Page 2 of 3
Today, though, the company employs just five people, two of whom are zone residents.
But of the three companies that have so far received Business Development Fund loans, the one that suffered the biggest headaches was Light & Energy Management Inc.
"Nobody worked as hard as we did," says Courtney Pollard Jr., chief executive officer of the company, which is partly owned by baseball great Dave Winfield. "We were on the phone every day. We refused to give up."
It took the company 18 months to secure a $3.25 million loan with a 5 percent interest rate. That wait translated into $103,011.72 in legal fees. The lucky law firm this time, though, wasn't Troutman Sanders. (Troutman Sanders was already Light & Energy Management's corporate law firm.) Instead, Minkin & Snyder, home to David Minkin, the husband of Campbell spokeswoman Glenda Blum Minkin, was brought in. Sheri Labovitz, a former attorney with Minkin & Snyder and wife of close Campbell friend and former Chief of Staff Steven Labovitz, charged the company $270 per hour; Minkin & Snyder collected a $50,000 payday, according to AEZ information. Meanwhile the AEZ pays its own attorneys only $130 to $170 per hour.
LEM's legal fees were so high it had to pay the bill with money from the loan.
In hindsight, Pollard says he would go through a commercial bank for the loan.
The process took its toll. While Pollard waited and, as he says, the zone tried to figure out what it was doing, an investor pulled out. The AEZ also made Light & Energy Management purchase its equipment and property with loan money instead of allowing the company to put the money in the bank and use the interest to make monthly payments on each. LEM was left with little working capital, Pollard says, and if the company defaults on the loan, the zone will be trying to recoup its investment by selling equipment that's years old and used.
To make matters worse, LEM discovered that one of its founders embezzled from the company -- twice. What's more, two major contracts (with the city of Atlanta, incidentally) were suspended indefinitely.
The suspensions forced the layoffs of 12 zone-area employees -- half the number of residents that the company had employed.
"It's a little rough right now," Pollard says. "We're struggling to make a go of it."
And payments on the loan haven't even begun yet. Like the other businesses, LEM is allowed to defer payment on the principal for two years. Each of the companies faces "balloon" payments at the end of the loan terms -- LEM's totals nearly $1.4 million -- so the companies will need to be a picture of fiscal health.
A mixed bag
From its inception, Atlanta's Empowerment Zone has been plagued by sloppy management and infighting between its 17-member governing board and the zone administrators. In 1997, nearly the entire Empowerment Zone staff was fired after it was discovered administrators blew through most of the zone's $4 million, 10-year administrative budget in a year. In 1998, the federal Department of Housing and Urban Development forced the Empowerment Zone to repay $1.1 million in misspent money.
Since 1997, four different bodies have occupied the Empowerment Zone's director's chair. And the door keeps revolving on the governing board, too, a board headed by Campbell.
The turnover has been a tremendous problem, says Michael Rich, an Emory University political science professor who tracks zone progress as part of a research project that is submitted to HUD. One of the surprises of the program "is that it's still alive given all the trouble it's been through," he says.
Not that it's been without its successes. The Empowerment Zone pumped $1 million into the Fulton Bag and Cotton Mill, a multi-million dollar loft apartment project in Cabbagetown. Money has also been allocated for the Sweet Auburn Curb Project, the North Yards Business Park and the Historic Westside Village project.
It's unclear if and when any other businesses will receive loans through the Business Development Fund. J and R Foods Inc., a bakery business on Metropolitan Parkway, has been favorably recommended by the Empowerment Zone's outside consulting firm, Beresford & Hilliard International, and has been approved for a loan.
But even J and R has gone through a three-year Empowerment Zone wringer.
"The zone has hurt a lot of people by making promises that never came through," says Jonathan Handman, president of J and R. He's dealt with all three directors and twice been told that no money existed in the Business Development Fund. The turnover and ineptitude at the top kept delaying the loan process, which threatened the health of the company, Handman says. And a lack of coordination between different arms of the AEZ meant J and R Foods missed out on opportunities for tax abatements and utility bill breaks, among other goodies, he says. "One hand didn't know what the other hand was doing," Handman says.
Rich Jenkins wrote: "Good riddance. The city and its taxpayers are still on the hook…
If you believe the official narrative that he was stopped due to "having illegally tinted…
God forbid we have experts on things, huh?
Scariest three words in the English language: "Harvard economics professor."
Damnit - the crappy weed I was referring to was in the linked story... the…