Belle Reve is a Bywater facility that has provided housing and other services for people with HIV/AIDS for 16 years. Assisting HIV/AIDS patients is an expensive proposition because care has to be available 24 hours a day, and the agency depends on a number of income streams, including foundation grants and federal monies. So it's big trouble for Belle Reve when one of its funding sources is notoriously slow in making payments to the facility, and often is behind eight months or more in reimbursing the agency for services.
That source? The city of New Orleans.
Vicki Weeks, Belle Reve's executive director, says the city's payment process has been problematic for years. In September, the city paid some but not all of Reve's invoices for January-March 2009, but the Office of Community Development (OCD), which oversees the U.S. Department of Housing and Urban Development's Housing Opportunities for People with AIDS (HOPWA), used 2008 carryover funds to make the payments. Weeks says OCD promised to pay out the carryover funds much earlier and she still has yet to receive anything from the 2009 funds.
"Not a penny," Weeks reports, "and they owe us $267,000."
Not many businesses would agree to provide services without a signed contract and then not receive any reimbursement for work performed until nearly eight months later, but that's exactly what the City of New Orleans expects from local agencies that supply housing for people with HIV/AIDS. The city wants these organizations to provide services beginning every year on Jan. 1, but it doesn't send out contracts until at least August and sometimes later. It's not a sustainable business plan, and it forces some of these agencies to secure bank loans while waiting for a city contract and reimbursement.
Weeks says it has been particularly hard on smaller agencies that don't have the cash reserves and fundraising mechanisms of the larger organizations like Belle Reve. Mark Johnson operates one of the city's smaller HOPWA providers, Brotherhood Incorporated in the Tremé, and last year the financial strain — accumulating bank debt and no incoming funds — became too much for Brotherhood.
"We had to shut down until we got the signed agreement," Johnson says.
In April 2008, Johnson says his board told him there wasn't enough cash flow to keep the six-bed facility open while awaiting a contract from the city. The signed contract arrived in November, six months later, while Brotherhood's doors remained closed to needy clients. Since then, Johnson has been able to reopen the facility, but his organization currently owes a bank $160,000.
"I can't keep constantly floating the HOPWA program to the tune of $150,000 to $200,000 every year," Johnson says, adding that Brotherhood has now had to put up its property as collateral on the loan.
Patricia Campbell, regional public affairs officer for HUD, says the federal agency is "concerned," and has taken action. "In June of this year, we did do a monitoring review, which outlined a number of issues and problem areas," Campbell says.
Congress awarded HOPWA funds fairly late this year — July 31. The city's share of these funds is formulaic, however, so each year it can expect approximately the same amount from the federal government: $3 million. Could the city pay local agencies while it is waiting for its federal grant? With the New Orleans metropolitan area currently having the second highest growth rate in the country for AIDS cases, now might be a good time to find out.
According to the OCD, the city is funding seven agencies with 529 clients through the HOPWA formula funding, which is based on an area's AIDS statistics. Some clients are given rental, mortgage and/or utility assistance while others are housed in agency-owned facilities and provided around-the-clock supportive care. In an email interview, Anthony Faciane, OCD's deputy director who is in charge of the HOPWA program, stated that federal funds are paid out on a cost-reimbursement process, adding, "Sub-recipients are supposed to have operating capital to carry them until money is available and payments can be processed."
Faciane affirms that the city did commit $435,000 in leftover 2008 HOPWA funds to pay agencies while waiting on the 2009 HOPWA allowance. However, his office still had to conduct "procedural and regulatory steps," which included advertising funding availability, evaluating and ranking applications, selecting agencies, negotiating and executing contracts, processing invoices and, finally, disbursing funds.
The application process began Jan. 5, but the first check wasn't sent out until Aug. 21. One of the steps was routing six contracts, which were signed by agencies in late May, from OCD's offices in the Amoco building, 1340 Poydras Ave. — across the street from City Hall. That short journey took more than a month, and the contracts arrived in the city attorney's office July 7.
Eric Oleson is the director of Project Lazarus, which has two facilities for HIV/AIDS clients and houses a total of about 70 people each year. He says he was told the HOPWA carryover funds were supposed to keep cash flowing for agencies until 2009 funding came through. His organization had only a month's worth of payroll reserves when it received the leftover monies in September.
"The whole system they had set up didn't work," Oleson says. "It was still very delayed."
HUD's Campbell says that this lack of synchronization and disconnect between offices was one of the main problems noted in the June monitoring report. Based on the report, HUD is now providing technical assistance to the New Orleans program.
"One of our recommendations is they needed to coordinate better to make sure they're complying with getting the funding out in a timely fashion," Campbell says.
Faciane doesn't mention the technical assistance in his response and defends the city's funding procedure, saying it is "based on a traditional HUD grant administration process." He also notes HUD hasn't cited the city for any findings or concerns regarding its HOPWA program.
In 2008, local HIV/AIDS agencies made similar complaints about the Mayor's Office of Public Health and AIDS Funding and its long delays in allocating money from another federal source, the Ryan White Part A HIV/AIDS program ("What's In Their Wallets?" Gambit, Aug. 19, 2008). In October of that year, the City Council's Housing and Human Needs committee held a hearing on the matter as well as a subsequent meeting, and Noel Twilbeck, executive director for NO/AIDS Task Force, which receives both Ryan White and HOPWA monies, says Ryan White funding has dramatically improved, but HOPWA remains a problem.
"It feels like a stone wall that doesn't go anywhere," says Twilbeck.
Could the New Orleans City Council get involved with HOPWA funding and demand faster results? Councilmember Stacy Head thinks so, and she says it wouldn't be a difficult fix given that under the HOPWA formula, the city receives a similar amount every year for HIV/AIDS housing.
"We could set up a revolver (fund), so that we pay these agencies in March, and we get reimbursed in August (when HUD sends the city its funding)," Head says.
Head adds the revolver fund could be supplied by Neighborhood Improvement Funds (NIF) or leftover HOPWA monies. As for the applying pressure to force OCD to more efficiently distribute reimbursement to local agencies, Head says it would depend on the council withholding funds, something she says it hasn't been willing to do.
Holding back funding could be counterproductive because of whom it would affect most: agencies in most desperate need of a faster system. One improvement over last year's process has already occurred: The city's HOPWA deadline was Oct. 30, more than two months ahead of the 2009 cutoff date.
Johnson of Brotherhood says this type of preplanning is critical because funding delays could produce deadly results. "Without housing, medicine and proper care," he says, "people will die."