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At a city council hearing this morning, local nonprofits that depend on city contracts will get a chance to gripe about the payment delays they routinely suffer–and hear a potential solution for their distress.

As a recent report from the watchdog group City Project documents, small nonprofits that deliver services like afterschool programs, child welfare services or tenant counseling must endure long waits to get paid by the city. The average delay, their survey of 77 groups found, is four months. Because these small organizations usually don’t have reserves, they wind up taking out loans in order to keep the staff paid and keep the work going. And by city contracting rules, those nonprofits don’t get reimbursed for the interest they pay.

“It’s ridiculous that we have to wait so long,” said Jennifer Flynn, executive director of the New York City AIDS Housing Network. “The people that really suffer are the ones who the money is intended to serve.”

That could change, under a rule revision that city Comptroller Alan Hevesi is now drafting and circulating for review. That change, or a similar one introduced in the City Council, would direct the city to pay interest on bridge loans–as long as the contractor in question wasn’t to blame for the delays.

The City Council has held hearings on the subject before, but many organizations were unwilling to testify about the delays for fear they would lose their contracts, said
Councilmember Kathryn Freed, who chairs the contracts committee. “There are still a lot of problems with delays in payments for not-for-profits,” she said.

The committee will also be voting on a bill that requires all contractors to abide by the city’s human rights law, and establishes a mechanism to disbar contractors that break the law. The hearing is scheduled for 10 a.m. in the Council Chambers of City Hall.

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