D.C. Mayor Vincent C. Gray said he would ask the Office of the Inspector General to investigate how and why the city poured $5.5 million into a plan to renovate vacant apartment buildings in a deal that went sour.
Peaceoholics, the nonprofit organization that proposed building the housing for at-risk young men in 2008, no longer owns the three apartment complexes, which were purchased with money from the city’s Department of Housing and Community Development.
The housing agency appears to have done little vetting before it transferred the properties in 2011from Peaceoholics to Richard Hagler, who has faced more than a dozen lawsuits in the District and Maryland alleging such problems as shoddy construction and breach of contract.
At one of the complexes, some tenants complain of poor maintenance, rodents and other issues. Another complex in Southeast Washington appears to have been renovated but remains shuttered.
Gray (D) said his administration must take steps to ensure that such plans “reach the people who need housing” and “do what those programs were designed to do.” The project began under the previous administration, headed by then-Mayor Adrian M. Fenty (D), who frequently praised Peaceoholics.
Gray noted that DHCD already has taken steps to terminate one employee and placedanother employee on leave. The Washington Post, which documented the ill-fated project in a story Monday, has identified those employees as chief program officer Chris Earley and project manager Ray Slade, respectively.
Peaceoholics, which had no previous experience in development or operating housing, also had no backing from a bank. Instead, the group received a $1.6 million construction loan through a private lender.
DHCD agreed to put up the three buildings as collateral for the loan, which put the city in danger of losing them when Peaceoholics could not make payments.
Last year, Hagler became the owner, but now he is having difficulty paying the lender. Hagler did not return calls for comment.
D.C. Council member Jim Graham (D-Ward 1), who heads the Committee on Human Services, said he is still confused about what happened to at least $1 million in city funds. “There is money which is unaccounted for,” he said. “It seems this was a building project in search of a mission rather than a mission in search of a building.”
Graham and D.C. Council member Michael A. Brown (I-At Large), who oversees the Committee on Housing and Workforce Development, have also called for an inspector general probe. “At every turn, it doesn’t pass the smell test,” Graham said.
The council member said he would like to see some of the apartment units used for their original intent: to house at-risk youth. He said that’s why he began asking questions. “What’s clear about this was the losers were the youth,” he said.
Staff writer Debbie Cenziper and researcher Jennifer Jenkins contributed to this report.