Newark director's nonprofit fell behind on thousands in loans to city corporation

By Naomi Nix | NJ Advance Media for NJ.com
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on September 15, 2014

Baye Adofo-Wilson became Newark's newest economic development director.

 

NEWARK — Before Baye Adofo-Wilson was named by Newark Mayor Ras Baraka as the city’s economic development director, he served as executive director of the Lincoln Park Coast Cultural District in Newark, overseeing a financially troubled non-profit organization that fell behind on loans of tens of thousands of dollars to the city-funded Brick City Development Corp.

Now as a city official, his duties will include the oversight of the same redevelopment agency his non-profit group could not repay.

Adofo-Wilson said there was no conflict in his role, and said he would not handle any Lincoln Park Coast Cultural District matters while serving as head of economic development.

“I’ve already recused myself,” he said. “My staff knows to not send me anything about Lincoln Park.”

Baraka echoed similar comments saying it would only be a conflict of interest if Adofo-Wilson continued working for the Lincoln Park Coast Cultural District.

"He's not a part of Lincoln Park anymore," Baraka said in an interview. "He is no longer working with them."

Representatives with the Brick City Development Corporation declined to comment. Current management of the Lincoln Park Coast Cultural District have not responded to repeated questions about the loans.

But Walter Luers, the president of the New Jersey Foundation of Open Government said while the loans don't disqualify him from being director, the financial connection a "bad policy."

“Just because something is technically legal, doesn’t mean you have to do it," he said. It "doesn’t mean it's right, doesn’t mean it's good policy."

At issue was a townhouse project on Washington Street in Newark that held a combination of affordable housing units, market rate units and commercial space, records show.

An examination by The Star-Ledger of documents and public records shows that in September 25, 2009, the Lincoln Park Coast Cultural District secured a $2.6 million loan from Wells Fargo. By 2011, however, the non-profit group defaulted on the loan.

Adofo-Wilson said in an interview, which was corroborated by public records, that the non-profit struggled to make the loan payments for the project because of the 2008 financial crisis and because the city delayed finalizing its tax abatement, making the properties hard to sell.

The Lincoln Park Coast Cultural District was first started in 2003, with a goal of shaping the Lincoln Park area into a bustling arts and cultural district for the city. Adofo-Wilson became its founding executive director and continued to serve in that role for ten years.

Before taking on his role at Lincoln Park Coast Cultural District, Adofo-Wilson worked for three years as New Jersey Director and Senior Director of Community Economic Development at the Regional Plan Association, an urban research organization.

Under his tenure at Lincoln Park Coast Cultural District, the organization launched an annual music festival, formed a community farm, set-up a job training program, and launched several residential and mixed-use projects totaling more than 40 million dollars, according to the non-profit.

Among those development efforts was the Washington Street project, which called for 13 townhouses with 39 units located at 478-480 Washington Street and 450-466 Washington Street.

Records show Lincoln Park Coast Cultural District bought the properties from the city in 2005. The Newark City Council approved a long-term tax abatement for both locations in 2008, but it would only be released once both projects were finished being constructed.

Adofo-Wilson said the not-profit secured an initial loan from Wachovia--which was bought out by Wells Fargo--for construction costs, with the non-profit looking to sell the units project after the project was finished.

But by 2010, the city had still not authorized a tax abatement, making the new development hard to sell, according to Adofo-Wilson.

According to city records, the group struggled to get financing for a second phase of the project, further stalling release of the abatement.

To help refinance the Wells Fargo loan, Lincoln Park Coast Cultural District took out a second loan from Community Loan Fund of New Jersey for close to $1.3 million in June 2011, records show, after Brick City Development Corp. agreed to guarantee it, along with an additional $250,000 loan.

The next year, Brick City gave the non-profit an additional $87,452.69 loan, records show.

But Lincoln Park Coast Cultural District had trouble paying its new lenders too.

A Star-Ledger review of more than a year’s worth of emails between Adofo-Wilson and agents of BCDC show the corporation repeatedly pressured him to get caught up on the BCDC loans.

On January 18, 2013 then BCDC chief Lyneir Richardson emailed Adofo-Wilson about the Lincoln Park Coast Cultural District loan payments.

“This is now technically in default. What’s the game plan for repayment? Want to avoid a problem” he wrote.

Adofo-Wilson wrote back saying he was working with the city to get the “tax abatement issue” resolved, but it was taking a long time. “It’s impacting everything for us,” he said.

Such exchanges would continue for months. In July 2013, Adofo-Wilson said the non-profit had lost close to $300,000 because the tax abatement issue remained unresolved.

In August 2013, Adofo-Wilson said he left as executive director of Lincoln Park Coast Cultural district in August of 2013, to pursue a fellowship at Harvard University, although he continued to serve as board member until June of this year.

But records show Adofo-Wilson continued to talk with BCDC about the intimate details of the loans throughout the winter of 2013. In November 2013, he signed a pay-to-play affidavit as a managing member of Lincoln Park Redevelopment Urban Renewal, LLC, the company that owned the 450 Washington Street properties.

“I knew the project better than anyone else,” Adofo-Wilson said when asked about his communication with BCDC.

Lincoln Park Coast Cultural District problems paying back the loan have persisted.
The non-profit defaulted on the loan this Spring after failing to make monthly payments of $9,464 for April 1st, May 1st, and June 1st, records show.

A day after The Star-Ledger started asking the city questions about the loans, Lincoln Park Coast Cultural District presented a check to New Jersey Community Capital for $18,928 to satisfy the April and May payments, records the non-profit provided to the newspaper show.

Lincoln Park Cultural District Board president Theresa Hooper Marshall said recently of the loans that it was "taken care of," but did not elaborate.

In July, newly elected Baraka named Adofo-Wilson as director of Economic and Housing Development. His appointment was quickly approved by the Newark City Council.

Baraka several people were interviewed for the position. Ultimately, Baraka said, he chose Adofo-Wilson because of his accomplishments in Newark.

"I got a better feeling emotionally about his relationship to the people of Newark," Baraka said.

Baraka said he plans to take the Brick City Development Corporation in another direction, shifting the organization from giving out loans to sparking economic development in neighborhoods and supporting technological ventures.

And Adofo-Wilson said as economic development director, he will look to streamline the tax-abatement process so that other developers get approved faster and do not have the same issues as Lincoln Park Coast Cultural District.

“The tax abatement process should be much quicker than it is now,” he said. “I now know government bureaucracy makes small businesses go under.”

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