Investigations

The company that will manage new housing at the redeveloped Beecher Terrace has been accused in a lawsuit of failing to maintain safe and sanitary living conditions at a St. Louis public housing complex.

Missouri Attorney General Josh Hawley filed the lawsuit last week in St. Louis Circuit Court against the St. Louis Housing Authority and the property manager, McCormack Baron Management, Inc. Hawley alleged that management created a “public nuisance” at the Clinton-Peabody Housing Complex by allowing pest infestations, mold and structural issues to go unchecked.

Hawley said in the lawsuit that the conditions of the complex are “intolerable.”

“No Missourian should be forced to come home to the conditions that Clinton-Peabody residents face each day,” Hawley said.

McCormack Baron Management, Inc. is an affiliate of McCormack Baron Salazar. Both branches of the St. Louis-based company have roles in the redevelopment of Beecher Terrace, a 760-unit public housing complex just west of downtown Louisville.

Julie DeGraaf Velázquez, managing director of development for McCormack Baron Salazar, attended the Louisville Metro Housing Authority’s board of commissioners meeting Tuesday and declined to comment.

At that meeting, the board approved the Master Development Agreement between the housing authority and McCormack Baron Salazar. There was no discussion of the pending lawsuit.

In an emailed statement Tuesday night, McCormack Baron Salazar chairman and founder Richard Baron said the Clinton-Peabody complex is the “last vestige of traditional publicly-assisted housing” in St. Louis, and his company is “part of a broader coalition of community stakeholders, residents and politicians who are striving to identify funding opportunities to transform Clinton Peabody in a similar way to the planned transformation of Beecher Terrace.”

Jean Porter, a spokeswoman for Louisville Mayor Greg Fischer, said in an emailed statement that McCormack Baron Salazar has “a proven history of neighborhood transformation projects across the country, including previous work in Russell, like Chestnut Manor and Hampton Place, and they’ve been good partners in engaging with the community on [the] plan to transform Beecher Terrace.”

Porter declined to address the lawsuit, and referred additional questions to the Louisville Metro Housing Authority. Lisa Osanka, the interim leader of the housing authority, declined to comment.

The allegations against McCormack Baron Management, Inc. come as Louisville’s housing authority faces criticism of its own about how it manages its public housing.

A report earlier this year by KyCIR found the Dosker Manor complex on the eastern edge of downtown was infested with bedbugs and among the worst-ranked public housing complexes in the nation. The housing authority announced new policies and an overhaul of some technology systems two months after that report.

Beecher Terrace Redevelopment Begins Soon

The redevelopment effort is already underway at Beecher Terrace, and the first phase of demolition is set to begin in the coming weeks.

More than 100 residents have already been moved, mostly to other public housing or Section 8 units in Russell or nearby neighborhoods. Others have been moved across Jefferson County, according to a map obtained through an open records request.

As master developer, McCormack Baron Salazar will oversee the planning, design and construction of some 640 housing units at the complex’s site. According to the project’s CHOICE Neighborhoods Implementation Grant application, the redevelopment is projected to cost nearly $158 million.

The CHOICE Neighborhoods program, run by the U.S. Department of Housing and Urban Development, awarded the project $30 million in 2016. The grant will assist in the demolition of the existing Beecher Terrace public housing complex and the construction of a mixed-income residential development to replace it.

McCormack Baron Management, Inc., the affiliate company sued by the Missouri attorney general, will serve as property manager for the new housing built on the Beecher Terrace site, according to the documents.

The company’s development agreement says it will be paid between 10 and 12 percent of the project’s total development costs.

The allegations against the company are deeply concerning, said Aukram Burton, head of the Kentucky Center for African American Heritage, which is based in Russell.

“Here we are, trying to rebuild from the Urban Renewal campaign and we’re going to be stuck with someone that’s being charged with shoddy business practices,” he said. “That’s not good, because we deserve more than that in this community.”

Kevin Fields, president of the Louisville Central Community Center, Inc., a Russell-based nonprofit, said he toured some McCormack Baron properties in St. Louis and was impressed.

He doesn’t remember touring the Clinton-Peabody complex, however.

“If this is something that has credibility, then it could hamper our progress. We’re making tremendous progress,” Fields said. “This news, certainly, would be of concern.”

Metro Councilwoman Barbara Sexton Smith, who represents the Beecher Terrace area, said the alleged mismanagement of the public housing complex in St. Louis is proof that oversight is critical to the success of the Beecher Terrace redevelopment project.

“[This lawsuit] should make the rest of us acutely aware, to be paying much more close attention,” she said. “Someone has to be held accountable.”

Sexton Smith said the housing authority and the city’s Code Enforcement officers should work together to ensure that any new property is in line with the city’s property maintenance code.

This month, the city’s codes and regulations department began inspecting public housing after years of passing complaints back to the housing authority. The department’s director, Robert Kirchdorfer, changed the policy after the Jefferson County Attorney’s office wrote Kirchdorfer a letter informing him that public housing inspections are his agency’s responsibility.

Sexton Smith said she will continue to monitor the Beecher Terrace development and other issues affecting residents of public housing developments, many of which are in her district.

“We have a number of issues,“ she said. “A society must be judged on how well it takes care of the least of us, and public housing is one of the most serious components.”

Reporter Jacob Ryan can be reached at jryan@kycir.org and (502) 814.6559.

Jacob Ryan is a reporter for the Kentucky Center for Investigative Reporting.