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Marta Mossburg: Errors are inevitable with no transparency

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Marta Mossburg

A letter to the editor Monday by Maryland Secretary of Housing and Community Development Raymond Skinner said that I was wrong about state loans noted in a previous column and presented "highly inflammatory and grossly untrue charges."

I apologize for the errors and for any harm done to the people who owned the properties mentioned in the Sept. 15 piece, "ACORN isn't the only organization fleecing taxpayers."

But I do not apologize for investigating the loans DHCD extends to businesses through its Neighborhood BusinessWorks program. And I will continue to research the identities of the lucky few to receive subsidized loans at a time when taxpayers can least afford to offer them. As even Skinner noted, they cost money in a year when the state will have to cut more than $1 billion from its operations to balance the budget.

In the letter he wrote, "the Neighborhood BusinessWorks program has made $56 million in loans to 230 small businesses since 1996, received $48 million back in program income so far, and has another $16.5 million in outstanding loans that yielded us more than $3 million just last year."

Only in government could a program that loses millions be described as a "sound program that delivers impressively on its revitalization mission and also ably fulfills its obligation to be a good steward of financial resources." According to DHCD, $2.6 million of the $12 million loaned to businesses since 2005 are delinquent.

Left out of Skinner's description of program success is how many jobs have been created from agency loans and how much those businesses have contributed in taxes. Would those figures paint the same rosy picture?

And if the loans are so worthy, why won't the department give me the names of its recipients? I have asked numerous times for information on the names of the owners and businesses receiving loans and their loan status.

Is the agency afraid political donors or relatives of elected officials may show up on the list? Or does the agency fear more loan "modifications" will become public?

Readers may remember the story of the now-defunct Senator Theatre in Baltimore City, which the DHCD bailed out with another loan after the owner defaulted on the first, putting state taxpayers back over $600,000.

In response to my queries, the agency gave me at best partial information that is often so vague as to be meaningless. For example, one of the loan recipients noted as having received $475,000 is identified as "Jason's."

No information about the owner, address, phone number, type of business, date of incorporation or status of the loan was included. The rest of the data offered similarly incomplete information, leaving me little to work with to match loan dates with businesses.

The lack of transparency is particularly galling coming from Gov. Martin O'Malley's administration, which publicly proclaims open government as one of its chief goals. It's hard to take seriously the claim if it is practiced only when it is convenient.

And if the program is so successful, wouldn't the agency highlight its work in every press release and media opportunity possible and pester reporters to write about their projects?

Instead, the agency seeks to hide from view the fact that their loan standards, which include dispensing money to new restaurants and other new ventures that would never get money from a bank, belie sound judgment.

Again, I apologize for my mistakes. And if the state provides full disclosure on its loans, I will duly note those which deserve praise. In the interest of consistency, DHCD could create a LoanStat along the lines of StateStat and BayStat, designed to monitor government performance. Until then, I will hold the state accountable to standards to which it talks about but frequently does not practice, leading to millions in losses when every item on the budget is up for scrutiny.

Examiner Columnist Marta Mossburg is a senior fellow with the Maryland Public Policy Institute and lives in Baltimore.

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