Note – A prime example of how to make money through “affordable housing.” And regarding the skin rashes from the carpet, that is from the mold coming from the vents. katy
From the article –
A neighbor, Priscilla Henderson, showed a reporter mismatched splotches of white paint around the air vents in her apartment. Maintenance staff had spray painted over mold or mildew that was growing from the vents in long strands, she said.”
“Her carpeting is so filthy, Henderson said, it gives her small children rashes and turns bare feet to black. The manager told her she will have to pay for cleaning, she said. “I’m glad I’m paying $25 [a month for rent] because that’s all it’s worth,” she said.”
March 13, 2010
By STEVE McGONIGLE – The Dallas Morning News
Ridgecrest Terrace, a sprawling, low-income apartment complex in west Oak Cliff, has an infamous history as a crime-infested blight on a hillside.
Drug dealers once lined its streets like carnival barkers. Gunfire and assaults were a constant. Housing code inspectors came with police escorts, if they came at all. Twice, the city of Dallas sued to have Ridgecrest declared a public nuisance and closed.
Yet federal housing officials have kept the money flowing. Last year, the U.S. Department of Housing and Urban Development sent the owner $1.5 million in stimulus funds – the largest allocation to any subsidized housing project in Dallas County.
HUD has funneled millions in rent subsidies to Ridgecrest’s owner despite multiple failed inspections, repeated late filing of spending reports and a city lawsuit alleging dangerous living conditions such as sewage spills, exposed wiring and rotting floors.
Rene Campos Jr., president of the Dallas investment company that owns Ridgecrest, insisted it has made considerable improvements since it bought the complex in 2004. Accusations that Ridgecrest remains a decaying slum are untrue and stem from a bitter feud with police, he said.
“I’m actually very pleased with what we’ve done here,” Campos said.
The stimulus award went to Ridgecrest, and other HUD landlords nationally, to cover a shortfall in federal rental assistance.
But U.S. Rep. Kenny Marchant, R-Coppell, said the public should be furious that HUD gave stimulus funds to Ridgecrest without more rigorous scrutiny.
“It’s just a prime example of government waste and lack of oversight and throwing money at a problem without knowing anything about the situation,” said Marchant, a member of the House subcommittee that oversees HUD.
The grant to Ridgecrest was one small piece of the $787 billion federal stimulus plan, which was intended to save jobs and spur economic recovery. The initiative has come under relentless attacks by critics who allege fraud and waste.
Beyond that, the award also raises questions about the quality of HUD’s enforcement effort. The agency has paid almost $12 million in rent subsidies to Ridgecrest’s owner despite repeated incidents of potential contract violations.
Jerry Brown, a HUD spokesman in Washington, said the stimulus award to Ridgecrest and 6,300 other subsidized properties fulfilled a contractual obligation, and was meant to preserve housing for low-income tenants during the economic downturn.
“We were trying to take the worry out of it for the families,” he said.
While he conceded that HUD’s enforcement effort at Ridgecrest could have been better, Brown deflected questions about whether the stimulus award was a mistake.
HUD, the spokesman said, must weigh the country’s need to retain a limited stock of low-income housing against the requirement that conditions be livable.
“It’s a delicate balance,” he said. “It’s not always going to be the perfect solution.”
The stimulus award to Ridgecrest was part of $2 billion Congress appropriated last year to ensure HUD landlords received a full 12 months of rent subsidy payments. Fourteen projects in Dallas County benefited.
Ridgecrest was set to run out of such payments in April 2009. The stimulus award was calculated to cover the final seven months of the fiscal year.
The subsidy program allows residents to cap their rent payment at 30 percent of their income. HUD pays the landlord the remainder of the fair market rental rate.
The agency requires landlords to maintain their property in a “safe, decent and sanitary” condition.
Even if standards are not met, HUD is slow to cut off funding because residents could lose their housing. The number of subsidized apartments around the country has been declining for years. More than 2,000 have been lost in Dallas County over the past decade, according to HUD.
The stimulus law required recipients to file quarterly spending reports, but a landlord lobbying group later persuaded the government to waive the transparency rule because the money was the equivalent of a regular subsidy payment.
Ridgecrest Terrace, which has 246 subsidized apartments, collects approximately $210,000 each month from HUD, or just over $850 per unit.
The complex occupies 16 rolling acres along the 500 block of South Walton Walker Boulevard. Mountain Creek Lake is about a mile to the west.
Built in 1969, Ridgecrest is described as garden apartments. Its lawns are broad, but landscaping is sparse. The drab gray exterior gives the 19 buildings an institutional look. One resident derisively dubbed it “the projects.”
Whether the stimulus award to Ridgecrest has improved living conditions is in debate. Some residents contended they have seen little change. “They ain’t done nothing with it,” Ruby Fannin said.
A resident for four years, Fannin pointed out rust-colored streaks on her bathroom wall from a water leak. She also noted the absence of outside security lights that she said would make her feel safe about leaving her apartment.
A neighbor, Priscilla Henderson, showed a reporter mismatched splotches of white paint around the air vents in her apartment. Maintenance staff had spray painted over mold or mildew that was growing from the vents in long strands, she said.
Her carpeting is so filthy, Henderson said, it gives her small children rashes and turns bare feet to black. The manager told her she will have to pay for cleaning, she said. “I’m glad I’m paying $25 [a month for rent] because that’s all it’s worth,” she said.
Shannon Behan, who has been doing outreach work at Ridgecrest for two years on behalf of a nearby church, called conditions at the complex “absolutely horrible.”
The management, he said, is slow to fix appliances or problems with the heating and air conditioning systems. Residents complain they have trouble sleeping because of constant noise from gunshots and drug activity around their units, he said.
“We can walk around the back side of the apartments, and you will see the needles and the condoms and the baggies [for drugs] just laying on the ground everywhere,” he said. “And these children actually live in these conditions.”
Owner Campos said he has invested heavily in renovating Ridgecrest. “Our mantra is we provide clean, safe, affordable housing for people,” he said.
Campos, a Harvard-educated investor, made a fortune in the 1990s buying, rehabilitating and reselling distressed private apartment properties around Texas.
He and his two former business partners were known in Dallas real estate circles as “the Hartex Boys,” after their property company’s name.
Campos, 46, lives in a $1 million home in University Park. He owns a $4 million vacation property in Hawaii. He plays polo, rides a custom motorcycle and drives a Land Rover.
He said his current business holdings consist of 11 fully and two partially subsidized apartment complexes in Texas and Louisiana with an appraised value topping $45 million.
Eureka Holdings, Campos’ principal enterprise, owns a $4 million office plaza near the Dallas medical district where its headquarters is located.
Campos formerly co-owned boutique hotels in University Park and downtown Dallas. Eureka spent more than $32 million to buy and remodel them.
In 2003 Eureka was hired to manage another federally subsidized apartment complex in Oak Cliff called Mesa Ridge.
The relationship ended after the owner was sued by the city in 2006 for multiple code violations and filed for bankruptcy.
Campos said he bought Ridgecrest out of an unanticipated need to protect his investment in an adjacent apartment complex, Mountain View.
Crime in the area was so bad, Campos said, that he decided to apply a formula that had worked in rehabilitating other problem properties: a combination of capital improvements and the aggressive use of court-ordered evictions.
Campos conceded that his plan for Ridgecrest did not go smoothly.
The property was in “very poor” condition, he said, and the crime problem made major repair work unsafe. The quick evictions he had used on his private properties were almost impossible under HUD rules.
Campos said the city of Dallas, which had welcomed his purchase of Ridgecrest, was understanding for the first couple of years. Then, he said, a rift developed.
Off-duty police officers that Campos said he had hired to provide security were monitoring drug dealers rather than arresting them. So Campos told the dealers that they were going to be evicted, he said, and they left.
Police, he said, were furious that he had ruined their investigations. As revenge, he said, police complained to HUD and the city attorney’s office about substandard living conditions at Ridgecrest.
He provided The Dallas Morning News with e-mail messages from police Lt. Kimberly Stratman urging his brother, David Campos, not to disturb any ongoing investigations and reporting that a recent undercover operation produced “dismal” results.
“It appears that many of the identified, targeted dealers moved out or left during the investigation,” Stratman wrote on Sept. 11, 2006. “It was very odd.”
Stratman, whom Campos identified as the architect of a “vendetta” against him, said her complaints about conditions at Ridgecrest were made to protect her officers and the complex’s residents. She also maintained that she had not acted unilaterally.
“I was in a partnership with the west Oak Cliff community prosecutor,” she said. “We were both aware of multiple code violations at the property and the related crime and quality-of-life issues.”
Stratman said she and Assistant City Attorney Whitney Sanderlin met with several HUD representatives in August 2007. Both said they could not understand how a complex with raw sewage spills could repeatedly pass HUD inspection.
Federal officials offered little in the way of an explanation, Stratman said. “I don’t understand that myself,” she said.
Subsidized housing supervisors in the Fort Worth regional HUD office did not respond to interview requests from The News. Their superiors at HUD’s national office in Washington declined to be interviewed, agency spokesman Brown said.
The visit from city officials did prompt HUD to order a special inspection of Ridgecrest in October 2007. The complex received a score of 45 out of a possible 100 points. Sixty is considered the minimum passing score.
It was at least the fourth time in six years that Ridgecrest had failed an inspection, and the second time since Campos took control of the property.
Campos appealed the results to Washington. After reviewing documents from Campos showing that repairs had been made or were under way, HUD officials increased the score to a passing 68, according to records released under a Freedom of Information Act request.
Dallas officials had a more alarming view of Ridgecrest’s condition.
On May 8, 2008, the city filed suit against Ridgecrest, citing more than two dozen categories of code violations and seeking an injunction to compel repairs.
The alleged violations included water leaks, sewage spills, deficient air conditioning and heating, holes in walls, broken windows, no hot water, lack of security devices and smoke alarms, rotting sub-floors, and malfunctioning toilets.
Between January 2005 and May 2008, inspectors recorded 169 code complaints about Ridgecrest and issued 92 notices of violations, city records showed.
Assistant city attorney Sanderlin said the lawsuit was filed after she showed Campos pictures of alleged violations and tried for several months to negotiate a repair agreement.
She said she also notified Trini Rodriguez, the HUD official who monitored Ridgecrest, of the lawsuit. She said she was unaware of any HUD response.
Campos said his talks with Rodriguez gave him the impression the HUD supervisor shared his suspicions about the city’s allegations against Ridgecrest.
“He was apologetic,” Campos said. “He didn’t like the smell of this.”
Rodriguez did not respond to interview requests made to HUD.
Campos said the first he heard of code problems at Ridgecrest came when Sanderlin pressured him to sign a repair agreement without a list of specific violations.
Four months after the city sued his company, Campos filed a counterclaim accusing the city of violating his civil rights.
The suit was pending for 18 months. During that time, several buildings at Ridgecrest were draped in blue tarps to cover holes in the roof. One building caught fire because of an electrical problem and was uninhabitable for more than a year.
Chris Bowers, the first assistant city attorney, said Campos blamed the repair delays on reluctant insurance carriers and his lack of financial resources.
“There were more problems with this complex than most that we file suit on, and the owners were more resistant to dealing with the problems than most,” Bowers said.
While acknowledging there had been missteps, Campos said he was committed to complying with the terms of his HUD contract as well as his personal standards.
Campos said his company has paid for more than $1 million in capital improvements to Ridgecrest and spent the rest of the subsidy money on bills and maintenance. Eureka has not turned a profit on the property, he said.
Eureka would not release Ridgecrest’s financial records to The News . HUD denied a public records request. Both cited proprietary information.
Some work is visible at the complex. There are sections of newly repaved sidewalks. Excavations for plumbing or drainage work have been made. The blue tarps are gone, and the fire-damaged building has eight freshly remodeled apartments.
Some of that repair work came on the heels of a HUD inspection in January 2009 that assessed Ridgecrest a failing score of 47. The score was raised to a barely passing mark of 62 on March 5, 2009, after another appeal to HUD in Washington.
HUD awarded Ridgecrest its first stimulus payment of $862,184 on March 16. The second installment, totaling $651,644 was disbursed on July 13, HUD said.
In August, Eureka agreed to pay HUD a $3,000 fine for failing to file three consecutive years of audited financial statements on time. Campos blamed the lapses on inattentiveness by his accountants.
Brown, the deputy assistant HUD secretary for public affairs, said additional enforcement proceedings against Ridgecrest remain an option.
“We can and will do more to force management to improve the complex and be more responsive to the needs of its tenants,” he wrote in an e-mail.
In November, Eureka and the city settled their lawsuit, with the company agreeing to make requested repairs without either side admitting fault.
Campos said the lengthy conflict with the city has made him question whether he should keep Ridgecrest in his portfolio.
“This isn’t an asset we’d want to own long term,” he said.
TIMELINE: RIDGECREST TERRACE
December 2004: Property sold to Dallas real estate investment company Eureka Holdings Inc., which assumes a $5.2 million loan.
June 2005: HUD inspection gives property a failing rating of 37 on a scale of 100.
January 2006: HUD inspection gives property a rating of 81.
May 2007: Eureka takes out a $15 million loan on Ridgecrest and an adjacent complex.
October 2007: HUD inspection gives property a rating of 45.
February 2008: After two appeals, the inspection score is raised to 68.
May 2008: City of Dallas files a lawsuit to force repairs of alleged substandard conditions.
January 2009: HUD inspector gives property a rating of 62, three points above failing.
March 2009: HUD disburses $862,184 in stimulus funds to Ridgecrest.
May 2009: HUD notifies Ridgecrest of its failure to file three years of required financial statements on time.
July 2009: HUD disburses second stimulus payment of $651,644.
August 2009: Eureka agrees to pay a $3,000 fine for untimely financial filings.
November 2009: Eureka settles lawsuit with the city of Dallas, agrees to make repairs.
SOURCES: U.S. Department of Housing and Urban Development, Dallas Morning News research
Stimulus funds aiding companies fined for pollution (Boeing), accused of fraud (Granite Construction) & AIMCO – a major apartment owner based in Denver – offered $13 million in tax credits – paid $3 million to settle a lawsuit over complaints that it operated mold and rodent-infested buildings
Political Action Committee – National Apartment Association (NAA) files Amicus Brief in mold case (two infant deaths in mold filled apt – Wasatch Prop Mgmt) citing US Chamber/ACOEM ‘litigation defense report’ to disclaim health effects of indoor mold & limit financial risk for industry
“Changes in construction methods have caused US buildings to become perfect petri dishes for mold and bacteria to flourish when water is added. Instead of warning the public and teaching physicians that the buildings were causing illness; in 2003 the US Chamber of Commerce Institute for Legal Reform, a think-tank, and a workers comp physician trade organization mass marketed an unscientific nonsequitor to the courts to disclaim the adverse health effects to stave off liability for financial stakeholders of moldy buildings. Although publicly exposed many times over the years, the deceit lingers in US courts to this very day.” Sharon Noonan Kramer
Information on Riverstone Residential, the Louisiana Housing Finance Agency, and the owners of Toxic Mold Infested Jefferson Lakes Apartments in Baton Rouge, Louisiana continuing to allow tenants to be exposed to extreme amounts of mold toxins