A Questionable Connection

Residents' Journal and Better Government Association

An 8-month investigation by Residents Journal and the Better Government Association has found that dozens of contractors for the Chicago Housing Authority have given hundreds of thousands of dollars to a political organization linked to CHA CEO Terry Peterson.

Residents' Journal and the Better Government Association found that many companies gave to the 17th Ward Democratic Organization - a political entity linked to Peterson - just before or just after they were awarded contracts from the CHA. One firm gave a $2,500 donation to the 17th Ward Democratic Organization the same day the firm was awarded a construction contract worth $3,292,095.

Residents' Journal and BGA found at least 63 companies who donated to the 17th Ward Democratic Organization and also received contracts from CHA. These donations are particularly surprising given that the 17th Ward contains no CHA family public housing developments, senior buildings or redevelopment sites.

Many of the companies are involved in CHA's 10-year, $1.6 billion Plan for Transformation, including managers of public housing sites, relocation counselors, moving companies, developers and construction companies. One of the CHA contractors who contributed to the 17th Ward Democratic Organization was criticized repeatedly by public housing residents for providing poor service. At least one CHA contractor who also gave to the 17th Ward Democratic Organization was cited by the federal government for failing to document their contributions to residents, as required under federal law.

Two CHA contractors which are based out-of-state made their only political contributions inside Illinois to the 17th Ward Democratic Organization and related political candidates.

The 17th Ward Democratic Organization's political fund is heavily dependent on firms that do business with CHA. One-third of the income to the 17th Ward Democratic Organization came from CHA contractors from 2001 to 2004. In those years, the 17th Ward Democratic Organization took in a total of $673,333.05, of which $250,368.32 - 37.18 percent - came from contractors at the CHA. RJ and BGA computed these figures by comparing public filings of the contributions to the 17th Ward Democratic Organization with a list of CHA contractors.

It is not illegal for CHA contractors to give donations to political organizations. However, it is illegal for government officials to condition government action, such as the awarding or renewing of contracts, on the basis of political contributions. Any such actions could be considered bribery or extortion under state or federal law, according to a legal analysis by BGA.

Further, federal employees, as well as state and local employees funded by federal dollars, are at risk of being found in violation of the federal Hatch Act if they engage in overt political activity while on duty, using government resources for political activity or using their official titles when soliticting political contributions. Almost all of CHA's budget comes from the federal government, making CHA employees subject to the Hatch Act.

CHA states that its policy is that "Contracts with a value equal to or greater than $100,000 must be led by an open competitive sealed bidding process, or competitive negotiation after public advertisement." Anyone who interferes with such an open and competative process through the use of undue influence or interference could be found in violation of state or federal law, according to BGA's legal analysis.

15 Years of Political History
Peterson's political history with the 17th Ward dates back more than 15 years. The strong connections between Peterson and the 17th Ward are clear both in the public record and in the financial details of the 17th Ward's political committees.

Peterson was chief of staff to 17th Ward Ald. Alan Streeter from 1990 to 1994, according to a biography on the web site of the Millennial Housing Commission. In that year, he left Streeter's office to accept a post as Assistant Commissioner for the city's Department of Planning.

In April 1996, Streeter pled guilty to federal charges of extortion and filing a false income tax return under the Silver Shovel investigation. Shortly after Streeter's resignation, Mayor Richard M. Daley appointed Peterson to replace Streeter as 17th Ward Alderman.

Peterson won a special election in February 1997 to fill Streeter's term and then won his first full term in 1999. In March 2000, Peterson won a Democratic Party election to become 17th Ward Committeeman, according to the Chicago Board of Election Commissioners. Ward committeemen are elected within their respective political parties to serve four-year terms as the chief political officers in their respective wards. They control party resources, including the Ward Democratic Organizations.

Because of Ald. Streeter's criminal prosecution, however, the 17th Ward Democratic Organization had been disbanded. To help with the costs of elections and political activity, Peterson had another political fund, "Citizens to Elect Terry Peterson," which was created August 29, 1996, according to forms filed with the state Board of Elections.

Citizens to Elect Terry Peterson was active for all three of Peterson's campaigns. During the first six months of 1997, Citizens to Elect Terry Peterson started off with $12,195.31, raised an additional $115,455 and spent $123,976.72 to help Peterson win the special election to fill Streeter's term. For the February 1999 campaign for alderman, records show that Citizens to Elect Terry Peterson raised and spent substantial funds: In the last six months of 1998, Citizens for Terry Peterson started off with $91,582.81, raised $53,495 and spent $49,971.74. In the first six months of 1999, Citizens to Elect Terry Peterson started off with $95,106.07, raised an additional $10,131.34 and spent $64,685.29, much of it on campaign-related expenditures such as printing costs, transportation, food, publicity and mailings. For the 2000 campaign for 17th Ward Democratic committeeman, Citizens to Elect Terry Peterson started with $78,407.92 in the bank and spent $46,656.37 on palm cards, posters, billboards, mailings and other expenses.

In May 2000, Mayor Richard M. Daley appointed Peterson to replace Philip Jackson as CHA CEO. Daley subsequently appointed Latasha Thomas to replace Peterson as 17th Ward alderman.

Thomas, an attorney, served as Peterson's chief of staff from 1996 to 1997, according to her biography on the City of Chicago Web site. She then worked for the City Department of Human Services until Mayor Daley appointed her alderman. Thomas also served as Treasurer of Citizens to Elect Terry Peterson after February 2000, according to the Illinois State Board of Elections. In June 2000, about the time Peterson took over at CHA, Citizens to Elect Terry Peterson had $31,751.55.

Citizens to Elect Terry Peterson had minor activity after Peterson became head of the CHA. The fund did not take in new contributions but in September 2000, Citizens to Elect Terry Peterson donated $10,000 to help launch Citizens to Elect Latasha Thomas.

With the help her new political fund, Thomas won the February 2001 special election to fill the remainder of Peterson's term. Citizens to Elect Latasha Thomas started off 2001 with $48,177.54, raised an additional $92,248, and spent $108,634.45 on buttons, political advertisements and other campaign items.

Peterson continues to appear prominently on Thomas' Web site. He is listed as her predecessor in her biography on the City of Chicago Web site and appears in a photograph and press release for the groundbreaking of a new restaurant in the 17th Ward.

The 17th Ward Democratic Organization was reestablished Sept. 24, 2001, with the same chairman and treasurer as Citizens to Elect Latasha Thomas, Albert Blanchard and Gary Watkins. That same month, Citizens to Elect Terry Peterson donated the remaining balance of its funds - $218.40 - to the 17th Ward Democratic Organization and then shut down its operations. Both Citizens to Elect Latasha Thomas and the 17th Ward Democratic Organization remain active committees.

The new 17th Ward Democratic Organization provided tens of thousands of dollars for Thomas' 2003 campaign. In the second one-half of 2002, Citizens to Elect Latasha Thomas spent $10,784.44. In contrast, the 17th Ward Democratic Organization spent more than seven times that amount - $74,732.48. In the first one-half of 2003, Citizens to Elect Latasha Thomas spent $79,788.68. In that same period of time, the 17th Ward Democratic Organization spent $39,010.28.

For the March 2004 campaign, the 17th Ward Democratic Organization assisted Thomas with her successful effort to become committeeman of the 17th Ward and also helped Milton Patterson with his campaign to become state representative from the 32nd district.

Some time before he decided to run for state representative, Patterson, a former assistant deputy commissioner for the City Buildings Department, apparently succeeded Terry Peterson as 17th Ward Committeeman. Peterson won the February 2000 election to serve a four-year term as committeeman but records are not available at the state board of elections or at the Cook County clerk's office to indicate when Peterson resigned from the post or when Patterson became committeeman.

Citizens to Elect Milton Patterson was created Jan. 13, 2004 and has the same chairman as the 17th Ward Democratic Organization, Albert Blanchard. Funds from the 17th Ward Democratic Organization provided the decisive difference for Patterson over Charles G. Morrow III, an incumbent who had been in place since 1986.

Discrepancies exist between the reports filed with the state Board of Elections by the 17th Ward Democratic Organization and those filed by Citizens to Elect Milton Patterson. The 17th Ward Democratic Organization reported that it donated $47,500 to Citizens to Elect Milton Patterson in 5 separate contributions from Jan. 10, 2004 to Feb. 28, 2004. The 17th Ward Democratic Organization also stated that they made two loans to Citizens to Elect Milton Patterson - $20,000 on March 10, 2004 and $10,000 on April 19, 2004.

Citizens to Elect Milton Patterson, however, stated that they received 4 donations from Jan. 10, 2004 to Feb. 24, 2004 totaling $32,500. They also reported they incurred 4 loans from March 2, 2004 to May 24, 2004, totaling $53,000.

Depending on which filing is correct, the 17th Ward Democratic Organization's contributions to Citizens to Elect Milton Patterson are approximately 40 percent of the total.

Interviews With Ward Officials
Ald. Thomas confirmed that Peterson has an active relationship with the ward, though she denied that Peterson was steering CHA contractors to make donations to the 17th Ward Democratic Organization.

"We talk every day," Thomas said in an interview in late March. "We're friends. We talk about things like how my daughter is doing, and I ask him how his mother is doing."

Thomas said that Peterson resigned as 17th Ward Democratic Committeeman "when he became head of the CHA."

But she added that Peterson continues to serve on the Community Development Corporation Board, assists the alderman when individuals with Housing Choice Vouchers (formerly known as Section 8s) contact her, and remains active in additional ward activities.

"He attends CAPS meetings and talks to the police captain and attends 17th Ward fundraisers," Thomas said.

Thomas said that she did not remember if Peterson had donated funds to the 17th Ward Democratic Organization. State Board of Elections records show Peterson donated $200 to the 17th Ward Democratic Organization on Oct. 8, 2003, $150 on April 19, 2004 and another $150 on June 16, 2004. Peterson also donated $500 on March 2, 2004 to Citizens to Elect Milton Patterson and made separate donations to the campaigns of Mayor Richard M. Daley, Cook County Commissioner Jerry Butler and state Rep. Calvin Giles.

Thomas denied that Peterson helped the ward organization get donations from CHA contractors. She maintained that she devotes special effort to get African American contractors involved in the ward's activities.

Albert Blanchard, the chairman of the 17th Ward Democratic Organization, Citizens to Elect Milton Patterson as well as Citizens to Elect Latasha Thomas, confirmed that Peterson is active in 17th Ward politics and community life, though he also denied that Peterson was influencing CHA contractors to give funds to the 17th Ward Democratic Organization.

In a telephone interview, Blanchard, a retired city employee, noted that Peterson was a resident of the ward. "He still has an interest," Blanchard said. "He comes through the ward office occasionally, community meetings, meetings with the constituency, talking about the needs of the community."

Blanchard said that he is not involved in fundraising for the 17th Ward Democratic Organization and focuses instead on the "day to day political operations." He explained that he did not know about donations from CHA contractors to the 17th Ward Democratic Organization.

"I'm not so deeply involved," Blanchard said. "I don't look at the D-2s [political contribution reports filed with state and county election officials]."
Blanchard said he did not know why CHA contractors would give to the 17th Ward Democratic Organization, but speculated that they may have learned of Peterson's history with the ward.
"I think much of it might be perception," Blanchard said. "Terry Peterson was previously the alderman. People perceive they might be able to gain an in-road. It's human nature to think, to try and leverage ourselves."

Gary Watkins, the treasurer of the 17th Ward Democratic Organization, Citizens to Elect Latasha Thomas and Citizens to Elect Milton Patterson, said he did not want to comment on this story.

"I'm not in a leadership position," Watkins said. "I don't know anything."

State Rep. Milton Patterson did not return phone calls seeking comment for this article.

CHA's Comments
CHA spokesperson Kim Johnson verified that Peterson was active in various 17th Ward activities, including service as a board member of the Community Development Corporation Board. But Johnson emphasized that Peterson was not involved in any fundraising activities for the 17th Ward Democratic Organization or related organizations.

Johnson also emphasized that Peterson has no role in awarding of contracts at CHA. While Peterson regularly attends 17th Ward events including fundraisers and may have spoken to CHA contractors at those events, Johnson said he did not try and persuade CHA contractors to make donations to the 17th Ward Democratic Organization.

"Terry is not involved in the awarding of contracts," Johnson said. "Nobody can come up and say he said 'I want you to give money to the 17th Ward."

Johnson said that Peterson did not host fundraising events for the 17th Ward Democratic Organization, was not aware of any literature from the ward organization that listed his name and would not have allowed his name to be used on fundraising materials.

"He is not involved in fundraising activities," Johnson said.

Johnson said that Peterson is a 15-year resident of the 17th Ward and remains very active in ward activities. She said he attends various meetings, including CAPS meetings and events that have to do with development. She said Peterson is particularly concerned with bringing African American-owned businesses into the ward.

"There are times we [CHA staff] have tried to get him to go home and he is still out in the community. "If he is not doing CHA business, he is doing something for his community," Johnson said.

"You are talking about someone who, on the one hand, is trying to do right with the Plan [for Transformation], and, on the other hand, really cares about his community."

Johnson said that Peterson continues to help Ald. Thomas with projects that were initiated during his tenure as alderman. She specifically mentioned the opening of B.J.'s Market, an African American-owned restaurant, and the Martin Luther King Center, a new community facility. Peterson appears on Thomas' official Web site in a photographed ground-breaking for B.J.'s Market and is mentioned in Thomas' press releases for the openings of both the King Center and B.J.'s Market.

"There's no CHA money in B.J.'s Market," she said. "We didn't build it."

"You have to go out into the community to make these things happen."

Johnson added that Peterson was applying his experience in planning and development both as head of CHA and as an active 17th Ward resident. As a board member of the community development corporation, he has made particular effort to bring new businesses into the 17th Ward.

"It would seem odd if someone who was so actively involved in rebuilding so many other communities would not be involved in rebuilding his own," Johnson said.
"He enjoys being a part of neighborhood building."

The Contractor Connection
The new 17th Ward Democratic Organization saw a rapid increase in fundraising since it was re-constituted in September 2001. Much of the increase was due to contributions from CHA contractors. Many contractors made donations about the time they received contracts from CHA. Though some contractors have extensive records of political contributions, some CHA contractors made their only political donations to the 17th Ward Democratic Organization.

By the end of 2001, the 17th Ward Democratic Organization had brought in $47,791.40 - of that figure, $14,650 came from CHA contractors, according to an analysis from Residents' Journal and the Better Government Association. In 2002, the 17th Ward Democratic Organization brought in $172,668.32 in itemized contributions, of which $60,493.32 came from CHA contractors. In 2003, the 17th Ward Democratic Organization brought in $202,355, of which $82,300 came from CHA contractors. In 2004, the fund brought in $250,518.33, of which $92,925 came from CHA contractors. Some CHA contractors gave to multiple candidates in Illinois but gave a large share of their political contributions to the 17th Ward Democratic Organization and related candidates - Latasha Thomas and Milton Patterson.

Residents' Journal and the Better Government Association compared the amounts and dates of CHA contracts with political donations reported to the state Board of Elections. A list of CHA contracts obtained from the U.S. Department of Housing and Urban Development under the Freedom of Information Act, however, does not match precisely the list of contractors and the contract amounts on CHA's web site. HUD officials were unable to explain the differences between their records and CHA's. Where there are discrepancies, Residents' Journal and the Better Government Association have cited both sources.

From 2001 to 2004, H.J. Russell, a real estate development firm based in Atlanta, Ga., made $19,050 in contributions to a number of political campaigns in Illinois, including the campaigns of Mayor Richard M. Daley, former U.S. Rep. William Lipinski (D-3) and Ald. William Beavers (7), according to the state Board of Elections.

But H.J. Russell gave more than 68 percent of its total political contributions to the 17th Ward Democratic Organization and related candidates. H.J. Russell gave the 17th Ward Democratic Organization a total of $13,000 in 9 separate contributions from October 4, 2002 to September 23, 2004. The $13,000 in contributions to the 17th Ward Democratic Organization represented 68.2 percent of the total the company gave to political organizations in Illinois from 2001 to 2004.

H.J. Russell made its two largest contributions to the 17th Ward Democratic Organization shortly before it won two contracts from CHA. H.J. Russell gave the 17th Ward Democratic Organization $5,000 on October 4, 2002, approximately three months before it was awarded its first contract with CHA. That contract began February 1, 2003 and ended January 31, 2005, and was for $9,423,032 for management services at ABLA Homes and Loomis Courts on the West Side, according to a list of CHA contractors obtained from the U.S. Department of Housing and Urban Development. CHA's web site indicates that the same contract was worth $8,073,834.

H.J. Russell gave Citizens to Elect Latasha Thomas $500 on February 25, just after it won its first contract and approximately two months before it was awarded its second contract with CHA. The second contract was for $489,540 for additional property management services, according to HUD. CHA's web site indicates that the contract was worth $2,657,625.

H.J. Russell did not return telephone calls asking for comment on this story.

The list of CHA contractors who also gave to the 17th Ward Democratic Organization also includes local firms with extensive records of political involvement. According to its Web site, d'Escoto Inc. is one of Illinois' largest Latino-owned construction firms and has worked for Chicago's departments of Aviation, Sewers, and Transportation as well as Cook County Hospital, the CTA, Chicago Public Schools and Metra. The company garnered previous press attention because it is run by the father of Miguel d'Escoto, commissioner of the City of Chicago Department of Transportation.

According to a list of CHA contractors obtained from HUD by Residents' Journal under the Freedom of information Act, d'Escoto received one contract from CHA worth $1,463,408 that lasted from August 2002 to August 2004. CHA lists two contracts for d'Escoto: a $1,175,000 contract lasting from August 2002 to August 2004, and a second contract for $1,311,132.67 lasting from Nov. 1, 2004 to Oct. 31, 2006.

In 1997, before Peterson became head of CHA, d'Escoto made two $200 donations to Citizens to Elect Terry Peterson. After Peterson became head of the CHA in 2000, d'Escoto made much larger contributions to the 17th Ward Democratic Organization. The company donated $2,000 to the 17th Ward Democratic Organization in November 2002, two months and two days after their contract with CHA began. In 2003, the firm donated $7,500 to the 17th Ward Democratic Organization, including a $5,000 donation in November 2003. The following year, d'Escoto gave $4,000 to the 17th Ward Democratic Organization in two separate contributions - June 28 and Oct. 14. The last donation was less than one month before d'Escoto won its second contract from CHA. In all, the firm gave $13,500 - 14.2 percent - of all its political donations to the 17th Ward Democratic Organization.

Frederico d'Escoto, president of d'Escoto, said in a telephone interview that his company gave to the 17th Ward Democratic Organization because of their commitment to developing minority leadership. He said that he first got to know Thomas in City Hall.

"She seemed to be a person with spirit and vitality. She walks the walk and talks the talk," d'Escoto said. "We were speaking about different projects in her ward. She seemed to be at the forefront of a transformation in her community. "

The goal we have personally and civically and corporately identified is identifying young leadership and helping them."

Another firm that won contracts with CHA lost a previous contract with the City of Chicago after a media investigation revealed that it overcharged for its services. G.F. Structures lost a contract in 2000 to provide wrought iron fences to the City. The media reports mentioned that G.F. Structures' owner, Richard Crandall, was a reliable contributor to the political campaigns of Mayor Richard M. Daley and an insurance client of Cook County Commissioner John Daley, the mayor's brother.

The media reports prompted the City to bring in an outside auditor and re-bid the wrought-iron fencing contract. The reports also led to the resignation of Alexander Grzyb, acting purchasing agent for the City. G.F. Structures received more than $10 million for the fencing work. The outside auditor eventually found that G.F. Structures was overpaid $7,994.

G.F. Structures started receiving contracts from CHA beginning in September 2001, more than one-and-one-half years after the firm was cited in media reports. The list provided to Residents' Journal by HUD indicates that G.F. Structures received 8 contracts from CHA worth more than $63 million. CHA's web site, however, lists 13 contracts for G.F. Structures valued at nearly $70 million. Both lists show one contract for $407,563 from Sept. 27, 2002 to Sept. 26, 2003 required G.F. Structures to fix CHA's roof at the agency's downtown location.

G.F. Structures donated $900 in 2 separate donations to Citizens to Elect Terry Peterson in 1998 and 1999. In November 2001, G.F. Structures donated $200 to the 17th Ward Democratic Organization. Just one month later, the company received two contracts from the CHA valued at $689,465 and $2,246,444, according to CHA's Web site.

G.F. Structures donated increasing amounts to the 17th Ward Democratic Organization in subsequent years. The value of their contracts also increased.

On February 8, 2002, G.F. Structures received a CHA contract worth $24,712,027.03 for construction services. In September 2002, G.F. Structures donated $1,000 to the 17th Ward Democratic Organization.

On June 7, 2003, G.F. Structures gave $600 to the 17th Ward Democratic Organization, followed by a contribution of $1,900 later that same month. On October 27, 2003, they gave another $2,500.

G.F. Structures won five contracts from CHA that fall, according to both CHA and HUD. On Sept. 1, 2003, they received a contract for $2,000,000. On Oct. 7, they received a contract for construction services valued at $14,478,413.89. On Oct. 15, the company received two additional construction contracts for $8,960,010 and $7,131,042. On October 27, 2003 - the same day they made a $2,500 donation to the 17th Ward Democratic Organization - the company received a construction contract worth $3,292,095.

Michael Lusk, who identified himself as an employee of G.F. Structures' owner, Richard Crandall, said that G.F. Structures "would rather not participate" in the article.

The list of CHA contractors who made political donations also includes a number of firms who gave exclusively to the 17th Ward Democratic Organization.Done Rite Construction made a contribution of $500 to the 17th Ward Democratic Organization on November 3, 2003, two months after it was awarded a $2,000,000 contract with the CHA, according to both CHA and HUD. Done Rite did not make any other political contributions to any other political fund from 2001 through the end of 2004.

Done Right Construction did not return phone calls seeking comment for this story.

HUD and CHA list differing numbers of contracts with differing amounts for Kutak Rock, a law firm based in Omaha, Neb. According to HUD, Kutak Rock won a $10,000,000 contract for legal services that lasted from July 16, 2002 to July 16, 2004. CHA's list indicates that Kutak Rock had three contracts: a $110,000 contract for legal services from Jan. 2, 2001, to Jan. 1, 2003; a $200,000 contract from July 16, 2002 to July 16, 2004; and a third contract for $250,000 awarded on Jan. 2, 2004.

Kutak Rock made its only donations to political organizations in Illinois to the 17th Ward Democratic Organization, according to the state Board of Elections. Kutak Rock donated $2,500 to the 17th Ward Democratic Organization on June 27, 2003 and donated $1,500 on June 16, 2004 - the final day of a contract which appears with different amounts on the CHA and HUD lists.

Bob Starr, an attorney at Kutak Rock who works on CHA projects for the firm, declined to comment, citing a long-standing "client confidentiality policy."

Legum and Norman
One out-of-state company that won contracts with CHA has been criticized by public housing residents as well as the federal agency which oversees the nation's public housing system. Legum and Norman, a Virginia-based private property management firm, currently manages two CHA family developments, a scattered site development and several senior properties.

Legum and Norman made its only political contributions in Illinois to the 17th Ward Democratic Organization and to Citizens to Elect Milton Patterson. The company made its first donation of $500 to the 17th Ward Democratic Organization on November 22, 2002. Three months later, Legum and Norman won two contracts - a $2,104,441 contract to manage Armour Square and Shields Apartments from Feb. 1, 2003 to Jan. 31, 2005; and a contract worth $1,420,748 to manage Lawndale Complex and Bridgeport Homes from Feb. 1, 2003-Jan. 31, 2005, according to a list of CHA contracts obtained by Residents' Journal from the U.S. Department of Housing and Urban Development. CHA's web site lists the same two contracts but with differing amounts: $1,436,317 to manage Armour Square and Shields Apartments from Feb. 1, 2003 to Jan. 31, 2005, and $1,242,741 to manage Lawndale Complex and Bridgeport Homes from Feb. 1, 2003-Jan. 31, 2005.

Legum and Norman won two additional contracts three months later. The company was awarded $343,505 to manage the Lincoln Sheffield Apartments, Clark & Webster and Briton Bud Apartments from May 1, 2003 to April 30, 2005. Legum and Norman also was awarded $65,730 to manage the Southwest Scattered Sites from May 1, 2003 to April 30, 2005. CHA lists these contracts with differing amounts as well: $265,395 to manage the Lincoln Sheffield Apartments, Clark & Webster and Briton Bud Apartments from May 1, 2003 to April 30, 2005, and $705,706 to manage the Southwest Scattered Sites from May 1, 2003 to April 30, 2005.

Legum and Norman made four political contributions during the term of those contracts. They contributed $1,000 to the 17th Ward Democratic Organization on November 10, 2003. On February 7, 2004, they contributed $1,000 to Citizens to Elect Milton Patterson. In 2004, they contributed three more times to the 17th Ward Democratic Organization: $275 on May 24;$1,000 on June 28; and $500 on Oct. 14.

Some residents expressed satisfaction with Legum and Norman's management at the Bridgeport Homes on the South Side. But many other tenants showed a visiting RJ reporter problems that had not been addressed by management staff.

One Bridgeport Homes resident who asked to remain anonymous said that she has had long-standing problems with work orders that have not been completed. In particular, this resident said her doors need weatherization that requires her to use excessive heat. The resident added that her apartment has a consistent presence of mildew which management officials addressed only partially.

"You can set a candle in my front door and the wind will blow it out," the resident said. "My downstairs feels like outside."

They're dragging their feet on the work orders and they call themselves done."

Emily Cano, a lifetime resident of Bridgeport Homes and area vice president, said that roofing work done in the middle of winter left a number of residents - including seniors and persons with disabilities - in freezing conditions.

"In the dead of winter, they took our insulation," Cano said. "We didn't get electric heaters until a couple of weeks later. We weren't informed of [the removal of the roof]. We had to figure it out on our own."

Cano said that Legum and Norman fires or otherwise replaces managers at a rapid clip, often after a scandal or a clear demonstration of incompetence.

"Legum and Norman need to go. We need better private managers. We've been trying for a while to get Legum and Norman out. Why? Because they don't really care and they don't choose to do things for our tenants."

Lema Rubio said she has had problems with leaks in her roof for 15 years. Rubio pointed out mold on her walls as well as water collecting in a light bulb.

"A long time ago, I made a complaint and they said they would come and fix the roof but they never came," Rubio said. "One manager comes in and then another manager comes in. About six managers have come in and I told them the same thing."

Sherry Guzman, area president of Bridgeport Homes, said that Legum and Norman was not doing a good job overall. Guzman alleged that one of Legum and Norman's managers defrauded CHA by steering funds into a bank account for a bogus company.

Guzman said another manager made arrangements for a felon to live in the development - a violation of federal rules which say that tenants who house ex-felons can be evicted. Guzman showed an RJ reporter a copy of a letter allegedly sent by this Legum and Norman manager to an official at the Pontiac Correctional Center granting an inmate at the prison permission to live with his sister, a Bridgeport Homes resident.

Guzman's daughter, Sherry Cruz, had a litany of complaints against Legum and Norman that ranged from their failure to fix problems in her apartment as well as issues with their management of the development's public spaces. Cruz said that water collects along the base of the walls in her living room near electrical sockets."

That can be a fire hazard," Cruz said.

Cruz added that Bridgeport Homes' security gates are regularly locked at the end of the work day, preventing nighttime access by emergency vehicles. Cruz recounted one violent incident in which police were unable to access the development because of the locked security gates. The delay left the resident who was the victim of the attack at risk.

"If (residents) need an ambulance and the fire department, those gates are locked up. That hampers the ability of them coming in," Cruz said.

"To Legum and Norman, that is not an important issue - until somebody has a heart attack and dies."

Residents are not the only ones with complaints about Legum and Norman. On July 18, 2003, the Inspector General for the U.S. Department of Housing and Urban Development published its audit of CHA's private management contracts in family and senior developments. The audit's objectives were to evaluate CHA's controls over its private managers and determine whether the private managers were complying with HUD rules and the terms of the contracts. The audit was conducted in the wake of CHA's decision in 2000 to privatize all its property management.

The auditors reviewed 11 randomly selected management contracts during CHA's Fiscal Year 2001. They examined related financial information and work orders as well as other documentation related to the contractors' compliance with rules for Minority, Women and Disadvantaged Business Enterprises. Several firms did not subject their maintenance and management staff for required screenings for criminal backgrounds and drug testing, the auditors found.

The auditors also paid special attention to the contractors' compliance with Section 3 rules, which require contractors with public housing authorities across the nation to hire low-income residents or otherwise contribute financially to the welfare of low-income families.

The auditors found that "the housing authority failed to properly monitor and administer its management agreements with nine private management firms and two resident management corporations. The housing authority did not properly monitor its contractors' compliance with requirements of Minority, Women and Disadvantaged Business Enterprises and Section 3 programs. The management contractors also failed to adhere to their management agreements and other requirements for maintenance, work orders, unit inspections and tenant recertification."

The HUD auditors found problems with 11 of the 15 contracts they checked for Section 3 compliance: "HUD lacks assurance that (1) Minority contractors had the opportunity to compete for, or perform contracts financed in whole or in part by federal funds; and (2) low- and very low-income persons were provided employment and other economic opportunities afforded by federal financial assistance for housing and community development programs."

The HUD auditors specifically mentioned that Legum and Norman was the only company which "had not submitted any supporting documentation for the Section 3 program."

CHA officials responded to the HUD audit with a letter detailing remedial action they were taking to address the issues raised by the audit. CHA indicated they had increased their contract compliance staff and their training programs for private managers. CHA stated they were researching the 11 contracts which the auditors found did not comply with rules for documenting the companies' Minority, Women and Disadvantaged Business Enterprise status. CHA did not, however, specifically challenge HUD's assertion that Legum and Norman failed completely to document its compliance with Section 3 rules.

Legum and Norman Responds Marvin Price, Executive Vice President of Legum and Norman, said his company made donations to the 17th Ward Democratic Organization because they were asked. Price said he did not remember who made the request but was "sure" that it was made by either a CHA official or an official of the 17th Ward.

"We were asked to make a contribution and so we did," Price said. "I'm sure it was somebody from the ward or from CHA. I can't imagine who else would have called us.

"I think sometimes they sent a letter, and I may have had a call or [company president] Mr. [Michael] Shehadi may have received a call.
"It was a request. I can assure you of that. Because other than that, we wouldn't have known about it at all to begin with."

Price maintained that the donations were for awards or dinners rather than election costs. Though the donations to the 17th Ward Democratic Organization are Legum and Norman's only political contributions in Illinois, Price noted that the company receives many similar requests in Washington, D.C., and that their relationship with CHA predates their donations to the 17th Ward Democratic Organization and Peterson's tenure at CHA.

"We get asked here in the Washington area where our offices are all the time. But it had nothing to do with the contract [with CHA]. We already had the contract. I'm sure that we aren't the only ones that have contributed to things," Price said.

When a reporter pointed out that Legum and Norman's donations occurred at approximately the same time as the company was up for renewal or its contracts, Price said that the timing of the contributions had nothing to do with the contracts at CHA.
"If that's the case," Price explained, "that's coincidence."

Price also said that he was not aware of Legum and Norman's contributions to Citizens to Elect Milton Patterson.

"It may have been the decision made by one of the owners of the company," he said.

With respect to the complaints of the Bridgeport Homes residents, Price characterized the residents' complaints as chronic. He said the company had frequently changed managers at Bridgeport Homes because of the residents' recalcitrance.

"Bridgeport complains about everything," Price said. "I can turn myself blue in the face and they'll still be complaining. That's the nature of the beast. We don't charge people that'll coddle them and be their friends. We charge professionals.

“One of my best managers quit because she was sick and tired of these residents. And they made her life so miserable. So it’s a two-way street here.”

Plan for Transformation
Many of the CHA contractors who also gave money to the 17th Ward are playing important roles in the agency’s ambitious $1.6 billion Plan for Transformation, an effort to relocate tens of thousands of public housing families, demolish CHA buildings and build new mixed-income communities.

The Habitat Company, which oversees the development of all new public housing units in Chicago, made four separate donations to the 17th Ward. They donated $2,000 on October 1, 2002, $1,500 on Nov. 10, 2003, $600 on June 21, 2004 and $5,000 on Sept. 23, 2004, according to the state Board of Elections.

The Habitat Company did not return phone calls from Residents’ Journal seeking comment on this story.

The Quadel Company, the parent company of CHAC, which manages all of CHA’s Housing Choice Vouchers (formerly known as Section 8s), made its only political donations in Illinois to the 17th Ward Democratic Organization. Quadel donated $2,500 to the 17th Ward Democratic Organization on June 28, 2004, and then made another $2,500 donation less than one month later on July 20. Both donations were made several months before their $52 million contract to manage CHA’s Housing Choice Vouchers expired, on Dec. 31, 2004.

Residents’ Journal called CHAC officials to request comment on Quadel’s contributions to the 17th Ward Democratic Organization. Neither CHAC officials nor Quadel employees returned these phone calls.

Another donor to the 17th Ward Democratic Organization was Holsten Real Estate, which is building new mixed-income housing at the Cabrini-Green development and overseeing the rehabilitation of the Hilliard Homes on the South Side. Holsten gave $2,000 to the 17th Ward Democratic Organization on Sept. 30, 2002, $100 on April 19, 2004, $600 on May 24, 2004, and $1,500 on October 14, 2004.

Peter Holsten, the owner of Holsten Real Estate, said he donated to the 17th Ward Democratic Organization because his fiancée has known Ald. Latasha Thomas most of her life. Holsten noted that he supports many political candidates and said he had never been asked to make a contribution to the 17th Ward Democratic Organization in exchange for a CHA contract.

“No one has twisted my arm,” Holsten said. “There was no quid pro quo.”

Big “O” Moving and Storage won a $400,000 contract on April 1, 2003, to help relocate families displaced by the demolition of public housing buildings. Big “O” Movers donated a total of $2,000 to the 17th Ward Democratic Organization in two separate payments in 2001 and 2002. Big “O” Movers also donated to Citizens to Elect Latasha Thomas, giving a total of $2,200 in four payments – two in November 2000, and one each in February 2001 and May 2003.

An individual who identified himself to a Residents’ Journal reporter only as “Big ‘O’” said he contributed to the 17th Ward Democratic Organization because he lives in the ward.“

That’s where I live,” he explained, before declining to comment further.

Heneghan Demolition won a $2,125,547 contract to demolish public housing buildings in the ABLA Homes, according to CHA records and the company’s own web site. Heneghan made three contributions to the 17th Ward Democratic Organization, $600 on June 21, 2004, $250 on June 25, 2004, and $1,500 on Oct. 14, 2004.

An individual who identified herself as a receptionist for Heneghan quipped that the company makes donations to many political campaigns, and then said she would pass a reporter’s questions on to a spokesperson. No spokesperson for Heneghan, however, returned the reporter’s call before Residents’ Journal press deadline.

Changing Patterns for Families won contracts to provide transitional counseling and other supportive services to families displaced under the Plan for Transformation. According to HUD, Changing Patterns won three contracts: The first two contracts had a combined value of $996,200 and began Jan. 1, 2003. The last contract was for $995,150 and was to last from Feb. 1, 2004 to March 31, 2005. According to CHA, Changing Patterns also won three contracts, but two of those differ significantly from HUD’s list.

Changing Patterns for Families gave the 17th Ward Democratic Organization a total of $600 in two installments on June 28, 2004, and July 20, 2004. These were the only political contributions made by Changing Patterns for Families listed by the state Board of Elections.

Renee Max, a spokesperson for Changing Patterns for Families, said she would not talk to a journalist unless she had received prior approval from CHA.

“Anything with the media, journalists, CHA told us to get the OK with them, first with the housing authority,” Max said.

February/March 2005 / Volume 8 / Number 2