Audit criticizes city's housing rehab agency

January 31, 1992|By Ann LoLordo `

The Schmoke administration's agency for renovating Baltimore's vacant housing and providing affordable homes for the poor has spent more money on new buildings than recycling abandoned ones, a coalition of housing advocates charges.

Although the Community Development Finance Corp. "has done a remarkable job" in its first two years of operation, the quasi-public agency has strayed from Mayor Kurt L. Schmoke's original goal for it, according to an audit by the Maryland Alliance for Responsible Investment.

"The record to date indicates that the CDFC is a construction lender for newly constructed housing developed by a select group of developers that often does not address the needs of the lowest income families," said the audit, which reviewed 27 CDFC-assisted projects that created 623 housing units for low- or moderate-income families and the elderly.

The development corporation was founded to help create 1,000 new homeowners a year and renovate the city's 5,000 vacant houses. It opened in July 1989 with $10 million in public funds and $30 million from local banks.

Of the $19.5 million in construction financing provided by the CDFC, $14 million or 70 percent was for new construction, the audit found. The report said the agency did not have a policy for determining neighborhoods for its efforts or an avenue for community input.

But Frank B. Coakley, the CDFC's executive director, said the housing advocates should "look at the total picture." He defended the agency's commitment to the Nehemiah project in West Baltimore that accounts for more than half of the new construction it has financed.

"Houses that cost $70,000 to build are being sold for $39,000 to people with incomes of $13,000. I think that's a good job," he said.

Other concerns raised by the 16-page report included:

* The CDFC's board, which is chaired by city Housing Commissioner Robert Hearne, is a "rubber stamp" rather than a strong policy-making body. "The basic problem is one of community and civic oversight," said the community group.

* The CDFC has added to the cost of providing affordable housing because of its "onerous legal requirements and costs that make small deals more difficult and unduly burden community-based organizations." The development agency's legal counsel and the firm that handles its transactions exclusively is Shapiro and Olander, owned in part by Ronald M. Shapiro, Mayor Schmoke's chief fund-raiser and campaign treasurer.

* The participation by the private banking community has been "generally weak," the report said. "In some projects, public funds have been used to reduce the amount of private funds needed rather than to make housing affordable to lower-income people."

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