Building on Broken Promises

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A Broken Promise

Companies owned by developer and former D.C. council member H.R. Crawford has received millions of public dollars in recent years to build and renovate housing complexes. The projects have been marred by delays and controversy. Crawford blames funding gaps, environmental problems and other challenges for the delays.

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When government dollars began to pour in, however, Smith couldn't figure out who was getting paid or what service was being provided, and she feared her signature as head of the tenants association had been forged on checks to contractors, according to her notes. In her files, she noted questions on copies of two checks totaling $7,700, in one case writing, "Not filled out or signed by Florence Smith."

When asked by The Post for an accounting of how Crawford spent the government's money, HUD provided records that often lacked invoices and receipts. Records do show, however, that Crawford spent millions on fees for marketing, consulting, management, security and other non-construction costs.

Crawford reported paying almost $330,000 beginning in 1997 to A&D Security Consultants, which had incorporated only months earlier in the District and listed its address at Crawford's office building on Pennsylvania Avenue SE, records show. The company, which at times collected more than $10,000 a week to provide security guards, had been owned by former D.C. police sergeant Benjamin Ashe, longtime assistant chief Carl V. Profater and former D.C. Black Police Caucus head Lowell Duckett, who had strong ties to Barry. Barry was serving his fourth term as mayor at the time.

Ashe said that the company had been registered in Maryland under a different name and that it got the job from Crawford by responding to a request for security services. Duckett would not comment. Profater did not return calls.

Crawford also paid almost $100,000 in consulting fees to Othello Mahone, former interim director of the city's housing agency. In early 2000, records show, Crawford wrote directly to Mahone seeking housing agency money for two new housing projects. Mahone left the agency that June and within months started working for Crawford as one of six consultants paid to provide construction management at Walter E. Washington Estates.

Mahone said he saw nothing wrong with taking a job with Crawford after he left city government.

"I've done development before . . . and I needed a paycheck," he said.

Another consulting contract for construction management went to Elliot M. Johnson Jr., who had been a housing program specialist at HUD.

In 1997, Johnson, while working at HUD, sent an e-mail to agency staffers laying out "talking points" that supported Crawford's selection as the developer of Walter E. Washington and the fees he had charged. Johnson left HUD in 1998 and became a consultant for Crawford, drawing $179,000 before returning to HUD in late 2000.

Johnson said he was asked to review the Walter E. Washington project by his bosses at HUD. He said he took the job with Crawford because it offered him flexibility and the chance to work in the private sector.

"My interest, background and experience has always been in affordable housing," Johnson said.

HUD records show Crawford paid his own company more than $3.2 million in developer's fees over seven years, roughly in line with the markup other developers say they charge. But he also paid his company an additional $640,000 in fees for such things as marketing and management. Of that, more than $230,000 paid the salaries and benefits for employees at Crawford's management company, records show.

HUD officials say the agency expects developers to pay those expenses from their developer's fee, which is standard in the construction industry. But the agency did not object to the payments when they were detailed in Crawford's expense reports and an audit.

Crawford said his spending was proper. He said that he hired A&D Security to keep watch over a high-crime area and that he had allowed the owners to use his office address because they had just started the company. Crawford said he hired Mahone and Johnson because they understood the affordable housing business.

Although HUD officials said a developer's fee should cover operating expenses, Crawford said he did nothing wrong by billing for both because he was managing the rental complex and redeveloping it at the same time.

"The Crawford method was different because it takes a great deal of effort and staff to manage a project that has deteriorated," he said.

Crawford also said all his fees and expenses were vetted by HUD and financial experts. "A record of every dollar spent was tracked and made public and approved by HUD," he said.

HUD officials, however, said the agency failed to adequately oversee the project.

"There is no doubt that additional monitoring and oversight . . . was needed and would have resulted in more accountability with the developer," said HUD spokesman Brown. "The department is currently reviewing the documents and determining what enforcement actions should be taken at this time."

In the end, records show, HUD never received any of its $25 million back. Although the original agreement with HUD required Crawford to give some of the proceeds of the home sales to the agency, he begged off, saying that construction costs had spiraled. In 2003, he submitted a report to HUD that showed that he would just break even after selling the houses.

HUD waived repayment.

Crawford, however, under-reported the proceeds from the sales. His report showed the houses brought in $15 million, with his company receiving $1 million in sales commissions. But land records analyzed by The Post show the homes sold for about $17.7 million.

Crawford could not account for the discrepancy but said all the money from the home sales went into the construction of the project.

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For its part, HUD was supposed to track how much money Crawford repaid and how many original tenants bought into the new community.

In 1997, a Post reporter asked HUD why Crawford had been given $25 million even though he had been fired by the agency years earlier, prompting then-HUD Secretary Andrew Cuomo to direct the inspector general to review the project. The inspector general's report, which looked only at the start-up of the project, recommended, among other things, that HUD provide more oversight to ensure that the original tenants had the opportunity to buy the new houses.

In response to the report, HUD officials asked Crawford to provide monthly updates detailing the income of buyers and whether they were former tenants. Crawford told HUD that many tenants did not respond to letters alerting them to the home sales.

The letter, however, said nothing about local subsidies or the trust fund, both of which could have helped tenants buy a house. Crawford told them only that, "Walter E. Washington Estates, a townhouse community of affordable three and four bedroom houses, is now open. If you are credit worthy, you may qualify for one of these new units. Please feel free to stop by if you would like."

HUD did not investigate further.

Crawford said that he provided homeownership workshops and counseling but that most tenants couldn't qualify for mortgages. He said he decided not to use the trust fund to subsidize down payments and did not pursue the rent-to-own option detailed in the agreement with HUD.

"Everyone could not afford to become a homeowner, nor had the credit to buy a home," he said. "I am confident to say that everyone . . . ended up with better housing than was offered on the site at that time."

When the complex was almost complete, Crawford sold one of the houses to his daughter and included his name on the deed even though he had promised in a 1996 letter to the city that "neither I nor my company will have any ownership interest in this property." The house has more than doubled in value to about $320,000. City officials would not discuss the property-tax exemption, saying only that "the property owner met the legal requirements."

Crawford, who owns or has an interest in other local properties assessed at a total of about $4 million, said he simply co-signed the mortgage for his daughter. The house sits on a hill with a commanding view of Southeast, just above a neighborhood street that bears his name: "H.R. Drive."

In 2003, records show, HUD stepped in again, asking Crawford for an accounting of the $2 million trust fund he had been required to set up to help tenants and the new homeowners association. Crawford submitted a chart to HUD showing that the fund had been depleted, but he did not say what the money had been used for.

His reports showed that the money had been transferred into a separate account established to maintain the neighborhood and that the account, which Crawford managed, had been running in the red for more than two years.

Again, HUD did not investigate further.

In 2005, a security company sued the homeowners association for failing to pay a $20,000 bill. Homeowners demanded that Crawford account for the money in the fund, eventually hiring a forensic accountant to track the dollars.

"That's when a can of worms began to open," said homeowner Joe Madison, a radio show host. "Where was the money?"

Madison and his wife moved into Walter E. Washington Estates in 2002. He said Crawford, whom he had known for years, urged him to settle there and had paid him $7,500 as an incentive to move in. Madison, who said he did not ask for the money, said Crawford wanted to show that prominent families were interested in the neighborhood. According to an audit submitted to HUD, Crawford labeled the expense as "marketing."

Over time, Madison said, he and other homeowners began to suspect that Crawford wasn't spending money properly. They said their suspicions were confirmed by their accountant, who found that Crawford had inappropriately charged the homeowners association $900,000.

Crawford disputed the allegations, saying that costs in the project went "haywire" and that the dues paid by homeowners were too low to subsidize expenses.

To settle the matter, Crawford said he wrote a check for about $175,000 to $200,000 to the homeowners association.

Years later, the effects of the depleted account can be seen throughout the neighborhood: The pool has been closed for two years, the gates at the entrance often don't work and security cameras are broken.

"It was just chaos . . . everything was out of order," said homeowner Jerome DuVal, who moved his family out of the neighborhood in 2006. "There were a lot of false hopes."

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Riding a wave of praise for the development of Walter E. Washington Estates, Crawford was awarded millions of dollars from the city for four more projects meant to provide hundreds of homes for working families.

In 2003, the housing agency used HUD money to lend Crawford $2.3 million so he could buy and redevelop the 291-unit Parkside Terrace apartment complex in Southeast.

Records show that Crawford used more than $500,000 to pay deferred maintenance, old bills and operating deficits at the complex. HUD officials say they expect developers to cover their own operating expenses and use HUD money to produce housing.

HUD also expects developers to begin construction within 12 months. But three years after receiving funding, Parkside Terrace had not been renovated. Most of the HUD money was gone, and every tenant had moved out.

HUD officials said the city housing agency was supposed to monitor expenses and deadlines and had been chastised in a 2006 HUD report for ineffective oversight at Parkside and other housing projects.

In 2006, with Parkside at a standstill, Crawford cut a deal with help from the housing agency.

The nonprofit D.C.-based Community Preservation and Development Corp. stepped in to buy Parkside Terrace. Under the terms of the sale, Crawford received $7 million for the property, an estimated $5 million more than he had paid for it. Community Preservation assumed Crawford's unpaid HUD loans, with the city providing new funding so the nonprofit group could repay them.

"It was a failed project that everyone agreed needed to be fixed," said Gerry Joseph, Community Preservation vice president.

Crawford remains a partner in the project, which could bring him about $1.3 million in developer's fees, records show.

He struck a similar deal at Trenton Terrace Apartments in Southeast, a project that was also years behind schedule, freeing himself from an unpaid city loan through a deal with a new developer while selling the property for $1.6 million more than he had paid.

Crawford said the income wasn't all profit because he had to repay other loans and liens. He said that he tried to rehabilitate both developments and that his expenses were legitimate. At Parkside, he said he performed extensive analysis and repairs but in the end found that more money was needed to get the job done. Trenton Terrace, Crawford said, was plagued by crime and environmental problems, such as lead-based paint, and the city wanted to tear down the complex.

Crawford said he eventually sold most of his interest in the properties to bigger developers who had "access to resources as well as a commitment to low-income housing."

"I am in this business to make a profit," he said. "If you can provide an exceptional service that helps to lift people up from despair while making an honest living, then you are either talented, lucky or both."

Staff researcher Meg Smith and database editors Sarah Cohen and Dan Keating contributed to this report.