The city government's problem-plagued, nonprofit housing-rehabilitation agency and its economic development subsidiary have a delinquency rate of 42 percent on all loans made to small businesses and are almost $118,000 behind in paying back loans to Washington banks.
City housing director Robert L. Moore said yesterday he wants to sell a group of boarded-up, agency-owned homes to pay off the debts, because the banks "are ringing our bell." Moore recently stripped the housing organization, the D.C. Development Corp., of its control over city housing funds because of alleged mismanagement.
DCDC and its subsidiary, D.C. Investment Corp., were established in the early 1970s to help generate more low- and moderate-income city housing and to distribute loan money channeled from the city and federal governments to small city businesses. Almost from inception, however, the organizations have been criticized for making loans to board members and their friends and relatives. A federal grand jury investigated these practices, but returned no indictments.
Moore said yesterday that he wants to sell 28 of 37 partly vacant and boarded-up houses DCDC purchased two years ago from developer H. R. Crawford, now the Ward 7 City Council member. The highly publicized purchase earned Crawford a $107,000 profit, Moore announced at the time. Crawford himself claimed a "modest profit" of about $150,000.
Since DCDC bought the houses, mostly located in the inner-city neighborhood of Shaw, and assumed all the debts, only nine actually have been rehabilitated and sold to low-income persons. No work was ever begun on the remaining 28 houses, which are still boarded-up and vacant, and now DCDC is $24,335 behind in its payments to two blanks, Moore said.
He blamed former DCDC president Joseph Jackson, who resigned last month, for "not informing the board [of directors of DCDC] that the projects were in trouble."
The severity of DCDC's financial difficulties was revealed at a meeting yesterday of the City Council's housing and economic development committee. Moore told committee members that besides the Shaw homes, DCDC is delinquent on two other Washington properties -- the 84-unit Kenesaw Cooperative in Mount Pleasant and the Wade apartments at 13th and N streets NW. DCDC is $82,339 behind in its payments to two banks on the Kenesaw Cooperative and $12,013 behind in its payments to another bank on the Wade apartments, he said.
DCDC acting president Abraham Beaton said after the meeting that some of the loans made to small businesses are delinquent by as much as six months.
Moore said the city housing department still may take title to the properties from DCDC, a move he threatened last month but did not carry out.
The federal banking regulatory agencies are prodding the banks holding DCDC's delinquent loans to foreclose and take title to the properties, said Moore, who hopes to meet with bankers next week and propose selling some DCDC properties to pay some of its $2.5 million in total debts and rehabilitate still unfinished DCDC properties.
During yesterday's session, Council member David A. Clarke (D-Ward 1) revealed that DCDC was refusing to cooperate with the District auditor currently auditing one specific DCDC housing transaction that was not made public. D.C. Auditor Otis Troupe said his office requested last March 27 the minutes of a meeting regarding that transaction, which have not yet been turned over.
DCDC's Beaton said that since the corporation was not a city agency, their position was that they did not have to comply with a city audit. He did say that since the corporation is technically the housing rehabilitation arm of the city's housing department, he would respond to requests from Moore.