New Orleans - Mayor Nagin presented Zulu's King with a "mock-up" of an $800,000 check on a stage along the riverfront on Lundi Gras.
But City Hall said Friday that the Mardi Gras Krewe has not received any of the funds yet.
Nagin spokeswoman Ceeon Quiett tells FOX 8 News that no final contract has been signed between the city and Zulu and that it still must be determined whether the money is awarded in the form of a grant or a loan.
As part of its partnership with 'The Lens,' FOX 8 News has been looking into the matter.
A letter Nagin sent to Zulu dated February 15, 2010 informed the organization that even though it had been awarded the money, receipt of it may be contingent upon final approval by the New Orleans City Council and satisfactory resolution of any Office of Community Development findings of non-compliance with programmatic and fiscal requirements relative to any prior funding. Further the letter said that the city reserves the right to negotiate any provisions of the request and modify the amount of the award, if necessary.
Zulu in applying for the money said it would help the organization build a nearly 7,000 square foot facility. Zulu was one of several organizations to apply for the city's Urban Development Action Grant or UDAG funds. It's a program that focuses on creating economic development projects which create jobs and increases the tax base.
According to Zulu's application to the city, the project would create 10 permanent jobs and over 200 construction jobs in the city.
Zulu has '501 c-7 tax exempt status. 'The Lens' obtained Zulu's 990 tax exempt form for April 2007 through March 2008 showing gross receipts of $2.9 million.
The IRS spells out that in general, a club should be supported by membership fees, dues and assessments. And that an organization with such tax exempt status may receive up to 35-percent of its gross receipts, including investment income, from sources outside of its membership without losing the tax exemption and if an organization has non-member income that exceeds these limits, all the facts and circumstances will be considered as the IRS determines whether the club can continue to qualify for the exemption. If Zulu accepts the $800,000 from the city it could possibly put the group's exemption in jeopardy.
Councilwoman Stacy Head told FOX 8 News that if it is truly a UDAG loan that Zulu ends of receiving from the Nagin administration the City Council would have to approve the money first. And according to Council Budget Chairwoman Cynthia Hedge-Morrell's office, the Council's Chief of Staff has not received a request from the administration and so no action has been taken on the matter by the council.
FOX 8 News made numerous requests to Zulu officials on Friday for a comment but we were told that comment would not be made today and would come only after a thorough review of 'The Lens Report' has been accomplished. We also contacted the other companies that put in applications for the funds for comment, but were not successful.
