Collaboration in Civic Spheres

City of Seattle-funded 501c3 SEED under microscope

by August 20th, 2012

The iconic Seattle non-profit SouthEast Effective Development (SEED), which has increasingly moved into government-funded affordable housing, is reportedly investigating its finances while its high-profile Executive Director Earl Richardson is on paid leave and a big change in direction may be getting a closer look. Former Washington State Housing Finance Authority and Northwest region U.S. HUD executive Mark Flynn is serving as SEED’s interim executive director. A board member who spoke on the condition of not being named said they “cannot deny” reports SEED has undertaken a forensic accounting effort – adding “we’re in the midst of this investigation” – and also noting that “current events have been very unusual.”

In contrast to regular financial audits which look at general accounting practices and matters such as the reconciling of an organization’s financial records with its bank statements, forensic accounting and audits involve close examination of numerous individual transactions. Forensic accounting can be performed in order to investigate possible misappropriations or embezzlement, or to develop a historical record of how accounting has been performed. However, there is at present no official finding that has been issued publicly regarding any fiscal or other impropriety at SEED.

“People need to cool their jets”
Pat Murakami is a longtime South Seattle activist particularly concerned with economic development, condition of housing stock, and community representation in planning for the area. An entrepreneur who owns a computer networking firm, she served as the president of the venerable Mount Baker Community Club in Seattle from 2004 to 2009, the oldest of its kind in the U.S. She is current president of the South Seattle Crime Prevention Council. Murakami is also a SEED critic who says she is applying to serve on the organization’s board. She says it is her understanding a forensic audit is being done. SEED’s board president Virginia Kenyon would not confirm or deny reports of of a financial investigation, but did say, “We’re in the middle of some decision-making” about the organization’s future direction. “People need to cool their jets and let the board do their job” – more may be clear in about two weeks and the board is to meet in executive session this week, Kenyon added. Several community sources report SEED has discharged a financial employee. Though currently listed on SEED’s web site as Director of Finance, Su Jiang is no longer employed there.

Community “totally in the dark” about SEED’s troubles
Wayne Lau is the Executive Director of the Rainier Valley Community Development Fund, a publicly-supported agency created in 1999 to help mitigate the impacts of Sound Transit’s light rail project through Rainier Valley. The fund has also been a lender to SEED. He said the current unrest at SEED including Richardson’s leave and attendant unverified rumors, is a topic of much discussion locally, and that he’s “been quite surprised” at the lack of communication, “as have others who are totally in the dark as to what’s going on there. They ought to be accountable to somebody. If improprieties have occurred, they should be publicly disclosed.”

50-year loan from city
According to the annual 990 financial reporting form SEED filed with the Internal Revenue Service for 2010, the most recent available, Richardson was paid $111,044. He is the former director of the City of Seattle’s Office of Housing, which along with the city’s Office of Economic Development, lent more than $7 million to SEED for its latest and much-heralded mixed-use project affordable housing project – the $17 million Claremont on Rainier Avenue South. Housing Office officials said their portion of that was repayable by SEED in 50 years but the loan could be extended to 75 years. (The official “affordable housing” designation refers to projects which are technically not called “subsidized” because they do not involve HUD Section 8 housing vouchers and target slightly higher-income households which nonetheless earn under the so-called area median income, or AMI.)

Old Chubby and Tubby site
The Claremont is at the flagship site of the now-defunct local variety store chain Chubby and Tubby, and is the most recently completed of 13 housing developments listed on SEED’s web site. The Claremont has 58 apartments and 10 town homes to the immediate west. All are priced for renters who earn not more than 80 percent of AMI, and some are priced to be affordable to those who earn just 40 or 60 percent. The Claremont opened in April of last year and in a required 2011 year-end report to the City of Seattle, had a 33 percent occupancy rate, according to Seattle Housing Department spokesperson Julia Moore. More recent data was not immediately available. Repeated calls to the leasing office at The Claremont during posted open hours went unanswered, although the outgoing voice mail message emphasized apartments and town homes were still available for rent. The Claremont was funded by 11 government and four private sources.

Ground floor retail woes
The Claremont’s four ground-floor retail/office spaces along Rainier Avenue south are for sale or rent but remain empty or closed more than a year after the project’s announced opening was trumpeted in a City of Seattle Housing Office newsletter. One unit which according to a sign posted several weeks ago was to open Aug. 20 hosting a branch of the women’s workout club called Curves now displays an updated notice that branch is moving several miles away to 23rd Avenue and Jackson Street in the Central District. The other three units are also available. Lau, of The Rainier Valley Community Development Fund, which loaned SEED $1 million to develop The Claremont’s commercial spaces, said Richardson had earlier this year stopped payment on the loan, but that it subsequently was brought current. Richardson was trying to negotiate better terms.

The Claremont was intended to conform with a broader regional effort backed by The City of Seattle, King County and Sound Transit in Rainier Valley and other neighborhoods, to encourage transit-oriented development including government supported affordable apartments for lower-middle income workers. One tenet of TOD, as it is called, is that mixed-use developments with four- or five-story apartments on top and retail on the ground floor, particularly near transit lines, will help revitalize economically disadvantaged neighborhoods.

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The Claremont is within walking distance of Sound Transit’s Mount Baker light rail station at the complicated intersection of Martin Luther King Jr. Boulevard, Rainier Avenue South, and McClellan Street, and a pedestrian footbridge does connect Rainier Ave. with the station. However on a recent Saturday afternoon the welcoming committee at the bottom of the bridge’s west side was five loud inebriates suffused with the reek of beer, and the vast, cavernous station’s ground floor was empty.

Down Rainier Avenue, pedestrian traffic in front of the Claremont consisted of a man walking back and forth holding a beverage in a black plastic bag.

Through the apartment lobby door bold lettering above an archway leading to the elevator proclaimed The Claremont’s name, but the “M” was missing. A hydraulic lift platform had been left in the lobby over the weekend, with five large particle boards leaned against it, sideways, and one on the ground.

Seen in isolation, The Claremont cuts a fairly impressive figure.

SEED's Claremont development/Matt Rosenberg

But for pedestrians, the Claremont is an isolated island on Rainier Avenue South, with mostly unappealing, harsh surroundings in both directions including unfinished or fenced off buildings, metal paneling, asphalt lots, and the near-constant rattle of heavy freight rigs thundering north and south on the busy four-lane arterial. There is no parking evident for customers who would drive to The Claremont’s ground floor businesses.

“Ridiculous” economic development model
Murakami says the city’s template for economic development in distressed neighborhoods such as Rainier Valley is based on “a ridiculous model” of poorly-constructed and poorly-maintained affordable housing, with ground floor retail but scant customer parking, compounded by too little emphasis on broader job creation. Murakami says, “SEED has done way too much in subsidized housing. SEED needs to focus much more on effective economic development” which would bring more jobs and better wages to Rainier Valley and safer, more walkable streets.

SEED successful with arts, mall and neighborhood downtown projects
Down Rainier Ave. from The Claremont is another SEED development, a multi-phase project called Rainier Court across from the Rainier Valley Square Mall developed by SEED – which in contrast to adjacent sections of the arterial Rainier Ave. itself, is thriving. SEED also has successfully promoted arts projects and facilities in Southeast Seattle, and was considered instrumental in the neighborhood downtown revitalization of Seattle’s Columbia City business district, further south on Rainier, past Alaska Street and the landmark Seattle Public Library’s Carnegie-vintage branch. A number of SEED’s current and planned affordable housing projects, including Rainier Court, have involved environmental clean-up work of industrial contamination from past land uses. The City of Seattle contributed at least $9.2 million to SEED for land acquisition and development of Rainier Court’s Phase One, senior apartments with ground floor retail, now known as Courtland Place, 3700 Rainier Ave. S.

Downmarket Dakota
Rainier Court’s adjacent Phase Two project is a completed low-rise affordable housing development by SEED called The Dakota, 3642 33rd Ave. S., bordering Courtland Place on the east. It has partially vacant ground floor office and retail spaces on its west side. On The Dakota’s east side along 33rd, the ground floor units almost uniformly sport badly wrecked mini-blinds. Murakami said the inside is even more discouraging. She has a friend who lives there, she said, and in recent visits Murakami has observed what she describes as serious problems with maintenance and workmanship. She says she has seen firsthand a floor that slopes down toward the window in the laundry room, plus cracks in the walls of apartment units, puddles in the elevator that smelled of urine, and loose garbage in the garage. “The stench” in the building “was so bad I had to change my clothes when I got home,” Murakami said.

Be wary of creating “low-rise ghettos”
She added, “when you build with substandard materials and you have a low opinion of your tenants, you set the ball rolling for creation of low-rise ghettos. The developers and non-profit executives should have to live in these places, too. It’s a very disrespectful attitude that’s manifested toward the tenants.” Murakami said The Dakota is hardly the only such example. The Seattle Housing Authority’s New Holly development is another, and one overseen by another quasi-private non-profit entity at MLK and Massachusetts Avenue has stairs that are literally falling apart. She says she has also seen affordable housing units in Seattle built not on an actual foundation, but rather on small concrete footings, against all recommended practices.

Another Southeast Seattle resident, noted foster care home operator Tess Thomas, said it is well known in the community that many South Seattle subsidized and affordable housing developments continue to be built with substandard materials and will have short lives, 25 years or less. It’s something construction workers have told her about, and it’s a poor social investment in the long run, she said.

Wanted: an economic development strategy that works
To help turn it all around, SEED and other key actors need to develop a comprehensive economic development strategy for Southeast Seattle with real, not astroturf, community engagement, said Murakami. It would include more partnering with owners of targeted redevelopment parcels to sidestep eminent domain proceedings; finding ways to attract a major, community-oriented retailer such Fred Meyer or a Target; and the conversion of some of the Seattle Housing Authority’s Rainier Vista residential units along MLK into office and business spaces, to correct the current imbalance there between abundant dwellings and few neighborhood jobs.

An attempt to contact Richardson for comment through Facebook was not successful. His phone number is unlisted. As evident in this Seattle Times article, during the controversy about building Sound Transit’s initial, north-south light rail line at grade through Rainier Valley Richardson led support for the above-ground option that was ultimately chosen – helping to neutralize community critics who wanted the train tunneled or who opposed it outright, and paving the way for an explosion of affordable housing units in Southeast Seattle.

Impressive lineage
Since its formation in 1975 SEED has enjoyed favored status with city political leaders, and has an impressive lineage. As the Seattle alternative weekly The Stranger reported 11 years ago, SEED’s past board presidents include former Seattle Mayor Norm Rice, former King County Executive and U.S. Department of Housing and Urban Development Assistant Secretary Ron Sims, as well as Gary Locke, formerly King County Executive, then two-term Washington Governor, and now U.S. ambassador to China.

Although a number of its housing projects have been substantially funded by government, the definitions of public bodies in the Washington State Open Public Meetings Act do not suggest that SEED should be so classified. The key criteria is whether a body is created at the behest of a government “by statute, ordinance or public act.”

Although SEED is one of several designated City of Seattle Community Development Corporations, and despite a series of city council ordinances and resolutions approved to help facilitate an array of SEED projects dating back to 1970s, SEED’s genesis was independent of the city.

Transparency not a priority for SEED
SEED’s president, Kenyon, said it occasionally invites guests to its board meetings but it does not and will not provide public notice of its meetings or allow uninvited guests. SEED also – at this writing – does not disclose on its web site who its board members are. However SEED’s 2010 990 discloses their names, as of that year: Paul Thienes, Lawrence Montgomery, Lawrence Vinson, Lynda Miner, Claude Forward, Mary Lee Bell, Chandra Hughes, Karen Wong, Kenyon, Richardson, and Honorable Willie Gregory, a Seattle Municipal Court judge.

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