Modesto City Hall facing questions of favoritism

The loan for the $1.25 million purchase was approved by the 13-member citizens housing panel — not the City Council, he said. The panel includes Mayor Jim Ridenour, Councilman Garrad Marsh and members from the public, the county and other advisory committees.

The complex was purchased "for $150,000 below the appraised value," Muratore said. "I strongly believe it was allowable and that I was appropriately distanced from the process."

Benchmark also served as the property manager for Trinity dwellings, collecting rents from tenants and responding to maintenance calls for more than a year.

Property management fees

Asked if Trinity has returned property management fees to the city, as demanded in the Aug. 2 notice, Swehla said "anything related to the city's letter is something we are working on with HUD."

Records show that Trinity Ventures kept other work on NSP projects within its circle of business and political friends.

Trinity hired Mike Moradian to do inspections of foreclosed homes before they were renovated. Moradian works for Peace of Mind Home Inspections, which was reimbursed about $7,800 in program funds for Trinity projects.

Moradian is the leader of the La Loma neighborhood association, which supported Muratore in his 2009 campaign for council.

Swehla countered that hiring Peace of Mind had nothing to do with politics. "We hired them because they are good at what they do. We choose people based on trust and their capabilities," he said.

Moradian said Peace of Mind also did inspections for other NSP developers.

Trinity Ventures contends that its NSP projects are having a positive impact. Last year, it used loan money to purchase six bank-owned condominiums in the foreclosure-ridden Suncrest Villas on Norwegian Avenue, which wasn't generating enough homeowner fees to maintain the grounds.

According to records, Trinity got better deals than other developers on reroofing jobs and other repairs. It hired a contractor to reroof three homes for $5,000 apiece, compared with a nonprofit agency that billed the program upward of $18,000 for a single roof job.

The Modesto program requires for-profit developers to cover part of the renovation costs and repay the 3 percent loans over time.

The 11 developers involved with the program were chosen through a "request for qualifications" process. City staff scored the applications from developers based on criteria such as experience, ability to manage projects and financial soundness.

While nonprofit agencies were allocated a certain amount of funding, the citizens housing panel approved loans to for-profit developers on a project-by-project basis, officials said.

Marsh said he believes Trinity was more aggressive than other developers in bringing proposals to the panel. Most of the projects were considered by a subcommittee composed of Gene Hays, Michael Pratt and Linda Kenyon.

Marsh didn't recall anyone taking issue with the number of loans approved for Trinity, despite the business ties between Muratore and Swehla.

"Scott Monday did the presentation almost every time," Marsh said. "In my mind, they were doing a good number of projects at an affordable cost. Our goal was to get foreclosed properties back into service, and they were doing it pretty well."

Kenyon, a retired teacher, said the subcommittee was focused on keeping the purchase and renovation costs within a reasonable level, rather than the players behind the projects.

Trying to meet with feds

As for the conflict-of-interest violation, Muratore and Swehla said they are trying to schedule a meeting with HUD officials.

Muratore ran afoul of federal rules that prohibit elected officials of agencies that receive NSP funding from reaping profits from the programs. The city has frozen about $32,000 in unspent funds awarded to Trinity and barred any business owned by Swehla and Monday from further participation in the NSP.

The city order has stalled renovations at the Tully Road complex. Modesto's program has been put on hold for three or four months until audits are completed. Any future NSP projects are to go before the City Council for approval.

"I think it needs to be clearer that council members can't have any interest in the projects moving forward," Marsh said. "We need to be more diligent in ensuring there are no improprieties."

Bee staff writer Ken Carlson can be reached at (209) 578-2321.