Former assistant secretary of Housing and Urban Development H.R. Crawford testified yesterday that he approved the 1975 sale of the dilapidated, HUD-owned Clifton Terrace apartment complex to a real estate affiliate of the Youth Pride self-help organization despite numerous warnings about the firm's bad financial management practices.
"There were some compelling circumstances and national political considerations," Crawford said in justifying the sale of Clifton Terrace to P.I. Properties Inc. despite the fact that the firm's expenses totaled $100,000 more than their rent receipts during a year-long trial management period.
"I had made up my mind this was going to happen," Crawford, now the Ward 7 representative on the D.C. City Council, said during 1 1/2 hours of testimony at the conspiracy and fraud trial of Mary Treadwell, the former president of the now-defunct P.I. Properties. She is accused of using the firm to defraud the federal government and the Clifton Terrace tenants of thousands of dollars to enrich herself. Crawford said that at the time he approved the sale, "Clifton Terrace, I felt, could be used as a prototype for minority entrepreneurship." He said he decided the 285-unit apartment complex in Northwest Washington should be sold to P.I. Properties because its parent organization, Youth Pride, "was one of the most respected organizations in the city and they had widespread support throughout the Washington metropolitan area."
Crawford admitted there was a widespread feeling among other HUD officials that Clifton Terrace should not be sold to P.I. Properties. But Crawford said he was adamant that the sale should go forward. "I knew what I wanted to do," he told the federal court jury of eight women and four men.
Crawford said that he also approved reducing the purchase price on Clifton Terrace from $1.2 million to $800,000 after Treadwell complained about the "financial difficulties" P.I. Properties was having in operating the complex. P.I. Properties owned Clifton Terrace for three years before HUD foreclosed on the mortgage in 1978 after the firm had made only four monthly mortgage payments.
Crawford was not asked about the "national political considerations" that he felt justified the sale of Clifton Terrace to P.I. Properties. But after his testimony he recalled for reporters that at the time P.I. Properties first started managing Clifton Terrace in April 1974, former President Richard Nixon was already deeply involved in the emerging Watergate scandal.
As a result, Crawford said, the P.I. Properties venture was "a demonstration that within the administration there were people who cared" about the impoverished who lived at places like Clifton Terrace. "We were attempting to demonstrate that minorities could involve themselves in a worthwhile project."
Crawford's testimony came on the eighth day of the trial, although it was only the first full day of testimony, because of the six days it took to select the jury to hear the complex case.
While testifying that he wholeheartedly approved of the Clifton Terrace sale, Crawford admitted that he would have viewed the sale differently if he had seen some notes Treadwell made at a 1975 P.I. Properties meeting in which she indicated that she might be thinking of selling Clifton Terrace before the 20-year HUD mortgage was paid off.
Under HUD rules, if the agency ever attempted to foreclose on the mortgage, the buyer could keep from losing the property by paying off the entire mortgage and then would no longer have to follow HUD rules to provide low- and moderate-income housing. HUD lawyer Charles J. Bartlett testified that it was a "legal loophole."
In notes she made at a June 1975 meeting, Treadwell wrote, "20-year time reduced. Don't mention legal loophole."
Both Bartlett and Crawford said that if they had known about the note in 1975 they would have questioned whether Clifton Terrace was actually being sold to a nonprofit firm, as HUD rules required.
"It would have been a deviation from the objectives of the department," Crawford testified.
Under cross-examination by John W. Nields, Treadwell's court-appointed attorney, Bartlett conceded that when HUD actually foreclosed on Clifton Terrace, Treadwell contested the action and did not try to pay off the mortgage to keep ownership of the property.