By Ken Carlson, Modesto Bee -
Modesto council members could approve a response today to the civil grand jury report on the city's management of more than $33 million in federal stimulus funds.
In a report issued to the city in June, the Stanislaus County grand jury concluded that the city's oversight of the Neighborhood Stabilization Program was lacking. The report said the city failed to monitor whether there were qualified buyers or tenants for housing, allowed excessive spending on renovations in blighted areas and failed to monitor the nonprofit Stanislaus Community Assistance Project, which showed "egregious" favoritism in placing family members and staff in homes improved with taxpayer funds.
The federal program provided funds for buying and renovating foreclosed homes and converting them for resale or rental housing.
The grand jury also criticized a councilman for not briefing top officials before taking his concerns about SCAP to The Bee. And it suggested that another councilman, who was singled out for a conflict of interest, was deceitful in not fully disclosing his business relationships.
In its proposed response, the city partly agrees with four of the critical findings. But it disagrees that the former mayor, council members and the city manager showed insufficient interest in how the program was managed.
Limits placed on purchases
In regard to spending six-figure sums on ramshackle units, the city's response says the purpose of the program was not only to stabilize neighborhoods hard hit by the housing market crash, but "also to eliminate the slum and blight that inevitably resulted from this crisis."
Still, the city needs to ensure it gets the best "bang for its buck" and has placed a $165,000 limit on the cost of property purchases and renovations for single homes, the response says.
The city defends the actions taken after becoming aware of SCAP's tenant eligibility issues. It froze funding to the agency while investigating the matter last year and later required ineligible tenants to vacate the housing and forced SCAP to hire a property manager for tenant screening, the response says.
It says the city understands the grand jury's opinion on Councilman Dave Lopez, who brought his concerns to The Bee, and adds that a federal audit report dealt with Councilman Joe Muratore's conflict of interest.
Muratore and a business partner were required last year to return a $62,500 commission on the sale of an apartment complex funded with a program loan. Federal auditors recommended barring him from participation in federal housing programs.
The findings and recommendations of civil grand jury probes are not legally binding. The watchdog panel often requires agencies to respond, however.
The city says it has implemented four of the grand jury's recommendations regarding the NSP: New projects are required to receive City Council approval; it more closely oversees screening of prospective tenants and buyers; funds have been allocated for demolition of severely blighted properties; and a law firm has been hired to make program documents more enforceable.
The city will use its Web site to report which council members have received ethics training recommended by the state.
The City Council meets at 5:30 p.m. today in the basement chamber of Tenth Street Place, 1010 10th St.
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