|A STAR WATCHDOG REPORT
Repair work slipshod on local home
Tax money spent on unsafe maintenance
By MIKE MCGRAW and MICHAEL MANSUR
The Kansas City Star
Leaky roofs and sagging ceilings. Buckling and poorly repaired foundations. Dangerous furnaces and flues.
An investigation by The Kansas City Star found that a taxpayer-supported home maintenance program overseen by the city?s former housing agency approved all of that shoddy work.
Contractors working with the Housing and Economic Development Financial Corp., also known as HEDFC, even charged one elderly couple $700 for smoke detectors.
But that?s only the beginning of the problems uncovered by two independent, certified home inspectors hired by The Kansas City Star to check the quality of the remodeling and maintenance jobs.
The inspectors checked four homes and found a trail of slipshod work, including problems that could be life-threatening:
Improper venting of heating or hot water systems that could cause fires or asphyxiation.
Faulty electrical wiring.
Improper gas line connections.
Asbestos left in ductwork.
The newspaper?s inspectors also questioned whether some contractors actually did all of the repair work that homeowners paid for with low-interest loans and grants from HEDFC. Remodeling projects cost as much as $40,000 and took up to two years to complete.
?They didn?t do the work that should have been done to ensure a safe and habitable house, such as proper wiring and flues. And the work that did get done was substandard,? said Paul Romer of AAA Certified Home Inspections.
What?s more, the housing agency?s records show that some HEDFC inspectors signed off on the faulty repairs. They also failed to check whether licensed craftsmen installed appliances properly or whether city inspectors had approved the work.
In some cases, they hadn?t.
It?s unclear how many homeowners ended up with bad repairs. A court-appointed receiver, who took over the housing agency earlier this year, is reviewing complaints from 10 or more homeowners who said they had problems.
The receiver is continuing to investigate, but many other homes could be involved.
In addition to hiring inspectors to examine four homes, reporters informally called at least two dozen people who got HEDFC home repair loans.
Only one was satisfied with the agency and its contractor?s work.
The former head of the HEDFC, Ken Bacchus, declined to comment on the newspaper?s findings. Everett Tomlin, who oversaw the home repair program when he worked for the agency, also declined to comment.
Robert Patterson, an independent inspector once under contract with the housing agency, acknowledged that some rehab work was improperly done and said he often complained about it in memos and staff meetings. Patterson said he had no idea why other inspectors approved faulty work.
?That?s beyond me,? he said.
Patterson, who?s now working for the court-appointed receiver, agreed with The Star?s inspectors that it didn?t appear that $30,000 to $40,000 worth of work probably was done on some of the homes The Star inspected.
The federal government, which funneled millions of dollars into the home repair program, is interested in what happened to all the money sunk into the repair program.
One of the home repair contractors involved, Morris Goode, who does business as Goode?s Contractor, acknowledged that he had been subpoenaed by a federal grand jury. The subpoena is part of an ongoing investigation of the housing agency by the FBI, the Office of Inspector General and the U.S. attorney?s office.
Goode has said he did as many as 50 home repair jobs a year under the program, which made him one of the agency?s top paid remodeling contractors. Although Goode acknowledged he had made mistakes, overall he defended his work.
Goode said he had nothing to hide, adding: ?When they go through my records, they will find out I never took a dime for nothing and even reduced prices to make things work for the homeowner.?
Goode blamed homeowners for demanding he do work that wasn?t part of the original plan, and he said HEDFC did a poor job of administering the program.
?All I had was problems with HEDFC when I worked for them,? he said, adding that the agency owes him at least $10,000.
Goode told The Star that he planned to tell the grand jury that a housing agency official once offered him contracts in return for kickbacks, which he said he refused.
Even after the court-appointed receiver took over the housing agency, another HEDFC contractor asked how much he should add to his bid for the agency, a spokesman for the receiver told the newspaper. The receiver?s office rejected that offer.
While the federal investigation continues, taxpayers are getting stuck with another round of bills ? this time to fix the shoddy work.
Several homeowners have filed claims with the city, said Troy Schulte, the city?s budget director.
?We?ve inherited the problem in homes where the work wasn?t done to meet standards,? Schulte said. ?Sometimes we can?t even find that the work was done (such as installation of a water heater).?
What went so wrong?
Federal housing officials said most cities administer their own home repair programs for low- and moderate-income families and then check to make sure the work was done right.
Kansas City, however, turned its home repair program over to the Housing and Economic Development Financial Corp. Apparently no one was watching to make sure the work was done right, the newspaper found.
?There is a need for reform,? said City Manager Wayne Cauthen, who has dismantled the city?s old housing program and has promised a more efficient one. ?This type of situation cannot continue.?
Cauthen said the city gave too much control to HEDFC and failed to put in place the proper checks and balances. For example, the same agency shouldn?t make the loan, approve the contractor, then inspect the work, Cauthen said.
Meanwhile, the court-appointed receiver is spending tens of thousands of tax dollars to fix homes that the HEDFC repair program left unfinished or unsafe.
The receiver also is concerned that thousands of dollars in grants intended for removing harmful lead-based paint from homes may have been misused. Huge amounts of money were spent on lead abatement, but inspectors have found lead paint in homes.
Houses of horror
The Star?s inspectors visited homes and reporters interviewed homeowners who told horror stories of remodeling projects gone wrong.
Because of sloppy work and a dispute with a contractor, a woman and her son said they lived without a working bathroom for two months and had to use a bucket. Another woman said she suffered through cold winters and hot summers for two years without a working furnace or air conditioner.
?I was hurt that my people did this to us,? said Myrtle Carson, 84, whose home had numerous problems uncovered by the newspaper?s inspectors.
Among the things Carson and her husband were charged for was a $450 termite treatment. Myrtle Carson said she never asked for a termite inspection and her house never was treated. The Star?s inspector said he saw no evidence of termites or evidence the house had ever been treated.
One of the newspaper?s inspectors confirmed that three homeowners were charged hundreds of dollars more than they should have been for inexpensive, less-efficient off-brand furnaces and air conditioners.
Overcharges apparently were not uncommon. Documents showed that the Carsons were billed $700 for hard-wired smoke detectors that inspectors said should have cost much less.
One HEDFC contractor offered to install two new garage door openers on another home for $1,125. Sears later installed both for half that amount.
Homeowner Gracie Neal said her HEDFC contractor tried to install what appeared to be a used toilet as part of her $38,000 rehab job. ?I told him not to bring another toilet in this house that wasn?t in a box,? Neal said.
Another homeowner, Gracie Anderson, took out a loan for more than $31,000 to fix her modest 1,100-square-foot house, but an HEDFC inspector said that for the same amount, she probably could have built a new one.
?I had three different contractors work on my house for over three years, and they?re still not done,? Anderson complained. ?To this day, I?m not sure how much I owe and what it is all for. They kept telling me I needed stuff that I now doubt that I needed.?
More immediate issues at the Anderson house, such as a leaky roof, never got fixed.
Part of the problem, the newspaper?s inspectors said, was that some of the HEDFC?s contractors didn?t do good work.
The inspectors said the repairs done at four homes by Goode?s Contracting ? which records show had collected nearly $300,000 from HEDFC over the past 10 years ? posed serious safety concerns.
In two of those jobs, homeowners complained to the city and won full or partial arbitration awards from Goode. According to a deposition Goode gave in one dispute, he said he had no certification in carpentry, plumbing or electrical work.
City records show he had used unlicensed heating and cooling subcontractors.
Records indicate that Tomlin, who oversaw the repair program for the HEDFC, knew as early as October 2001 that homeowners were complaining about Goode?s work.
It wasn?t until late last year, when the housing agency first came under fire for its expensive rehabilitation of two homes on Tracy Avenue, that Tomlin barred Goode from the program.
Tip of iceberg?
Poor repair work wasn?t the only problem with HEDFC?s home maintenance program, the newspaper?s investigation found.
Homeowners who got loans told The Star that they:
Were charged as much as $1,400 in closing costs and other fees, although federal officials said remodeling loans usually don?t involve closing costs. Federal rules allow nominal fees, but some cities such as Wichita don?t charge any.
Were steered toward certain contractors, including one who recently served prison time for felony tax evasion.
Were pressured to accept shoddy work.
Doretta Stanley, who owns a home in the 5100 block of Lister Avenue, said in an interview that?s what happened when she hired Goode to install a new water heater, furnace and air conditioner and do other repairs.
Her new appliances didn?t work, and she refused to sign papers allowing Goode to be paid. She said HEDFC inspectors pestered her and even visited her workplace, but she wouldn?t sign.
Finally, Stanley said, she was summoned to HEDFC headquarters and met with Tomlin, Goode and others. In a letter to the court-appointed receiver, she described her experience.
?I was bullied, and I was talked down to by Mr. Tomlin,? she said. ?He said to me, ?You borrow our money and don?t want to pay the contractor. We didn?t have to loan you this money. You may as well sign because Mr. Goode will take you to arbitration or court and put a lien on your home.??
Tomlin and Goode declined to comment on Stanley?s account of that meeting.
Eventually, Stanley reluctantly signed off on the work. She said she cried as she drove to her unheated home.
Records show that city inspectors later found that the water heater and furnace were improperly vented and could have caused a fire or even killed her.
The court-appointed receiver?s office recently replaced them.
Stanley said that HEDFC officials had repeatedly assured her that ?we got you covered; we have an adviser and an inspector, and we will make sure the work is done right.?
?I trusted them,? she said.
The story until now
The city canceled its contracts with the Housing and Economic Development Financial Corp. earlier this year, about the time federal officials barred its top officers from involvement in many federal housing programs.
The action came after The Kansas City Star revealed last October that the housing agency had spent or been billed more than $1.1 million restoring two homes on Tracy Avenue that were then assessed together at about $46,000.
The FBI, the U.S. attorney?s office and the Housing and Urban Development inspector general are conducting a criminal investigation of the agency.
Meanwhile, a court-appointed receiver is attempting to sort out the agency?s finances.
For 30 years, HEDFC had been the primary agency through which millions of federal housing dollars flowed for building and financing moderate- and low-income housing.
To reach Mike McGraw, call (816) 234-4423 or send e-mail to email@example.com . To reach Michael Mansur, call (816) 234-4433 or send e-mail to firstname.lastname@example.org .