What's next in SCAP spending controversy?

Several investigations are ongoing, but it's not clear what will happen next in the controversy over how a Modesto nonprofit agency spent millions in federal stimulus money.

Modesto city officials are awaiting the results from a just-launched audit of the Stanislaus Community Assistance Project.

Investigators from the U.S. Department of Housing and Urban Development are reviewing whether the city provided proper oversight into how SCAP spent federal housing funds.

The FBI reportedly is looking into possible illegal use of taxpayer dollars.

Stanislaus County's district attorney says her real estate fraud unit is too busy working other cases.

A Modesto councilman wants California's attorney general to investigate possible wrongdoing.

State real estate officials say they will look into suspiciously high property appraisals, if someone formally asks them to do so.

And some people want a grand jury investigation.

Revelations about how Modesto officials enabled SCAP to spend millions of tax dollars, however, anger some community members.

"It's time to clean house," said Rod Lowe, who has been a Modesto builder for more than 30 years. "There needs to be more accountability and qualified oversight of how taxpayer money is spent."

Lowe is one of dozens of concerned Modesto residents who has contacted The Bee in recent weeks upset about how SCAP spent more than $8.3 million in federal Neighborhood Stabilization Program funds.

Lowe is particularly dismayed by how much the city allowed SCAP to spend to purchase and renovate Modesto homes and apartments.

"I don't know if there's corruption there or just mismanagement," Lowe said. "But they paid way too much."

For example, nearly $2.5 million in tax dollars was allocated for 30 one- bedroom apartments on Coolidge Avenue. The city based its purchase price on an appraisal done by a Santa Cruz firm that was hand-picked by the property's owner.

"That's the fox watching the henhouse," Lowe said. He also is upset by how much SCAP spent fixing up foreclosed homes.

SCAP bought one home on Rumble Road for $180,000, then spent $160,000 for fancy upgrades such as hardwood floors, granite counters and stainless steel appliances. SCAP's Executive Director Denise Gibbs then moved her parents into that government- subsidized house, even though that couple owned two other houses outright.

'The city has a problem'

Six other homes purchased by SCAP with taxpayer funds each received more than $100,000 in improvements.

Lowe said private investors typically buy foreclosed houses for $100,000 or less, then spend $5,000 to $20,000 fixing them up for use as rentals. He said the private sector does a good job renovating such homes: "We don't need the public sector wasting tax money to do it."

Some Modesto council members also have expressed concerns about how SCAP spent government funds.

"It is obvious the city has a problem," Councilman Garrad Marsh said Monday. "I want to ensure we take every step necessary to correct the problem and correct the procedures that allowed the problem to happen."

Marsh wants the council to ask the state to investigate whether SCAP violated federal or state laws. At its Aug. 2 meeting, the council is expected to consider the issue.

"I want the attorney general's office to be aware of what is going on," Marsh said. "If there is criminal conduct, I don't want them brought in at the last minute."

Marsh also wants Stanislaus' grand jury to investigate the city's oversight of the Neighborhood Stabilization Program.