A nonprofit affiliate of the Boston Redevelopment Authority is giving the Bay State Banner more time to pay off a $200,000 delinquent loan originally arranged by Mayor Thomas Menino two years ago.
The loan, plus 9 percent interest, was due on August 5 but the newspaper has yet to make any payments. The loan is being extended through at least next May, with a requirement that the paper start making monthly interest payments on December 1. A payment schedule for the original $200,000 loan and remaining interest would be arranged sometime next year.
The Banner, a weekly newspaper that caters to Boston’s African-American community, shut down in July 2009 amid an abrupt falloff in advertising revenue. It resumed publishing a month later after Menino arranged a $200,000, two-year loan through the Boston Local Development Corp. The BLDC, whose board approved the extension on Wednesday morning, is essentially a bank staffed by Boston Redevelopment Authority employees who oversee a revolving loan fund that was staked originally with federal grant money.
The loan extension for the Banner didn’t appear to be unusual. Bill Nickerson, a senior financial manager at the BRA, briefed board members of the Boston Local Development Corp. on more than a dozen loans to businesses that were delinquent for one reason or another. Nickerson said the BLDC is a patient investor that nevertheless has fewer losses than most banks even though it tends to make riskier loans.
“We play hard ball if we need to, but we’d rather not,” Nickerson said.
Nickerson said the Banner company appeared to be making progress toward a return to profitability. He said the Banner newspaper was unlikely to be a profit generator, but Exhale, a relatively new quarterly magazine published by the Banner, had the potential to attract new investors and help support the newspaper’s operations.
Exhale, a general interest women’s magazine, saw its revenue grow from $35,000 in 2010 to $122,000 in 2011, Nickerson said. The magazine is adding two new employees and selling tickets costing $100 to $150 to an event featuring local chefs later this month.
Melvin Miller, the publisher of the Banner, said he needed more time, given the tough economy, to turn the business around. “There is very little risk on this loan,” he said, noting it is fully collateralized by property he owns. “The real problem is whether [the BRA] want[s] to close us down prematurely.”
According to a business plan developed for the Banner in January 2010, the newspaper ran a $217,000 deficit in fiscal 2009 but was expected to narrow that loss to $27,000 in 2010 and then turn a profit of $125,000 in 2011. Nickerson said the Banner actually incurred a loss of $26,092 in 2011.
Miller reacted angrily when asked about the loss, saying publishing that information would make it harder to return the business to profitability. He said CommonWealth wouldn’t even be writing a story about his loan if his company made thumb tacks. “You’re going to pick on the black press,” he said.
The city’s loan to the Banner stirred controversy because Menino was running for reelection at the time. The Banner in April 2009 suggested in an editorial that it was time for Menino to step down. After the loan was made, the Banner made no endorsement in the preliminary or general election. Miller said he never intended to endorse in the preliminary and didn’t endorse in the general after black voters backed Menino in the preliminary election.
The Banner has run relatively few stories or editorials about Menino since. Miller defended the paper’s objectivity in an August 2010 editorial.
The Boston Local Development Corp. is also pressing Miller, who is in his 70s, to attract other investors and work out a plan of succession in case his health deteriorates or he decides to retire. Earlier efforts to attract investors apparently failed and Miller said he is pursuing other options, declining to be specific. He said many members of his family are currently working at the newspaper for meager salaries, including his wife, his sister, and his son.
