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The IRS woes came about because, for six months in 2005, payroll taxes weren’t paid for 10 to 12 employees, according to Tracy O’Drain, the Frankford CDC manager of economic development services.
According to the CDC board of directors, they were unaware the taxes weren’t being paid because they’d believed that the outside payroll company contracted by the organization was making the payments.
While non-payment of the payroll taxes may have been a result of poor management, it is not considered criminal. The city Office of Housing and Community Development requests investigations of such matters only when there is evidence of criminal activity.
“There is no such evidence with the Frankford CDC,” said OHCD director Deborah McColloch in an e-mail to the Times.
O’Drain said the CDC started paying the taxes in 2006 and is still working with agencies and city officials.
The Frankford CDC encountered more difficulties that year. A loss of confidence among funders in the agency’s operations, resulting in the subsequent loss of about $200,000 in funding, forced the CDC to end its role as a developer of affordable housing.
Its focus now has turned to economic development and the revitalization of the Frankford business corridor.
The current board members had to do their own digging to find out the depth of the CDC’s troubles. As they move the agency ahead, the plan is to let transparency guide their actions.
“There are no secrets,” Tobin said.
“We went through phases — crisis, discovery, now we’re restructuring,” he added. “The next phase is to move on and get back to the business of the CDC.”
One big step achieved by the organization was the recent move to its new headquarters. The CDC left the Third Federal Bank building at 4625 Frankford Ave., which it purchased several years ago, and set up operations at 4900 Griscom St., subsequently selling the bank building that had long taxed the organization’s bottom line.
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The new year has brought a new City Council representative — Maria Quinones-Sanchez — to work side by side with the agency. Quinones-Sanchez, who defeated former councilman Dan Savage for the 7th district seat, is aiding the CDC by boosting communication with city agencies and putting board members in touch with free legal counsel and a consultant to help the organization navigate its way to smoother waters.
As part of her pre-election plan for Frankford, Quiñones-Sanchez had talked about working with the CDC to establish Sweat Equity Zones to put homes back in the hands of the community.
At this point, however, the organization is not involved with housing development. Its focus is limited to economic development and the Frankford business corridor.
“Let’s make you whole and then see what role you’ll play,” the councilwoman said she told the CDC board of directors.
Quiñones-Sanchez, who has about 15 CDCs of varying sizes and capacities in her district, wants to be supportive of the organization, but she also wants to be realistic.
Her plan for Frankford remains unchanged.
“It has to happen no matter what or who plays that role,” she said. “At the end of the day, we’re going to move forward.”
O’Drain, the CDC manager of economic development services, thinks that Frankford as a whole is moving forward, though incrementally. Her statement at the November meeting of the civic organization Future of Frankford — “Either you support the CDC or you don’t” — was intended as a call to rally the troops.
“The cohesiveness is much stronger than it has been in the past,” O’Drain said.
After that meeting, she undertook an e-mail campaign that called for applications from people interested in serving on the volunteer board.
The nominating committee reviewed eight resumes of applicants not previously associated with the CDC and named five new members last week.
They are Lisa Marie Deeley, who works with the city’s Office of Community Affairs; Debbie Klak, president of the Historical Society of Frankford; Terrence McSherry, president of NorthEast Treatment Centers; Daniel Lodise, aide to state Rep. Tony Payton; and Frankford resident Michael O’Brien.
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Some board members say they sense a change in local attitudes toward the organization and its mission.
“People who disparaged us are asking how they can support us?” said Tobin.
One of those people is Klak. Why the change of heart?
Klak said she came to realize there were people determined to revive the CDC and get Frankford on the right path.
“They didn’t leave, didn’t abandon the organization,” she said.
While the new board vows to be more open in its community dealings, Klak remembers times during the past five years when the CDC was very closed about its practices.
“The (Frankford) business association hammered the CDC, asking where is the money and what are you doing with it?” said Klak, who at the time had a business on Frankford Avenue. “Walking away and not supporting the CDC would be very detrimental to Frankford.”
Rick Sauer, executive director of the Philadelphia Association of Community Development Corporations, said there are common virtues among CDC groups that serve their communities well. A good board should have community representation, be community driven, and have expertise in such areas as real estate, law and finance, as well as involvement in the public sector, Sauer said.
The mission of his office is to offer advocacy, policy development and technical assistance for community development corporations and other organizations in their efforts to rebuild communities and revitalize neighborhoods.
There are about 50 CDCs in the city, according to Sauer.
While a board requires a diversity of experience, part of the Frankford CDC’s challenge, as Quiñones-Sanchez sees it, is to overcome a problem of perception.
“Who can they draw to their board? How do we do public relations to get a buy-in,” she said, referring to strategies to gain more support in the community.
The Frankford CDC apparently isn’t the only non-profit that needs to bolster the expertise of its board. The Urban Institute Center on Nonprofits and Philanthropy undertook a study and concluded “that efforts to strengthen non-profit governance have insufficiently dealt with the fact that many non-profits are having difficulty finding board members and that this is one important fact associated with lower levels of board engagement. To promote not just adoption of strong practices and policies in theory, but to implement them in practice, requires an engaged and dedicated board.”
In addition to a board of directors, the Frankford CDC expects to create an advisory board composed of people who, even if they lack specialized expertise sought by the group, can offer helpful insights that benefit Frankford’s future.
A representative also will regularly deliver a report at the quarterly Future of Frankford meeting to uphold that pledge of transparency for the CDC’s dealings.
Its current initiatives include the Main Street program, a five-year program funded through the state Department of Community and Economic Development to achieve neighborhood improvements, and the commercial-corridor program. Grants cover the salaries for O’Drain and Main Street coordinator Theresa Hanas. A bookkeeper also is on staff for a few hours a week.
While the Frankford CDC has changed its focus from housing development to economic development along the business corridor, all non-profits go through varying stages of a life cycle, according to Sauer.
To prevent a volunteer board from getting in over its head, there is a need for a capable day-to-day staff, a good financial system in place, and board oversight, he explained.
“There’s a need to have those range of services — whether working to strengthen the commercial corridor on Frankford Avenue or building or repairing homes, a key local function needs to be addressed depending on capacity,” Sauer said. “If they don’t have the capacity, they should partner with other organizations to make sure they are being addressed.”
According to McColloch, who leads the city’s Office of Housing and Commercial Development, the Twin Homes at Frankford Creek project is being developed by Impact Services Corp., a city-based non-profit agency devoted to community revitalization. And as soon as some financial issues associated with another planned housing development, Gillingham Court, are resolved, OHCD will pursue development proposals, McColloch explained.
Working to straighten out the Frankford CDC’s problems and rebuild its reputations has been a long, hard process for board members Delany and Bowers.
“If I wasn’t a person of faith, I just could not have done it,” Bowers said. “It was a very dark night but we believed it would really hurt Frankford if we didn’t turn it around.” ••
Reporter Diane Prokop can be reached at 215-354-3036 or dprokop@phillynews.com