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HUD Chief Accused of Retaliation
Philadelphia Officials Sue After Land Dispute

By Carol D. Leonnig
Washington Post Staff Writer
Monday, February 4, 2008

Housing Secretary Alphonso Jackson demanded that the Philadelphia Housing Authority transfer a $2 million public property to a developer at a substantial discount, then retaliated against the housing authority when it refused to do so, a recent court filing alleges.

The authority's director, Carl Greene, contends in a court affidavit that Jackson called Philadelphia's mayor in 2006 to demand the transfer to the developer, Kenny Gamble, a former soul-music songwriter who is a business friend of Jackson's. Jackson's aides followed up with "menacing" threats about the property and other housing programs in at least a dozen letters and phone calls over an 11-month period, Greene said in an interview.

Greene and his colleagues have alleged in the court filing that Philadelphia is now paying a severe price for disobeying a Bush Cabinet official. The Department of Housing and Urban Development recently vowed to strip the city's housing authority of its ability to spend some federal funds, a move that the authority said could raise rents for most of its 84,000 low-income tenants and force the layoffs of 250 people.

The housing authority responded by filing a civil suit in December against HUD and Jackson, in which Greene claimed that the actions by Jackson's department are "retaliatory" and that the Bush administration has exaggerated the troubles it cited as grounds for stripping the funds. Greene said the developer failed to deliver on contracts, leading the housing agency to conclude that the transfer would be improper.

"The secretary was determined that we turn over this land to this specific developer," Greene said in an interview. "I refused. . . . He didn't have the ability to remove me. So he resorted to these extraordinary measures to extract what he wanted." The allegations regarding Jackson's role have not previously been reported.

At the heart of the matter is a dispute over the contract performance of Gamble, a local music legend who helped write such famous 1970s soul tunes as "Love Train" and "Me and Mrs. Jones" before founding a real estate firm to redevelop the downtrodden city neighborhoods where he spent his youth. In 2000, he spoke about self-reliance at the Republican National Convention. He has not contributed to the Republican Party, but he and his company have donated regularly to the state's GOP senator, Arlen Specter, records show.

Jackson, a longtime friend of President Bush, is under investigation by HUD's inspector general and the Justice Department for other alleged acts of favoritism and interference. Jackson's office last week said in a written statement that he could not comment on Greene's allegations because they are a subject of litigation.

According to people familiar with the existing probes of Jackson, investigators are scrutinizing whether he interfered in the operations of housing authorities in New Orleans and the Virgin Islands by helping steer no-bid and inflated contracts to friends, and whether he lied when he told authorities he had not.

Investigators are also examining Jackson's alleged role in arranging a New Orleans Housing Authority contract for a contractor and occasional golfing buddy who allegedly did repairs and remodeling on the secretary's South Carolina vacation home, according to two sources familiar with the probe. Details of these probes were previously reported by the National Journal.

Two senior HUD officials for public housing, Deputy Assistant Secretary Dominique Blom and Associate General Counsel John Herold, said last week that they were not familiar with all of Greene's allegations. But they said they had seen no evidence of a connection between his refusal to transfer the property to Jackson's friend and HUD's finding that Philadelphia had violated federal housing regulations.

Jackson, who ran the District's housing authority in the 1980s, joined HUD as a deputy secretary in 2001 and was named secretary of the $35 billion agency in 2004. He attracted attention in 2006 when he bragged in a speech in Dallas that he had arranged the firing of a contractor who criticized Bush. He later said he concocted the anecdote, and HUD's inspector general concluded that Jackson had not exercised improper influence over contracts.

The dispute between Jackson and the Philadelphia Housing Authority revolves around a city-led revitalization of the once-blighted Martin Luther King Jr. housing project in South Philadelphia. In 1999, Universal Community Homes, a nonprofit urban-development company founded by Gamble, and a for-profit developer, Pennrose Properties, won the first of a series of contracts from the city to develop 236 affordable, below-market units and provide key marketing and counseling services to incoming residents.

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.

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