The head of Rochester’s nonprofit economic development arm has resigned, and half the organization’s staff has been cut.
All operations will continue, officials said, while an outside contractor and former city official is brought in to supervise the office and review all contracts and operations.
There is limited detail, though, about what prompted the exodus.
A top city official said only that the Rochester Economic Development Corp. board of directors “identified concerns regarding (a) gap between revenue and expenses.”
REDCO has been losing money, records show. And seven banks once involved in a revolving loan fund all pulled out earlier this year. But no minutes of REDCO board meetings have been posted since July.
The board has tapped Lomax Campbell and his Third Eye Network to “perform a full review of contracts and operations to ensure the long-term success of REDCO,” board chairman Dana Miller said in a statement. Miller is the city’s neighborhood and business development commissioner. Campbell used to lead the city’s now-defunct Office of Community Wealth Building under former Mayor Lovely Warren.
He took the reins on Oct. 2.
Campbell sees this as a “turn-around management project,” assessing the model, the resource structure and going back to stakeholders and collaborators alike to see what works and what doesn’t.
His contract is for one year, he said, with optional renewals.
It was under Warren that REDCO found new life.
The organization formed in 1983, and was integral in the development of Tops Plaza on Upper Falls Boulevard. In the years since it largely dealt in small grants and low-interest loans. It never operated with its own payroll or management, and officials say it fell short in reaching women- and minority-owned businesses.
Warren wanted to expand its influence — and reach — to something on par with Monroe County’s Industrial Development Agency, or COMIDA. She brought Bayé Muhammad over from her cabinet to serve as CEO.
"We need to step up our game, or else we are going to be left behind," Warren said at the time.
The vision for a new REDCO mirrored the former Brick City Development Corp. (now the Newark Community Economic Development Corp.) in New Jersey. But key elements, including contracts with the city for financing, and a local university for instruction of entrepreneurs, never happened. And a push to hire administrative staff was not matched by revenue.
“My hope is to go back to the beginning, and see what needed to be put in place with that spin-out,” Campbell said.
REDCO was put in charge of a $13 million Revitalize Rochester revolving loan fund, seeded with money and low-interest loans from the state and local banks.
Those banks (Canandaigua, Citizens, Five Star, Genesee Regional, Keybank, M&T, and Upstate ) agreed to reserve $500,000 each to help with loans. But Miller says REDCO came to realize that “loans with traditional bank underwriting standards did not work well with start-up businesses,” which instead were primarily interested in grants.
“As a result, the banks were not able to participate in deals,” Miller said in an email response to questions. “They requested that we work with them to structure a new kind of lending arrangement and we will do that going forward.”
Muhammad resigned in August, effective Sept. 30. And Miller says the board severed ties on Sept. 29 with the group’s chief operating officer, vice president of business development and marketing communications manager.
“I really felt I’d gone as far as I can go with the organization,” Muhammad said in an interview, describing this as “a good time for new leadership.”
He did not leave for a different job but is taking time off.
