In Unprofitable Times, City Experiments With Nonprofits

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Of all the companies, small businesses and organizations hit hard by the recession, perhaps none are feeling the strain more than nonprofit organizations that rely heavily on fundraising, grants and volunteerism. Alexandria is no different.

Nonprofits help keep the city ticking. Where government services fall short, they often pick up the slack. But as nonprofit resources strain to make ends meet amid a citywide money crisis, who picks up the tab?

When Fannie Mae and Freddie Mac collapsed last year, nonprofits previously dependent on the companies donations felt the pinch. This year, Volunteer Alexandria, a nonprofit that connects volunteers with community causes, literally moved in with the Alexandria Red Cross so the two institutions could share space and resources, mitigating their costs.

The question arose at last weeks City Council legislative meeting. A bit overshadowed by the release of the proposed budget, the Alexandria chapter of the Boys and Girls Club requested that the city wave an expected $20,000 in fees related to a renovation of its Payne Street building, which has undergone no major renovations since it was built in 1936.

The nonprofit, aimed at helping to positively develop the citys youth, raised all the money for the renovations itself and already began construction. As the construction process ensued, the Boys and Girls Club told the city that their budget became tight, and asked Council to wave the fees that would otherwise be charged for such a construction process.

The Club currently serves over 200 young Alexandrians on a regular basis, a letter from the clubs board of directors stated. An improved facility will allow us to meet the needs of even more young people and help them to build confidence, develop character, and acquire the skills they will need to become productive, civic-minded and responsible adults.

To date, the nonprofit has paid the city almost $14,000 in fees but expects the total to reach about $20,000, according to the letter from the clubs board of directors, on which Mayor Bill Euille resides. He disclosed his association with the club before the discussion began.

We are concerned a little bit about the precedent we would be setting, said Councilman Paul Smedberg, who introduced the motion. Although I would have to say other people did mention other policy-related matters that did set precedent that we didnt have much input on in the past and this is fairly minor in regard to some of those [requests] in terms of dollars.

City Manager Jim Hartmann recommended against waving the fees despite the valuable service the organization provides, citing the precedent it could set, the economic climate and recent budgetary cuts.

The precedent in waiving fees for nonprofits, which would likely trigger future fee waiver requests by other nonprofits as they undertake various minor to major renovation or new construction projects, Hartmann wrote in his decision. Such fee waivers represent a potential multi-year revenue loss to the citys general fund of some unmeasurable [sic] amount.

While both Councilmen Rob Krupicka and Justin Wilson expressed a desire to help the organization, they expressed concern about the citys fiscal standing and the precedent the waiver could set. The two objected to the waiver, saying that the process of waiving the fees goes against the Councils standards of transparency.

We are essentially giving an invitation to a community of nonprofits that are struggling right now and are going to be asking for all kinds of resources, Wilson said. And to do this as a one-off outside of our normal processes, I have an objection to that.
Krupicka pointed to the fees, reiterating that they are meant to offset the costs to the city, which involves Planning and Zoning, Code Enforcement and other departments, in monitoring construction processes.

Fees are not arbitrary things that are just pumped out of the air, Krupicka said. The fees actually go to real human beings doing real work and if the fees arent there those human beings arent paid.
Rather than waive the fees, Council voted to give the club $5,000 in the form of a grant. Nonprofits usually go through a competitive process to receive grant money; the grant will go forward pending the city staffs research and report on how to implement a policy that would clarify a course of action in similar situations down the road.

Once awarded, the money will come out of the citys contingent reserve fund, originally intended for the Alexandria Economic Development Partnership.

Many of us have talked about it and we felt that while we feel the need to do something, $20,000 certainly in this current budgetary downfall is not a reasonable request, Euille said.

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