Update: HUD’s Public Inspection Scores

Last week we pointed to HUD’s release of 2009 Physical Inspection Scores for subsidized properties.

Eric Dexheimer at the Austin American Statesman followed up on the story this morning, adding some insight about American Housing Foundation, the owner of one of the lowest scoring properties in the state.

If you haven’t followed the stories, be sure to click through to the Statesman’s earlier pieces on AHF.

HUD fails 14 percent of Texas subsidized properties inspected in physical inspections

Back in 2008 we presented data on physical inspection scores of subsidized housing in Texas.  HUD has updated this dataset to reflect more recent inspections, and things are still bad.

56 of 388 properties inspected (14%) by HUD in 2009 received a failing score (i.e. less than 60 on a 0-100 scale) .

The ten lowest scoring properties in Texas are:

Property Name City Inspection Score
TANGLEWOOD APARTMENTS COMPANY Waco 29.22
ROBINSON GARDEN APTS Waco 29.47
Seville Apts, Phase I McAllen 30.51
LEVELLAND DEVELOPMENT CENTER Levelland 32.26
FAIRHAVEN APTS. Denton 37.49
GROVE PARK TERRACE APTS. Waxahachie 37.57
LAGUNA VISTA APTS Dallas 40.33
COLONIAL LODGE OF PARIS Paris 40.93
CREEKWOOD PLACE APARTMENTS Lancaster 41.15
SPHINX AT MURDEAUX VILLAS Dallas 41.35

The entire PIS dataset can be downloaded here.

Why was the leader of a failed Texas housing nonprofit a major political contributor to Texas officials?

Steve Sterquell, the one-time head of the now bankrupt Amarillo, Texas nonprofit affordable housing corporation American Housing Foundation, gave out nearly $370,000 to Texas elected officials over eight years according to the Amarillo Globe-News. This made Sterquell number 65 on the 2006 list of Texas campaign contributors according to Texans for Public Justice, a campaign watchdog group.

Sterquell died in an April 1 car crash that has been ruled a suicide. Bankruptcy proceedings for American Housing Foundation began in April of this year.

The nonprofit owns 78 apartment projects renting to low-income persons, 52 of which are in Texas. The Amarillo Globe-News has posted a list of the apartments.

This situation raises many questions.

1) Why did a Texas nonprofit housing corporation head give so much in political contributions to Texas state officials?

We will probably never know the true answer, but here is some speculation.

The largest contributions were made to the two most recent Texas Comptrollers. The Texas Comptroller’s office oversees the status of Texas corporations. According to the Amarillo newspaper…

In Texas alone, at least 160 for-profit and nonprofit limited partnerships, limited liability companies and other business entities can be tied to AHF, its office suite at 1300 S. Washington St., to Steve Sterquell or his son, Steve “Sterk” Sterquell II.

Contributions were also made to the Texas Attorney General, the state’s chief civil law enforcement official. It would be up to the attorney general to go after a statewide nonprofit corporation for violation of state law.

The governor and a local state representative also received contributions from Sterquell the paper reports. In recent years the Texas Legislature has dealt repeatedly with the question of property tax exemption for nonprofit Texas housing corporations. The Legislature also makes the ultimate decision on the amount of tax-exempt bond financing available to corporations like American Housing Foundation along with the rules on who the recipients of this state authorized bond financing can rent to as tenants and how much rent the tenants can be charged.

2) Did city and state housing officials exercise due diligence in providing bond and tax credit funding totaling in the hundreds of millions of dollars to American Housing Foundation?

This question has a simple answer is self evident — “no.”

It is clear that something was deeply wrong with the finances at the American Housing Foundation. It is unlikely that this happened overnight.

Each time AHF went to state or local officials seeking housing tax credits or tax-exempt bond financing to purchase another apartment project those officials had an obligation to examine the condition of the borrower (in this case AHF) who was asking for public funds. Whatever process state and local officials used to determine that AHF was creditworthy obviously came up with the wrong answer.

It was common knowledge in the affordable housing world that AHF was an unusual nonprofit.  It has been the subject of rumors and speculation for years. AHF was purchasing properties at a rate far greater than any other Texas nonprofit. Then there is the matter of the corporate airplanes that the nonprofit owned and operated for its executives, and occasionally giving a state official a ride too. I can’t think of another example of a nonprofit low-income housing corporation that maintains a fleet of corporate airplanes. This was no secret. It should have raised flags. But it did not.

Finally, there were the management problems which plagued AHF owned apartments.  My colleague Karen Paup worked, along with the leaders at Austin Interfaith (a grassroots community advocacy organization) to try to get government officials to force AHF to clean up deplorable substandard living conditions at the corporation’s Fairway Village apartment project in Austin. The same government officials who readily handed over millions of dollars in government authorized loans to AHF claimed to have little authority over the nonprofit so far as enforcing minimum housing property standards when the tenant’s health and safety were imperiled.

This tells me that the relationship between government officials and this large nonprofit corporation were, at the least, far too informal. American Housing Foundation is not the only nonprofit or for-profit corporation that enjoys a too trusting and too cozy relationship with public officials overseeing affordable housing programs.

3) What will become of the properties AHF owns and the the low-income tenants who live in the apartments?

Unfortunately, I fear that we know the answer to this question as well.

If the creditors are successful in the bankruptcy proceedings then the nonprofit will lose the housing. In many cases, the rent restrictions, monitoring requirements and long-term affordability covenants the corporation entered into with government housing financing entities will be erased in the bankruptcy.

If the use restrictions are wiped out by bankruptcy one of three things can happen.

  1. If it is in the creditor’s financial interest they might operate or sell the property while maintaining it as affordable housing.
  2. If the property is really nice, and a desirable place to live, then it will likely be worth more if it is operated as market rate housing. In this case the rents will go up and low income tenants will be forced out.
  3. If the property is undesirable, or if the creditor is lazy or incompetent, then the property is likely to be allowed to deteriorate in both its physical condition and its property management. In which case these properties will become a blight upon both the tenants and the surrounding community.

This bankruptcy could not have occurred at a worse time. Because of the current financial crisis gripping the country it is extremely difficult to find financing to purchase multifamily housing. This is doubly a problem for affordable housing. The lack of available capital to allow for the purchase of these apartment projects by new, responsible owners will likely consign many to a path of deterioration and decay.

There are clearly many lessons to be learned from this fiasco.

Changes to TX Residential Construction Commission do not fix the problem

In an earlier posting I applauded the decision of the Texas Sunset Commission staff to recommend the abolition of the Texas Residential Construction Commission (TRCC). That agency currently accomplishes little more than preventing homeowners from quickly taking home builders to court to compel them to fix problems with the builder’s or remodeler’s work on their homes.

Homeowners are required under the existing law to go through a lengthy process through the TRCC of getting an independent inspection of their home and waiting for the TRCC to give them permission to go to court. Homeowners have been singled out to have to jump through this hoop and endure delays of up to a year or more simply because the home building industry has convinced the Texas Legislature to abridge homeowner’s rights in this way. The TRCC was originally created as a crass effort to slow down and discourage homeowners from exercising their rights in court to get the work on their home done right.

On December 16 the Texas Sunset Commission, a joint Texas House/Senate/public board considered the staff recommendation and voted to reject it and instead keep the TRCC for four more years while imposing some changes on the way the TRCC does business. [The deliberations of the Sunset Commission can be watched here.  The discussion begins at 8:26].

The changes adopted by the Sunset Commission, with one exception, would make the TRCC better. The amount of time the TRCC can take to go through their process is limited and that’s a good thing.

But the fact that Sunset Commission did not allow homeowners to bypass the TRCC altogether and take their case to court if they choose is the fatal flaw in the recommendations.

Analysis of HUD report on low scoring subsidized housing in Texas

A total of 107 or 9.4 percent of HUD assisted housing apartment developments in Texas earned a very low score in the latest round of physical inspections.  The HUD Real Estate Assessment Center (REAC) physical inspection scores measure, among other things, the condition of a property’s common areas, units, and utility systems.

The developments with the lowest scores were:

Corpus Christi     South Bluff Apts                     16c*
Fort Stockton      Stockton Village                     19c*
Longview           Penwood Apts                         19c*
Hillsboro          Crestridge Apartments                20c*
Fort Worth         Spanish Gate Apartments              21c*
Dallas             Glen Hill I @ Ii                     23c*
Dallas             Field Stone Crossing, Llc            23c*
Dallas             Rosemeade Court Apts.                24c*
Houston            Sunflower Terrace                    27c*
Mission            El Rosario Homes                     27c
Waco               Parkside Village                     27c*

An overall numerical score is given as a value from zero to 100.  A score below sixty is considered failing.  An asterisk indicates that health and safety deficiencies were found with respect to smoke detectors. The lower-case letter indicates whether or not other kinds of heath and safety deficiencies were observed, as follows:

  • The letter “a” is given if no health and safety deficiencies were observed other than for smoke detectors.
  • The lower-case letter “b” is given if one or more non-life threatening H&S deficiencies, but no exigent/fire safety heath and safety deficiencies were observed other than for smoke detectors.
  • The lower-case letter “c” is given if one or more exigent/fire safety (calling for immediate attention or remedy) health and safety deficiencies were observed.

A full listing of Texas REAC scores is available.  Below is a listing of the Texas HUD subsidized developments with a score of less than 60 on the most recent published HUD REAC report.

City               Development Name                     Score

Alice              Alice Housing                        47c
Alvin              Alvin Memorial Gardens               56c*
Amarillo           Amarillo Gardens Apartments          54c*
Athens             New Haven Apartments                 49c*
Austin             Charles Place Apts                   31c*
Beaumont           Park Shadows Apartments              53c*
Beaumont           Seville Apartments                   51c
Beaumont           Sunlight Manor Apartments            44c*
Cedar Hill         High Pointe Village                  52c*
Center             Union Acres Trust                    55c
College Station    Southgate Village                    46c*
College Station    Grey Wolf Estates                    53c
Corpus Christi     Casa De Oro Apartments               55c*
Corpus Christi     Cliff Maus Village Apartments        45c*
Corpus Christi     Country Estates                      52c
Corpus Christi     South Bluff Apts                     16c*
Dallas             Casa Trevino                         39c
Dallas             Glen Hill I @ Ii                     23c*
Dallas             Lake June Village Apts               59c*
Dallas             Midpark Towers                       48c
Dallas             Oak Hollow Apartments                53b*
Dallas             Oakway Village Apts.                 46c*
Dallas             Prairie Creek Village Apartments     51c
Dallas             South Crest Apartments               40c*
Dallas             Woodland City Apts.                  54c*
Dallas             Cedar Glen Apartments                55c*
Dallas             Buckner Village                      35c*
Dallas             Rosemeade Court Apts.                24c*
Dallas             Claremont Apartments                 47c*
Dallas             Cimmaron Trail                       36c*
Dallas             Field Stone Crossing, Llc            23c*
Dallas             Reserve At White Rock Midrise        40c*
Dallas             Sphinx At Murdeaux Villas            59c*
Dallas             Buena Vista Townhouses               49c*
Dallas             City Park Lofts                      53c
Denton             Carriage House Assisted Living       43c*
Desoto             Williamsburg Village Healthcare      52c*
Elsa               La Hacienda Apartments               59c
Euless             Spring Valley Apartments             55c*
Fort Stockton      Stockton Village                     19c*
Fort Worth         Casa Inc.                            48c*
Fort Worth         Normandale Place Apartments          56c
Fort Worth         Sycamore Center Villas               57c*
Fort Worth         Spanish Gate Apartments              21c*
Galveston          Marina Landing Resort                55c
Grand Prairie      Willow Tree Apts.                    51c*
Hillsboro          Crestridge Apartments                20c*
Hillsboro          Hillsboro Housing Authority          54c
Houston            Evergreen Commons                    56c
Houston            Haverstock Hills                     55c*
Houston            Kings Row Apartments                 45c*
Houston            Long Drive Townhomes                 50c*
Houston            Sunflower Terrace                    27c*
Houston            Winkler Villas Apartments            57c*
Houston            Yale Village                         51c*
Houston            El Redentor Apartments Ii            59c
Houston            Silver Leaf Apartments               47c*
Houston            Leonora Apartments                   33c*
Irving             Treehouse Apts                       31c*
Jacksonville       Pine Creek Apts                      33c
Jasper             Hope Village Dba Pineview Apartments 59c*
Kerrville          Brookhollow Apartments               48c*
Lamesa             Northridge Ret Center                57c
Linden             Spring Creek {Le Town}               47c*
Longview           Autumnwood                           50c*
Longview           Jerusalem Apts                       43c
Longview           Penwood Apts                         19c*
Lubbock            Cricket Court                        45c*
Lubbock            High Plains-Lubbock                  53c*
Lubbock            Parkway Village Apartments           50c
Lubbock            Villa Del Norte Apartments           35c*
Lubbock            Cornerstone Homes                    51c*
Lufkin             Inez Tims                            59c
Lufkin             Lotus Lane Apartments                52c
Lufkin             Pinewood Park                        56c*
Malakoff           Cedar Creek Apts                     45c*
Mansfield          Spyglass Apts Of Mansfield           59c*
McAllen            Memorial Apartments                  51c
McAllen            Seville Apartments                   56c*
McAllen            Camelot Ret Com                      45c
Mercedes           Armory Housing Project               33c
Mercedes           La Merced Homes                      41c*
Mineral Wells      Sandstone Foothills                  58b
Mission            El Rosario Homes                     27c
Mission            Mission Palms Retirement Housing     38c
Odessa             Chaparral Village                    37c*
Palestine          Pinehurst Apts.                      59c
Pearsall           So Tx Care Center Asset Corp         56c
Plainview          Christian Manor                      57c
Plano              Colonial Lodge Of Plano              50c
Richardson         Lindan Park Care Center              48c
San Antonio        East Park Place                      46c
San Antonio        Pecan Hill Apts                      47c*
San Antonio        Villa De Amistad                     56c
San Antonio        Chapel Ridge Apts                    46c*
San Antonio        Mayfield Gardens                     53c*
San Benito         Lasby Park Terrace                   29c*
Sinton             Lulac Amistad Apts                   37c*
Snyder             Park Village {Nyder}                 38c*
Texarkana          Sunset Apartments                    42c*
Victoria           Salem Village                        44c*
Waco               Parkside Village                     27c*
Waco               Trendwood Apartments                 56c*
Waxahachie         Grove Park Terrace                   49c*
Whitehouse         Oak Brook Health Care Center         56c
Wichita Falls      Indian Falls Apts                    51c*
Winters            Senior Citizens Nursing Hme          38c

It is time to abolish the ineffective Texas Residential Construction Commission

The Texas Sunset Commission has released a report calling for the Texas Residential Construction Commission to be abolished.  Cick the image above to download the report.
The Texas Sunset Commission has released a report calling for the Texas Residential Construction Commission to be abolished. Cick the image above to download the report.

The hopelessly flawed Texas Residential Construction Commission (TRCC) has been recommended for abolition by the Texas Sunset Commission staff.  The Sunset staff report on the TRCC concludes, “Current regulation of the residential construction industry is fundamentally flawed and does more harm than good.”

I reluctantly concur.

The TRCC was pushed into being in 2003 by some in the Texas home building industry who wanted to block efforts by homeowners from taking builders to court over shoddy building practices.  Essentially all the TRCC does is require consumers to submit to a long and drawn out review, inspection and mediation process designed to discourage them from taking a home builder to court to enforce their contract.

Currently, the average time to process State Inspection requests, including the appeal process is 147 day although, outstanding cases have been open for as long as 20 months.

The Sunset Commission staff noted that a mere 12 percent of the cases the state reviewed of alleged defects produced a “satisfactory offer or repair or compensation over the life of the program.”  The other 88 percent of the cases ended up in court anyway, after the considerable delay of on average one half year imposed by the TRCC’s ineffective process.

Continue reading

VISTAs make good things happen in housing

We have a new VISTA volunteer at the Texas Low Income Housing Information Service and I am once again reminded how VISTAs make good things happen for the poor, especially in housing.

Ryan is a summer VISTA who was assigned to us through a VISTA program operated by United Cerebral Palsy of Texas.  His job is to help rebuild the on-line information and referral web site we call the Texas Housing Counselor.

I’ll blog all the details later but the short story is that another former VISTA set up this amazing web site for us a number of years ago. This web site got people that were looking for housing to enter some basic info then it told them what type of subsidized housing program they qualified for, made recommendations about where to start looking and then gave them a list of subsidized housing, organized by program in the city where they wanted to live.

If you know much about housing you can appreciate just how useful this type of help can be when confronted with the maze of different subsidized housing programs.

Building our Texas Housing Counselor web site the first time was a huge effort.  Rebuilding it is also huge.  One of the biggest tasks is checking the accuracy of several databases of subsidized housing maintained by various government agencies and then correcting or updating the data before we start providing it to people through the web site.

When I say this is a huge task, I mean it is a HUGE task,

  • 846 HUD subsidized apartment developments in Texas,
  • 751 US Department of Agriculture rural rental housing developments,
  • 416 Texas public housing authorities,
  • 1,830 Texas Department of Housing and Community Affairs subsidized apartment developments, and there are more lists to come.

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That is 3,843 apartment developments and counting. Continue reading