Jardine: Modesto slow to acknowledge SCAP problems

jjardine@modbee.comNovember 14, 2011 

(The Modesto Bee) - City Hall is located at Tenth Street Place in Modesto.

(The Modesto Bee) - City Hall is located at Tenth Street Place in Modesto.

At the get-go, Modesto city officials pooh-pooh'd concerns raised by The Modesto Bee over how the Stanislaus Community Assistance Project spent federal money intended to help low-income and underserved citizens.

For several weeks after the first story appeared in late May, officials from the mayor to department heads disdained reports that SCAP officials overspent to renovate homes and then, in eight cases, either placed the agency's own employees or their family members in the homes.

They seemed unconcerned that the SCAP board cut Joe Gibbs, husband of Executive Director Denise Gibbs, a sweetheart deal allowing him exorbitant bonuses for grant writing.

Mostly, they sought to deflect the issue by blaming J.N. Sbranti and Ken Carlson, whose reporting exposed the problems.

The city's response reminded me of how baseball brushed off steroid use until criminal indictments and Congressional hearings embarrassed the game and forced Commissioner Bud Selig to at least pretend to crack down.

Likewise, the city is getting tough after its own review confirmed many of the same problems The Bee has reported involving SCAP. Those included turning some of the renovated homes into taxpayer-subsidized clubhouses on the friends-and-family plan.

The city has dealt with more than just SCAP when it came to distributing the $33 million in federal Neighborhood Stabilization Program funds the city received in 2009 and 2010.

Councilman Joe Muratore and his business partner had to return $62,500 in a real estate commission they earned on an NSP property.

And in August, the council voted to ask the civil grand jury and the state attorney general's office to investigate the use of NSP funds by SCAP and the city's administration of the funds.

Unfortunately, city officials morphed into a bunker mentality, with high-ranking officials refusing to return calls regarding SCAP to Bee reporters and expecting to communicate via e-mail. City Manager Greg Nyhoff did return my call late Monday afternoon, telling me he clamped down on communications because the newspaper's stories — which he claimed have been inaccurate — created a level of distrust in the community.

In an Oct. 28 letter to the SCAP board, which Nyhoff forwarded to The Bee late Thursday upon written request, he alleged the nonprofit:

• Charged excessive rent to tenants in five units.

• Kept inaccurate or incomplete income verification records for tenants.

• Had income certifications and intake forms the tenants did not acknowledge.

• Has lease agreements for some of its tenants that differ from those approved by the city.

The last three items in particular suggest serious issues with SCAP's paperwork that merit a deeper look. District Attorney Birgit Fladager said the federal government — which promised to track the NSP funds to ensure they are spent correctly — would have "first dibs" on investigating cases involving federal money.

The federal Department of Housing and Urban Development, which doled out the NSP money to the city, is auditing the city's oversight of the program. Nyhoff said he doesn't believe the soon-to-be-released results of the investigation by HUD's Office of Inspector General will turn up much involving SCAP.

"I'm not sure we're going to see a whole lot," he said.

No matter. The city itself did not hire nor can it fire either of the Gibbses or Carol Prunty, the agency's housing director who has lived in two of the homes. Only SCAP's revolving-door board members — many whom have served at the Gibbses' behest instead of the other way around — can do that. But the city can refuse to do business with SCAP and has frozen all funding to that organization.

Dave Lopez, the only City Council member who demanded action against SCAP from the onset, is right when he said SCAP's management team needs to go.

"Otherwise, the trust from the city and the public is not going to be restored," he said last week.

The city, however, can shore up its own house. The council last week approved Nyhoff's request to hire an outside consulting firm on a $214,240 contract whose duties will include overseeing the remaining $12 million in NSP funds.

While he said city staffers did some things well in the monitoring process, he also said they were given vague guidelines from HUD and that they also did some things poorly.

"If everything had been perfect, I wouldn't have made the recommendation (to bring in the consultants)," he said.

Any improprieties or unethical practices by SCAP officials were done with the tacit approval of city officials who were blindly and naively trusting, in over their heads or simply allowed themselves to become too friendly with SCAP officials and thus unwilling to tackle the problem head-on.

Now the city is playing catch-up by demanding that SCAP hand over the rent it received from the employees or their family members living in SCAP homes.

The city waited way too long to act and is doing the right thing — for the public it's supposed to protect — only after being embarrassed by the facts.

Its lack of oversight contributed to problem. Instead, officials tried blame the messengers.

When you do that, you miss the message.

Jeff Jardine's column appears Sundays, Tuesdays and Thursdays in Local News. He can be reached at jjardine@modbee.com or (209) 578-2383.

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