CDC I

February 24, 2002, Sunday, Final Edition

SECTION: A SECTION; Pg. A01

LENGTH: 3500 words

HEADLINE: D.C. Revitalization Promised, Not Delivered; Nonprofits Collect Millions as Work Goes Undone, Neighborhoods Left With Eyesores

BYLINE: Carol D. Leonnig, Marcia Slacum Greene and Yolanda Woodlee, Washington Post Staff Writers

BODY:

First of two articles

The 49 turn-of-the-century town houses are empty, most of them boarded up and off-limits to potential buyers drawn to the resurgent neighborhoods around Columbia Heights. Hot commodities in a hot real estate market, these forlorn shells near downtown Washington are still havens for drug dealers and rats, yet some could bring in as much as $ 300,000 apiece.

But the housing boom that has dramatically altered this section of Northwest has bypassed the Development Corp. of Columbia Heights, a nonprofit agency responsible for the abandoned houses and the steward of numerous other properties in the neighborhood. Despite $ 3 million in city and federal funds provided over the last three years for the town house renovations -- and despite a market that commands a premium price for dilapidated properties -- the 49 houses remain unrenovated.

The same inability to turn public dollars into better neighborhoods can be found across the District, where nonprofit agencies established with the lofty aim of reversing urban blight have failed in their mission. In some cases, leaders of the nonprofit agencies have contributed to the problem, while enriching themselves or their friends. Over the past decade, the city has handed out more than $ 100 million in taxpayer dollars to the Development Corp. of Columbia Heights and a handful of other politically connected nonprofit groups. Known as community development corporations and led by powerful directors, these agencies were given a mandate to rebuild riot-scarred streets, draw new business, create jobs and provide affordable housing. But there is little to show for the millions.

A six-month investigation by The Washington Post, including an examination of internal audits, tax records and hundreds of other documents, has found myriad problems with the nonprofit groups and the city's system of overseeing them.

The eight city-designated community development organizations have completed only 70 of the 200 projects that have received public funds over the last 10 years. And of those 70, more than half have been delayed for years or have triggered lawsuits from buyers and contractors.

Despite handing out a steady stream of federal funds each year, city officials -- under Democratic mayors Marion Barry, Sharon Pratt Kelly and Anthony A. Williams -- have failed to monitor the community development organizations. Federal auditors found that the city has not carefully tracked the money given to them nor determined whether they have benefited neighborhoods. City Department of Housing and Community Development officials said they could not locate contracts for nearly two-thirds of the community development organization projects the city agency has overseen for the past decade.

In the meantime, officials of several of the nonprofit groups have broken conflict-of-interest rules, housing experts say, by personally benefiting or helping their friends and board members benefit from projects, contracts and fees.

The Post examined the performance of four of the city's community development corporations, their success in rehabilitating their neighborhoods and their use of millions of public dollars. The four -- the Development Corp. of Columbia Heights, Anacostia Economic Development Corp., H Street Development Corp. and Peoples Involvement Corp. in the Georgia Avenue corridor -- were chosen because of their large budgets and property inventories or poor records in completing projects, documented in federal and city audits.

In each of the four community development organizations, the nonprofit officials cannot show how millions of dollars they received for projects have led to tangible results. For more than a decade, unfinished projects have lingered on the books, receiving funds year after year but not reaching completion.

In three of the four communities, Columbia Heights, H Street and Georgia Avenue, historic theaters are rotting away, despite promises to revive them as cultural centers. In those neighborhoods and Anacostia, the beaten-down commercial corridors the corporations vowed to help rebuild are still plagued by disappointments, empty storefronts and eyesores.

Other community development organizations have fared better, among them the Marshall Heights Community Development Organization, which has consistently built low-cost, modest houses east of the Anacostia River. Compared with other community development organizations, it has taken on a smaller inventory of projects to develop. And because it relies on government funds for only a small portion of its revenue, it has been able to draw more private funding.

But community development organizations such as Marshall Heights are the exception. Across the District, for every community development organization project that is completed, at least two others have stalled, leaving a trail of ailing business districts, uninhabitable apartment buildings and weeded lots.

Community development organization leaders say they have had numerous successes but have also had to struggle against obstacles in trying to rebuild neighborhoods that many have forsaken. They point to the city's reluctance to subsidize developments, difficulties in winning bank loans and bureaucratic delays over which they have little control.

"You've got to give us credit for what we've done," said Robert Moore, director of the Development Corp. of Columbia Heights. "This is hard work."

Created in the aftermath of the 1968 riots that followed the assassination of the Rev. Martin Luther King Jr., community development corporations were envisioned by urban leaders as the best hope to rebuild devastated neighborhoods across the country. Federal funds would flow through local governments to the nonprofit agencies, where grass-roots leaders would know best how to draw new construction, promote business, create jobs and provide affordable housing.

Today, the 3,600 community development organizations operating nationwide remain popular among most mayors and community development advocates. In San Francisco, for example, community development corporations are credited with building 25,000 units of affordable housing, helping to ease a housing crisis.

But in the District, the system has become a magnet for criticism. Neighbors and private developers complain that valuable properties controlled by the community development organizations sit idle year after year even in booming neighborhoods while the nonprofit agencies continue to receive public funds.

"Here we are, it's February of 2002 . . . and the boarded-up nuisance properties have continued unabated." said D.C. Council member Jim Graham (D-Ward 1), who has pushed for two years to speed up the work. He faults the city and the D.C. Housing Authority for a lack of oversight that has allowed the 49 row houses to sit idle in his community. "Some blocks have six or seven of these properties, vagrants on the stoop, trash in the back. Imagine how that depresses morale and encourages other criminal activity in these neighborhoods."

In Columbia Heights, the community development organization houses are easy to spot. They are the shells being left behind as private developers transform one property after another, a renaissance driven by a dramatic shift in real estate values.

Columbia Heights is the buyer's alternative, a mostly residential area near the trendy neighborhoods of Adams Morgan and Dupont Circle that has a nearly identical housing stock but at far better prices. In the past two years, the number of home sales has doubled in the core of the neighborhood closest to 14th Street. And across Columbia Heights, the average home price has risen 27 percent over the past three years. In one year alone, the average sales price in the central part of the neighborhood jumped from $ 172,000 to $ 220,000.

Even before the real estate market boomed, the Development Corp. of Columbia Heights was becoming a major player, compiling a long list of properties provided by the city when owners abandoned them or failed to pay taxes. The city also provided funding to help develop 106 homes, buildings, storefronts and other parcels. All but 45 of those, however, sit untouched or indefinitely stalled.

Instead of revitalizing the neighborhood, critics say, the Development Corp.'s lack of progress on so many properties is doing the opposite, holding the community back.

Throughout most of its nearly two decades, the Development Corp. has been led by Moore, a powerful figure who has had access to a stream of public money, but virtually no oversight or accountability.

Moore, 62, a garrulous man with a ready smile, came to the District in 1979 as then-Mayor Barry's director of housing and community development. He resigned in 1982 after a D.C. auditor found that his agency had bungled a 163-town house development and could not account for $ 4 million in government money.

In 1987, he admitted stealing $ 6,000 from the Camden, N.J., housing authority he headed after leaving the District. He served four months in prison. A few months after his release, Moore was hired by the board of the Development Corp. of Columbia Heights.

Board member Leroy Hubbard said that Moore had gone through a drug recovery program and that the group prized his connections and housing experience. He was friendly with Barry and had hired many managers at the city's development agency who could help win grants and loans, Hubbard said.

Barry's administration did help, making the job easier for his longtime friend by giving the group priority status to redevelop in the Columbia Heights neighborhood. The arrangement meant that the corporation could get its pick of city-owned property to develop in Columbia Heights and access to as much as $ 3 million a year in federal money.

Hubbard defends hiring Moore, who now receives an annual salary of $ 72,000.

"He has been excellent at getting us what we needed from the city," Hubbard said.

Barry said that while he had nothing to do with Moore's hiring, "If I had been asked, I would have supported him, because he has the experience and expertise to do the job. He's more than qualified."

Under Moore's leadership, the Development Corp. has drawn nearly $ 40 million in public and private funds and amassed an impressive portfolio of properties, many provided by the city for free or at a discount. But it has completed just 12 of the 37 major construction projects it has proposed in the last decade.

"I thought we were in this group to improve our community, make it a place we were proud of. And when I found out that was not the point, I got out," said Kateri Ellison, a longtime resident and former corporation board chairman who resigned two years ago. "Bob Moore decides what he wants to do, and to hell with what the community wants."

Assessing his tenure, Moore said his group has spearheaded numerous successful projects, reclaiming a drug-infested apartment building on Girard Street NW, for example, and helping a team of developers give Columbia Heights its first strip shopping center.

Delays have been unavoidable in other projects, he said. He said he is committed to the neighborhood, noting the difficulty of finding contractors and financing to rebuild desperately poor urban areas. Nonprofit groups, Moore said, face more bureaucratic obstacles than private developers and take on less commercially attractive projects.

"It took a little longer than we hoped, but our pace is picking up," Moore said of the 49 row houses awaiting renovation in Columbia Heights and Shaw. "If it were magic, everybody would be doing it."

All around Moore's row houses, renovators are busy. Private developers this summer finished converting two battered 40-unit apartment buildings into condos, which sold out in a few weeks. The condos started at $ 59,000 and boast dazzling views of downtown.

They are just steps from other properties controlled by Moore's group: three boarded-up, decaying apartment buildings the Columbia Heights group has proposed renovating since the mid-1990s.

"I don't know what's stopping him," condo marketing agent John FitzGerald said of Moore.

Such delays are common. The Nehemiah Project, envisioned as a gateway to Columbia Heights on 14th Street, was parceled out by the city in 1992 to four nonprofits. By 1995, three of the four groups had completed their parcels, building a brick co-op, town houses and a shopping center. One parcel is still vacant and grim: a junk-car lot on the southwest corner of 14th and Belmont streets for which Moore's group has sole responsibility.

His proposal for the lot, a multilevel complex of shopping and condos, remains a concept on paper. Moore says he cannot get financing because the city has not fully endorsed his plan.

At another property, a 36-unit apartment building at 1429 Girard St. NW, the pattern of delay has been captured best in Moore's reports to his board.

In August 1995, he reported: "Financing and construction start projected for December 1995."

In October 1998: "We hope to start construction this year."

In June 1999, contractors were expected to begin in July. In July, he promised that work would begin in August. In September, he said it would start that month. In October, he made the same promise.

The renovations were completed a year later, in October 2000. But in the meantime, the property had been featured in a D.C. inspector general audit detailing the city's poor record of monitoring development projects it was subsidizing.

If the neighborhood has not clearly benefited from the Development Corp., Moore's family, friends and several members of the board and staff have.

Moore put his son Anthony on the corporation payroll as early as 1994, paying him up to $ 20,000 a year for maintenance work. A new vice president who asked why Anthony Moore was not showing up for work left after his father suggested that she take a demotion, according to staff and board members. Moore, who said he saw nothing wrong with hiring his son, said he removed him in September 2000.

The Development Corp. has had regular contracts with the companies of two of its board members, a practice that former investigators and lawyers from the U.S. Department of Housing and Urban Development say creates the appearance of a conflict of interest. Wright Touch Cleaning, owned by board member Diane Clark, receives $ 14,000 a year for cleaning the Development Corp.'s offices twice a week. Until this year, Capitol Multimedia, owned by board member Darryl Fields, received $ 12,000 annually for technology consulting, plus an additional $ 1,000 to $ 5,000 a month for various equipment and repairs.

Fields also lived and operated his business out of a co-op apartment that Moore's group was overseeing, but he did not pay his rent for 24 months, according to an internal memo written by Moore. And Fields was paid $ 2,900 to create a Web site for a subsidiary of the Columbia Heights group but never did the work, other board members said. Fields did not return repeated phone calls.

Clark and Moore said they did not consider the contracts problematic because the agreements began before the members joined the Development Corp.'s board. Several former board members say they learned of the contracts during a recent audit and found them to be a conflict of interest.

"The mantra over there has been, 'Ask not what you can do for the Development Corporation of Columbia Heights, but ask what the Development Corporation of Columbia Heights can do for you,' " said Elizabeth McIntyre, a board member who resigned in May.

In the past three years, 10 board members, including the former chairman and vice chairman, have resigned in frustration with Moore's leadership, according to interviews and board records.

The 49 eyesores that sit idle are among 78 row houses in Columbia Heights and the Shaw neighborhood that Moore persuaded the D.C. Housing Authority in 1997 to turn over to a coalition of community developers that he would organize and oversee. The other 29 have been renovated and sold. Authority officials say they have moved to directly oversee the work because of complaints about the pace and note a recent increase in homes repaired.

Even as most of the houses he is responsible for remain unrepaired, Moore's group has been paid a $ 1,000 management fee for every house developed by other members of the coalition. Moore's community development organization also received more than $ 500,000 in administrative fees from the city, budget records show.

The town houses cannot be sold until they are renovated, under an agreement with the Housing Authority. Moore told his board members over the last two years that banks had offered to lend up to $ 1 million to finance renovation on some of the town houses.

"The bottom line is there is absolutely no excuse why . . . houses should be sitting there boarded up for three years," said Harlan Wiley, president of a Virginia construction company who has worked with several other nonprofits to renovate housing in the area.

Wiley said he prepared a proposal to do work on the 78 row houses but was turned down. "We could have finished them all" by last fall, he said.

In Moore's 14 years as director, the Development Corp. has successfully renovated four single-family homes in Columbia Heights. The first was a four-story Victorian on Columbia Road that the group spent $ 217,000 to purchase and repair, audits show. Moore had, for the first time, tapped a program that allowed higher-income families to move in, then sold it at a loss to his friend Lynn French, former head of the city's Homestead Program. At the time, French and Moore said there was nothing improper in the arrangement.

The FBI began investigating the house deal in January 2001, raiding Moore's office and home and seizing documents related to the house. Prosecutors dropped the case last summer after deciding that they could not prove that the purchase was part of a criminal quid pro quo between French and Moore.

But the sale to French, combined with Moore's lack of success in repairing other eyesores in Columbia Heights, has infuriated neighbors.

Some of the most bitter complaints focus on Moore's handling of two large commercial wastelands in the heart of the neighborhood: the redevelopment of the old Tivoli theater and an empty lot across the street.

Moore called an emergency board meeting in August 1999. Twenty-four hours later, with less than half the board members present, he forged ahead with his plan to work with two developers of his choice. But most of the absent board members preferred a more experienced retail developer with much stronger financing. They tried unsuccessfully to reverse the decision, which one member called "heartbreaking."

Mayor Williams and his administration backed Moore. Williams's appointees, including a former city administrator, voted to award the redevelopment work to the team that Moore had put together over the more experienced developer, praising Moore's group for its neighborhood ties.

That outraged community members who pointed to the lackluster record of Moore's group and accused the mayor of trying to curry favor with a political network that had supported Marion Barry for two decades.

Last week, Williams defended his decision to back Moore.

"One of the reasons I thought we should support the Columbia Heights CDC was because it was important to include minority participation and a local group. I was insistent on having local participation up there," he said.

Today, the Tivoli redevelopment has been mired in disputes over the plan to alter the historic theater, but the builder promises to begin construction this summer. On the second parcel, the developer, who two years ago promised a skating rink and movie-plex, has lost those potential tenants and has been unable to obtain financing.

"It's just a joke what they proposed," said Geoff Griffis, former vice chairman of the board. "Meanwhile, our community suffers for who knows how many more years."

Rachel Jordan, who lives next to one of the abandoned row houses on Ninth Street, has had to put up with rats taking over the yard, dealers hiding drugs around the building and street people ripping off the boards to get inside. Over the past two years, Jordan, a single mother of two, has repeatedly called the Development Corp.'s phone number on the sign to ask about buying the house.

"They acted like they didn't know it was their property. Then they said, 'No, you can't buy it,' " Jordan recalled. "They let nobody buy it. They won't do anything with it. It's just property sitting there."

Staff researcher Bobbye Pratt contributed to this report.

Tomorrow: How the dream of rebuilding three city

neighborhoods went awry.

LOAD-DATE: February 24, 2002