'Violated their trust:' Affordable housing advocates, developers denounce Mayor Cooper's cut to the Barnes Fund

Yihyun Jeong | The Tennessean

Show Caption Hide Caption Nashville's budget crisis: Here's what you need to know State Comptroller Justin Wilson issued a dire warning, saying he would take over the city's checkbook if changes weren't made.

Earlier this year then-At large Council member John Cooper made the "tortured" decision to exit Metro government by not seeking reelection or eyeing higher office in Nashville.

But along came former Mayor David Briley's flashy Under One Roof affordable housing plan and Cooper quickly switched gears.

His predecessor's "inadequate" plan, he said, became a top factor that spurred him to run for mayor himself. And in September, Cooper — who campaigned on putting affordable housing at the center of all things the city does — won the mayoral runoff in a landslide.

"We can do better, and as mayor, I will do better," Cooper wrote as part of his policy plans.

But on Tuesday, Cooper announced he is slashing nearly half of the city's annual funding it sends to the Barnes Fund for Affordable Housing, which offers city dollars to grant incentives to Nashville developers who pursue projects priced affordably.

Of the nearly $10 million the Metro Council — including Cooper while serving on council — approved for this year, Cooper said only $5 million will be awarded because of the "fiscal pressures" facing the city and highlighted by the state comptroller.

The city faces an estimated budget shortfall this year of $41.5 million, thanks to two deals that are not on track to happen. The budget relies on one-time money from a private parking deal and the sale of the city's downtown energy system.

Cooper said in a statement Tuesday his primary objective is to avoid widespread personnel changes and interruption of city services.

Though Cooper has already brokered a deal that will bring an additional $12.6 million this year to the city's general fund from the Music City Center to go toward filling the budget gap, the housing fund is the latest cut made to balance this year's budget.

While city leaders, stakeholders and affordable housing advocates say they understand the circumstances surrounding the budget Cooper inherited, many say trust has been broken and the mayor could have, and should have, made the decision with more input and transparency.

The move also goes against one of the key talking points Cooper made on the campaign trail, all the while understanding what budget plights lay ahead.

Cooper's policy platform, which was quickly deleted in its entirety from his website following his election victory, outlined his thoughts on the shortcomings of Briley's housing plan.

Nashville mayoral candidates state their affordable housing solutions Nashville mayoral candidates state their affordable housing solutions during a televised debate June 25 at Belmont University.

Briley's proposal, he said, to commit $350 million of city funds to the Metropolitan Development and Housing Authority and $150 million to the Barnes Fund over the next decade, was just a plan that was "all sound bite and no substance."

In particular, he called the Barnes Fund component a "reframing " of existing funding as Nashville already allocates $10 million per year to the fund. Even as Briley's plan envisioned increasing Metro's contribution by $5 million annually, Cooper pointed out that his budget "amazingly" did not include any new funds this year.

"The Barnes Fund has done great work, but the funding is too unpredictable from year to year," Cooper said. "The Barnes Fund needs a dependable source of funding and I will work with the community to create one."

But as of now, only half of expected funding this year will come through.

'We have violated their trust'

Cooper's announcement came as a blow to the Metro Housing Trust Fund Commission, which was only alerted of the funding cut just an hour ahead of its meeting Tuesday to approve this year's grant recipients.

"It was a shock," Commissioner Kaki Friskics-Warren told The Tennessean. "It was demoralizing for our nonprofit partners and others who have spent hours of work into this."

Friskics-Warren was reappointed to a new term on the commission Tuesday by the Metro Council.

The group awarded seven grants to fund 549 affordable housing units in Nashville through seven organizations: Our Place, Affordable Housing Resources, Habitat for Humanity Nashville, Woodbine, Westminster, Be a Helping Hand, and Living Development Concepts.

They had expected to award nine.

"The Barnes Fund is frequently that keystone that when it falls into place, all the other pieces fall into place," Friskics-Warren said, adding that nonprofits often rely on the city's funding to use as equity to secure private dollars to make their projects possible.

The housing fund, launched under former Mayor Karl Dean in 2013, has invested $37 million to date in affordable housing development and rehabilitation.

"We have violated their trust and that will take time to heal and gain back," Friskics-Warren said. "It also sends a message to them that affordable housing is not a priority."

"I think what's so devastating is that we had so many viable proposals that where shovel-ready projects," she said.

One such project was a plan to build 51 townhouses in Madison by Forbes Plunkett Development in partnership with nonprofit New Level Community Development.

Developer Brandon Plunkett said he attended Tuesday's meeting fully expecting the award when a representative of Cooper's office stood up and said she was there "under tough circumstances" and delivered the bad news.

'This hurt,' one developer says

"This hurt," Plunkett told The Tennessean.

"I think with the effort and risk that people are going to take on with the applications in future, they they either won't do it or will find other ways outside the Barnes Fund," Plunkett said.

Though Cooper said there could potentially be another round of funding in the spring, Plunkett said it would be too late.

"That's not how development works," he said. "It's not an unlimited time frame."

Initially set to list the townhomes about 40% less than the median home sale in Davidson County, the group will now go market rate, Plunkett said.

He said a lesson was learned this week that even if Metro Council approves funding, it can't be relied on.

"If it can be changed like it was (Tuesday), it can be changed anytime," he said.

The Barnes Fund was approved as part of the budget council members adopted earlier this year. Former Metro Finance Director Talia Lomax-O'dneal during budget talks said "discretionary" items — such as the Barnes Fund or appropriations for nonprofits — would be what the city could look to cut first to fill any possible budget gap if it did not have the parking deal.

The Metro Charter gives the city's finance director authority to impound funding. But the awards announced Tuesday will have to be approved by Metro Council.

"I understand the budget issue. I'm just surprised that this was what was chosen to be cut first," Plunkett said. "Even if you're going to make cuts, there's certainty a more respectful way to do it."

"Affordable housing advocates work harder than anybody. They are 100% in on what they do. I think they were owed more consideration," he said.

Susie Ries, co-chair of NOAH’s Affordable Housing task force, said the group was "terribly disappointed" by the funding cut.

"Given the city’s current dire financial situation, the cut is not surprising but it is maddening," Ries said. "Nashville has developed a lengthy history of luring businesses here with financial incentives without offering anything but lip service regarding its concerns for the marginalized."

Cooper, she said, campaigned on a promise to make affordable housing a priority and manage the growth and its ballooning cost.

"There’s got to be a better way to grow this city," she said.

Friskics-Warren said while the administration elected not to engage with the community or the commission, the group is "absolutely ready to work" with Cooper.

As for Plunkett, he's moving on.

"I don't know if the Barnes route would be something we would ever take on again," he said.

Yihyun Jeong covers politics in Nashville for USA TODAY NETWORK - TENNESSEE. Reach her at yjeong@tennessean.com and follow her on Twitter @yihyun_jeong.