When Frank Johnson called the Village of Oak Park in 2000, he just wanted a loan to fix a leaky roof on his family’s home.

But he wound up with a years-long roller coaster ride of emotion and stress”an imbroglio displacing his family for two years, costing him more than $70,000, and causing the U.S. Dept. of Housing and Urban Development (HUD) to call for change in the way the village’s housing department operates.

“It’s just been a horrible experience,” Johnson said. “I hope no family has to go through what we went through.”

In response to HUD’s findings, the village issued a request for proposals (RFP) on Feb. 22 to find a consultant to redesign the village’s single-family home rehabilitation program.

At issue for HUD are the village’s “construction management practices, as well as its approach to the treatment of lead hazards in residential rehabilitation projects,” according to a HUD letter to former Village Manager Carl Swenson.

Two staff members in the housing program have since left the village; one via early retirement, one after being suspended for another matter.

Frank Johnson bought his home at 1034 N. Austin Blvd. in 1995 from the Oak Park Residence Corporation using the village’s First-Time HomeBuyer Loan Program. That’s when the trouble began.

He didn’t know it then but later learned that if he had been allowed to apply for a mortgage insured by the FHA (Federal Housing Administration), inspectors would have required much of what was wrong with his house to be fixed before he bought it. But, ResCorp asked him not to apply for an FHA-insured mortgage, and to take a conventional loan instead, he said. ResCorp Executive Director Ed Solan could not comment on home sales before his tenure, but said that is not ResCorp’s standard practice today.

Shortly after buying the home, he and his family”wife Maureen and four sons”noticed what they later learned was a fungus forming on the kitchen ceiling. They cleaned it and repainted, but the fungus kept coming back. Over and over again.

When buying the home, he’d gotten the card of Frank Pond, supervisor of Oak Park’s rehab programs. Years later Johnson found the card and called Pond inquiring about a loan to fix the fungus problem. Johnson and his family qualify for low-income assistance programs funded by federal Community Development Block Grants, or CDBG. The village receives about $2 million in CDBG funding every year, which it uses on programs or other expenses (such as street repair) that are shown to benefit low-income residents.

Pond had good news. Johnson’s home, built before World War II, would likely qualify for a lead abatement grant”money that would not have to be repaid that would buy new windows to replace those likely filled with lead paint.

Johnson and his wife were very happy about free windows, but illness delayed his application, as did the typical queue of applications. Johnson said that in 2002 he received a letter from the village saying he’d been approved. Meanwhile, the fungus still needed to be cleaned and repainted, cleaned and repainted.

Another year passed.

He began communicating with Jeff Leicht, a new hire at the village who would oversee the project. In June 2004, Johnson’s third eldest son was graduating from high school. He had a bunch of visitors coming and the house still had a leaky roof. He’d received code violations from the village because his rear porch was in disrepair.

Finally the rehab work began in the fall of 2004. The village found a general contractor, Robert Grimando of R&G Enterprises, and came out to test the house for lead.

It was everywhere. Lead paint on the inside walls. Lead paint on the stucco outside. Lead paint on the basement floor. Lead paint on the outside of the water pipes. Oh, and yes, lead paint in the windows. Lead-painted walls can be painted over, but friction surfaces like windows are the most dangerous because they can produce dust that’s inhaled, Leicht said in a recent interview.

It would all have to be replaced. The Johnsons would get, in effect, a new house.

“We thought it was a blessing,” Johnson said.

From bad to worse

As part of the project, the family would need to take a $40,000 loan”no problem because it was a fraction of the $251,625 rehab, and because it was part of the village’s Deferred-Payment loan program. The loan is interest-free and does not need to be repaid for 20 years or until the property is sold. It does incur a 10 percent fee, adding a total of $44,000 to the Johnson’s total mortgage.

The work began, displacing the Johnsons into one two-bedroom and one one-bedroom apartment. Their home was supposed to be finished the next April.

However, in January, the happiness began to fade for the Johnsons. Their home was entirely encased in plastic with signs reading “Poison,” scaring neighbors. The Johnsons felt bad for their neighbors and never saw it coming.

“Nobody said that in the scope of the work we’re going to put a bubble around your house,” he said.

Then the contractor found structural damage in the house, and the Johnsons had to take another deferred loan for $26,598. What could they do? With the house stripped down to “toothpicks,” they felt their backs were against the wall.

Shortly after that, work on the house slowed considerably, then stopped completely.

Johnson and Leicht both said they checked in regularly but little progress was being made. Both tried to contact the contractor. With the end date for the contract approaching, the contractor asked for more time. Eventually it became clear he wouldn’t finish the work.

The contract had a penalty for finishing after the end date, but Leicht said that was not enforceable. With the Johnson house torn down to the studs, there was nothing the village could do but allocate another $110,000 and find a second contractor to finish the job.

But that wasn’t the end.

The first contractor hadn’t paid all of his subcontractors. “People came out of the woodwork” looking for payments, Johnson said. He felt like he assumed the role of general contractor, organizing payments for those who never got paid for their work.

The new contractor meant well, but was in over his head, Johnson and Leicht said. A lot of work promised in the contract still isn’t done today.

Program problems detailed

HUD outlined several shortcomings of the way the village ran federally-funded housing rehab programs, specifically the Johnson case. HUD found that the village did not “provide sufficient documentation that project costs were necessary and reasonable,” and that “there were also issues related to the Village’s program design that may have contributed to the high level of investment in this project.”

It also found the village:

Did not ensure an independent cost estimate be completed to match rehab standards;

Did not review project costs to test if they’re eligible for federal assistance;

Did not require line-item budgets for projects;

Did not properly document the Johnsons’ eligibility for the assistance;

Did not properly advertise bids on projects to get the lowest possible bid;

Improperly merged rehab costs with lead abatement costs.

In response, the village in January instituted a procedure for giving public notice for bids, and establishing cost estimate standards. In the most recent letter from HUD dated April 12, the agency says most of its questions are answered and calls for a copy of revised operating procedures for the Single Family Housing Program within 90 days of the letter.

Frank Pond retired recently as part of the village’s early retirement incentive program, and Jeff Leicht no longer works for the village, having decided to quit after having been suspended on an unrelated matter. Cynthia Breunlin, housing programs manager, and interim Village Manager Ray Wiggins did not return phone calls Monday seeking comment, however village spokesman David Powers replied to e-mailed questions.

Powers said the village’s rehab program “has not been revamped to function cost-effectively within the more stringent federal lead abatement requirements that have gone into effect since the program was originally created. We are taking steps to make the necessary changes, and, as the letter indicates, with HUD’s approval.”

The village hired K&H Consulting Services of Galena, Ohio, the lowest priced and most qualified respondent to the RFP. K&H expects to have a report ready in about a month.

Leicht said the village needs to do three things to improve the program. First, use performance bonds to insure the cost of the work. If one had been used on the Johnson case, expenses would have been limited to the budgeted $277,880.

Second, sworn statements should be required from contractors. The statements list all work being done by subcontractors so the village can obtain lien waivers from each company, rather than just pay out lump sums to contractors once inspectors see that work is completed.

And finally, Leicht said the village needs to enforce its completion penalty when contractors don’t finish a project on time. Leicht said he did that once but was cited for the action later in a job performance review.

“That position needs to have the big stick … to make sure the contractors stay in line,” Johnson agreed.

Powers said ways to hold contractors accountable may be among the consultant’s recommendations. He said the first contractor on the Johnson house became injured and agreed to end the contract, while the second contractor “was selected at the urging of the property owner.”

News of the HUD report was not brought before the village board in public. Suggesting that it should have been “implies that the letters from HUD are more than they really are,” Powers said. “Terms like ‘noncompliance’ are routine in correspondence between federal government agencies and the local organizations that implement their programs. It is not an accusation of wrongdoing, but HUD’s method of providing technical assistance in administering a program it funds.”

A HUD representative did not return a phone call Monday asking about the the findings.

‘We feel horrible’

Altogether, more than $380,000 was allocated to fix the Johnsons’ home. In a March 2005 memo to the village board, Breunlin states that a “conservative estimate” would peg the value of the home at $300,000. However, Leicht said that between $40,000 and $50,000 of the money allocated was not spent, and that a nearby house was listed for more than $500,000, so the cost of the work did not necessarily exceed the home’s value.

Frank Johnson and his family moved back into their home on Saturday, April 8, hurt by the thought of the waste involved and embarrassed by putting their neighbors through the ordeal.

“It just hurts my heart that all this money was poured into this for a shoddy product,” Johnson said. “We feel horrible that it’s happened.”

The project literally made him feel not so good.

The Johnsons organized a one-day work-a-thon and barbeque that 40 members of their congregation showed up for the last Saturday in March. The crew put on some finishing touches to help the house pass its final inspection so the family could come home (despite missing gutters, storm doors, and other details). The crew worked all day. But the house didn’t pass. Breunlin told him they hadn’t cleaned well enough. Johnson’s blood pressure shot up, sending him to the hospital later that day, he said.

Asked if given the chance would he do it all over again, Johnson said, “No way. Let me naively live in my lead house and paint over the walls,” he said. “Maybe one day I’ll feel good about it, but I don’t.

“All I wanted was a roof and a loan.”

CONTACT: dcarter@wjinc.com

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