Sweetheart Deal

How does Virginia McGuire make a profit in the nonprofit business of creating affordable housing? Simple. She pays her husband.

Within two years after Cornerstone acquired Cascade Park, Dixon says, a lack of property maintenance spawned conditions that were worse than the housing project she had fled. "In the project, at least I had hot water," Dixon says. "I had heat. I had air conditioning. It was a lot better."

Anything that could go wrong at an apartment complex went wrong at Cascade Park. Sewers backed up. Ceilings caved in. Vermin arrived, followed by drug dealers. Because the thermostats were broken, the residents had to keep their air conditioners running on high day and night. All that did was generate enormous electricity bills that were heaped on the residents.

The residents asked the property manager to make repairs and increase security, but their requests were routinely ignored. So they complained to their representatives at the Walker Project, an agency created to carry out the desegregation decree, which in turn contacted Cornerstone. The residents were promptly given promises.

Virginia McGuire, whose tiny nonprofit is using government money to buy apartment complexes, says she can provide affordable housing and pay her husband's company hundreds of thousands of dollars, too.
Mark Graham
Virginia McGuire, whose tiny nonprofit is using government money to buy apartment complexes, says she can provide affordable housing and pay her husband's company hundreds of thousands of dollars, too.
Former tenants Hal Barker, left, and Ted Barker, standing outside the Williams Run apartments, say they felt compelled to dig into the details of the complex's sale. "They destroyed a marvelous community," Ted says.
Mark Graham
Former tenants Hal Barker, left, and Ted Barker, standing outside the Williams Run apartments, say they felt compelled to dig into the details of the complex's sale. "They destroyed a marvelous community," Ted says.

"This is the first I have heard of such problems and it is of great concern to me," wrote Scott McGuire, then Cornerstone's vice president, in a February 6, 1998, letter. McGuire instructed his property manager to make immediate repairs, telling him that the backlog was "just not acceptable."

Nothing happened, so Dixon decided to act. She formed a tenants organization called the Knights of Cascade and started circulating a petition among her neighbors. The petition included a detailed list of problems at the property, which was described as "unlivable." More than 100 residents signed. Cornerstone quickly tried to block the effort, Dixon says.

"They tried to discourage people, telling them if they signed the petition they were going to be evicted," Dixon says. "At one point they retaliated against me. They raised questions that I had been working and not reporting my income to them. That was not true. That was just another way of striking back."

But Dixon was not intimidated. She turned to Dallas attorney Mike Daniel, who litigated the Walker class-action suit, and he took the matter to court. In May 1998, Daniel filed a false-claims complaint against Cornerstone, arguing that it had broken its agreement with HUD to provide "decent, safe and sanitary" housing.

As the case progressed, Cornerstone began blaming the tenants for the maintenance problems at Cascade. In court filings, it blamed the roach problem on "housekeeping practices" and the sewage problem on the "improper introduction by tenants of grease and other substances into the sanitary lines of the complex."

As part of an offer to settle the matter, Cornerstone promised to "educate" tenants about proper housekeeping practices and stated that it would begin charging tenants for damage they caused. Cornerstone even suggested that the Walker Project pay them to educate the tenants.

Daniel says the offer was preposterous. When it acquired the project, Cornerstone agreed to repair the property and spend tens of thousands of dollars on social service programs, namely after-school programs, English classes and a computer lab. It was the same promise later made about Williams Run. But Daniel saw no evidence that Cornerstone paid for any social services or significant repair work at Cascade Park.

"They weren't spending any money for maintenance, and they were taking a lot out for maintenance fees. That was one of the things that made us so mad; this was not a struggling operation," Daniel says. "I thought they were making money just hand over fist when we were going through the books."

In the end, the residents prevailed. On July 23, 1998, U.S. District Judge Jerry Buchmeyer appointed a receiver to take control of the property, a rare decision that effectively yanked the property out of Cornerstone's hands. In a separate action, Cornerstone agreed to pay Cascade Park's residents $175,000 to settle a claim in which they accused the company of improperly billing them for utility usage.

"We rang their bell," Daniel says. "That doesn't happen very often."

Jim Edmondson, who was Cornerstone's president at the time, insists today that Cascade Park was "very low-priced and reasonably maintained." He blames the tenants' complaints on "a series of lousy luck and bad timing" such as a stretch of 90-degree weather that "hindered our attempt to repair the air conditioning system and aggravated everything we were trying to do."

The year of the Cascade Park fiasco, Cornerstone dissolved and re-formed as a for-profit limited partnership named Elsinore Group.

Edmondson, Scott McGuire and Culwell moved over to the for-profit, becoming its executives and principal employees. Over the next several years, Virginia McGuire says, she and these fellow affordable housing advocates would attempt to do four apartment deals together. Only one made it to closing: Williams Run.


Like Sheila Dixon, the Barker brothers are not easily intimidated. In fact, there is nothing they seem to enjoy more than a good fight.

Ordinarily, eviction cases are minor affairs. But when Green Bridge began its efforts to evict Ted Barker in December 2000, the small-claims case quickly mushroomed.

Green Bridge argued that it had a right to evict Ted because he refused to leave his apartment 30 days after he was notified that his lease wouldn't be renewed. Ted, who defended himself with Hal's help, argued that the eviction was retaliation for his and Hal's criticism of the McGuires. Improbably, Ted's defense got an unexpected boost when Green Bridge sued the Barkers for libel in state court.

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