Cutting Grass At The Roots

Mary Taylor-Shelby says her non-profit may go under. Is she the only one to blame?

by Phil Campbell

ary Taylor-Shelby has the personality Memphis’ inner city needs. Strong and dynamic, she has grand visions of what she wants done in her South Memphis neighborhood. As she looks at the homes on Cannon Street, which range in condition from dilapidated and getting worse to modest and holding their own, she pronounces a future for her community that seems both incredibly ridiculous and wildly possible.


Taylor-Shelby: “I didn’t know what a ledger was.”

“I want this neighborhood to have some homes like they have in Germantown,” she beams. Her accent is mixed in the concrete reality of the toughest streets in Cleveland, Ohio, with the imprints of a twang from almost two decades in the Bluff City. Whenever she gets in front of a group, the 46-year-old former welfare mother and homeless person with a 7th-grade education apologizes for not being “articulate.” Then she might tell a joke that begins something like, “I had a dream last night that I was in bed with Alan Greenspan.”

Taylor-Shelby wants to create a mixed-income neighborhood on streets that are located not far from a row of seedy hourly-rate motels. That mission began in 1991, when her organization – Students, Mothers, and Concerned Citizens (SMACC) – gained status as a Community Development Corporation. These organizations, called CDCs, are non-profit developers that take government grants and private loans to build or rehabilitate homes for low-income people in areas where banks don’t go on their own.

She’s met with some success, too. SMACC has commanded more than $3 million in the past seven years, has sold 11 homes, and has created four temporary residences for homeless families. Taylor-Shelby’s efforts have been praised by a host of activists and political officials, including an American president who declared her one of the nation’s “Thousand Points of Light.”

Things at SMACC seemed to be on track until last September, when the city’s Internal Auditing Division examined SMACC’s finances. Last month it came back with its conclusion: In 1995, $31,203 had been abused for a variety of reasons, from double-billing to using money on projects it was not legally earmarked for. Thirty-one grand may not seem like much, but for SMACC it could be the difference between life or death. The city’s charges of poor money management can have an adverse impact on the CDC’s future funding. The group may be looking at going from a $624,000 budget in 1997 to almost nothing by the next fiscal year. The group has run out of administrative funds, so Taylor-Shelby and her staff are now just well-meaning but unemployed volunteers. More importantly, Taylor-Shelby claims, the families currently living in temporary housing might be back on the streets if SMACC doesn’t get continued emergency-shelter grant funding.

The city’s Housing and Community Development Division (HCD) says it’s going to make sure that Taylor-Shelby’s group is held accountable for its financial mistakes. Taylor-Shelby, however, is protesting the city’s finding, writting letters to everyone she can think of, including U.S. Rep. Harold Ford Jr. “I feel like I have been used like the Tuskegee Institute Study, discriminated and abandoned,” she wrote to the congressman. She called a Flyer reporter at home one Saturday morning last month to voice her suspicions about the motives of certain bureaucrats. “The city’s trying to get rid of me,” she said.

Lately, Taylor-Shelby has been more willing to admit her mistakes. But the activist insists that the city should not be excused from blame. She points to a letter she wrote two years ago seeking technical help from HCD. That assistance, she says, never came.

“We have a desire to do something posi-tive for the city. These errors were not inten-tionally made. [The city] didn’t actually come out and spend time with us,” she says.

Taylor-Shelby’s situation is symbolic of what may happen to other nonprofit developers who get in over their heads. Though a number of grass-roots developers have avoided SMACC’s problems, the CDC concept in Memphis is catching on, and an increasing number of inexperienced neighborhood groups are seeking recognition from the city and the federal government as nonprofit housing developers.

The SMACC dilemma also illustrates potential communication problems between these developers and the city; both groups have been feeling their way through the first few years of grass-roots housing development, a new direction for Memphis under Mayor Willie Herenton’s administration. How long it will take HCD and these nonprofit developers to mature beyond accounting missteps is anybody’s guess.

According to a report from the city’s internal auditing division, SMACC’s true financial condition remains unknown. The nonprofit’s 1995 finances were too disorganized to review in six months, so auditors decided to stick to just reviewing reimbursements the city made to SMACC three years ago. The 1996 books, which most organizations had completed by March 1997, are not done and are still unreadable, according to Tony Rallings, the city analyst who scrutinized SMACC.

Rallings came back with three problems at SMACC, some of which suggest a knowing failure by Taylor-Shelby to abide by regulations. They are:

n Almost $20,000 was billed to the city for housing-rehabilitation expenses that SMACC had already used a private loan to pay for. SMACC used the city’s $19,774 to cover operating expenses, a financial decision that SMACC’s federal grant does not allow.

n $7,679 in work that was not fully disbursed to SMACC’s contractors.

n $3,750 for work that either did not meet contract specifications or was not documented properly.

So, did Taylor-Shelby scam the city of $31,000 three years ago to keep her organization alive? “Some of these disallowed costs, in my opinion, were intentional,” Rallings says.

Taylor-Shelby denies that assertion. “We were following the rules to the best of our ability,” she says. What Taylor-Shelby readily admits is her ignorance of most things financial, as well as a fear of the complications of running a business. When the city came by last September looking for her ledger books, Taylor-Shelby didn’t know what they were talking about.

“I didn’t know what a ledger was,” she says. When SMACC got brand-new computers three years ago, her reaction would have gotten her fired in the private sector. “We were so intimidated by [the computers], we kept them in the boxes for six months.”

SMACC’s problems don’t end with the city, either. Taylor-Shelby admits her organization is also in trouble with the two banks that have taken a chance on her group’s ability to pay off debt. SMACC is behind on payments to NationsBank and First Tennessee, with a total balance of $85,000 left on the loans. “They’re working with us,” Taylor-Shelby says.

SMACC has four homeless families living in transitional housing. They pay no rent and can stay for a year, but they are expected to develop a savings. Taylor-Shelby has also moved three families into houses that she is in the process of rehabilitating. Rather than wait for all the final work and reimbursement paperwork to be completed, she has gambled that everything would go smoothly and that these families would be able to purchase homes relatively soon. If SMACC's funding, stops, Taylor-Shelby says, these families will have nowhere to go.

It would be easy at this point to dismiss this affair solely as Taylor-Shelby’s fault. But did the city do everything it could to prevent this problem? “We need them and they need us,” says city auditor Lillian Hite, on the relationship between CDCs and the city government. When Taylor-Shelby is the only person in that part of South Memphis attempting inner-city revitalization, what choice does the city have but to see that she succeeds?

HCD apparently lacked both the foresight in its adviser role to help prevent errors before they occurred and the skills as a regulator to catch the mistakes after they were made. It took an audit from a different division of city government to find problems.The city auditor’s office criticized HCD for not watching CDCs more closely.

“During our review, we noted that HCD management does not have uniform, written standards and procedures for review of reimbursement requests,” Rallings’ audit reads. “In our opinion, the lack of these may have resulted in reimbursement of many of the disallowed expenditures described above. Documentation submitted … should have raised questions to the reimbursement reviewer/approver.

Taylor-Shelby says she was getting mixed signals from all the bureaucracies she had to deal with. When the U.S. Department of Housing and Urban Development, which funnels its money through HCD, visited to see SMACC’s progress, it seemed to have different priorities. “They came in here and said, ‘I want to see some homes. The paperwork we can deal with later. I don’t want to see no [concrete] slabs where homes should be.’”

HCD director Debra Brown sat down with a Flyer reporter last Friday, gathering several staff members from her office who have worked with SMACC. “We didn’t have a concern to this point,” Brown says. “From what I know, she’s been successful to this point.” Vernua Hanrahan, director of HCD’s Center for Neighborhoods, notes that not one but two private accountants have attempted to help SMACC over the years.

How HCD fulfills its technical-assistance role has been a source of debate. Neighborhood developers criticize the city for being indifferent to their needs, even though encouraging grass-roots activism has been an official keystone in the Herenton administration’s philosophy. Many of these grass-roots activists won’t complain publicly, though, because they depend on HCD for their financial survival.

“There is not a good system for technical assistance in this town,” says Steve Lockwood, of the Vollintine-Evergreen Community Association’s CDC. “I’m not completely blaming the city for that, but they’re a piece of the puzzle.”

Perhaps the biggest disagreement occurs over what “technical assistance” actually is. Taylor-Shelby and some other grass-roots developers define the word sweepingly, referring to help with the ledgers as well as the construction and rehabilitation of homes, how the board of directors is organized, and how the office is structured.

The city takes a narrower view. Carl Reynolds, HCD’s interim deputy director for administration, says, “[Technical assistance] is not to come in and do the books ourselves. That’s not our role.” And, Reynolds points out, many grass-roots organizations would prefer that the city stay out of their affairs. Rather than sending in a bureaucrat to review these organizations thoroughly, the Center for Neighborhoods has stuck to annual training seminars.

“They had been to a lot of the trainings in the past,” Hanrahan says. “When [Taylor-Shelby] says she didn’t get [technical assistance], I almost fell out of my seat.”

Last year, HCD and area CDCs tried to address the technical-assistance problem by hiring a consultant, but a recent political struggle ended that solution. Under a complicated agreement, the city used public and private money to hire a consultant to help the CDCs in a variety of ways. That consultant turned out to be Liz Wills, a former director of a highly successful CDC in the Bronx. Memphis HCD paid her salary, with the Community Foundation pitching in. Wills reported to the CDC directors.

Wills was beginning to feel her way around Memphis, and was meeting with some success, until HCD changed the rules. Director Brown, seeing a chance to help the ailing SMACC, sent a letter to the CDC directors requesting that Wills spend half her time with Taylor-Shelby’s organization. The other CDCs, however, wouldn’t allow their consultant to spend so much time on just one nonprofit developer. Everybody needed help in some form.

The CDC activists were officially Wills’ boss, but the city held the purse strings, so it was an unworkable dilemma. The CDC directors, with Wills’ consent, terminated Wills’ contract last month. HCD offered Wills a full-time position, but the consultant turned it down.

Taylor-Shelby will be responding to the city’s questions regarding its finances this week. And the CDC director remains true to her personality. “I’m not making no excuses for our weaknesses or things that we didn’t do right,” she says, “But this has created a serious hardship. And they’re not going to sabotage my will to keep going.” n

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