December 11-17, 2003
cover story
Neighborhood Transformation Investigated
 Danger: The homes along North Bodine, which was once flourishing, are now boarded up. 
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Exclusive report: Disorganization, shoddy record-keeping and missing expense reports could cost the city millions.
During the summer of 2002, Ramon Hernandez and his neighbors tended their community garden, a space where tomatoes were beginning to ripen and green vegetables were flourishing. As they worked, his neighbors reminisced about the long, hot days in Puerto Rico and how, three decades later, the sun could be just as hot in Philadelphia.
They lived in brick rowhomes on a small section of Bodine Street near Susquehanna in North Philly. The houses, which were nearly 100 years old, still looked relatively new. The orange-red bricks were intact. The concrete steps leading up to each doorway were level. All of the doors had proper hinges and all of the windows had been fitted well. There was no litter or trash on the street where children rode their bikes. A few blocks away, a Hispanic grocery bustled with housewives and children gathering ingredients for dinners and gossip about the Puerto Rican community.
That July, Hernandez and his neighbors got two-page letters written in English from the Redevelopment Authority (RDA). Hernandez's letter said that RDA was "contemplating condemnation" of his property and that the city would likely pay him $20,000, which was considered to be fair market value, but far less than his home was actually worth. The letter failed to explain what was happening or why. Instead, it was riddled with state law citations and technical terms like "Option Agreement." At the end, the letter asked for his approval and signature.
There was a problem with that letter, and with the letters Hernandez and his neighbors received during the following four months. The language was contradictory -- saying both that everyone had to move and that no one was to move until further notice. The letters failed to tell property owners that they had the right to appeal. That they had the right to be compensated for moving expenses after the city forced them out of their homes. That they had the right to accompany an assessor when he determined the value of their properties. And in most cases, the RDA sent out notification letters eight months late -- Hernandez and many of the families on Bodine Street never knew they had options to find better replacement housing.
 The Report: HUD found problems at the Office of Housing and Community Development and Redevelopment Authority in its 18-page report. |
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The properties on Bodine Street were acquired under the Neighborhood Transformation Initiative (NTI), a program now being scrutinized by the federal government. City Paper has learned that in September, the U.S. Department of Housing and Urban Development (HUD) ordered an unscheduled audit at the RDA. The resulting 18-page report, obtained through the Freedom of Information Act, cites the RDA and the city's Office of Housing and Community Development (OHCD) for failing to document expenses, issue notifications with correct information in a timely manner and explain how owners and tenants can apply for reimbursement for expenses -- which may ultimately cost the city part or all of a $68 million federal block grant.
Herbert Wetzel, RDA executive director, says that his department cannot comment on the HUD report. "We didn't intend for this report to be publicized," Wetzel says.
During final interviews for this story on Monday, Mayor John Street's spokesperson, Barbara Grant, said the city could not respond to HUD until late in the week. She also declined to answer City Paper's questions and categorized HUD's report as a "misunderstanding."
"Officially, we can't respond directly to [City Paper's] questions," Grant says. "Prior to talking directly to our funding agency [HUD], it is not appropriate to comment on the audit. We have an obligation to HUD to talk to them first before we make this public. The audit allows for a period over which to respond. If we respond [to City Paper], we feel that our efforts [to answer HUD] will be characterized unfairly."
But late Tuesday afternoon, a copy of the city's response, drafted by OHCD Director Deborah McColloch, was hand-delivered to HUD. City Paper has also obtained a copy of the 16-page letter. "We had all of the documentation and data, just in the wrong files," McColloch says. "We disagree with HUD's findings."
Between Sept. 2 and 5, HUD regional relocation specialist Michael Szupper was sent to the city's RDA offices and asked to evaluate how the city acquires property for NTI using a sampling of case files. Szupper was to look through the files, assess the paperwork, check that the RDA was following federal codes and get additional information from managers and caseworkers in the RDA office.
"We do not do assessments like this every year," says John Carpenter, a Philadelphia-based HUD spokesperson. "We have a limited amount of staff time that we can spend doing these sorts of assessments. [Some] entitlement communities are reviewed based on a risk assessment. The risk assessment takes into account a lot of factors that includes, in this particular case, the scale of activities that the city is undertaking right now. So when we had Mr. Szupper go to the city of Philadelphia, it was because of the scale of the work being done under NTI."
Szupper was not made available for comment.
For the assessment, Szupper selected six files: One was on the 900 block of South 12th, and the other five were Hernandez’s neighbors on the 2100 block of North Bodine Street. Hernandez, who has been fighting the city and is still living in his house, was not included. "This was just a random sample," Carpenter says. "We don’t have the ability to review every single case. It is my understanding that we randomly picked six."
Every one of the files contained mistakes, ranging from errors in how the people on Bodine were compensated for their properties to how the RDA sent moving notices eight months late. One woman’s file even contained her original birth certificate, without which she could not apply for a passport or get a driver’s license. The letter she received read as if the RDA needed the original, which she unwittingly turned over -- and the RDA neglected to make a copy and return the certificate to her. The report also points to systemic problems in the way the RDA acquires properties for NTI and mistakes that are likely affecting hundreds of families throughout the city.
 Bittersweet Home: Ramon Hernandez, who has been fighting the city's claim on his property, will move in the coming weeks. |
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At the end of 2002, Hernandez and his neighbors celebrated their last Christmas together. They lined the cornices of their homes with white lights and tacked garland to their windows. Aida Cartagena, who moved from Puerto Rico 35 years ago, had hung white icicle lights that glistened under a layer of heavy snow. "It was such a happy and sad time for us," says Wanda Ocasio, who had lived on the block with her two children for 13 years. "It was time for holidays, but we could not be cheerful."
The homes were as well kept inside as they were out. Before Estabania Massa's husband died, he stripped the hardwood floors himself, sanded them down and polished them to look as if they were new. She was 70 years old then, and had been living on North Bodine for three decades.
In his own home a few doors down, Hernandez had finished the woodwork in his house and meticulously hung vintage posters of Frank Sinatra and Princess Diana along the peach-colored walls he painted himself. "It was the most beautiful block," says Rosemary Cubas, executive director of the North Philadelphia-based Community Leadership Institute. "They strung lights around their houses and the trees. I'll never forget how magical that little block looked. Bodine, to those who lived there, was vibrant and full of life."
Cubas, who lives just blocks away, became an accidental advocate for the residents on Bodine. She had been meeting with a group about predatory lending and was explaining in Spanish how to avoid becoming a victim. Massa sat quietly through the meeting, clutching an envelope and letter. At the end, she approached Cubas and, waving the letter, asked for help. "I thought she was crazy," Cubas says. "She told us that she had to move, that the city was taking her house. She kept repeating over and over that she'd gotten a letter that she couldn't understand, but that the government was coming to take away her home. She didn't know if she had options, or that the city would help her move. She came to our meeting, which had nothing to do with her situation, because she didn't know where else to go."
The letter Massa received was sent from the RDA to the families living at 2142-2152 N. Bodine and to the family living at 914 S. 12th. Printed on RDA letterhead, it began, "RE: Model Cities URA Condemnation." The content is confusing, and it is unclear what the RDA is asking the residents to do. "As you are aware, the (RDA) is contemplating condemnation of the above referenced property," the letter begins. "This notice is to inform you of your rights under Federal law. If the (RDA) acquires the property and you are displaced from the project, you may be eligible for relocation assistance This is a notice to vacate the premises within 90 days of the offer letter. You should continue to pay your monthly rent to your landlord because failure to pay rent and meet your obligations as a tenant may be cause for eviction. Please contact us before you make moving plans."
Only one of the residents did not own her property, but the letter asks for copies of a lease and rent receipts for the past year. It also asks for proof of income for every adult in the family for four pay periods, child support documentation if any, utility bills, birth certificates and Social Security cards.
"These people, who do not speak English, were receiving letters telling them these things that don't make sense in any language," Cubas says. "The city may take your house. You must move within 90 days. But don't move just yet. And if you owe rent, keep paying it. What does that tell someone? These letters were coming from the most powerful force -- the city of Philadelphia -- and it put people into a tailspin of panic. Estabania Massa was beside herself. She was terrified. She was acting like you would when you are in shock."
Local governments use the power of eminent domain to take private land for public use in urban renewal projects. Airport authorities, highway commissions and community development groups use state laws to acquire property, and the owners of the property are entitled to reasonable compensation.
NTI uses eminent domain to acquire land, and City Council approves the acquisition at Council meetings. The program, which began in April 2001, is Mayor John Street's sweeping proposal to eradicate blight and unsafe streets throughout the city. It was originally estimated that the city could demolish 14,000 buildings and develop 16,000 new housing units. In addition, NTI was supposed to remove garbage and hazardous trees, tow abandoned cars and green several acres of vacant land. But the five-year project has been scaled back: It is now estimated that NTI will realistically demolish between 7,000 and 9,000 buildings.
To its credit, NTI has accomplished massive cleaning throughout the city: More than 185,000 abandoned cars have been taken off the streets and the city has cleared 189,394 buildings and signs of graffiti. NTI has removed 33,000 tons of debris from the city's 31,000 vacant lots -- and 19,000 lot cleanings are scheduled for 2004. NTI has uprooted 15,081 hazardous street trees and, to date, has demolished 4,106 residential properties considered to be dangerous.
The list of NTI's triumphs may be long, but fundamental problems with how properties were acquired through NTI remain an issue. To determine which buildings would be taken during the initial stages of NTI, the RDA sent inspectors through sections of the city to survey the conditions of buildings and lots. Inspectors used clipboards and log sheets to estimate the status of buildings from their exteriors. They referred to the Pennsylvania Urban Redevelopment Law to determine what, exactly, was blighted.
The law used by the RDA is nebulous and imprecise. A building qualifies as "blighted" if it meets any of the following criteria: unsafe, unsanitary or overcrowded conditions; inadequate planning; fire hazard; excessive land coverage; lack of proper light and air; faulty street and lot layout; defective design and arrangement of buildings; economically or socially undesirable land use. By this definition, it could be argued that City Hall is blighted -- bird feces and garbage blanket much of the concrete walkway outside, and scaffolding covers massive portions of the building. That's two: unsanitary conditions and lack of proper light.
Inspectors used their surveys to create a general list of properties the city would be interested in acquiring. It is unclear whether any of the inspectors entered the homes or checked to see if anyone was living there. It turned out that of the 5,334 properties that NTI has acquired, 5 percent -- about 250 -- were occupied by families.
 Bodine Vacated: North Bodine stretches through vast, unoccupied lots. |
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The city is encouraging developers interested in taking blighted buildings for new projects to apply for acquisition. Anyone interested can stop by the Office of Housing and Neighborhood Preservation on Market Street, pick up a Property Acquisition Request Form and fill in the blanks. The form is only one page long and asks for the basics: name, address and the City Council district of the property to be acquired.
A letter attached briefly explains the form and process by which the city reviews applications. Although the form asks for a brief statement about funding, the letter explains that "you do not have to include the cost to acquire the property in this estimate. Indicate funding sources that you expect to use to finance your project."
The city funds NTI primarily through a municipal bond package worth $275 million. The bonds are issued as needed and the total amount is expected to last five years. Last month, a Washington, D.C.-based firm called Fitch Ratings lowered the city's bond rating outlook from "stable" to "negative," which could increase the cost of the city's borrowing in 18 months. Even so, Council has already signed off on $189.3 million worth of bonds. The estimated total cost of NTI and related programs and services is $1 billion.
NTI also uses the bulk of a $68 million federal Community Development Block Grant issued by HUD. The CDBG program was established in 1974 to help urban areas get annual direct grants to develop affordable housing and revitalize poor neighborhoods. Cities with populations of at least 50,000 and urban counties of 200,000 or more are eligible for the grant. HUD determines the annual amount using a formula based on population statistics -- and checks to ensure that the money is being used properly and that federal regulations concerning documentation are being followed. Because NTI uses CDBG money, "[we wanted to] determine if the city and the RDA are in compliance with the requirements," HUD spokesperson John Carpenter says.
According to the HUD report, it turns out those requirements weren't met. The majority of the problems have to do with disorganization, shoddy record keeping and missing expense reports. Records in each of the case files were missing: There was no proof that the occupants had been notified of their rights in a sufficient amount of time, and no proof that the city followed all of the federal regulations for reimbursing people for moving expenses.
Another problem was that the RDA could not provide HUD with the city's plan for relocating people displaced by NTI. Under federal code, there should have already been a comprehensive relocation plan in place before the city started acquiring property for NTI.
According to Cynthia Bayete, NTI assistant director, concerns that HUD may have about property acquisition have little to do with the inner workings of NTI. "The questions being raised by HUD have no impact on NTI activities," Bayete says.
When a property is acquired using HUD money, the city must follow a set of guidelines called the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, URA for short. The URA and HUD Handbook 1378 outline a chronology of notices that the city is supposed to send to property owners. Because each notice builds on the one sent previously, it is important the letters contain the right information and are sent within a certain time frame.
To wit: The RDA should have sent Estabania Massa, who lived at 2148 N. Bodine, a General Information Notice first. According to federal guidelines, the notice should have explained that a project was proposed that might require the city to take her property and that she had the right to appeal and the right to relocation expenses. It should have explained that if the project was approved and the city did take her property, that there would be a number of notices and letters following detailing how she would be reimbursed and when she would need to move. This letter was supposed to be written clearly in a language that she could understand (in this case, Spanish), and it should have given her contact names and phone numbers of staff members who could answer questions and provide assistance. Massa should also have gotten a HUD booklet explaining what happens when the city acquires a property.
Then Massa should have received a Notice of Eligibility explaining her rights to compensation and relocation assistance. It also was to include the following: Owners have the right to be present during the property assessment and point out special features, which could increase the property value; tenants and owners can settle on a set amount for moving expenses or itemize each room and total costs for reimbursement; owners and tenants can appeal the amount that the city has agreed to pay them. Massa should have also received an Offer of Just Compensation, which should have explained how much the city would reimburse her for a new home and for moving expenses.
Finally, Massa should have received a 90-day notice to vacate the property. According to federal code, that notice should have been sent in plain language. If Massa was unable to read or understand the notice, she "must be provided with appropriate translation and counseling." The notice must also have been personally served or sent by certified or registered first-class mail. The city would then have to retain some sort of receipt or other proof that Massa got the notice.
In the six cases reviewed by HUD, the RDA didn't follow code. The report cites the RDA for sending out the General Information Notice after the Notice of Intent. In some cases, notices were sent eight months late, so that "the content of the letters were not accurate and did not contain necessary information." The report continues, "This problem was exacerbated by the use of standardized General Information Notices, rather than ones tailored to each occupant's residency status."
 Leading the Fight: Rosemary Cubas wants the city to start following federal procedures and to give residents a fair deal. |
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The city didn't document in the files when it sent out notice letters or if they'd been written correctly. The letters that did go out failed to explain the rights to appeal and be compensated properly. And it wasn't clear if the RDA included the HUD booklets, which are user-friendly explanations of the process. The report further charges that "the General Information Notices were not clearly written. These notices informed the occupants that they had 90 days to move from the date of the [Offer of Just Compensation] and later stated that they would not be required to move without at least 90 days' written notice."
McColloch disputes HUD's finding and says that the city did notify residents correctly. "Letters were hand-delivered, so there were no return receipts," she says, adding that the city didn't ask for a signature or write its own receipt of delivery. "Since the report was issued, the RDA has gone back to those people and asked them for receipts to document the file." McColloch says that she does not know whether the RDA representatives were able to communicate in Spanish.
In five of the six cases, Notices of Eligibility -- which explain that owners have rights to compensation and for moving expenses -- were sent out several months late. In some cases, they were sent after the person had already moved. Five of the six files had no documentation proving that the families on Bodine and South 12th had gotten their letters and had the opportunity to apply for reimbursement.
In addition, the files showed no proof that the 90-day notices had been sent properly. The report states "no specific 90-day notices were delivered." It also shows that the notices that were sent didn't contain the appropriate information and were issued before the Notice of Eligibility letters.
In three of the six cases, HUD found that the RDA left no paper trail of receipts proving that the property owners had been paid. Moving receipts and reimbursement checks were missing.
And even though the families had the option to accept a fixed amount for their moving expenses based on the number of rooms or to itemize their exact costs, "it is not clear whether the occupants understood these options sufficiently to make an informed decision," the report states.
"There has been mass confusion and worry," says David Koppisch, of the Women's Community Revitalization Project. "People were told to move and were offered a pittance for their houses. Many weren't told about relocation cost compensation and were getting all kinds of conflicting information."
The city's response says that it did have canceled checks and some receipts, but that they were filed in other city departments.
Other mistakes: The woman living at 2142 N. Bodine was eligible for benefits because of her low-income status. But there is no indication that the city ever told her. In her case, the city did not accurately establish the cost of her replacement house because there was little information on the expense of her utilities.
There was no proof that the city provided the family living at 2144 N. Bodine with a proper replacement house. And HUD found that when the RDA determined incidental moving expenses, it shorted the family $614.13.
When she was told to move, the woman living at 2146 N. Bodine decided just to purchase a property owned by her former husband. For her, it would be the easiest move, and she felt that it was the best home she could purchase with the money allocated to her by the city. But the RDA denied her the ability to purchase the property, saying that she had a "vested" interest in it. "Please be advised that there are no URA requirements which prohibit her from purchasing a property from a relative," the report states.
For the man living at 914 S. 12th St., HUD found that he was eligible for reimbursement totaling $2,485, but the city only paid him $1,211.25.
The city also failed to complete Preliminary Data Forms, which are used to gather information about the costs associated with potential moves, what kind of assistance the family may need and replacement housing. "This information is instrumental in defining the advisory services needed by the occupants as well as assisting the RDA in budgeting for relocation payments, moving expenses and establishing [replacement houses]," the report states.
McColloch was unable to say whether the city did complete those forms or whether they were handed over to HUD.
 Still There: The front door of Hernandez's home is a reminder of what used to be on North Bodine. |
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At the time of the audit, the RDA was asked to detail its process for relocating people displaced because of NTI. The RDA had been using a HUD handbook as a reference -- but when asked, the RDA was unable to provide any written plan.
To be sure, the RDA didn’t start taking properties when NTI began. For years, the office has been acquiring properties under eminent domain for urban renewal projects. The major difference now is the scale of properties acquired by the RDA, which is hundreds, rather than three or four, at a time.
The city and the RDA have made efforts to abide by the Uniform Relocation Act, which is long and complicated. "If you look at the URA, it is just loaded with different kinds of procedural things," the RDA's Wetzel says. "There's a lot to follow."
On the other hand, HUD maintains offices to assist city redevelopment authorities with procedures and paperwork. "It is not a simple process," Carpenter says. "Most cities have highly skilled staff that are capable of complying with the requirements. We also offer technical assistance to cities that ask for our help if they're having trouble. We believe that it is something that is certainly possible to comply with without an undue hardship."
The city was given 30 days from Oct. 9, 2003, to comply with HUD's requests. HUD asked the RDA to provide the missing documentation and proof that the occupants in the six cases had received all notifications and had been paid the correct amounts. HUD also asked the RDA to produce its relocation plan. According to the RDA's Wetzel, the city never formally asked HUD for an extension or explained why it took nearly eight weeks to hand over part of the missing paperwork.
In the city's response to HUD, the OHCD disagrees with most of the findings, adding that "in no case did any administrative or record-keeping activity harm or have any material effect in the benefits offered to relocatees." The response says that the RDA had most of the necessary paperwork, but that it was filed in separate locations. It also says that the city has a plan for relocating people -- but that it was located in a different binder containing HUD documents. The city says that home appraisals were reviewed by an RDA staff member before determining the value of each property, but that "there wasn't a document that HUD could look at that said "appraisal review.'"
The city has admitted that the notices were not sent out in a timely manner and that they did not contain the correct information in all cases. "We have complied with HUD's requests to change the documents and the way we send notifications," McColloch says. "We want to try and provide information in the best way we can to folks, and we value the guidance that HUD can give us on that."
The city also concedes that money was owed to two of the residents who were displaced. "There were disagreements between the RDA and HUD about how expenses were calculated," McColloch says. "It does appear that [the residents] were owed a small amount of money. We're prepared to give that amount to them."
The city's response to HUD explains that it has instituted a quality control program to prevent problems with paperwork, documentation and reimbursements in the future.
HUD would not comment on what actions might be taken or when, but the report continually cites a section of the code called "Remedies for noncompliance; opportunity for hearing." Though there was no mention specifically of what steps would be taken if the RDA does not comply with HUD's requests, the code does outline a variety of disciplinary actions. HUD could terminate payments, reduce payments for future grants or limit availability of money, and could refer the matter to the Attorney General for civil action. "We're not going to comment on what will happen if they don't respond," Carpenter said, adding that he believes the city will comply.
The Oct. 9 report comes just ahead of a possible moratorium on the properties taken for NTI. During the spring and summer of 2003, City Council held hearings about how residents were being notified. At that time, Council members asked that the proper steps be taken to ensure that people were properly informed. Kevin Hanna, secretary of Housing and Neighborhood Preservation, promised the city that the RDA would certify all letters and would translate all materials into Spanish. But it is clear now that the city was supposed to be doing that all along. Council members and interest groups are now calling for a halt on acquiring properties until NTI gets more organized.
"There are a lot of complaints," says Councilman at-Large David Cohen. "People have maintained their homes. The city takes people's properties for the absolute lowest price, whether they've been living there for 65 or two years. The city is undermining people's rights when it tries to convince people that they have no chance of winning if they fight. That's not the way city government ought to act."
Cohen, who has not yet seen the HUD report, contends that the city has been withholding key information about how people can apply for more reimbursement or appeal the city's decision. "The city doesn't make certain information available [to the public]," he says. "It acts like a greedy developer when it goes after properties. I see injustice. It seems to me that we ought to have a moratorium [on taking properties for NTI] until the city straightens out its policies." Cohen says that he will propose a moratorium as soon as he has enough support within Council.
Ironically, the 2100 block of North Bodine Street now looks like the areas of Philadelphia NTI was intended to improve. The ceramic roses have been removed. Particle boards, stamped 9/2002, block the door and windows on Estabania Massa’s house. A strand of Christmas lights still hangs on Aida Cartagena’s old cornice, though it has started to droop. What’s left of a faded yellow piece of paper hangs on one of the doors. "Danger," it reads. "The building located at _______ is in imminent danger of collapse." Most of the trees have been taken away, and the land surrounding the rowhomes is covered with weeds and trash.
"That may have been blighted land at one point many years ago," Cubas says. "But people grew a garden off that land. And they fed each other off that garden. They watched out for each other and ensured a good quality of life."
In the year since the RDA took over the properties, little has been done in the way of redevelopment. It is unclear what, exactly, the land will be used for. One memo from a North Philadelphia development corporation speculates about the expansion of a nearby glass factory or the creation of a parking lot. There is no indication that any replacement housing will be built on that land.
"This is happening everywhere," Cubas says. "I know that it is. Bodine is just a sliver of what is pervading throughout the city. If the city wants people to move, then fine. But the city can't expect that people somehow know that they have rights to appeal, rights to be compensated fairly, rights to assistance in relocation. There is no excuse for not informing residents in an understandable way that their property will be used for an NTI program."
The families on Bodine have relocated around the city. A community group eventually helped Estabania Massa find a new home. Wanda Ocasio, too, has her own place on East York Street.
Only Hernandez remains on that block. But after nearly a year fighting the city, even he has been forced out. Hernandez plans to move into a nearby house in a few months, though it won't replace the decades of work he put into Bodine Street. "I don't want to move, but I must," he says. "It is time."
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