A Point of View

Gwendolyn Grant
President & CEO
Urban League of Greater Kansas City
May 23, 2008

The Unfortunate Plight of the Black Economic Union

The Black Economic Union of Kansas City (BEU) is the oldest Community Development Corporation (CDC) in Kansas City. It has developed over one million units of housing and over one million square feet of commercial space in the urban core. It is an important community based organization.

Like most CDC’s in the African American community, it has fallen upon hard times.  Its problems coincide with the travails of the City of KCMO’s Housing Department.  City Manager Wayne Cauthen recklessly dismantled the Housing Department and myopically initiated a lawsuit that placed control of many of the City’s assets and resources for the development of affordable housing into the hands of a federal receiver.  These acts adversely affected black CDC’s.

As a result of the City Manager’s destructive lawsuit, BEU recently lost one of its major assets – the office complex at 18th and Paseo, which houses the Full Employment Council (FEC) and the Urban League of Greater Kansas City (ULKC) – in foreclosure.

 The Land Clearance for Redevelopment Activity (LCRA), acting as a conduit in a scheme devised by FEC, using money from corporate benefactors, purchased the complex valued at $3.1 million for a mere $1.4 million.

 FEC, a government funded job training and placement agency is now the de facto owner of the complex. Clyde McQueen, president and chief executive officer of FEC is an African American but FEC distinctly is not a black community based organization in the vein of BEU, Black United Front, Freedom, Inc., Southern Christian Leadership Conference, and the Urban League.

How did a venerable black organization lose a valuable asset?

According to the receiver, BEU was delinquent for approximately $300,000 on a one million dollar loan collateralized by the 18th & Paseo office complex. However, BEU has a subordination agreement relieving it of any obligation to pay the loan so long as certain conditions exist.

Ignoring the subordination agreement and pleas from various African American civic leaders, the receiver demanded payment.
BEU lacked the cash resources to pay the $300,000 demanded by the receiver. After exhausting many avenues BEU secured a six-month loan from the Downtown Minority Development Corporation (DMDC). The loan was contingent upon FEC and ULKC renewing their leases.

McQueen refused to renew the FEC lease. Upon hearing of his demurral, ULKC made arrangements to guarantee repayment of the loan.

The receiver refused to accept the payment. Unbeknownst to BEU and people working tirelessly to help a community-based African American organization retain ownership of a major asset, McQueen was maneuvering to acquire the property for FEC. He secured an interest-free $1.5 million loan and made arrangements for LCRA to purchase the property on the courthouse steps.

When BEU learned of McQueen’s machinations, it was too late to keep ownership of the property with an African American organization.

While there are many villains in this saga, there are at least two heroes. Great Plains Energy altruistically provided the interest-free loan that probably kept the complex out of the hands of speculators who could have uprooted FEC and ULKC.  DMDC should be commended for making a loan in an 11th hour effort to avert the foreclosure.