Corruption in Oakland's Section 8 program

Corruption in Oakland's Section 8 program

By Lynda Carson April 21, 2009

Oakland -- As recent as March 17, 2009, the Oakland City Council voted to loan East Bay Asian Local Development Corporation (EBALDC) $1,257,000 for a major renovation project at Effie's House, a 21 unit residential building at 829 E. 19th St., in East Oakland, after Mary Hennessy, EBALDC's director of property management publicly testified on March 17th, that Effie's House was in terrible shape, as she pleaded with the council members, asking for $1,257,000 in NOFA renovation funding.

So desperate to prove to the world that Effie's House is such a wreck in need of major renovations, EBALDC's Mary Hennessy went so far as to bring Deborah Butler, a resident of Effie's House before the Oakland City Council on March 17, and a March 18, Oakland Tribune article quoted Ms. Butler as saying, "The building needs some serious, major work," she said, ticking off a list that included upgrades to paint, appliances, outlets and pipes, among other things. "My (front) door has shifted so I can see the outside light when it's closed. I had to move my bed away from the windows because the air (and water) came in."

The $1,257,000 loan granted to EBALDC is part of a huge $10 million NOFA loan package to a number of nonprofit housing organizations including Resources for Community Development and Affordable Housing Associates, to renovate nine Oakland residential properties filled with low-income families. More than 600 households may be displaced from their housing once the major renovation projects get underway.

Before receiving a nod of approval by Oakland's City Council on March 17, for the $1,257,000 loan, EBALDC also went through a several months long painstakingly complicated process to convince several committees including the Central City East Project Area Committee (CCEPAC), and Oakland's Community and Economic Development Agency (CEDA), that Effie's House was in such bad shape that it has been failing inspections by the City of Oakland recently, including a September 10, 2008, field inspection by Oakland's Fire Department.

Additionly, CCEPAC documents record that on November 3, 2008, Mary-Lucero Dorst of EBALDC told committee members that, "Approximately $1.78 million would be needed to rehabilitate Effie's House. Documents reveal that Mary-Lucero Dorst listed the vast number of improvements that are needed, including some recommendations/requirements made by the fire department regarding the site," as part of her presentation before the committee members.

According to the November 3, CCEPAC documents, committee member Frank Rose asked about whether the residents would be relocated, and if so, how many? According to documents, "Mary-Lucero Dorst responded that all the residents would eventually need to be relocated, but EBALDC will split it up so that one half of the residents will be relocated for 6 months while the necessary work is done, and then they will switch and have the other one half be relocated." The cost of relocation was not factored into their proposal, according to documents.

EBALDC was very successful with their multi-faceted pleadings and presentations before the various committees and Oakland's City Council to painstakingly document the need for a $1,257,000 loan for the major renovation of Effie's House, that was granted as recent as March 17, 2009.

Oddly enough, only 12 days later after successfully portraying Effie's House as being a total wreck in need of major renovations, in a complete role reversal a March 29, letter to the Oakland Housing Authority (OHA) reveals that EBALDC is trying to convince the OHA that Effie's House is in such great shape and that theres been so many upgrades made to the property during the past year, that they are seeking a 64% rent increase from a Section 8 tenant, located at the property.

In a March 29, document to the OHA, EBALDC claims that theres been laundry room upgrades, improvements to landscaping, and the letter mentions the upcoming - major rehab work under the City of Oakland's NOFA funding process, as reasons why such a major 64% rent increase should be granted at this time.

Meanwhile, in the same March 29, document to the OHA, EBALDC failed to mention that they had just spent months convincing the City of Oakland that Effie's House is a total wreck in need of $1.78 million for major renovations, that it has been failing inspections, and that it will end up displacing the tenants from their housing in coming months.

In fact, EBALDC had just intentionally misrepresented (fraud) the facts to the OHA, in regards to the true condition of Effie's House in their rush to gouge a 64% rent increase out of the Section 8 program, a low-income housing program for the poor.

In addition, to give this whole shady affair a deeper perspective, during March 2009, Oakland's Rent Stabilization Program announced that as of July 1, 2009, the allowable rent increases in Oakland were set at 0.7% starting July 1, 2009, through July 1, 2010, despite EBALDC's demand of a 64% rent increase from a Section 8 tenant while spending several months trying to prove that Effie's House was such a wreck that it needed over a million dollars in major renovations.

Disturbingly, the April 17, 2009 letter from the OHA's office of Contract Administration and Compliance, reveals that EBALDC was granted the most part of the major 64% rent increase it demanded, coming up short by only $9.00 per month of their original demands.

Tenants in the Section 8 program and those residing in housing owned by nonprofit housing organizations are exempt from Oakland's Rent Adjustment Program, and are not allowed to fight against rent increases like most renters citywide are allowed, no matter how unfair the rent increases may be.

In this particular case, according to the OHA the tenant is not allowed to appeal the decision of the OHA to grant EBALDC the nearly 64% rent increase, regardless of how bad of shape the building may be currently in.

At this point, one has to wonder who is keeping an eye on Oakland's Section 8 housing program for the poor, and how did the system become so corrupted that the nonprofit housing organization was granted nearly a 64% rent increase by the OHA, while simultaneously claiming to the City of Oakland that the building is such a wreck that it needs over a million dollars in renovation funds.

According to the Council of Large Public Housing Authorities (CLPHA), "The Section 8 Housing Choice Voucher Program serves more than 4.7 million seniors, people with disabilities and low-income families with children by helping them afford decent housing in the private rental market."

"The program is usually administered by public housing authorities (PHAs); they pay landlords the difference between 30 percent of household income and the PHA-determined payment standard - about 90 to 110 percent of the fair market rent (FMR). The rent must be reasonable compared with similar unassisted units and the housing must meet HUD-established Housing Quality Standards (HQS)."

The OHA administers around 11,142 Section 8 vouchers in the City of Oakland, and owns around 3,308 public housing units.

Meanwhile, EBALDC, a 501c-3 charity nonprofit housing organization has just managed to completely hoodwink the City of Oakland into believing that Effie's House is a major wreck and in desperate need of a $1.2 million loan for renovations, which will saddle the low-income renters with a heavy debt for many years to come, while displacing the tenants from their housing when the major renovation work gets under way, in coming months.

At the same time, EBALDC has just fraudulently claimed and managed to convince the Oakland Housing Authority that Effie's House is in such great shape and has had so many upgrades during the past year, that it deserved a nearly 64% rent increase from a Section 8 tenant residing at Effie's House.

Corruption in Oakland's Section 8 program appears to be alive and well.

Lynda Carson may be reached at tenantsrule [at] yahoo.com