HUD Chief Accused of Retaliation

As an incentive, the builders were to get a key parcel of land where they would develop 19 homes to be sold at full market rates. But the partnership finished only 80 of the 236 units they contracted to build, because Pennrose pulled out of the project early on. Pennrose President Mark Dambly said the decision was mutually agreed upon by the builders and the housing authority.

The authority stepped in to help finish building affordable homes and rental units with Universal. But Universal failed to deliver any of the services it had promised, Greene said. The authority concluded that, as a result, it was not obligated to give Universal the vacant land where it planned to build market-rate homes.

Greene said Gamble told him in a 2006 meeting that Gamble didn't have to worry about defaulting on the King project, because he had important friends and Jackson was one of them. HUD officials said Gamble socialized often with Jackson.

In September 2006, Gamble invited Jackson to visit him in Philadelphia. After the two men swapped stories about mutual friends and local politics, according to a person familiar with the meeting, Gamble gave the secretary a tour of the townhomes that Universal had built at the King project.

Gamble complained, while pointing out the adjoining vacant property, that the Philadelphia Housing Authority had never turned over the land to Universal, the source said. As he was leaving for Washington, Jackson asked the regional HUD director for Philadelphia to check into Gamble's complaint with Greene.

Universal's president, Rahim Islam, and general counsel, Andre Dasent, speaking on Gamble's behalf, said in an interview that they could not comment in detail on Greene's allegations because they had not yet seen the lawsuit. However, they "vehemently" disputed that Universal was in default on the King project and complained that Greene's stubbornness soured their partnership.

They said that Gamble and Jackson were not close friends, but friendly, and that Jackson was an admirer of Gamble's contributions to his city.

The regional HUD director, Guy Ciarrocchi, who served as Bush's 2004 state reelection director, confirmed in an interview that he called Greene at Jackson's request, asking what could be done to transfer the property. He said he relayed Greene's view of the situation -- that Universal didn't deserve the property -- to Jackson's deputy at headquarters and never heard another word about it.

In December 2006, then-Philadelphia Mayor John Street called Greene to say he'd gotten an "animated" call from Jackson, Greene said in the interview. Jackson insisted that the housing authority turn over the property to Gamble, the affidavit states. Greene reiterated to Street that he wouldn't do it because of Universal's delinquencies.

Street, who is chairman of the authority's board, declined to comment on the conversation, citing the sensitive litigation.

At the same time, HUD was reviewing whether the Philadelphia authority had made an adequate number of housing units accessible to people with disabilities. The law required that 5 percent of units be accessible, and the city argued it had 6 percent. But HUD inspectors concluded that the city had less than 5 percent and had violated the rules.

With support from a national expert on the subject, Greene and his staff argued that HUD's calculations were mistaken and sought a meeting to resolve the disagreement. But HUD officials declined to meet with the authority, saying in a letter included in the court filings that such negotiations would be "premature."

In the following months, Jackson's deputies, including Blom and Kim Kendrick, assistant secretary for fair housing, repeatedly threatened in calls and in writing to find the Philadelphia authority in violation of both federal accessibility law and HUD's redevelopment grant for the King project, according to their letters and the lawsuit. They said the authority was in default on the King project unless it transferred the vacant land to Gamble.

In March 2007, the Philadelphia authority, or PHA, raised the stakes. It filed a complaint with the HUD inspector general seeking a probe of Jackson's office, citing "HUD's attempts to force PHA to give away land at MLK to the politically-connected developer even though PHA believed doing so was contrary to public purposes." The inspector general opened an investigation and interviewed officials in Philadelphia, but has not disclosed any conclusions.

In July and August, Jackson's deputies insisted that Greene sign documents committing to the fixes that HUD prescribed at the MLK site, and return the papers to HUD headquarters within days or the same day, according to the suit. When they called and faxed Greene's office, authority staff affidavits say, HUD staff members said they were speaking at the direction of the secretary. The city authority agreed to everything HUD sought but did not agree to transfer the land, citing its lawyers' assessment.

Greene said he went to HUD's headquarters in Washington last summer to meet with Jackson's deputies to discuss the accessibility dispute. He said he tried to explain why HUD was mistaken in estimating how many of the authority's units were accessible to the handicapped. The lawsuit contends that Kendrick's response reflected "HUD's belligerence" toward the authority.

"Six percent of PHA's units are compliant only if I say they are," Greene recalled Kendrick telling him, according to the affidavit. "PHA's units are 6 percent negative if I say so."

Kendrick said through a HUD spokesman that she never made that comment.

In October, after numerous letters back and forth, HUD agreed in writing that Greene did not have to give the property to Universal. In a December letter, however, HUD told the Philadelphia authority that it must sign a promise to provide more handicapped-accessible units or HUD would revoke a broad agreement giving it flexibility in spending federal funds. Without that agreement, the authority said, it couldn't raise private money and would have a major budget shortfall. The authority sued to block HUD's revocation.

In the interview, Greene, who is black, said Jackson is seeking to help specific black-owned businesses and is sending a message to other housing authorities that they had better not defy him on that agenda. "His wish is to eliminate all resistance to his desire to take care of all these politically connected African American contractors," he said. "I don't see that as my duty."

Greene said, "I'm experiencing what happens when you really say no to the secretary."

Research director Lucy Shackelford contributed to this report.