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Corporate largesse has also flowed toward Butts's nonprofit, from the likes of Citibank, Boston Properties, Coca-Cola, Starbucks, and other companies looking to stay relevant uptown. In 2011, ADC took in $3.8 million in private gifts. In 2012, the organization reported donations of more than $200,000 from Deutsche Bank, more than $150,000 from Bank of America, more than $100,00 from TD Bank, more than $60,000 from Wachovia, and more than $50,000 from Bloomberg LLC. Similarly, M&T Mortgage Bank has also been a generous contributor, donating more than $20,000 just in 2012. And on March 22, M&T approved a $1 million loan to Butts on his regal $1.2 million brownstone on St. Nicholas Avenue. Butts had already renovated the home at least once, via two prior loans for substantially less than $1 million.
ADC's tax returns also show that from 2007 to 2011, program revenue—money ADC takes in from services it provides—came close to tripling: from $6.9 million to $19.3 million, including rental income, which doubled.
Meanwhile, an ADC subsidiary called Harlem Village Homes II was also doing well. Harlem Village buys dilapidated or foreclosed properties for a pittance, renovates them, and resells them at a large profit. In 2007, just to take one example, Harlem Village bought eight brownstones from the federal Department of Housing and Urban Development for a grand total of $10, property records show—and then renovated the buildings and resold them in 2011 and 2012 for an average of $1 million apiece—or $8.5 million in all.
It was a similar Harlem Village sale in 2006—to Todd Hunter, the son of former NBA players' union head Billy Hunter, who is under investigation for fraud—that led federal investigators to order Wright to speak with them earlier this month. Those homes are intended for buyers making less than $130,000 per year; that year, Todd Hunter was vice president at investment firm Prim Capital.
"That's not community development, that's real estate development," says one longtime observer of ADC. "At some point you have to wonder if it violates their non-profit status, or at least the spirit of it."
All of which would suggest that business—even the not-for-profit kind—was booming uptown. "Based on my experience, if you had invested $100 million in Harlem development," says Ronald Gold, a real estate appraiser and member of the Greater Harlem Real Estate Board, over the course of a decade "it would be worth around $600 million in the open market."
And yet, if you click on the "Financial Highlights" link on ADC's website, the page is blank. The most recent press release posted to the site is more than a year old.
The Voice reviewed six years' of ADC's tax returns and found that, in 2008, ADC posted a surplus of nearly $11 million, but one year later, a deficit of $4.2 million. The trend continued in 2010, with a $5.3 million deficit, and in 2011—the most recent year available, the same year program money nearly tripled and ADC was flipping all those brownstones—with a $1.1 million deficit.
The tax returns also show that from 2006 to 2011, ADC's total debt more than doubled, to $117 million from $58 million. Total assets did not increase at nearly the same rate, so it wasn't as though ADC was taking on debt strategically, as a way of, say, increasing its real estate portfolio. And its cash reserves were simultaneously draining fast: At the beginning of 2007, the agency had $6.5 million in cash on hand; by the end of 2011, there was just $860,000. A stock fund worth $7 million in 2007 had plummeted to just $1.2 million by the end of 2011. ADC is said to owe its attorney, Charles Simpson, as much as $2 million in legal fees. ("No comment," Simpson replied when asked about the debt.)
Meanwhile, projects like the ballroom and others have stalled. A highly touted plan to build a new facility for the elementary school, announced in 2007, has yet to get off the drawing board, and one ADC employee says "millions" were wasted on an unusable architectural design. "There were meetings where the plans were shown," the employee says, "and none of it ever materialized."
It is a strange predicament: A prominent institution, dialed in to government and private largesse, buttressed by a revenue-generating real estate portfolio, is nevertheless in such financial trouble that on multiple occasions, according to three current and former employees, it actually had to borrow money, or divert money earmarked for other purposes such as Head Start, to meet payroll. Why were there layoffs at ADC in February? Why have a number of board members resigned in discontent?
The answers to these questions are apparently so sensitive that few current or former board members—a roster of distinguished New Yorkers—would return phone calls, let alone talk on the record. Calls and e-mails to Reverend Butts were not returned.
ADC president Ralph Dickerson, who was appointed only a couple of months ago, told staff in one of his first meetings, according to an employee who was present, that "he is not trying to do anything miraculous, he just wants to keep the doors open because they are in a fiscal crisis." In a telephone interview with the Voice, Dickerson said that he did not recall making that statement, but acknowledged financial strains and the recent layoffs, calling them part of an "austerity program." Asked what the state of ADC was when he arrived, Dickerson demurred. "This organization deserves to continue, and I can't afford to look back. I've got to go forward with it."