Hamilton: ‘We have been complaining for some time, but no one wants to listen.’
Woods: Neighborhood nonprofits ‘are finding their federal funds frozen if they don’t hire City Construction.’
A D V E R T I S E M E N T
A D V E R T I S E M E N T
The city housing agency might not pass inspection.
By BETTY BRINK
On a treeless stretch of rolling land just north of the Riverside Drive and Berry Street intersection, four pastel-painted two-story model homes have risen from the proverbial ashes of one of the most blighted chunks of real estate in the city — 42 acres formerly filled with hundreds of units of abandoned, boarded-up, and deteriorating apartments whose only permanent occupants were rats. If all goes as the city hopes, 230 homes priced from $86,000 to $118,000 will soon cover those acres, turning a long-depressed area into a vibrant community of affordable housing, small businesses, and retail shopping.
The Sierra Vista project, a public-private partnership of the city, real estate developer Michael Mallick, and one of Fort Worth’s oldest local builders, History Maker Homes, officially opened with balloons, music, fried chicken, and congratulatory speeches. Visitors toured the models, and some decided to buy, adding to the total of 46 homes that were already under contract. Across the street, the crumbling buildings of a former Montgomery Ward-anchored shopping mall have been purchased by Mallick, and will soon be replaced by shops and restaurants.
“It is the fastest-selling new development in Fort Worth,” said Assistant City Manager Dale Fisseler, the former head of the city water department who now oversees the city housing department. “I’ve never been more optimistic about revitalizing this city’s poor neighborhoods,” he said.
“A new day is dawning for the East Side. And it’s about time. We have been forgotten for too long,” said Kathleen Hicks, the area’s tenacious city council representative and Fort Worth’s mayor pro tem, who got the lion’s share of the credit that day. Hicks is the first council member from that district to make economic revitalization of the most depressed areas of the East Side a visible reality — and to get the council and the mayor on her bandwagon. Her next big project, scheduled to take off this summer, is the even more ambitious 200-acre Masonic Home development in Poly, another economically depressed area a few miles east of Sierra Vista. It too will be developed by Mallick. All of it is happening with the help of a tax-increment financing district that Hicks talked the council into approving in the area last year. TIFs were invented to encourage development in blighted neighborhoods, but this is the first in Fort Worth east of I-35.
But even as Sierra Vista is being touted as the jewel in the crown of the city’s long-overdue efforts to restore livable and affordable housing in neglected neighborhoods, a growing chorus of voices — including community activists, a city councilman, a city council candidate, two ex-housing department whistleblowers, and another former employee — say that crown is being tarnished by a rogue housing department that operates by intimidation, favors a select few, is mismanaging millions of dollars of federal money, and is rife with “conflicts of interest, abuse of power, and collusion.”
“The department has abandoned its original purpose to provide housing in inner-city neighborhoods,” said John Cox, a senior planner who quit after 12 years with the city because of that change. “For reasons I am at a loss to explain, the folks at the top have undertaken a concerted effort to make those groups and organizations [that do low-income housing] fail.”
Several of the local nonprofit community housing groups claim that the department runs its own construction company in unfair competition with local contractors, strong-arms their groups to use the city company as their subcontractor, and cuts off their funding if they refuse. Another said the department makes the nonprofits jump through so many hoops that the completion of some houses get stalled for years, eating up funds and keeping the nonprofits from building more, thus defeating the purpose of the program. All said they feel the department is trying to shut them down — and Cox said those concerns are legitimate.
The nonprofits, known as Community Housing Development Organizations (CHDOs), use city-administered funds from the U.S. Department of Housing and Urban Development to build new homes and renovate old ones in targeted low-income neighborhoods. And their story is backed up by the whistleblowers, one a former licensed Realtor for the city and the other a former housing inspector, who say that the city-owned firm that was established in 2004, aptly named City Construction Co., causes more problems than it solves. The pair asked that their real names not be used because that might make it even harder for them to find new jobs — and could draw retaliation from the city.
Neighborhood nonprofits with proven records of competence “are finding their federal funds frozen if they don’t hire City Construction,” said Lonnie Woods, an attorney and a candidate for council District 5, who is representing two of the CHDOs.
“We have been complaining [to the mayor and council] for some time,” said Melinda Hamilton, head of one of the nonprofits, “but no one wants to listen.”
“The rules were always changing,” said B.C. McPherson, bishop of Mount Sinai Missionary Baptist Church and head of its CHDO.
Cox agreed. “We changed the procedures in midstream and then blamed the CHDOs for failing to follow them. It was completely unfair.”
Council member Donavan Wheatfall said the housing department is “riddled with gross conflicts of interest, the biggest being the [in-house] City Construction Company. ... If the CHDOs fail, the money stays in the department. More for the [city] construction company to use,” he said, “and less to go into the neighborhoods where it’s really needed.”
The other former workers and the nonprofit officials said that they have taken their allegations to Mayor Mike Moncrief, City Manager Charles Boswell, and other council members, to no avail. Now those folks might have to listen. Several of the five CHDOs have hired attorneys to try to force the city to release their funds.
In what may be an even greater crisis for the department, the two former employees who asked not to be named said that they are cooperating with HUD’s Office of Inspector General in an investigation of the Fort Worth Housing Finance Corp., an entity within the housing department under which City Construction is incorporated. A spokesperson for the OIG would not confirm or deny that an investigation is in progress. However, one of the ex-workers said that they carried four boxes of documents to the HUD regional office in Dallas last year, at the request of an OIG investigator. She said that she was told then that the OIG had been looking at the Fort Worth department since 2002.
The pair allege that millions of federal dollars have been squandered or lost due to mismanagement, incompetence, questionable deals made with shady or inept contractors, and substandard work.
All of the accusations are “completely baseless and false,” said housing director Jerome Walker. “There is no OIG investigation that I’m aware of. ... Are we perfect? No, but we administer our programs faithfully and honestly.” The city’s construction company is legal, he said, and no one is forced to use it. “It was established to build six affordable homes in Stop Six as a model for developers who are reluctant to build in that area,” he said. “And that is all that it did.” The charges, he said, come from disgruntled former employees and nonprofit leaders whose organizations lost their funds because they kept sloppy books and failed to meet HUD’s stringent guidelines on accounting for funds.
“CHDOs are free to use their own subcontractors,” Walker said. “We don’t strong-arm anyone.” If Hamilton felt pressured, he said, “It was a misunderstanding. [By suggesting City Construction as a contractor] we were simply offering her assistance and assurance that she was going to get fair treatment and get the work done right. It had nothing to do with her funds being frozen.”
Fisseler acknowledged that there are problems. “It is true that the perception [by the community development groups] was that if you didn’t use the City Construction Co. to build the project, you weren’t going to get a good deal,” he said. But, he added, “There is no evidence to substantiate those charges.”
The nonprofits, he said, lost their funding because they didn’t adhere strictly to HUD’s regulations. “We are sensitive to their complaints,” Fisseler said, to the degree that “the city recently hired a consultant to train the nonprofits in the HUD guidelines. ... We want to help them maneuver through the red tape.” The bottom line, he said, is that the buck stops at the housing department’s door. “If we don’t enforce the federal regulations, we stand to lose future federal funding, or pay back what we’ve already been given.” If that happens, he said, “Everyone loses.”
“Shoddy houses are being built in our part of town that just make the problems worse,” said Stop Six resident Lavonya Dillard. “They bring our neighborhood down, rip off the poor, and don’t solve the problems.” Dillard lives near a boarded-up brick house at 2912 Walker St. that has sat empty for four years. It was built as part of the city’s in-fill program by a CHDO.
The house is an eyesore on an otherwise trim block. The garage door hangs at an angle and will not close flush with the ground, a dirty blue rug hanging out from underneath it. The foundation is crumbling. All the windows and doors are covered with plywood that is loose enough to pry off.
According to county tax rolls, the house was completed in 2003 (before City Construction was on the scene), by NB Homes, a construction company owned by ex-pro football player Marcus Buckley, a former Eastern Hills High School star. NB Homes was awarded the no-bid contract by the housing department, on behalf of the Carter Metropolitan Community Development Corp. The house cost around $75,000 to build, said whistleblower Mary Jones (not her real name).
Attempts to locate Buckley were unsuccessful, and his company is no longer listed in the phone book or with the Texas Residential Construction Commission.
When the Walker Street house was completed, the Carter group refused to take it “because it was so poorly built,” said Jones. She, former housing inspector Jane Brown (not her real name), and neighbors said that the back of the house is sinking because the lot was not filled properly and the foundation was poured so badly that there is now a decided slope from the front door to the back of the 1,200-square-foot structure. “We were in that house a number of times with city inspectors,” Jones said.
Over the four years it has been boarded up, thieves have stripped the inside of “everything but the walls.” Dillard said, “They took everything — the doorknobs, the doors, the electrical outlets, the bathtub, mirrors, the kitchen countertops, and the cabinets.”
Walker acknowledged that vandalism had made the house uninhabitable, but denied that he knew anything about the structural problems. “I was never informed of any,” he said. The city’s responsibility to the house ended when it was turned over to the CHDO to sell, he said. “They never found a qualified buyer.”
Another neighbor, who asked that his name not be used, said that, when problems with the house were reported to the city, “No one would come out here and do jack. A lot of us are trying” to improve their neighborhood, he said, “but this just makes the whole street look bad.”
Most of the other houses on the block are small, neatly kept frame homes, with appraisals ranging from $28,000 to $67,000. But the house at 2912, although it is the only boarded-up, stripped bare, sinking, and vacant one on the block, is appraised at $92,800.
“The assistant minister of Carter Metropolitan Church, Keith Thomas, wanted to build houses for poor folks,” Jones said. The church in Far Southeast Fort Worth formed a nonprofit housing corporation and was approved for HUD funding. On the city tax rolls, the house is still owned by the church. But the church is no longer in the business of building homes for the poor, Jones said. “They were burned so badly that they quit,” she said. Calls to the minister were not returned.
The city, per HUD guidelines, was supposed to oversee the work and make sure that it was being done properly at every stage of the way, Jones said. “It is the city’s responsibility to keep the CHDOs whole,” she said. “Their mission is to make sure the houses being built with HUD money are solid and sound, that they will do what the HUD program requires — provide quality housing for the poor. ... The city failed to do that.”
However, in this case, the city may belatedly take some responsibility. Walker said the housing department and the church have reached an agreement for the city to repossess the house and rehabilitate it so that it can go back on the market. Funds for the rehab, he said, will come from the proceeds from another house the church built and sold several years ago. He said that he does not know where the builder is today. “We haven’t worked with NB Homes in a number of years.”
Unfortunately, the house at 2912 Walker St. wasn’t an exception, according to Jones and Brown. They allege that there are dozens like it scattered around the city, all built with federal funds. “This one,” Jones said, “was just one of the most egregious.” After 2004, many were built by City Construction.
The company was set up by Walker and his housing program manager, Donald Cager, a former HUD employee, in July 2004. Its assumed-name certificate filed with the county lists Walker as president and Cager as construction manager and states that the firm is a subsidiary of the Fort Worth Housing Finance Corporation. The FWHFC is another under-the-radar city entity set up in 1979 by the city council to provide below-market interest-rate mortgages for first-time, low-to-moderate-income homebuyers in inner-city neighborhoods. Since then, the nonprofit has morphed into a full-fledged real estate and construction company, buying and selling more than 300 lots and building more than 150 structures since 1996, according to Walker, who is its designated agent. The city council acts as its board of directors.
At 2617 May St. on the city’s old South Side, Ruby Walker said that she’s madder than hell at the housing department. “I’m living in a shoddy crackerbox that was built by the city three years ago, and it’s a cheap piece of crap,” said the 76-year-old widow, who shares the house with her granddaughter.
The contractor was City Construction Co., and Cager was one of the men she dealt with. Ruby Walker’s original house, a four-bedroom, two-bath frame that she had lived in for 30 years, burned over six years ago, and she found that because of her age and income, she qualified for a HUD-funded, city-built home. But the process took three years before construction even started, with a nightmare of lost paperwork and turnover in city personnel. She chose a three-bedroom, two-bath, and garage plan with aluminum siding “so I wouldn’t have any upkeep,” she said. What she got was a two-bedroom, one-bath, 1,200-square-foot home with pressed-wood siding and no garage. It is valued on the tax rolls at $137,000.
A tour of the home shows why she’s so angry. The concrete is cracked at regular intervals across the driveway, the foundation is cracked the whole length of one side of the house, and the siding is coming loose in a number of places. Inside, the house is small and cramped. One bedroom is so tiny that there’s barely room for twin beds. In the bathroom, there’s no caulking around the bottom of the tub, nor at the back of the sink. “We have to wipe the water up here all the time,” she said. The pressed-wood trim around the doors is coming loose. “They told me that it took $70,000 to build this place, but I don’t believe it. There’s not nearly that much money in here. I’ve been complaining since day one,” she said, “but they haven’t done nothing. They promise, but nobody ever shows up.
“What I don’t understand is how they think this kind of house improves this neighborhood. It’s not going to last 10 years,” she said. There are three such houses built by the city on her block, she said, “and they are all just as poorly built as mine.”
This year, Hicks is FWHFC president. She, Walker, and Fisseler are also named as the managers of City Construction. But, Hicks said, “I have no hands-on involvement with the company.”
However, she went on to say that she “has seen in-fill housing that concerns me.” Even Walker said that such housing over the years has been less than stellar.
“That is why we [the council] are pushing for better standards,” Hicks said. “We have a housing crisis in Fort Worth in our poorest neighborhoods. For too many years, it was ‘anything goes’ as far as housing for these folks. And the city turned a blind eye. We can’t accept that any longer. ... That’s why the new affordable housing task force that I sit on with [Northside councilman] Sal Espino has started to address this issue. ... but there is so much to do.”
She promised to look into the charges that have been leveled against City Construction. But she hopes that developments like Sierra Vista and Masonic Home “will mean that “there won’t be a need for a City Construction Co. ... Private developers will be stepping up to the plate.”
City Construction seems to be the common thread that runs through many of the complaints about the housing department.
“Because the housing department tries to intimidate the CHDOs into using the city’s construction company, economic recovery in some of our poorest neighborhoods is at a standstill,” attorney Woods said.
Yet, he said, the Fort Worth housing department has a powerful tool for jumpstarting such a recovery: the Community Housing Development Organizations program, established by Congress in 1994 and administered under HUD’s HOME program to create affordable housing for low-income households. Participating cities are required to set aside 15 percent of any HOME grants they receive to be invested in housing developed by CHDOs in poverty-ridden neighborhoods. Walker said Fort Worth sets aside more than the required minimum from the $3 million or so that his department receives annually from HOME funds.
Cox, the former planner, said that the only effective housing providers in poor neighborhoods have been the nonprofits. “But a few years ago, we changed our focus and our mission,” he said. “We didn’t provide the support [for the CHDOs] that was our mission. ... We brought them in under certain expectations as to how the process would work [under the HUD guidelines] and then we changed the procedures in midstream. ... Then we would blame the CHDOs for ‘not producing’ under the new regs that they didn’t understand and shut them down. We were setting them up to fail.”
Cox, who worked closely with the CHDOs since the program was first established in Fort Worth in 1993, resigned over those issues about a year ago. But long before that, he said, “I was cut out of the meetings. I was looked upon as a ‘pro-CHDO’ person.”
The former planner said he never understood the reason for the changed attitude. “The only one who can answer that is Jerome,” he said.
Cox was the planner on the first CHDO project in the city — the $1.2 million grant to Shirley Lewis of the Near Southeast Community Development Corporation to rehabilitate occupied homes. “It was highly successful,” he said. Lewis needed more funding to continue her ambition to revitalize the Near Southeast Side, one of the most neglected of the city’s inner-city neighborhoods. But she was often blocked in those efforts, he said, “and wound up feeling betrayed by the city. It just would not, or could not, provide the funds needed to restore that neighborhood.” Lewis told the Weekly that her group is one of those seeking legal help to free up money from the city, but declined further comment.
Besides Lewis and the groups Woods represents in Carver Heights and Stop Six, the attorney said that two other housing groups, in Como and Poly, have hired lawyers for the same purpose. Officials of those groups did not return calls from the Weekly seeking comment.
Hamilton, of Carver Heights East Redevelopment Corp., and Kenneth Williams, pastor of the Spirit of Prayer church that sponsors the SOP Community Economic Development Corp., said their funds were frozen about six months ago when both refused to use City Construction as the subcontractor for their redevelopment projects. Their neighborhoods are in the far Southeast (Carver) and far south areas of Fort Worth.
It is not illegal for the city to have its own in-house construction company, HUD spokesperson Patricia Campbell said, for tasks such as completing jobs that might not otherwise be finished. But under HUD regulations, she said, the city can’t dictate which subcontractors the nonprofits must use. “A CHDO can use whomever they want as long as they are qualified ... and the city determines the costs are reasonable,” she said. If the city allows the in-house company to act as a subcontractor, she said, it must adhere to the same strict HUD regulations that are required of private contractors — submitting bids, doing cost analyses, and meeting timelines.
However, Jones and Brown said City Construction worked on HUD-financed jobs that were not put out for bids. And Hamilton claims that she was pressured to use City Construction — without competitive bidding — on a new home project that was ultimately quashed by the housing department when she refused.
“If the CHDOs are having any kind of problems, HUD should be notified,” Campbell said.
Hamilton said she and Williams have proven track records as builders. Hamilton had successfully rehabilitated 50 homes in Carver Heights, all now occupied, and had money left over from her initial $1.2 million HUD grant received in 2003. “At every stage of these developments, we must keep good records, account for every dime.” Hamilton said — and insisted she did just that. But once the renovations were done and she had been OK’d to start a new-home project in the same area, her funds were suddenly frozen.
Hamilton is a former UPS employee who grew up in Fort Worth. After a tornado hit her neighborhood in 2002, Hamilton, a community and political activist, won a HUD-funded grant to rehabilitate the damaged houses, many of them owned by elderly low-income citizens. Carver Heights East Redevelopment Corp. was born. “I have a drive, a passion, to revitalize this area,” she said.
The $1.2 million grant, administered through the housing department, allowed her to renovate 50 1950s-vintage small brick and frame homes. She used her own subcontractors and came in under budget.
The rehabilitation seems to have revitalized the whole neighborhood. Lawns are neatly mowed, other houses show signs of new paint, and flower beds are filled with bright blooms. “This is the kind of ‘comeback’ these HUD programs are supposed to be promoting,” Woods said.
Hamilton said the city praised her work, and she applied for a second grant to build new houses on an 11-acre tract near the older addition. No problem, she said she was told by Walker. But by that time the City Construction Company was in existence, and she was dealing with Cager, the company’s manager.
“When he gave me the approved plans, I was stunned to see that the City Construction Co. was listed as the subcontractor for the whole development,” Hamilton said. She had already lined up another subcontractor and said she told Cager that she wasn’t going to use City Construction. Besides, she said, she was angered that neither he nor Walker had consulted her on the matter.
That’s when everything went sour, she said. Cager became angry, she said: “He inferred in so many words that if I did not use his company, I might have trouble with the funding. ... I felt the threat, and I reported it to Jerome.” He told her not to worry, she said, that he would take care of it.
The next thing she knew, her funds were frozen, and the new development was stalled.
Cager did not return calls seeking comment for this story. Walker said that no one had ever been pressured to use the construction company. Hamilton’s funds were frozen, he said, because of problems with her paperwork and a lack of available funding. “The project was just not found to be economically feasible,” he said.
Hamilton also reported Cager’s behavior and her subsequent loss of funding to Moncrief and Wheatfall, she said. Moncrief did not respond to requests for comment from the Weekly.
“The housing department’s trying to shut me down, but I’m not giving up,” Hamilton said. She has taken a second job to keep her nonprofit operating until HUD funds are released or she can find other funding sources.
Williams had completed six new homes in the south end of Stop Six and found buyers for all of them. When the last house was sold, however, the city froze his funds and never paid him the balance owed him from his account.
The attorney said that when the city froze SOP’s funds, the organization had to close its doors. Curiously, Williams’ nonprofit corporation is still listed on the city’s web site as a qualified CHDO. There are only four such nonprofits named by the housing department, and none of the other CHDOs in conflict with the city is listed.
Directors of two groups named on the web site, Mental Health Housing Development Corp., and United Riverside Rebuilding Corp., said they had not been pressured to use City Construction. MHHDC’s Bonnie Siddons, whose group builds low-income apartments for people with mental deficiencies, praised the department staff as “very good.” Pay was slow, but they did get their money, she said.
Kelly Allen-Gray who heads up United Riverside, has built 22 houses since 2001. “We’ve had a pretty positive relationship,” with the housing department,” she said, “but everyone has a different experience.”
Williams, a minister who also ran a construction company that employed some of his parishioners, is out of the state and was unavailable to comment. But Woods said Williams was owed $170,000 when his last house was sold. And that is when his funds were suddenly frozen for “poor paperwork,” Woods said. Williams had to pay the balance he owed to his subcontractors out of his own pocket. ... It ruined him,” Woods said.
SOP also was pressured by Cager to use City Construction after its Stop Six houses were under way, Woods said. But Williams already had his subcontractors lined up, and he refused. When his houses were all done, he found that the city wouldn’t release the proceeds.
Woods said Williams and Hamilton were both given what he considers fabricated reasons for the freezing of their funds. “They were petty. Technical and minor violations of HUD regulations. None had to do with a misuse of the funds.” Both completed their projects on time and met all of the HUD guidelines at every step of the process, he said.
Jones said that Hamilton was one of the best. “She followed every reg and did good work.” Williams, she said, did have problems with the HUD red tape. “But he tried very hard, finished the houses, and didn’t get any help from the department.”
Hamilton said that “Folks downtown don’t know what we need. ... And they won’t come out here to see the neighborhoods or listen to us. If anything, the city should be doing all it can to help us do our jobs.”
Then why isn’t that happening?
Money, Woods and Hamilton both say.
“There are millions of dollars in federal funds at stake here,” Woods said, “and the housing department now has a construction company that can profit from that money. ... If they can’t get it by forcing the nonprofits to hire the company, then they get it by shutting them down.”
Woods explained how the process works for local nonprofit housing organizations looking for HUD funding. Williams got around half a million dollars to start his six-house building project, with the first $50,000 going to the nonprofit to set up its infrastructure. But none of the money wound up in the nonprofit’s bank account. It stayed with the city, he said, which doled it out in increments for builders to hire subcontractors, pay for materials, and the like. Williams had to complete two houses at each phase of the development and get them sold. As each phase was completed, he could make a draw for the next two houses.
The proceeds from the sales of the first four houses went back to the city’s HOME fund. But when the last two houses were built, Woods said, the proceeds were supposed to go into his organization to gain what HUD calls “capacity” for the nonprofit. The reasoning, Woods and Hamilton said, is to give the nonprofits a leg up toward becoming self-sustaining. “HUD wants these groups to set up an economic base in the community, to stay in the community, become a source of jobs and continue the rebuilding of the neighborhoods. And to set an example that other developers will follow,” Woods said.
According to the act that established CHDOs, any money drawn from a city’s HOME trust fund and not used must be deposited right back into the trust fund. However, those funds can be used only for other HOME low-income housing projects. Now the funds owed to Williams and the others, Woods said, can be redistributed to other CHDOs “who may be more willing to use the city’s construction company.”
HUD regulations are not just stringent for the grantees, said Woods. “Those regs are a two-way street. The city is required by HUD to provide training for CHDOs before they get their contracts as well as ongoing assistance and periodic checkups during the construction process. ... My clients have never been given such training, and there were no checkups. This is a mockery of the law. If the housing department is going to use the most obscure technicalities to shut down these nonprofits, doesn’t it seem more than reasonable that it should be adhering strictly to the rules itself?”
As to Fisseler’s statement that the city has hired consultants to train the CHDO directors, Hamilton said that she’s not been called. “I would love to go to a training session, but to date, there have been none since I applied for my first funds.”
“Jerome can deny that the OIG is investigating all he wants to,” Jones said, “but a year ago, someone from the OIG came to my office asking for certain documents and said they were ‘looking at the Fort Worth Housing Finance Corp.’” Jones said she then delivered four boxes of documents to the HUD regional office in Dallas.
Their allegations deal with the City Construction Company, as well as a host of other irregularities the two women said they witnessed during their four years in the housing department. “Donald Cager created the company while I was there,” Jones said. “It seemed to be operating as an independent company. But it was getting jobs that were not being bid out to private contractors as the law requires.” City Construction, they charge, was building in-fill housing and new housing with HUD funds and doing shoddy work. Both women claim that they saw dozens of charges made to Walker’s and Cager’s city credit cards that were for building materials purchased at Home Depot for the city construction company.
Brown inspected many of the homes and said, “They were substandard.”
Two years ago, Brown accompanied a HUD auditor on an inspection of 83 homes that had been built or rehabilitated with HUD funds and sold to first-time homebuyers under a program that provides low-interest loans for down payment and closing costs. Those loans are forgiven if the buyer stays in the home for five years. The audit found hundreds of deficiencies, she said — deficiencies that the housing department was forced to go back and correct at a cost of thousands of taxpayer dollars.
Brown said she also found out that money from another federal program was being diverted improperly to City Construction. She was working in the Greenway Model Block program, a neighborhood that was in a 100-year floodplain, she said, and whose homeowners were receiving home improvement loans to fix up their houses. It was a poor neighborhood, and the residents had no flood insurance. The city set aside $60,000 of a HUD block grant in a special account in the housing department to pay the premiums for their insurance, she said.
In May 2003, when it was time to renew the premiums, Brown discovered that the account was wiped out and in fact, “had a negative balance of $18,103.” When she made inquiries of the department accountant, she was given copies of the posted entries from his books that she made available to the Weekly. “I found that payments had been made from the account for new construction projects.” The addresses of the projects were listed, and she said they were houses and apartments being renovated by City Construction.
“The funds were finally replaced in October [of 2003],” she said, “but the withdrawals continued” up until the time she was removed from the project. City Construction was using the account, she said, “as its own private piggy bank.”
The two women say that there has been $12 million lost in foreclosures on property that was financed by the FWHFC, because no one was monitoring the loan accounts. Jones said that many of the buyers were not qualified and that the department knew it. “Then, when they couldn’t make the payments, they walked away.”
Jones, who worked with HUD auditors while she was in the department, said that one HUD audit listed $8 million that needed to be reconciled.
HUD spokesperson Campbell said that the results of two HUD monitoring reviews of the city’s affordable housing programs are nearing completion and will be released by the middle of May. Two HUD-funded projects that have been plagued with major problems are included: the Evans Avenue-Rosedale Street redevelopment project near downtown and the Mercado development on the North Side.
Walker denied all of the charges that the women and the nonprofit groups have made. “There is no money missing,” he said. He also said that the City Construction Company was never intended to compete with private builders. “We put it in place to produce some model housing in depressed neighborhoods” because so many good builders were reluctant to build in the inner city, he said. “We wanted to show that quality housing could be built, money could be made and that there was a market.” The only houses built by CCC, he said, are six that were built last May on East Crest Court in Stop Six, all brick and priced around $100,000. Only two, however, have been sold, he said. One, at 3100 East Crest Ct. was denied an approval rating by the Texas Residential Construction Commission, which was set up to enforce uniform housing construction standards. Walker said it was due to technical problems with the paperwork.
And, in spite of Walker’s assertion that all of the houses built by CCC were on East Crest, the TRCC lists two others built by the company, the one on May Street and one on Fogg Street on the city’s South Side.
To date, no other developers have jumped in to build near East Crest. “I think it will be slow,” Walker said. “A project that small won’t appeal to volume builders. ... They want a sizable tract of land, such as Sierra Vista, and some incentive to build in a risky market.” Still, the city has provided the model, he said, and when all of the houses sell, he expects builders to take notice.
Wheatfall isn’t convinced. “There is this huge conflict of interest with Jerome and the department,” the council member said. “Jerome is president of the construction company, which is under the direction of the housing finance corporation, and Jerome is its agent, controlling the money that flows through there. The housing department is doing business as a company, and there is no demarcation. It’s in competition with private builders, it gives itself jobs, and there’s no oversight of what Jerome does or how he spends the money. If there are complaints, who does the investigation? Jerome.”
The whole set-up needs to be changed, he said. But, he fears it won’t happen because, he said, Walker has “the protection of the mayor.”
Walker did not return calls regarding Wheatfall’s comments.
Wheatfall said that in spite of Walker’s explanations, he sees City Construction as an example of the department’s real problems. “It should not be in the business of building homes; it should be seeing that the CHDOs and other developers are getting the funds and the incentives to build in the poorer neighborhoods,” he said.
You can reach Betty Brink at
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