SCAP turns over documents to Modesto

A troubled nonprofit agency has turned over some records requested by the city and agreed to cooperate with an audit of its federally funded housing projects, a Modesto official said Thursday.

A valley congressman, meanwhile, expressed outrage Thursday over the practices of the Stanislaus Community Assistance Project and what he sees as a lack of oversight of the Neighborhood Stabilization program, a federal effort that was supposed to help communities stricken by foreclosures.

"Clearly the federal government … and the city of Modesto should have been paying more attention," said Rep. Dennis Cardoza, D-Merced.

The congressman, who helped Modesto secure $36 million in Neighborhood Stabilization funding, said he was "absolutely flabbergasted" by SCAP's conduct, such as the six-figure compensation for Development Director Joe Gibbs and the lavish renovations to a home occupied by the parents of Executive Director Denise Gibbs.

"I would not encourage anyone to do business with this organization until they come clean," Cardoza said.

Modesto Mayor Jim Ridenour called SCAP's refusal last week to turn over records to the city "a bunch of malarkey" and promised a thorough audit of SCAP projects.

An auditing firm that works for the City Council could start reviewing the files at SCAP's Coffee Road office July 11. SCAP has spent more than $7 million in taxpayer money buying and renovating 21 properties for the city housing program.

Leo Briones, a public relations spokesman for SCAP, said Thursday the agency will cooperate with city auditors.

The city "has been given all of those documents now," he said. "We have had discussions … about what other information they wanted, and we are moving forward with that."

As of Wednesday, city officials were trying to determine if SCAP still had a functioning board of directors. Four directors remained after board president Darryl Fair's resignation last weekend and at least five other departures.

SCAP announced a reconstituted board, including newly appointed chairman Jonathan Dattilio of Lincoln, vice chairman Patrick Pokorny of Riverbank, secretary Daniel Malakauskas of Stockton and Tom Drury of Modesto.

According to a copy of SCAP's bylaws, dated in May, the agency is supposed to have at least seven board members. Briones said the board possibly would reappoint former director Ralph Baldwin and was recruiting others.

Julie Hannon, the city's director of Parks, Recreation and Neighborhoods, said Thursday that SCAP turned over "a portion" of the records requested and she had spoken with Dattilio about the audit.

The city is holding the remaining Community Development Block Grant and Neighborhood Stabilization program funds that were awarded to SCAP — about $637,000 — until the audit is complete. The city froze the funds last week because of concerns about SCAP employees or their relatives living in homes renovated through the program.

Hannon confirmed that Denise Gibbs' parents were living at 913 Rumble Road after $340,000 in taxpayer money was spent buying and renovating the 2,383- square-foot home, and that four or five other homes were occupied by SCAP employees or their relatives.

According to a city letter sent to Fair before he resigned, the investigation will look at possible conflicts of interests in administering program funds, rental agreements, tenant assets and whether tenants at certain properties were eligible for the program.

If the audit finds that SCAP violated program rules, the agency would be expected to follow the auditor's recommendations, the letter says. Because the actions of SCAP staff members are under scrutiny, the auditors will report to the city and SCAP board, but not to Gibbs or other staff.

Except for the $637,000, SCAP has spent the $8.34 million funding allocated by the city. Hannon said the funding is distributed to developers to buy homes after appraisals are reviewed. The developers are reimbursed for renovations after city staff checks the invoices and other paperwork.

The freeze on the remaining funds could delay the completion of renovations on apartments at 221 E. Coolidge Ave., where more than $2.15 million has been spent, Hannon said.

Briones said that SCAP's leadership is identifying conflicts of interest that might have existed with SCAP executives, staff and board members. He said Gibbs' parents have given notice they will leave the Rumble Road house within 60 days.

Some relatives of employees were allowed to apply for housing because they met the guidelines for being at risk of homelessness, Briones said. The agency also rented homes to people with HIV, cancer and other debilitating diseases, he said.

SCAP compensation to Joe Gibbs also has caused an uproar. Joe Gibbs had an agreement with the agency to earn bonuses for his grant writing. His compensation amounted to $627,331 in 2009-10. After The Bee revealed how much he was earning, Gibbs agreed to forgo $426,471 of what he said he was owed.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or (209) 578-2321. Bee staff writer J.N. Sbranti can be reached at jsbranti@modbee. com or (209) 578-2196.