The incredibly profitable business of crony politics

Do-nothings’ $21M reward

By ISABEL VINCENT and MELISSA KLEIN

Never mind that no new projects at Charlie Rangel’s favorite nonprofit, the Upper Manhattan Empowerment Zone, have been approved in a year — the group will still get $21 million in state funding.

“That is the best news,” Kenneth Knuckles, the UMEZ president, exclaimed at a meeting of its governing board last week.

The New York Empowerment Zone board met for the first time in 13 months and approved three projects for UMEZ worth a total of $3.5 million.

One allocation, a $2.2 million loan, will be used to build a hotel/medical office building in Washington Heights. Another grant for $1 million will go to the Apollo Theater Foundation to hire staff and consultants as part of a new international marketing push. A third grant for $312,061 is going to the Classical Theater of Harlem to hire staff.

Rangel, the Harlem Democrat, wrote the legislation that created empowerment zones throughout the country in order to revitalize distressed urban communities. The New York Empowerment Zone opened in 1995 with $300 million in federal, state and city money, $249 million of which went to UMEZ and the rest to a similar Bronx nonprofit.

New York had been slow to pay its remaining commitment of $21 million, a delay blamed on “fiscal constraints.” With the state contribution. UMEZ has about $55 million left in its coffers.

But critics charge the group has done little with the money or its mandate to stimulate the uptown economy — and instead hoards its cash to continue to stay in business and pay salaries.

Salaries amounted to $2.2 million in the 2011 fiscal year, according to its most recent tax filing.

Funding for projects has been so slow that the UMEZ arm that makes loans of up to $250,000 to small businesses finalized only one such agreement last year — $200,000 to Jado Sushi restaurant on Frederick Douglass Boulevard.

“I’m sure that you’re not pleased with that,” Kenneth Adams, an NYEZ board member and commissioner of Empire State Development, told UMEZ execs last week. “How can you close more?”

Knuckles said three loans had already been finalized in the current fiscal year.

The loans go to “unbankable” clients who can’t borrow elsewhere, and nearly 60 percent of all the loans made require payment restructuring, UMEZ documents show. A “great deal of staff time” was spent on loan collections last year, according to UMEZ.