Federal auditors are urging the U.S. Department of Housing and Urban Development to terminate longstanding contracts with a Dallas company that operates some of the area's worst apartment complexes.
The company, Pioneer Management, Inc., based in Oak Cliff, ran the Prince Hall Chambre Apartments in South Dallas until November 1 and still runs the Coston Arms Apartments in southern Dallas, among other sites leasing to low-income tenants who qualify for rent subsidies under HUD's Section 8 program.
Pioneer and its poor management of the Prince Hall Chambre complex were the subject of an August 19, 1993, Observer cover story, titled "A Dangerous Place."
A 37-page audit report, issued by HUD's Office of Regional Inspector General in Fort Worth on November 14, blasts Pioneer's management practices, calling its properties "unsafe for tenants."
The federal agency began its investigation of Pioneer in response to poor conditions at a Tyler apartment complex Pioneer had previously managed. A Tyler newspaper reported a dramatic turnaround at the crime-ridden complex after HUD replaced Pioneer in 1992 with another management firm.
The audit report states that, "HUD management reviews, corroborated by other information, show Pioneer mismanaged HUD properties, causing them to physically deteriorate and become infested with drugs and crime...Also, Pioneer falsely certified to HUD that it had a broker's license, allowing it to carry out duties as a management agent.
"Due to severe management neglect," the report continues, "Pioneer properties suffer from inadequate cash flow, deferred maintenance, crime, and vandalism. As a result, the properties need millions of dollars of HUD funds for repairs, and tenants do not live in safe or decent housing."
The report, signed by D. Michael Beard, district inspector general for audit, recommends termination of Pioneer's management contracts for nine HUD-subsidized apartment complexes in Texas. By the date the report was issued, however, Pioneer had already been removed from several of those complexes, according to Robert Greene, HUD's loan management branch chief in Dallas. The report also calls for administrative sanctions against Pioneer, and repayment of nearly $270,000 in "ineligible and unnecessary costs" improperly charged to HUD.
Pioneer officials would not comment on the audit report. But the report states that they "generally disagreed" with HUD's findings during a September conference, and provided an unsigned, partial response to specific HUD findings that is incorporated in the report.
As the Observer story detailed, Pioneer was founded by I.H. Clayborn, who once held the post of grand master in the Dallas branch of the Prince Hall Masons. Clayborn died earlier this year; his widow is now president of the company.
HUD officials say the quality of Pioneer's management operations began to decline in the 1980s when Clayborn, a highly respected leader of Dallas' black community, was forced to withdraw from Pioneer's day-to-day operations because of poor health.
John LaBella, chief of HUD's Loan Management Branch in Fort Worth, will now determine what action to take against Pioneer. A new management company, Union Housing Management of Louisville, Kentucky, has already taken over operations at Prince Hall Chambre. LaBella usually accepts the recommendations of the audit report, Beard said last week.
The Observer article reported that Thomas Garlon, Prince Hall Chambre's former manager, was collecting two salaries as full-time, on-site manager at two Pioneer properties. The salaries, paid from HUD monies, totaled $67,620--way above the norm for similar low-income sites.
Meanwhile, as Garlon drew his two salaries--as well as additional contract fees from Pioneer--conditions at Prince Hall Chambre continued to deteriorate. HUD inspection reports noted recurring problems with the property's physical condition and operations.
Worst of all, the complex became known as one of the easiest places to buy crack in South Dallas, as well as the site of numerous violent crimes. Day and night, gang members and penny-ante pushers could be seen peddling their wares on the grounds of the apartment complex.
One crack dealer was seen making drug sales on the front lawn of the complex in broad daylight while Garlon sat in his office, after having boasted about his success in "cleaning up" the property.
The HUD audit report charges, among other complaints, that Pioneer "diverted funds from property accounts" to pay Garlon's two salaries, in violation of HUD regulations.
In fact, the issue of Garlon's two salaries made it to the top tier of the HUD hierarchy. Albert Sullivan, then director of Multifamily Housing Management in Washington, D.C., wrote to Pioneer in 1993, stating that Garlon's salaries could not be paid directly from HUD property monies. The report notes that it was the fourth such letter sent to Pioneer by the federal agency.
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Beard says Pioneer was supposed to pay for an on-site manager out of money derived from its annual management fee from HUD. Pioneer ignored HUD's demands to stop paying Garlon's salaries from the apartment complexes' operational funds for several years, Beard said.
The report states that Pioneer diverted a total of $253,909 to pay for salaries of its staff members during a two-year period ending in early 1994. More than $134,000 went directly to Garlon, who no longer works for Pioneer.
The audit report cites numerous other problems at Pioneer-managed properties. It states that a tenant at Coston Arms Apartments in Dallas sued the property after suffering injuries "when her living room ceiling fell in on top of her." The report adds, "Property personnel did not reply to the tenant's repeated requests for maintenance."
The report also cites the Observer's story about Prince Hall Chambre, which described the complex "as a supermarket for crack cocaine." Prince Hall Chambre rated "unsatisfactory" in its latest comprehensive management review, which was conducted by HUD in September 1993.