The project illustrates what has gone wrong in the federal government’s $2 billion-a-year program to build homes for the poor, with hundreds of delayed or defunct development deals nationwide.
In Beaumont, 75 miles northeast of Houston, the nonprofit Statewide Consolidated Community Development Corp. was paid $467,000 to deliver 18 units across the city. The money came from the U.S. Department of Housing and Urban Development’s affordable-housing fund. But construction delays and questionable expenses vexed the project, and six years after the money was awarded, construction stopped.
Across the street, Grogan and her family are furious. “We’re trying to do everything we can to make this house livable for my mama,” said Grogan’s daughter, Emma Brocks. “But those new houses have been like that for three years. It’s terrible.”
Officials at Statewide did not return calls and letters seeking comment.
Statewide first proposed the affordable-housing project in 1999. But state underwriters denied the request, saying the developer’s funding sources were “questionable,” site control documents had expired and the profit in the project was too high.
Statewide applied again, and in 2002 received a favorable response. The state housing agency approved a $636,000 HUD loan with 1.5 percent interest over 20 years. In exchange, the developer would build in the neediest neighborhoods of Beaumont.
In 2003, after no work had started, state officials recommended canceling the project. That never happened. Work eventually began, but in 2006, state officials again noted delays. Despite the concerns, the state in mid-2007 granted Statewide a 14-month construction extension.
Almost immediately, housing officials found more problems, including undocumented consulting fees and travel expenses, records show. Statewide also submitted at least $15,000 in expenses to pay a relative of the group’s executive director for ground maintenance and repairs. Housing officials said the payments created a conflict of interest.
With $467,000 spent on the delayed project, the state suspended the contract. In an e-mail to housing officials in late 2007, the executive director defended the project and attributed the delays to soaring construction costs after Hurricane Rita struck in 2005.
A bank moved to foreclose last year, and the state struggled to find a solution. The city of Beaumont offered to buy and complete the properties.
“We’re hoping that we can keep these homes from being demolished, because that’s what would inevitably happen — they’ve been sitting so long,” Beaumont community development manager Johnny Beatty said. “That would be a travesty.”
The state, meanwhile, has not pursued repayment from Statewide.
“As far as we can tell, they don’t operate anymore,” said Tom Gouris, head of state’s affordable-housing program.
The project is particularly unsettling to Grogan, a retired housekeeper who has been trying for years to find the money for home repairs. She and her husband bought the house in 1973 and raised 13 children within its bright orange walls.
Now, the windows don’t keep out the wind. The roof doesn’t keep out the rain. Insects scamper through cracks in the walls and floors.
“I’ve been here all my life,” Grogan said from her rocking chair in the living room.
Across the street, the unfinished homes sit empty, a stark reminder of what might have been.
Staff researcher Jennifer Jenkins contributed to this report.