Federal officials have sharply criticized the District's chief program for providing home improvement loans to low-income residents and warned that sanctions could be imposed if the city fails to reduce excessive administrative costs and increase the program's project completion rate.
The D.C. Department of Housing and Community Development spent an average of $11,300 to process each of 52 low-interest home rehabilitation loans it granted last year while the average loan was $19,936, according to federal officials.
The U.S. Department of Housing and Urban Development, which provides about half the loan program's annual budget, found that 51 cents of every federal dollar in the program in 1985 was spent for administrative costs. HUD guidelines recommend limiting administrative costs to 15 cents of each federal dollar.
HUD also found that each D.C. program staff member concluded an average of four remodeling loan transactions last year -- a productivity rate far below that of similar programs in other cities.
Federal guidelines require that each program staff member complete at least 25 cases per year, including arranging for the loan and seeing that the remodeling work is completed. The case completion rate for other large cities ranges from 20 to 74 per staff member, according to HUD figures.
Some participants in the D.C. program complained in recent interviews of delays of up to two years in getting their loans approved. They also said that contractors they selected from lists provided by the city did shoddy work on their homes.
In one case, a newly installed bathroom sink fell off the wall. A 28-year-old homeowner, who asked not to be identified, said he fired his first contractor after the foundation of the back porch had to be rebuilt twice and after his new sidewalk began to crumble.
"I just feel like screaming," said Gladys Grayton, 56, who obtained a $39,000 loan to repair her Northeast Washington home. "I am sorry I ever heard talk of the program. I wish I had gone through the bank. I just think the city could come in here and do the house and stop trying to make everything so no blame can fall back on them."
In 1980, HUD placed a moratorium on the use of federal funds for the D.C. program because of a large backlog of applicants and problems with record keeping and inspections of remodeling work. The moratorium, which shut down the loan program, was lifted about two years later after the city adopted new procedures.
But following a 1985 review, HUD notified the District in December that sanctions could be reinstituted if the program's cost-effectiveness and efficiency continued to decline, according to HUD documents.
The rehabilitation program is the second District housing program to undergo close federal scrutiny. In March, HUD Secretary Samuel R. Pierce Jr. ordered one of his assistants to form a special task force to assist the city in resolving problems in public housing that were cited in a 1984 federal audit but never corrected.
I. Margaret White, manager of HUD's District field office, said this week that HUD will determine what, if any, action to take after a review of the District's low-interest loan program.
Sanctions could include placing conditions on the federal money used for the program or another funding moratorium, White said.
"They are slipping back into the same problems we saw when we shut down the program a few years ago," White said yesterday. "We are very concerned because we want to make sure that too much time does not elapse before the corrective measures are taken."
Shirley T. Diamond, the District's neighborhood improvement housing administrator who oversees the rehabilitation program, disagrees with HUD's analysis of administrative costs. She said that the seven D.C. employes who work on the program also perform other tasks and that HUD had trouble isolating staff time spent on the rehabilitation program.
Diamond said the D.C. housing department had not calculated the costs but is developing its own time-accounting system.
"It is really a negotiating process," Diamond said of HUD's view of the program. "It really does HUD no good to impose sanctions because they're not going to run the program. They have told me they don't want to do that and I don't want them to do it."
The seven-year-old program, called the Single-Family Rehabilitation Program, is used by the city housing department to improve deteriorating properties for low-income homeowners and owners of one to four units of lower-income rental housing.
The program, which received $3 million in federal funds and nearly the same amount in D.C. funds in fiscal 1985, grants low-interest or deferred loans of up to $50,000 for owner-occupied houses and up to $95,000 for four-unit properties, according to housing officials.
Of the 20 program participants contacted by The Washington Post recently, nearly everyone praised the program's emphasis on correcting housing code violations for people who cannot afford to make repairs.
"Without that, we could not afford to get our houses done and they would just go downhill," said Shirley B. Pringle of Northwest Washington. She said she received a $30,000 low-interest loan to repair the roof of her home, upgrade plumbing and electrical wiring and do other work.
But many of the loan recipients were highly critical of the way the program is managed, saying that the city lacks the proper sensitivity to the frustrations encountered by homeowners who have little or no experience in monitoring construction work.
Clyde Prentice, who received a $19,000 loan to make repairs at his home at 1829 Fourth St. NW, said he moved out of his house in anticipation of the construction work and said he felt pressured into accepting what he described as unprofessional work.
"He the contractor couldn't do the work, but when I recognized that it was too late," said Prentice, whose bathroom sink fell off the wall after the remodeling was completed.
Landen McCall, chief of the rehabilitation program, said the city gives loan recipients a list of housing contractors but does not officially endorse any of them. He said the list includes contractors who are licensed, bonded and have done statisfactory work for the District.
"There is a consensus in the community of a feeling that if the government puts money into it, the government should be responsible for it," said McCall. "We are trying to tell people that that is not the case."
McCall said the housing department provides technical support through preconstruction conferences and inspections of the completed work, but the city does not get involved in disputes between contractors and homeowners.
Nevertheless, some program participants believe that the city should monitor the program more closely.
Gladys Grayton said that although the renovation work on her house was supposed to take four months, it remains uncompleted after three years because of a dispute she has with the contractor over the quality of the work.
Grayton said her contractor, whom she selected from the District list, walked off the job after she complained about the paint job in her kitchen and refused to let the contractor paint other rooms. She said she became convinced that the workers were incompetent after they painted her kitchen without repairing a huge hole in the ceiling and a hole in the wall.
Because the construction work was never completed, Grayton has lived in the house without heat for three winters. The stove and sink were never installed in the kitchen, only two ceiling lights work, and her basement door is without a knob and lock.
Kent Boucher, a Claxton Walker & Associates housing inspector hired by The Washington Post to look at Grayton's house, concluded that the house was "not habitable." Grayton said she was told by the housing department that she will need an additional $10,000 loan to complete the work she wants done on the house.
"I got into debt for that much money in good faith, and I don't see why I should get into extra debt to pay for their wrongdoing," Grayton said.
Diamond, who maintains that Grayton dismissed her contractor, called Grayton's situation "unfortunate" and said she spent about a year trying to resolve the matter. She said that some loan applicants own very old property and can't afford to take out a loan large enough to cover all the costs of rehabilitation.
"Many of the homes have had no routine maintenance and are in such dilapidated condition that it would take more money than what they are able to borrow," said Diamond. "Still a lot of people believe that for $30,000 they are going to get a brand new house or a Taj Mahal."
Florence Hall, who lives at 804 K St. NE, said she only wanted the contractor to comply with the repairs included in her contract but had to file a grievance with HUD and threaten to stage a sit-in at Mayor Marion Barry's office before she could get the city to listen to her complaints.
"I have never done any carpentry work in my life, and I could have done better myself," Hall said of the work done on her house. "The bathroom looked like a bunch of kids were up there trying to play carpenters."
Hall said shortly after the bathroom plumbing was supposed to be fixed, it began to leak and caused a portion of her kitchen ceiling to fall. Months after the contractor left, Hall said the newly installed tile on the bathroom floor began to pop up.
Sarakinis Contracting Co. of Arlington received the contract to do Hall's house. Irene Sarakinis, who was in charge of the job, said because she had hired a new crew for Hall's house, the work didn't require as much expertise as work she had done in other homes.
Nevertheless, Sarakinis said she did extra work that she did not charge for to make certain that she got paid for the work included in her contract.
"When you give more than what is in your contract, they homeowners expect to get every inch of blood that you have left," said Sarakinis, adding that Hall is only the second homeowner to complain out of the 35 contracts she has had under the program.
HUD determined that the city took from one to two years to process some cases, according to White. HUD recommends that applications for loans of $12,000 or more should be processed and construction work completed within six months.
Yvonne Bowlding said it took the city 1 1/2 years to process her application for repairs that included a leaky roof.
"The roof was leaking when I applied for the program," she said. "By the time I got in, the roof had fallen in three places. If a person has a major problem, it is obvious that the problem will be more severe."