City financial counselor for poor came up short on its own worker benefits

Launch of Financial Empowerment Centers

Mayor Bloomberg speaks at launch of city's pilot Financial Empowerment Centers in 2009. Photo by Edward Reed.

The Bloomberg administration established the Office of Financial Empowerment in 2006 to help low-income New Yorkers “build assets and make the most of their financial resources.” Yet an organization the office is about to hire to operate one of five new Financial Empowerment Centers providing counseling to poor people has at least occasionally had trouble fulfilling financial obligations to some of its own employees.

Bedford Stuyvesant Restoration Corporation, a venerable service provider based in Brooklyn, has twice been ordered by federal judges to make payments to union pension and benefit funds, after failing to make contributions agreed to under their workers’ contracts. The organization was one of 12 that applied to the city’s Department of Consumer Affairs to run the new Financial Empowerment Centers, and last month it was approved by the department for a three-year, $278,400 contract to run the Brooklyn center. None of the other four prospective operators of the centers – Credit Where Credit is Due, East River Development Alliance, Fund for the City of New York, and Phipps CDC – have been involved in litigation over employee benefits. (The Fund and Phipps have each faced an employee discrimination case; both were dismissed.)

Tracey Capers, the Restoration executive vice president who will be heading the organization’s Financial Empowerment Center activities, told The New York World that the two court cases were “irrelevant” to the corporation’s work under the financial empowerment initiative.

In 2005, the Board of Trustees of the International Brotherhood of Teamsters National 401(k) Savings Plan filed suit after Bedford Stuyvesant Restoration Corporation failed to fulfill contributions to its employee benefit fund. Restoration ended up agreeing to pay more than $460,000, covering the full amount owed plus damages, interest and attorney fees. Then last year, employee James Anderson sued Restoration in federal court, asserting that the organization had failed to make some contributions that year owed to a multi-employer health and pension fund, the Local 966 Health Fund, totaling nearly $11,000. Because Restoration did not answer or appear in court, the judge entered an order of default and the corporation had to pay about $20,000 covering the late and unpaid contributions due as well as liquidated damages and attorney fees.

Capers said that she would not speak on the cases. “Our track record kind of speaks for itself. The City of New York wouldn’t be awarding such a contract to our organization if we weren’t qualified and if clients didn’t speak highly of improved financials,” said Capers. She stressed that Restoration had a long history of providing job training and placement programs, and that wealth building and financial counseling “are really the last component that complements our array of services to help people move up economically.”

The attorney who had handled the Teamsters case, Brian O’Dwyer, said he and his client would not comment. Anderson also did not respond to the World, although his attorney Elizabeth Pilecki said she had not been aware of Bedford Stuyvesant Restoration Corporation’s role in the new consumer counseling initiative. Given the organization’s legal history, she said, it was “interesting” that the city had chosen the corporation as a potential partner but added she could not comment further without consent of her client.

The Department of Consumer Affairs has worked with Bedford Stuyvesant Restoration as a partner in the Financial Empowerment Centers since the city opened a pilot center at the organization’s Restoration Plaza site in 2009. Prior to that, the organization had a $120,000 contract with the department to provide tax preparation services. Said agency spokesperson Abby Lootens: “As part of our responsibility review of the selected vendors, which is currently underway for the Financial Empowerment Center vendors, we do a vendor check with the Department of Investigations to determine if DOI has conducted an investigation into the businesses.” The Mayor’s Office of Contracts has rated Bedford Stuyvesant Restoration Corporation’s performance as “excellent” or “good” on its prior city contracts.

Bedford Stuyvesant Restoration Corporation has received ample credit for building up central Brooklyn’s economy over the decades, with programs that the organization touts have attracted more than $475 million in investments to the area and placed more 20,000 young people and adults in jobs. For the past two years, it has held Wealth Building Tuesdays, workshops that provide one-on-one financial counseling for anyone who chooses to attend, and the organization has teamed up with banks to distribute information on improving financial health.

Reid Cramer, director of the Asset Building Program at the New America Foundation, a Washington think tank, agreed that Bedford Stuyvesant Restoration Corporation is sufficiently qualified to assume a role as a city-sponsored financial counselor: “I would say their legal history is irrelevant because I think it’s a separate issue – how employees are given information and benefits is separate from the programmatic side of executing a contract and delivering information and services to clientele.”

Noting that Restoration is one of the oldest community development corporations in the nation – “They have a storied history with an important role in developing and stabilizing that Brooklyn community and they continue to do good work” – Cramer added that “organizations can have long histories and go through rough patches. Hopefully their legal troubles are behind them and they’ve learned some lessons.”

He also lauded the Bloomberg administration initiative’s approach of using not-for-profits to run the Financial Empowerment Centers, which, he suggested, “ensures that incentives to provide information and effective advice truly beneficial to people are in the right place.”

The Department of Consumer Affairs has yet to officially award the contracts to the five vendors; finalized versions are expected in early January. In the meantime Restoration is preparing for the expansion of its counseling work around the city. “We’ve been a partner with DCA under the Financial Empowerment Center initiative since the beginning with a successful history in the pilot program and are very pleased to be awarded this latest contract,” said Capers. “We’re uniquely and perfectly qualified for this.”


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