D.C. May Cut Ties With 2 Nonprofits Over Troubled SE Housing Projects

Hopkins, who has led the organization since 1979, is active in District politics. Since 1999, he has given $6,000 to an array of local candidates, campaign records show. AEDC's for-profit subsidiaries, as well as a company in which an AEDC subsidiary has an interest, have donated about $15,000, including $2,000 to Fenty's 2006 mayoral campaign.

AEDC originally proposed building an assisted living facility in the 2700 block of R Street SE and received a $390,000 loan from the city's housing agency. After zoning officials rejected it, AEDC switched to townhouses and the District forgave the loan, much of which Hopkins said had been used for legal fees and to raze a building.

Buyers paid up to $325,000 for eight of the brick-faced properties. Almost from the start, they complained about a variety of problems, including heating and air-conditioning systems that did not function properly on their top floors.

"I feel like I've failed my family," said Paula Lynch, who lives in one of the properties with her husband and their six children. "They don't have heat and air conditioning. They have mold, and we live in a brand-new home. I feel like I've been had."

After Fenty visited residents in May, the District's interim attorney general, Peter Nickles, filed charges against the builder, Arnold Litman, for failing to request or obtain final inspection. Litman's attorney, David Cox, said his client is contesting the charges, which he characterized as "unfair and unfounded."

East of the River has been immersed in local politics since former council member Wilhelmina Rolark helped establish it in the late 1980s. In its early years, the mayor and Ward 8 council member chose its board of directors.

Rick Eisen, an attorney for East of the River, said it has received government funding for seven projects in which it was a lead developer or a partner. Last year, it was a partner in the project that brought Ward 8 its first new supermarket in nearly a decade.

Initially, East of the River requested no D.C. support for Fairlawn Estates, which it touts on its Web site as offering "a suburban quality lifestyle with the convenience of city living." The project's difficulties, Jackson said, began in April 2005, when East of the River's then-executive director was fatally struck by a car.

"There were problems with the administration of the project," said Jackson, who took over in 2006. "The oversight of the general contractor was not sufficient."

The faulty work, she said, included a cracked retaining wall and a manufactured house missing a bay window. Both problems have been resolved.

In April, District inspectors issued a citation because of inadequate fencing to control storm water. The fencing has been replaced. District officials also say that sloping inclines in front of at least five houses are steeper than indicated on design plans, a condition that Loewinger said has caused water to seep into several basements and create mold. Jackson said the mold was the result of vandals breaking windows, allowing rain into four homes. She said the mold has been removed.

Exacerbating its troubles, East of the River also had a payment dispute with its contractor, which put a lien on the project that halted work in November. After it ran out of money, East of the River sought $2.7 million from the city, a request that was rejected because "it didn't seem like a prudent use of funds . . . to bail out a market rate project," said Leila Finucane Edmonds, the agency's director.

East of the River has apologized to prospective buyers and offered refunds. In the meantime, the developer is seeking new funding.

"We don't know how long it's going to take," said Eisen, the attorney for the group. "We can't tell you a specific period of time."