SUBSIDIES FOR JOB CENTER RAISE DOUBTS; SOME SAY DEVELOPER, A POLITICAL ACTIVIST, HAD UNFAIR ADVANTAGE; 'IT SMACKS OF FAVORITISM'; POWER BEHIND PROJECT SAYS SHE'S PROVIDING A 'VALUABLE SERVICE'

THE BALTIMORE SUN

In an East Baltimore shopping district that had fallen on hard times, Marie Washington saw an opportunity to transform a shuttered haberdashery into a gleaming job center.

She called it Fair Chance.

But some neighborhood and City Hall critics say Washington, a longtime political activist turned developer, had an unfair advantage.

To them, the restoration of one building on a half-vacant block east of downtown reflects more than Washington's vision. To them, it is an example of how people with political influence can amass public subsidies far more easily than people with just a good idea.

The building being rescued at taxpayer expense is the Sam Glass & Son menswear shop, which closed in 1994. Washington's small development group bought it at auction the next year for $198,000 and is refurbishing it with a $500,000 bank loan and at least $1.05 million in government grants and low-interest loans. If she gets everything on her wish list, the renovation could cost taxpayers $2.63 million.

When it reopens in the next few months, the turn-of-the-century building at 301 N. Gay St. will have sleek new offices for a state agency and The Chance, a job training program for high school dropouts.

"We feel we can add a valuable service and package that for the business community," Washington says. "When you take into context what's happening with welfare reform, really we're ahead of the curve."

Her undertaking has a laudable public purpose: a one-stop office where chronically unemployed young people will be able to find tutoring, job training, resume guidance and referrals for child care.

The city and state routinely give private and nonprofit groups subsidies for such projects in the name of neighborhood redevelopment. Competition is fierce.

But Washington, 47, an East Baltimore power broker who rose through the ranks of an entrenched political club, quickly obtained much of the assistance she wanted.

In the past two years, she has been helped by a state senator whose campaign she managed and an East Baltimore renewal coalition whose board includes many of her allies, among them a state delegate for whom she was campaign treasurer.

Much of the aid she has secured is for the renovation, although a portion will be spent to create a parking lot at the site of two nearby empty buildings that Washington bought for $35,000.

But the government assistance goes beyond grants and loans. Washington's chief tenant, besides the grant-funded job program, happens to be the state government.

Rent from state

The state has agreed to pay $280,000 a year for the next decade to lease space for a field office for social workers. The rent -- higher than average for first-class offices in downtown Baltimore -- will guarantee enough cash flow to cover the mortgage and loans.

Mitchell Henderson, 60, a skeptical East Baltimore community leader, has watched in astonishment as public dollars have flowed into the project. In contrast, he says, it took him several years of persistent lobbying to get a $5,000 grant for an after-school program.

"We need so much help here. We got so many vacant houses; our streets are all broken up," he says. "People watch all that money go to one place, and they get discouraged and walk away."

The Gay Street building will be home to three interlocking groups run by Washington:

East Baltimore Community Corp. (EBCC), a nonprofit organization that provides drug treatment, housing and community services. It has run the employment program with a federal grant for 2 1/2 years.

The group is an offshoot of the Eastside Democratic Organization, former Mayor Clarence H. Du Burns' political club. Established in 1969 by Burns and Robert L. Douglass, now a city councilman, EBCC parlayed its control of Eastside politics from the 1970s to the mid-1980s into government contracts and grants. Washington, a Burns protege, is the paid director.

Fair Chance Inc., a nonprofit entity that will be responsible for the day-to-day management of The Chance employment program.

East Baltimore Enterprises Inc., the for-profit development arm of Fair Chance. The corporation will make money from leasing the building and any redevelopment projects. Profits will go into The Chance's treasury or toward repaying loans, Washington says.

Washington compares the arrangement to those of other tax-exempt groups, such as the Johns Hopkins Institutions, that have profit-making subsidiaries.

"We're no different than anyone else," she says.

City Council President Lawrence A. Bell III disagrees. He calls it "highly unusual" to have city and state elected officials from the same political club involved in a nonprofit organization whose project they are supporting with government money.

"I believe it smacks of political favoritism that is very troubling," Bell says.

The project's supporters include Democratic lawmakers from the clannish Eastside political world, with an organization chiefly run by Washington's allies. The following are examples of the relationships, based on interviews and city and state documents:

State Sen. Nathaniel J. McFadden has pushed through bond bills in Annapolis for the project: $200,000 in 1995, $300,000 in 1996 and $450,000 this year. All are direct grants; this year's still needs the governor' approval.

McFadden is an EBCC director and is on Fair Chance's advisory committee. A former councilman, he won his Senate seat in 1994 with the help of Washington, a campaign strategist and treasurer of his ticket.

Historic East Baltimore Community Action Coalition Inc., which is in charge of a multimillion-dollar revival of poor neighborhoods around Johns Hopkins Hospital, is considering a request for $995,000 in federal loans. Those funds would be used to enlarge the building and parking lot, and make other improvements.

Washington is the coalition's secretary. Hattie N. Harrison, a fixture in the House of Delegates since 1973, is its president. Harrison ran for re-election in 1994 as part of the McFadden ticket.

On the board are Jean Booker and Martha Benton, public housing activists who are founding directors of Fair Chance and East Baltimore Enterprises, the groups seeking the money.

The same coalition has agreed to contribute $514,000 in empowerment funds to Fair Chance, but the project is outside the empowerment zone.

Harrison co-chaired the grant application process.

The project also has the support of City Council members Douglass and Paula Johnson Branch. The two pushed for a special session last year to approve $34 million in federal loans to revitalize East Baltimore; Washington is seeking a share.

'Volunteer stuff'

Branch's daughter, Tonya Johnson, who is the councilwoman's paid secretary, helped incorporate Fair Chance and East Baltimore Enterprises. The other founding members were Washington and William Jackson, an EBCC director and part-time council clerk.

Like Douglass, Branch has long been active in EBCC; both are on the board. Branch also is on Fair Chance's advisory committee. And Douglass, a one-time state senator, was a paid tutor with the program that became The Chance until his 1995 council victory.

All of the elected officials interviewed say they saw no conflicts in the project because the groups are nonprofit and the officials won't benefit from it financially.

McFadden, Branch and Douglass say they are honorary EBCC directors and not intimately familiar with the Gay Street building renovation. Harrison did not return phone calls.

"It's all volunteer stuff," Branch says. "It's part of giving back to the community."

But the political backdrop and the amount of government assistance have made the project controversial in some government offices and homes in East Baltimore.

McFadden's latest award hasn't gone through as easily. The governor did not include it in his initial 1997 bond recommendation, and budget analysts noted that the state was already leasing the building and had just awarded it a $400,000 business loan. A state employee, speaking on condition of anonymity, says, "There's an awful lot of money going to one place."

Anthony J. Ambridge, the city's real estate officer, raised questions after Fair Chance sought $31,440 from the city last summer for "moving expenses and increased rent." The move involved was from rent-free offices at a high school to the Gay Street building.

Because Fair Chance owns the building through its subsidiary, it would have been paying itself with city money. But amid complaints from Ambridge, Bell and others, the money was steered into the job program because the building renovation wasn't finished.

"With any deal, I always question the costs and accountability," Ambridge says. "Because there are political leaders involved, one has to be overly sensitive. In government, you have to give the appearance of propriety as well as avoiding impropriety itself."

Mayor Kurt L. Schmoke says he is watching the project but has not intervened because city lawyers have found no evidence of a direct conflict of interest.

"We're mindful of those concerns," Schmoke says, but he adds, "When we've reviewed it, we found that's what the [Historic East Baltimore coalition] wanted. If people in the community disagree, they should object."

Neighborhood leaders are divided. Mitchell Henderson is critical of the amount of money going to Washington's project, but others are supportive.

Michael V. Seipp, who is directing the private-public partnership trying to revive East Baltimore neighborhoods, says The Chance is as important as new housing and new roads.

"There are a lot of folks here who haven't been in the work force in years," he says. "Our argument is that you can't make structural changes in people's lives unless you gear it to employment."

The politicians also extol the goal of preparing hundreds of young men and women, often lacking high school diplomas and living in poverty, for work. The Chance's brochures promote high school equivalency classes and training in trades, data entry and cosmetology.

"This is a good program," McFadden says. "I just don't see any problem whatsoever. Baltimore is a small town. I have the same relationship with Johns Hopkins University or Morgan State University."

He denies any influence stemming from Washington's political role, saying, "This has absolutely nothing to do with the campaign," he says. "This is not politics; it's business."

From a business standpoint, all the government assistance has practically guaranteed that Fair Chance won't lose.

Washington's development group got a modest bank loan for the project, but the bulk of the costs will be covered by city, state and federal money and rent payments from the state.

Big rent increase

State officials say they are increasing the number of social workers on the Eastside and had to move from a city building. They will pay $279,939 a year for 18,700 square feet at Gay Street, more than five times the current $52,837 for 7,238 square feet in a city multipurpose center.

"Their offices were grossly overcrowded. When a client comes in with several family members, it got to be an unbearable situation," says Steve Cossard, assistant state secretary for real estate.

Washington spotted the state ad for office space just as she did a federal notice that started her project. More than three years ago, she urged the Mayor's Office of Employment Development to compete together with her nonprofit for a federal job training grant. Baltimore was one of six cities that won.

The first grant has run out. But with new government aid and a prominent location, the program is about to be resurrected.

Not everyone could pull it off, says Linda Harris, head of the mayor's employment office. "They're very entrepreneurial."

Pub Date: 4/27/97

Sun staff writer Walter F. Roche Jr. contributed to this article.

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