Burke went on to qualified their support for Emmanuel Retirement Village by mentioning that the city has lost money on some other projects downtown. Their logic is, that if the city can waste money downtown, then the city must do the same, albeit on a more limited scale in East Winston.

I get their logic. To a certain extent Councilmembers Burke, Adams, Montgomery, and Taylor have a point. But the city’s shameless funding of BB&T Ballpark and the development around it doesn’t need to be duplicated on a smaller scale in East Winston. The African-American members of the city council should have opposed giving a blank check to Billy Prim. The millions wasted on BB&T Ballpark could have funded game-changing development in East Winston.

Besides, public/private ventures in East Winston have historically been a losing bet. For years the city has pumped money into East Winston with little to show for its investments. The city has propped up Southeast Plaza Shopping Center and Ogburn Station.  The city collaborated with Liberty CDC to open Liberty Street Market. The city spent $350,000 on that colossal failure, and now the property sits idle and unused.

In the early 1990s, the city lent a developer far less money to develop an upscale housing development in East Winston. Lake Park never succeeded like it was promised. Half the lots remain vacant. The homes that were built are quality homes, but they have not appreciated.  Now those loans are due, and the developer is unable to pay the city back. Lake Park should serve as an example to city council members. They should not fund Ujima’s CDC’s Emmanuel Retirement Village.

I’m not saying don’t invest in East Winston; I’m saying the city should think long and hard about how it invests in East Winston. East Winston needs more public investment, not public/private partnerships with minimal benefit to the community. I’d like to see the city make significant investments at the old Vulcan Quarry that is about to be redeveloped.

The city needs to think big. The city must always remember that debt that it owes East Winston after decades of neglect and abuse; routing roadways through it, making it the only portion of the city to host public housing, etc. The city could redevelop Reynolds Park back to its former glory complete with skating rink, and a Ferris Wheel. The city needs to think big. The city shouldn’t partner with every businessman or in this case, CDC who comes before the city council hat in hand.

Ujima CDC is following in the footsteps of Goler CDC. Goler is one of the few remaining pieces of the old Depot Street neighborhood that wasn’t razed. Depot Street, now Patterson Avenue decades ago was a mixed-income black community replete with African American owned businesses that city leaders gladly sacrificed so that R.J. Reynolds could expand. Today those former factories have been transformed into the Innovation Quarter. Goler Memorial was spared by the federal bulldozer, and today its CDC has become a player in Downtown Winston’s real estate market. Now Ujima wants to follow in Goler’s footsteps.

Emmanuel Retirement Village has the potential to enrich the members of its CDC. But please don’t tell me that 50 senior citizen apartments would be a game changer for East Winston. The city of Winston-Salem needs to stop propping up the city’s real estate sector. East Winston needs real development. We should be asking why the city located BB&T Ballpark in West Salem to prop that neighborhood up instead of locating the ballpark in East Winston? A ballpark is a game changer, 50 market-rate senior citizen apartments won’t have a substantial effect on East Winston. But the potential failure of Emmanual Retirement Village will leave the taxpayers of Winston-Salem on the hook for another failed project. And it will be another opportunity lost when the City of Winston-Salem could have implemented meaningful programs to aid East Winston but didn’t.

 

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