One Stop Capital Flop 

You'd think the loss of six million dollars would teach Oakland to stop making ill-advised business loans. You'd think.

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His timing was just right. The Clinton administration had recently approved the federal government's most ambitious attempt to revitalize America's urban wastelands. In all, the administration approved $3.5 billion in grants and loans, and sent checks straight to the cities in need. Through the US Department of Housing and Urban Development, Oakland picked up a check for $50 million, of which $22 million was slated for what is now called the One Stop Capital Shop. Oakland's poor neighborhoods were in dire need of such a loan program. After more than a decade of trickle-down economics that failed to trickle down west of the I-580 corridor, many areas were commercial ghost towns where the bulk of the commerce consisted of check-cashing, liquor-store transactions, and corner drug deals.

The money came with high expectations. According to a HUD memo, it was to be dispersed within three Economic Enhancement Communities -- West Oakland, East Oakland, and Fruitvale/San Antonio -- by early 1996, and "show tangible results by fall 1996." The administration had a good reason to see this money move: For every $35,000 dispersed, the administration required the creation of one new job. The formula allowed Bill Clinton to make stump speeches that included the number of jobs he'd "created." In Oakland, $50 million was expected to buy 1,429 new jobs.

The mood for renewal was optimistic. "There was a lot of excitement in the community," says Elihu Harris. "When they announced this money was coming, a lot of people started thinking of all the ways they could spend it. But there was also a lot of confusion, too." For one, the city wasn't set up to handle loan requests, perform project analyses, or collect payments, much less within the time frame the feds wanted.

Brooks-Hamilton was nonetheless willing to try his luck with the bureaucracy. He began his quest in August 1995, following the few rules then in place: He prepared a business plan, filled out a loan application, and met with Art Scott, a senior analyst at the city's Community and Economic Development Agency (CEDA). Brooks-Hamilton says he started out asking for $1 million (a city audit conducted later claims he asked for $500,000). But a few weeks later, staffers told the businessman he'd have a better chance at $150,000. It was far less than the applicant felt he needed, but still, he figured, it was something.

Within two weeks, his application had made it past the city's Loan Review Committee and the Economic Enhancement Communities Policy Board. The business also gained the support of the Black Chamber of Commerce and then-CEDA boss Jim Reinhardt.

At the time, citizens hadn't yet passed Measure H, which would have called for the city auditor to review such a loan, so when Brooks-Hamilton's case reached the city council in October 1995, there was little to stop it. The loan committee had shown no hesitation in approving his loan, a fact Brooks-Hamilton still offers as evidence that his product was a can't-miss. In fact, the city analysts who helped create the U-Wheel-It business plan estimated that Brooks-Hamilton and Edmonds would gross $6 million over the course of three years, selling thousands of carts per year.

But on the day Mayor Harris showed up with his fake check, it was just that: fake. Brooks-Hamilton didn't receive the real cash until three months later. And when the check finally came, it was made out to him, not the company. The bank, he claims, wouldn't let him sign the check over to his fledgling company's account. Weary that it'd take even more time to get things straightened out, Brooks-Hamilton dumped the money into his personal account. It was a move that later raised some eyebrows.

Brooks-Hamilton ignored a city consultant's suggestion that he lease a space and rent machines on the cheap. Instead, he says, he used the $150,000 loan to purchase the warehouse on 27th Street, and invested $100,000 in heavy equipment, including a $50,000 state-of-the-art tube-bender. He would again raise eyebrows by writing the deed to the building in his own name, not the company's, although nobody from the city noticed the detail immediately.

For a short time, it seemed the U-Wheel-It manufacturers were on a roll. Brooks-Hamilton sold five hundred units to a local Home Depot, his biggest contract. Not long afterward he flew to Florida and appeared on QVC at 3 a.m., he says, selling three hundred units in thirty minutes at $39.99 a pop. But that was the apex of fame for the U-Wheel-It. The company was already late in paying its bills and had fallen behind on payroll for the five employees who manufactured the carts full-time. (While his loan agreement called for creation of fourteen jobs, the company never hired even half that many.) The relationship between the founding partners, furthermore, was starting to grow tense.

In July 1996, after returning from Florida, Brooks-Hamilton successfully lobbied the city for another $250,000. SCORE, a nonprofit consulting group hired by the city, had recently audited the business and given it decent marks. "Pros include Brooks-Hamilton's enthusiasm," said the group's report. Cons included the company's cash crisis and lack of a marketing plan. The council granted Brooks-Hamilton his money, and this time the check was deposited to the proper account.

But money couldn't save the U-Wheel-It. By late 1997, Edmonds was homesick and worn out from commuting. He fought with Brooks-Hamilton so often that he stopped staying at his partner's home while in town and instead slept in the warehouse. Meanwhile, Brooks-Hamilton's stress and time commitment to the company were trashing his relationship with his wife and kids. After two years of selling, the company had moved only a thousand units. He needed more help.

The following spring, the businessman again approached the city, this time asking for $500,000 to market his product. By now, CEDA's loan committee knew that Three J's & B.H. Enterprises was sinking in debt, and that U-Wheel-Its weren't exactly rolling across California's beaches. The company had reported operating losses of $151,000, and hadn't created the jobs called for by federal guidelines.

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