Federal legal aid for poor spent on alcohol, staff loans, report says

http://www.cnn.com/2008/US/01/17/legalaid.programs.ap/index.html

Congressional investigators: Legal Services Corp. didn't monitor how money spent
The nonprofit, funded by Congress, distributes grants to legal aid groups in all states
Top LSC officials say they don't tolerate "spending of grantee funds outside the law"
Report questioned the use of more than $1 million in payments

WASHINGTON (AP) -- Congressional investigators say legal aid programs serving poor people spent federal money on alcohol, interest-free loans for staff, late charges on overdue bills and even lobbyist registration fees.

The parent organization that distributes grants to programs in all 50 states, Legal Services Corp., failed to monitor how the money was spent by state and local legal aid officials, according to the investigators in a new report. It did not specify how much money was misspent but questioned the use of more than $1 million in payments.

The new report, obtained by The Associated Press, was based on examination of spending at 14 of 138 legal aid programs financed by the Washington-based Legal Services Corp.

The top officials of the Legal Services Corp. responded, "We have no tolerance for any spending of grantee funds outside the law or the regulations of the LSC, and have formally referred all potential violations noted in the report to our Office of Inspector General."

"We will take whatever actions are warranted when all of the facts are known," said corporation President Helaine Barnett and Board Chairman Frank Strickland.

Among the organizations whose activities were questioned in the report: Nevada Legal Services Inc.; California Indian Legal Services Inc.; Legal Aid and Defender Association of Detroit, Michigan; Legal Services for New York City; Philadelphia Legal Assistance Center; Wyoming Legal Services; and Laurel Legal Services Inc. of Greensburg, Pennsylvania.

Some of those groups were not identified in the U.S. Government Accountability Office report, but congressional offices disclosed they were among the ones targeted by GAO investigators.

After an April 2006 visit to the Las Vegas office of Nevada Legal Services, the GAO cited the conclusion of inspectors checking the program's performance: "Overall, this program is in very good shape. Its delivery structure is sound, its management is excellent, and its case handling staff are performing at a high level."

But less than one year later, during a February 2007 visit by compliance inspectors and congressional investigators, federal officials decided to investigate questionable transactions, including a complex $3.6 million real-estate deal.

The Legal Services Corp., a nonprofit corporation funded by Congress, distributes grants to legal aid groups in all 50 states. The state and local groups help poor people involved in civil cases, including domestic violence, child custody, housing foreclosures, veterans and Social Security benefits, consumer problems and health issues. Three of four clients are women, mostly mothers.

Congress gave the group $348.6 million for the last fiscal year.

The Associated Press previously reported on extravagant spending on hotels, meals, limousines and other perks by the corporation's presidentially appointed board of directors and top staff in the Washington headquarters.

The latest report angered two lawmakers who have been monitoring the program's problems.

"It is not acceptable to Congress or the taxpayers for scarce funds to be spent on the enrichment of others instead of on legal services," said Sen. Mike Enzi, R-Wyoming, senior Republican of the Committee on Health, Education, Labor and Pensions.

Sen. Charles Grassley, R-Iowa, senior Republican on the Senate Finance Committee, said the findings were "more documentation of abusive and wasteful spending that is jeopardizing the ability of the Legal Services Corporation to provide legal assistance to people in need."

Among the findings:

• The New York City, Detroit and California Indian Legal Services programs used federal money to buy liquor. Federal guidance for nonprofit corporations states that costs of alcohol are unallowable with no exceptions.

The New York officials did not return telephone messages by the AP requesting interviews. An official in Detroit declined to comment.

The California program didn't violate any rules, its executive director, Devon Lomayesva, told the AP. She said her group was willing to discuss the matter with the parent corporation's inspector general.

The GAO said the Detroit executive director acknowledged her program paid another organization for beer and wine costs for a reception.

The New York City executive director told GAO investigators, "LSC funds are no longer used to purchase alcohol."

• In Detroit, a contractor was paid far more than staff members, about $750,000 between 2004 and 2006, to operate computer servers and maintain the computer network. When asked by investigators why he was not an employee, with a commensurately lower salary, "he stated that there were benefits to being an independent contractor," the GAO said. The GAO said there appeared to be little distinction between the contractor and other legal aid employees in the same office.

• The Philadelphia office gave employees the perk of interest-free loans, which were used for college tuition, down payments on homes and purchases of personal computers. The GAO said there are no rules that would permit such loans.

The Philadelphia office did not return telephone messages left by the AP.

• In New York, the group used grant money to pay for lobbyist registration fees. With only limited exceptions, recipients cannot use grant money for lobbying. Each payment was only $50, but the executive director there agreed the payments violated its rules and promised it will not happen again, the report said.

• California Indian Legal Services, the New York City program and Wyoming Legal Services used funds to pay late fees on overdue accounts. In Wyoming, a vendor who was angry about unpaid office rent "threatened to place a lien against the goods in the unit and sell them at a public auction," the GAO said.

Wendy Owens, executive director of the Wyoming organization, told the AP, "Those late payments occurred under the tenure of a previous executive director and we have long since corrected those issues."

The GAO said all three executive directors agreed there was no excuse for failure to make payments on time.

• In Greensburg, Pennsylvania, the executive director was questioned by the GAO about a $30,000 payment to another organization. The director "stated that the previous executive director entered into the agreement and that she did not know anything about the agreement, other than the fact that she continued to pay the bill every year," the GAO said.

The executive director, Cynthia Sheehan of Laurel Legal Services Inc., disputed the investigators' conclusion, saying the money went to a bar association's free legal help program.

"I can assure you I did know what it was and that the Legal Services Corporation approved the contract every year," she told the AP.

• The Las Vegas office purchased its building with federal and non-federal funds and then agreed to sell it to a developer for $3.6 million, the GAO found.

When the sale fell through, the organization was able to keep $280,000 that the developer placed in an escrow account as "earnest money."

However, the $280,000 was placed in an account that was immune from any controls by the Legal Services Corp.

Investigators described the deal as an "unusual transaction." Legal Services officials eventually concluded the funds should have gone to a restricted account and kept under their scrutiny.

Nevada Legal Services officials declined to comment.

 

newsday.com/news/local/ny-enheal0102,0,1238070.story?coll=ny_news_local_promo

Newsday.com

Funding special districts

The perks your tax dollars pay for

BY SANDRA PEDDIE

sandra.peddie@newsday.com

11:30 PM EST, January 1, 2008

The Federal Bureau of Investigation’s Management of Confidential Case Funds
and Telecommunication Costs

Audit Report 08-03
January 2008
Office of the Inspector General

 

"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said. 

Your Tax Dollars Not at Work

http://www.pitch.com/2008-01-03/news/your-tax-dollars-not-at-work/full

The Citadel Plaza shopping center was supposed to revive the inner city. Instead, it has leveled a neighborhood and left a contaminated mess. Now the developer wants more of our money.

By Carolyn Szczepanski 

Published: January 3, 2008

Behind Benni Ewing's house, there's a festering, empty expanse where a shiny new shopping center should be.

The area looks like an abandoned dumping ground. Hip-high weeds blanket awkward mounds of dirt. Unruly vines creep up half-toppled utility poles. Huge piles of rubble sit next to streets with no houses.

On the northeast end of the 35-acre tract, a crumpled stretch of chain-link fence arches up from the ground like the skeleton of some prehistoric beast. In the middle of the raw landscape, one boarded-up white house stands like a ghost of the former neighborhood.

The place looks like a forgotten war zone, not the site of one of the largest taxpayer-backed projects ever in Kansas City.

Behind a standing portion of the chain-link fence, signs read "COMING SOON: CITADEL PLAZA." But it has been seven years since an organization called the Community Development Corporation of Kansas City started this project at 63rd Street and Prospect. Construction on the 300,000-square-foot shopping center was supposed to be finished by the end of 2007.

Ewing lives in a five-bedroom house on Park Avenue, where homes were to be leveled to make way for Citadel Plaza. The 40-year-old Sprint employee says she got a letter from the Community Development Corporation of Kansas City in October 2006, telling her that the developers intended to buy her out. Ewing says her house has been in her family for 37 years, so when the CDC-KC offered her $42,000 to move, she said, "No way."

She expected a negotiation. But in the past year, she hasn't heard again from the CDC-KC. She has listened to the rumble of backhoes and bulldozers, though, as the organization continued demolition on her street. "They call our neighborhood blight, but look what they've turned it into," she says.

She points to the ripped-up sidewalk in front of her house. Down the block, orange pylons spill into the street, next to muddy lots. An oversized tumbleweed of discarded plastic fencing spasms in the wind. An explosion of trash — a splintered television, a rolled-up rug, a handful of black garbage bags — has been splayed over the curb for months.

"Why are they doing this to my family?" Ewing asks. "Why are they making us live like this and not communicating with us?"

The man who could answer those questions is William Threatt Jr., president of the CDC-KC. If you ask him, the area is evidence of a groundbreaking achievement to bring big-name retailers to an underserved community. He'll tell you that the CDC-KC just needs the city to front it $45 million to make sure the project doesn't fall through.

But if the recent past is any indication, that would be a risky investment.

Before Terry Riley was the city councilman for the 5th District, he was an AmeriCorps volunteer in 1994 and 1995 in one of Kansas City's toughest neighborhoods. The Blue Hills neighborhood — bounded by Prospect on the east, Paseo on the west, 47th Street on the north and 63rd Street on the south — was a neglected and dangerous slice of the urban core.

"Blue Hills Park was known as a gang park. It had bullet holes in the backboard of the basketball goal," Riley says.

Volunteers worked to shut down crack houses and start block watches; they began to improve the housing stock and encourage homeownership.

In 1994, City Hall marked the southeast corner of the neighborhood as part of a massive tax-increment-financing plan — a 14-project initiative that would front developers some future tax revenues if they would help revive blighted areas. Riley says the blocks around the intersection of 63rd Street and Prospect were perfect for city incentives.

"I mean, it's everything you can possibly imagine: the blight, the crime, the land, the poverty levels, everything," he says. "It fits the criteria like none other."

Finding someone to redevelop the area wasn't easy, though. Residents wanted a full-service grocery store and other retailers. Will McCarther, now the vice president for community affairs at Research Medical Center, was part of the original team tasked with getting the project off the ground. He says he met with the city's big-name developers, but they weren't interested in taking on the Citadel Plaza.

The CDC-KC seemed like a good fit. The idea of community-development corporations grew out of a federal push, in the 1960s, to revitalize declining inner-city communities. CDCs use public funds to jump-start new projects in blighted areas that traditional developers and private funders consider risky investments.

Established in 1974, the CDC-KC is one of more than 4,000 such entities across the country. But like many of them, the CDC-KC is small. Threatt, who makes $92,000 a year, according to the group's most recent tax filing, says it has only five full-time employees, down from as many as 30 in the late 1990s. For the most part, Threatt says, the CDC-KC contracts with outside experts for specific projects.

When it came to finding a developer for the Citadel Plaza, the CDC-KC wasn't a stranger to the neighborhood. In recent years, it had developed the Linwood shopping center at 31st Street and Prospect and the Metro Plaza at 63rd and Paseo.

But Citadel would be a much larger undertaking than anything the CDC-KC had done. Spanning seven city blocks, the new shopping center would include more than 320,000 square feet of retail space — more than three times the size of the CDC-KC's biggest previous project. With millions spent on street beautification and redesigning a portion of 63rd Street, the total price tag would exceed $80 million — considerably more than the $12 million spent on Linwood.

Maps and diagrams fill the small conference room in the CDC-KC's office on Linwood. According to project outlines, the Citadel Plaza will include staple goods and services, such as a supermarket, a shoe store and clothing retailers. But it will also include a day spa, a fitness center and an art gallery. Threatt won't divulge company names, but he says the CDC-KC has secured letters of intent from businesses that will occupy more than 70 percent of the space, including an anchor tenant.

Market studies commissioned by the CDC-KC indicate that area residents have more than enough buying power to make the center profitable. According to a study by St. Louis-based Development Strategies, people living within three miles of the site spend more than $1 billion every year on the same goods and services envisioned for Citadel Plaza. No longer will urban residents have to drive to midtown or Independence to get fresh vegetables and baked goods, Threatt says. The development will draw from traffic along U.S. Highway 71 and thousands of employees at nearby Research Medical Center.

In 2001 and 2002, the federal Department of Housing and Urban Development awarded the CDC-KC nearly $3 million in grants to buy properties and demolish them. Kansas City lent the CDC-KC $1 million in late 2005 and another $200,000 in early 2006. The city also advanced $3.5 million in TIF funds in 2007. Threatt says Citadel Plaza has plenty of private backing as well, though he won't name names. Of the $80 million price tag, Threatt says, less than 6 percent will come from taxpayers.

Based on the scarred and trash-strewn landscape at 63rd Street and Prospect, Citadel has a way to go. But Threatt thinks his group deserves congratulations. This project, he says, is far more difficult than the typical shopping-center development. The typical developer, Threatt says, buys empty plots from a single owner and starts leveling the land. But the CDC-KC has had to knock on the doors of more than 150 houses and businesses, negotiate with scores of homeowners and banks, then tear down dozens of structures.

There are only a few properties left to be acquired, a handful of structures left to demolish.

"The risk is over," Threatt says. "They said it couldn't get done, and we've done it."

But that's far from the truth.

ill Threatt is a somber man who speaks with the slow, methodical cadence of a professor lecturing first-year students.

When it comes to the Citadel Plaza, Threatt deflects criticism with indignant certainty of the project's merits and his organization's progress.

Threatt has a long history in housing and public service. He worked for HUD in the late 1970s and early 1980s. As an associate superintendent for the Kansas City, Missouri, School District, he oversaw the security and management of the district's many buildings. He did consulting work for the CDC-KC before he stepped in as president in 2000.

But Threatt and the CDC-KC have some troubled spots on their development records.

In 1988, Threatt was a representative for a development company called 7th Street Investors. That year, the now-defunct Housing and Economic Development Financing Corporation (a nonprofit agency that managed the city's spending of federal housing funds) lent the group $82,000 to renovate two apartment buildings in the 5900 block of Benton Boulevard. The term of the loan was 15 years, but from 1988 to 2003, Threatt's investment group didn't make a single payment. In 2004, taxpayers recovered little more than half the amount when 7th Street Investors paid off $50,000 and the loan was settled.

Later, there were more loan problems. Shortly after he took the reins in 2000, Threatt says, city officials asked the CDC-KC to renovate an apartment building at 2901 East Linwood. The group used $102,000 of the city's federal housing money to buy the building and assess its rehab potential. In August 2004, though, the structure was placed on the city's dangerous-buildings list after neighbors complained about vagrants squatting there.

Nathan Pare, manager of the city's dangerous-buildings department, says that when the city inspected the property, the roof was shot, the foundation was separated and the building was wasting away from years of neglect.

For three years, city officials sent the CDC-KC letters, posted notifications on the structure itself and filed notices with Jackson County. "We never had any feedback from them whatsoever," Pare says of the CDC-KC.

In November, the city tore down the building at a cost to taxpayers of $21,825.

Around the same time that 2901 East Linwood went on the dangerous-buildings list, another CDC-KC property burned.

Carolyn Turner purchased a home on East 61st Street from the CDC-KC for $97,500 in 1999. But the CDC-KC hired a builder — Nelson Construction — that installed the wrong countertops in the kitchen, laid the wrong floor in the downstairs bathroom and hung octagonal windows in square holes.

"I wrote to everybody at CDC, and they kept telling me I need to talk to somebody else," Turner says. "Everyone kept passing the buck."

On July 2, 2004, Turner's son came home to discover that the house was on fire. In 2006, she filed suit against the CDC-KC to recoup the repair costs; according to court documents, an investigator concluded that the fire was linked to improper wiring for the microwave. In December 2007, a judge ordered the CDC-KC to pay Turner $3,300 to fix the exterior of her house.

That's not the only time that the CDC-KC has been to court in the past two years. In 2006, Douglass National Bank sued the CDC-KC after it defaulted on a $500,000 promissory note. A circuit judge ordered the CDC-KC to repay the note plus $50,000 to cover interest, late fees and attorneys' costs.

Three months after the ruling, the CDC-KC handed over $200,000 to settle another lawsuit in federal court. That dispute dated back to 2004, when the Aldi supermarket chain contracted with the CDC-KC to assemble property near 30th Street and Prospect for a new grocery store. Aldi pulled out of the deal and for two years tried to recoup $200,000 it had put in trust. The CDC-KC ignored or denied Aldi's requests to release the money. In June 2007, the CDC-KC returned the money and the case was dismissed.

The CDC-KC was held in contempt of court last year. That dispute had to do with the CDC-KC's partner in the Citadel Plaza development: New Markets LLC, based in Las Vegas. In 2003, New Markets failed to pay a Pittsburgh architectural firm $64,000 for design services. Attempting to recover its costs, the architectural firm sued to garnish New Markets' stake in the Citadel Plaza.

The CDC-KC and Citadel Plaza LLC were decidedly uncooperative. For months, Citadel Plaza LLC — represented by Phillip Kusnetzky, also the attorney for the CDC-KC — ignored the court's order to respond to questions. In March 2007, Threatt didn't show up to his deposition, even after being served with subpoenas and rescheduling the deposition three times. In September, a Jackson County judge held the CDC-KC and Citadel Plaza in contempt. (New Markets satisfied its debt with the Pittsburgh firm in late October 2007, and the contempt charge against CDC-KC was dropped.)

Threatt says the New Markets lawsuit was nothing more than lawyers fighting with each other, and that his attorney told him not to attend the deposition. He says there was no wrongdoing in the case of the 7th Street Investors loan, and because the money stopped flowing from the city, the CDC-KC had inadequate financial resources to deal with the now-demolished building at 2901 East Linwood. Threatt also insists that Turner's lawsuit was without merit and that, in the supermarket case, it was the Aldi chain that violated the contract, not the CDC-KC.

Lawsuits and loans aside, even CDC-KC's successes have been qualified — most notably, the Linwood shopping center at 31st Street and Prospect.

Threatt acknowledges that the original concept — to create a shopping center featuring only mom-and-pop retailers — failed. In recent years, though, Threatt says the CDC-KC has lured regional and national chains to the center and invested $4 million to improve the look of the decade-old development.

"These shopping centers have been a resounding success," Threatt says. "Go into Ashley Stewart or Foot Action, and you don't know if you're at 31st and Prospect or Oak Park Mall."

Outside, it's a different story. On the west side of the street, the parking lot undulates with uneven pavement, and a security guard lingers in front of the abandoned anchor-tenant space. The former grocery store is empty and dark but for a few forgotten shopping carts and discarded buckets. It's been more than six months since the supermarket closed. Threatt says the CDC-KC is looking for a replacement.

Hearing that Threatt calls the shopping center a "resounding success" worries Pat Keeling. A former president of the Blue Hills Neighborhood Association, she doesn't want the Citadel Plaza development to end up like Linwood.

"For the life of me, I don't see why they're allowed to continue," she says of the CDC-KC. "They did that Linwood shopping center, and it's a disaster. And I've said from the very beginning that we didn't want an extension of that here."

What they got has been much worse.

In the late 1990s, Keeling was excited about the promise of a new shopping center that would spur development along Prospect. A longtime neighborhood advocate, she's proud — and protective — of Blue Hills. So it galls her that the Citadel Plaza project has faltered over the past seven years.

After the CDC-KC started buying and tearing down houses, the area turned into an eyesore, residents say. The CDC-KC bought homes and let them sit vacant for months. Criminal activity flourished around the abandoned structures, and the ghost blocks turned into illegal dumping grounds. Paul Tancredi, the current president of Blue Hills Neighborhood Association, says it got so bad that the fire department and SWAT teams used the structures for training.

When workers finally tore down the houses, they didn't bother to clean them out, recalls resident Janet Boggess. "Debris, furniture, toys," she says with disgust. "It was a mess, a literal nightmare."

Threatt doesn't deny that the first phase was disjointed. "Their concern was valid," he says of the neighbors. "What occurred was, in those days, you'd get some funds in, and the money wouldn't go as far as you thought."

But the CDC-KC made mistakes that had little to do with having enough money. In January 2005, the CDC-KC agreed to pay Joseph Witherspoon $63,000 for his home on Wabash. Two months passed, and the CDC never closed the deal. After consulting a lawyer, Witherspoon assumed that the contract was void.

One day in late March, Witherspoon got a frantic call from his son, who was living in the Wabash home. A demolition crew had started ripping into the Witherspoon's still-inhabited house. Workers busted down the back door and began to strip the siding.

"Before we'd come to any kind of settlement, they started to destroy my house," Witherspoon says.

The infuriated homeowner filed suit against the CDC-KC. The case was settled out of court. Witherspoon says he was compensated for the damage.

Threatt insists that the crew only "clipped the side of his house." Photos from Witherspoon's case file, however, show one side of the home mostly torn off.

Demolitions continued during the summer of 2006 — and the fallout was far more serious.

In June, inspectors from the city health department determined that the CDC-KC was tearing down houses that contained asbestos.

When Thomas Gerleman, a public health specialist, visited the Citadel Plaza site on June 8 and 9, the area was scattered with debris. Eight men were loading lumber from a dilapidated house into the back of a station wagon. When he started taking photographs, Gerleman noted in his report, the demolition workers "became belligerent and threatening."

Gerleman reported that the owner of the demolition company, Delroy Fadell, "could not produce any documents or permits authorizing him to demolish any of the structures, nor was he aware if any environmental surveys had been done." The scene raised suspicions of widespread asbestos contamination.

"It looks like a hurricane or tornado did the demolition," Gerleman concluded.

In a letter to City Manager Wayne Cauthen, Threatt complained that the CDC-KC was being made a "scapegoat" and said he was "completely flabbergasted" at allegations that he had failed to abide by federal and state laws requiring special handling of asbestos. He wrote that media attention and the investigation by the health department were "designed to embarrass the City of KCMO and damage the credibility of the CDC-KC and the economics of the project."

A year later, Threatt still scoffed about reports of asbestos contamination. "It's a technical item," he told The Pitch in May 2007. "We're talking about charred little pieces of hard asbestos siding or floor tiles that should have been — we find out after the fact — remediated, taken off before and, for various reasons, wasn't."

Despite Threatt's claims, the contamination proved real and extensive. Kingston Environmental Services found asbestos in 11 of 12 standing structures and on nearly all of the recently cleared lots. Kingston also found asbestos buried as deep as 6 inches underground and suggested that there could be hidden contamination on older lots overgrown with vegetation.

Threatt expects the cleanup to cost $250,000. The state estimates a $300,000 price tag.

Threatt also told The Pitch in May that the CDC-KC had the financial resources to deal with the problem and that the cleanup would start soon. In fact, it would be another six months before the city and the state signed off on Kingston's cleanup proposal. According to city documents, the effort was slated to begin November 5 and wrap up by the end of that month.

To date, no dirt has moved on the site.

In October, Threatt acknowledged that the CDC-KC had made a mistake and said his organization had paid the price. "Were there private financiers and banks concerned by all the negative publicity? Yes. Have we lost some loan commitments, lost some investment commitments? Yes. It is one of the major reasons why the time frame has elongated," he says.

Even if the cleanup moves forward, the CDC-KC faces stiff state penalties for failing to properly dispose of the asbestos. The Missouri Department of Natural Resources issued citations in early 2007; in September, the still-unresolved issue moved up the legal chain to the state Attorney General's Office.

Steve Feeler, chief of the DNR's enforcement section, says there were two reasons for the escalation. First, the complexity of the situation raised some legal issues best left to the state's top attorneys. The second reason: "I was ignored by counsel for CDC-KC for about four months," Feeler tells The Pitch in an e-mail.

In mid-December, the state signed off on a settlement that requires the CDC-KC to pay a $50,000 fine and invest more than $400,000 in community environmental projects and eco-friendly design elements at the Citadel Plaza.

An investigation by the U.S. Environmental Protection Agency is ongoing.

Through all of the discussion of asbestos contamination, Benni Ewing says she has never received a letter from the CDC-KC regarding the health issues or how it was handling the cleanup. She wonders if that empty white house behind her property is still standing because it's full of asbestos. Whenever a pile of demolition debris shows up on her block, she can't help but wonder: Is that rubble contaminated?

Keeling says that over the years, she has tried many times to speak with Threatt and the CDC-KC staff, mostly to no avail. Tancredi says the Blue Hills Neighborhood Association invited the CDC-KC, along with other organizations, to a meeting this past summer, but no one from the CDC-KC showed up.

Threatt tells The Pitch that the CDC-KC was not informed of that meeting. In July, though, he did receive a strongly worded letter signed by the Southtown Council, Research Medical Center and the Blue Hills Neighborhood Association. That letter outlined the groups' previous support for the project and emphasized that they were "extremely concerned" about the lack of progress.

"Unfortunately, not only have positive outcomes not been forthcoming in a reasonable fashion, but collectively we are experiencing significant issues and challenges resulting from CDC-KC's lack of performance," the letter noted.

It took the CDC nearly four months to reply in writing. In his November 7 response, Threatt outlined the progress of the project and blamed City Hall for the delay.

Two days after Threatt sent that letter, though, the CDC-KC was hit with another lawsuit.

Adnan Khan owns a Valero gas station on 63rd Street, just west of Prospect. Earlier this year, the CDC-KC agreed to pay him $775,000 for his property. In October, Threatt sent Khan a letter giving him 18 days to vacate the premises. The CDC-KC then changed its story and said Khan could stay until the end of November if he paid $9,000 rent. More than the rent requirement, Khan was struck by the CDC-KC's insistence that he "not remove anything from the location."

Ron Bodinson, Khan's attorney, says his client has no problem turning over the property when the CDC-KC is ready to clear the land and start developing. "But he does object to them turning over the property to a competitor and them being able to sit there, using his equipment, making money," Bodinson says.

Threatt says the CDC-KC bought Khan's entire operation, not just the land.

Now, he says, the only thing holding up further development is a financing agreement with the city — an agreement lending the CDC-KC $45 million in taxpayer-backed bonds.

Threatt says he hopes that the City Council will authorize that $45 million early this year. "It has been very frustrating," he says of his negotiation with the city.

But if the city lends Threatt $45 million and Citadel Plaza doesn't break ground, or if it isn't as successful as the CDC-KC pro­jects, the public will be left with the debt.

Along the way, Citadel Plaza's troubles have stirred unusual tensions at City Hall.

That much was clear back on February 21, 2007, at what should have been another boring meeting.

That day, Threatt and a gallery of CDC-KC lawyers and financial backers sat before the City Council's Finance and Audit Committee. Their goal: Secure permission to negotiate a deal with the city manager — a deal for $55 million in city-backed bonds to start construction on the Citadel Plaza.

City Finance Director Deb Hinsvark told the committee that staffers from her department had been meeting frequently with the CDC-KC and that the two parties had "dramatically" different projections for how much revenue the Citadel Plaza would produce. The city's financial advisers believed that Citadel Plaza would ring up $55 million in TIF reve­nues over 20 years; the CDC-KC projected $101 million over the same length of time. The finance staffers suggested an independent study.

"We've been working very hard with this developer, and this does feel like a surprise end run around our staff," Hinsvark said of the CDC-KC's effort to negotiate a deal directly with Cauthen.

Riley accused Hinsvark of impeding the project. Other council members had to cut in to keep the meeting on track.

At one point, Hinsvark approached the microphone while council members were speaking. "I need to correct something I said earlier," she said.

"Hold on real quick," Riley interjected. "Never before have we had a staff member who, while the council is talking, abruptly gets up and interrupts and says, 'No, I want to talk right now.' That's totally inappropriate. I was trying to say something, and she just runs up to the microphone and arbitrarily cuts me out."

"I apologize, Councilman Riley," Hinsvark said when the committee chair allowed her to continue.

"From the finger pointing in my face earlier this morning to the interruptions ..." Riley trailed off.

"He and I have been arguing all morning," Hinsvark acknowledged.

Hinsvark left City Hall abruptly in September 2007.

Riley still bristles at what he considers to be unfair scrutiny of the project by city staffers.

Cindy Circo, Riley's fellow 5th District council member, did not return calls from The Pitch seeking comment on Citadel Plaza.

Threatt says the city has forced the CDC-KC to jump through hoops that other developers haven't had to, such as the third-party study.

"We're not trying to say we did everything perfectly," Threatt says. "We have a cross to bear. But that's not what the holdup is in this project. There are items prohibiting it moving forward."

But he won't specify what those items are.

Neither will LaTrisha Underhill, the assistant city manager working on the CDC-KC agreement.

In October, Underhill told The Pitch that the Citadel Plaza situation was "an emotional issue for a lot of people."

But when pressed for specific issues delaying the agreement, she was unwilling to provide details. "They've been various and sundry," she said.

Underhill left her job at City Hall on December 20, after news reports that she had sent sexually explicit e-mails.

Tancredi is adamant that, before the city puts taxpayer money on the line, the CDC-KC must convince the city that it can be trusted. The CDC-KC should fully explain how things got so bad, how it intends to clean up its financial and environmental mess, and how it will complete the project, Tancredi says.

"I don't think they ought to rely on the argument, 'Hey, we're on the east side, no one else is doing much over here, so back us up.' They should be able to say, 'These are our abilities and this is how we'll get it done.'"

Ewing and neighbor Janet Boggess are starting yet another year wondering what's going to happen to what used to be their neighborhood. They're thinking about suing the CDC-KC or the city — if they can figure out which to blame.

 

Now up for grabs: Federal funding for your digital-TV upgrade

http://www.news.com/8301-10784_3-9838556-7.html?tag=nefd.pulse
 

While this next article centers around Australia's portion of donations to tsunami victims back in '04, the U.S. gave $350 million to the same cause. Also please remember that the U.S. was one of the main targets by members in the U.N. for not giving enough.

Ref: CNN article "U.S. ups tsunami aid from $35 million to $350 million"
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 PRI Unveils California’s Top 10 Policy Blunders of 2007 Press Release
12.20.2007
http://www.pacificresearch.org/press/id.3548/press_detail.asp

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For Immediate Release:
December 20, 2007

Contact: Susan Martin
PRI (415) 955-6120
smartin@pacificresearch.org

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The Pacific Research Institute (PRI), a free-market think tank based in California, today unveiled its annual “California Top 10 Policy Blunders” of 2007.

“Governor Arnold Schwarzenegger has stated that he will begin 2008 by declaring “a state of fiscal emergency” – a far cry from saying there will be no operating deficit earlier this year,” said Joshua Treviño, vice president of public policy at PRI.

California’s top 10 policy blunders include mistakes and missed opportunities in education, the economy, technology, and health care:

1. Continuing to Pursue Massive Tax Increases to Finance the Governor's Health Care Scheme. As part of the unending state health care debate, the governor has proposed a 6 percent payroll tax and a $1.50-a-pack cigarette tax increase to finance his proposed new California health care scheme. The governor wants voters to approve these tax increases next year at the ballot. At a time when the state economy is slowing down and the 2008-09 fiscal year deficit could be as high as $14 billion, the governor wants to spend an additional $14 billion for his new health care scheme financed with taxes on workers that will destroy jobs. Where is the logic or common sense? This proposal will cause severe hardship for California's economy for decades to come.

2. Assembly Considers Corporate Welfare for Tech Companies. In late February 2007, Assemblyman Mark Leno (D-San Francisco) introduced a bill mandating that California government and its employees use only the non-proprietary, open document format developed by IBM, Sun Microsystems, and Google. Not only would user-friendly, time-tested, and familiar applications be replaced with untested and unstable new software, but state agencies would be required to convert all existing documents to the new format. Without any significant justification, this bill threatens to destabilize the government’s critical information infrastructure, decrease worker productivity, and increase the budget deficit. While the legislation stalled in committee in 2007, Leno plans to reintroduce it in January 2008.

3. Another Year of the California Sick Tax. The Federal government and almost every state encourage Health Savings Accounts (HSAs) by allowing individuals and their employer to fund them with pre-tax income, similar to an IRA or 401(k). California taxes these contributions. Assemblymen Alan Nakanishi, Cameron Smyth, and Chuck DeVore, and Senators Abel Maldonado and George Runner have introduced bills to correct this flaw, but the bills died on the table. It survives, barely, in the governor’s health proposal, which contains the necessary tax reform. HSAs paired with high-deductible health plans will encourage Californians to save for health care rather than depending on employers or the government.

4. Increasing the Minimum Wage. At a time when the national economy could soon slip into recession and the state's economy is slowing down with massive looming state budget deficits, Sacramento lawmakers showed no common sense by increasing the cost of hiring California's low-skill workers. On January 1, 2007, the state's minimum wage went up more than 11 percent to $7.50 per hour, making it the fifth-highest minimum wage in the nation. On January 1, 2008, the minimum wage will increase to $8. This will lower employment of low-skill workers at a time when California should be encouraging job creation and stronger economic growth. Instead, job growth in California is now less than half of what was projected by state officials.

5. Ending an Era of Public-School Choice. Most California parents no longer have the right to choose their children’s public schools without permission from their resident school districts—a freedom they have had for nearly 15 years. In its reauthorization of the Districts of Choice Program (SB 80), the legislature prohibited new public school districts from participating and piled mountains of red tape onto current participants.

6. Municipal Wi-Fi is a No-Go in California. Plans to blanket California cities with free wireless Internet access continued to fail in 2007 amidst rising costs, poor planning, and chaotic bureaucracy. These projects are built on a flawed model, and their failure was predictable. In San Francisco, Earthlink abandoned its muni wi-fi project, declaring that the model “is simply unworkable.” In Sacramento, a coalition of high-tech firms has refused to fund its own proposal. After nine months of planning, a muni wi-fi project in Napa was scrapped when engineers realized that utility poles were too short. In Silicon Valley, the nation’s foremost innovation hub, an ambitious wireless project is floundering and project leaders have declared, “we don’t have a business model here.” Even in tiny Mountain View, home of tech giant Google, the company’s best and brightest engineers have failed to build a city-wide network which works indoors.

7. A $14 Billion Tax and Spending Hike Posing as “Health Reform”. Governor Schwarzenegger’s evolving health plan began as a $12 billion obligation. It would require all Californians to buy health insurance, tax doctors two percent and hospitals four percent of revenues, and tax employers with 10 or more employees four percent of payroll. Gov. Schwarzenegger also said he would “never close the door on anything,” including an additional tax hike on California residents. And so it came to pass. Nine months later, the California Legislature met in special session to consider a revised version of the governor’s plan. It would cost $2 billion more, and would rely on the lottery to fund health care. Similarly, all Californians would have to buy health insurance, insurers would not be allowed to rate risks, and hospitals would still have to pay 4 percent of revenues. The governor’s latest “compromise” with Assembly Speaker Nunez indorses a payroll tax of up to 6.5 percent on businesses. A tax hike is not health reform.

8. Producing Shaky Unrealistic Budgets. Before the ink was dry on the governor's current fiscal year budget it was clear that the economic assumptions and budgeting practices used by the governor and Sacramento lawmakers are flawed. When the budget was passed, the governor said that the current fiscal year budget would have no operating deficit. But now it is clear that this statement will not be true. According to current projections, the current fiscal year revenues (ending June 30, 2008) will be at least $2.5 billion lower than expected. And the projected deficit for the next fiscal year is now a staggering $10 billion to $14 billion. Gov. Schwarzenegger has stated that he will begin 2008 by declaring "a state of fiscal emergency" -- a far cry from saying there will be no operating deficit earlier this year. Reinstating dynamic revenue analysis, as PRI advocates, would help produce more realistic budget numbers. And comprehensive tax reform could end the "revenue rollercoaster."

9. Pushing Government-run Preschool…Again. U.S. House Speaker Nancy Pelosi (D-San Francisco) was stumping for more spending on government-run preschool last summer at a national children’s summit. “We know that these investments in our children today pay off many-fold in later years.” National research and California voters, however, know better. Studies have consistently shown that preschool does not have long-term benefits for students, and California voters overwhelmingly rejected a 2006 government-run universal preschool initiative.

10. Bowen ends e-Voting in California. In August, Secretary of State Debra Bowen decertified nearly all the touch screen electronic voting systems used in California. She made this decision without consulting local election officials, and despite the fact that there has never been a documented case of election fraud involving an electronic voting machine. The voting machines discarded by Bowen were purchased with a $200 million bond approved by voters in 2002. Not only has this investment been lost, but Bowen appears reluctant to embrace any new technologies in the future, declaring that “for government applications, you don’t want to be on the cutting edge.”

Dishonorable Mentions:

A $203-Million-a-Year Health Access Plan in San Francisco. San Francisco Mayor Gavin Newsom’s health plan for the city’s uninsured residents requires employer contributions of around $30 million annually – which could still result in job losses. The program is not insurance, and does not fix government-caused insurance problems. Instead, it offers San Franciscans the incentive not to become insured at all, because they will receive highly discounted or free care without it. Moreover, the Golden Gate Restaurant Association (GGRA) filed suit against the San Francisco Employer Mandate for Healthcare, the restaurant group contends that provision conflicts with the federal Employee Retirement Income Security Act (ERISA) because the U.S. law is the exclusive regulator of employer health plans. GGRA currently awaits the court’s decision.

Attempting to Halt the Growth of Charter Schools. Slashing classroom funding for high-poverty charter schools by more than half wasn’t enough for the California State Assembly. Under the cover of night, Speaker Fabian Nuñez (D-Los Angeles) introduced “trailer bill” SB 92, which would have forced Gov. Schwarzenegger to choose between forfeiting existing classroom funding or letting fewer charter schools open. The gambit backfired when hundreds of Los Angeles charter school parents and teachers protested outside Speaker Nuñez’s Los Angeles district office.

California Warns Santa: You Owe Taxes on Those Toys! On the eve of “Black Friday,” the busiest shopping day of the year, State Board of Equalization Chairwoman Betty T. Yee released this helpful reminder: “As the holiday season approaches and gift buying begins, shoppers want to be aware of their tax obligations. If you buy something that is taxable from an out-of-state retailer who didn't charge tax, it's very likely you owe the use tax.” Not only does this message confuse, scare, and drive away consumers at the height of the holiday shopping season, but it also puts a knife in the back of California retailers. Yee has unwittingly reminded consumers that unlike businesses which set up shop in California, out-of-state Internet retailers such as Amazon.com do not collect sales tax. With Congress voting to protect Internet access from taxation, state legislators are looking to ramp up taxes on e-commerce. The BOE is working with other states on the “Streamlined Sales Tax Project” to facilitate the collection of taxes on out-of-state purchases. In the meantime, however, Yee reminds Santa: shop out-of-state and save!

Preventing Health Insurers From Acting Against Fraud. One of the benefits of the market for individual health insurance in California is that health plans can underwrite applicants’ risk. This means, for example, that smokers pay higher premiums than non-smokers. Some applicants misrepresent their health status when they apply for health insurance. Sometimes, the insurer identifies the fraud and rescinds the policy. The Department of Managed Health Care, the California Department of Insurance, and the courts are de facto forbidding these audits, by requiring insurers to prove that the applicant “willfully misrepresented” his health status; that is, mind-reading. Outlawing these rescissions forces the insurer to raise health premiums for everyone, because insurers will become gun-shy.

State-Mandated Sensitivity Training for Teachers to Stop Racism and Improve School Performance. In November, State Superintendent of Public Instruction Jack O’Connell convened a two-day summit on racial achievement gaps. Before the summit even began, he told the San Francisco Chronicle that racism is to blame and state-mandated sensitivity training for teachers is the solution. That explanation hardly passes the straight-face test since at more than one in 10 affluent, suburban school districts statewide where fewer than one-third of students are in poverty (nearly 300 in all), a majority of students in at least one grade are not proficient in English or math. A lack of rigor, not racism, is the real culprit behind California’s poor public school performance.

State Forbids Employers From Creating Cyborgs. In November, Governor Schwarzenegger signed a bill barring employers from forcefully implanting microchips under the skin of employees. These chips, known as “radio frequency identification” (RFID) tags can carry personal information, and could potentially be useful for keeping tabs on workers. This law is unnecessary for the same reason we don’t have specific laws forbidding employers from stapling bar codes to employees’ foreheads, or branding them like cattle: assault is already illegal.

Failing To Allow More Autonomy for Nurse Practitioners. The state should reform “scope of practice” laws affecting nurse practitioners, who are qualified to provide basic, affordable health care. This would allow Californians to take advantage of retail-based “convenient clinics,” a competitive answer to emergency rooms for basic services. More primary-care physicians are entering specialty fields, but nurse practitioners (NPs) provide quality care comparable to physicians and enjoy wide-ranging prescribing and billing ability, while costing less. Unfortunately, California regulations prevent more than four nurse practitioners working under one supervising physician at a time. Freeing this profession is necessary to allow “storefront” health clinics, which are expanding by the hundreds in other states, to grow in California. More such clinics will improve care for many patients who flood emergency rooms to the detriment of hospitals, taxpayers, and patients themselves.

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 http://www.apatheticvoter.com/GovernmentWaste-PA.htm