Did local developers play too big a role in steering Seattle’s largest-ever public housing project?

Bruce Lorig, a developer with a long record of working on public projects, has been a major player throughout the $180 million Holly Park redevelopment project. He served as co-chair of two early advisory committees and was a member of Holly Park’s board of governors. He was also a member of the so-called “panel of experts” that urged the Seattle Housing Authority (SHA) to consider managing the redevelopment project itself, rather than contracting with a large national firm.

But it’s Lorig’s role on a key review panel that helped choose contractors that is the subject of a complaint filed March 10 with the federal Department of Housing and Urban Development. In the complaint, veteran activist John Fox of the Seattle Displacement Coalition charges Lorig with violating HUD’s strict conflict-of-interest rules. Fox alleges an architectural firm that benefited from Lorig’s Holly Park decisionmaking was simultaneously under contract with his private development firm. The architectural firm of Weinstein/Copeland, expected to pocket $1.9 million for its work on the first phase of Holly Park, was also the project architect on the Willis Condominiums built by Lorig Associates.

Fox adds that Henry Popkin, another member (with Lorig) of the “panel of experts” that shaped the conditions for the development contract, ended up snagging the $6.9 million contract himself. According to SHA records, Popkin Development was the only one of six applicants to be interviewed by the review panel, an unusual approach for a public contract, especially on such a large project.

Popkin, Lorig, and SHA officials all deny any impropriety.

Popkin says SHA staff, not the “panel of experts” he sat on, assembled the proposal his company responded to. He also defends Lorig, noting that Weinstein/Copland was just one of a dozen possible subcontractors named. Popkin feels Fox is being unfair. “I think it’s unfortunate the Seattle Displacement Coalition uses tactics like this complaint to further their position.”

Lorig says he was included on the Holly Park selection team because of his knowledge of the construction industry. “[Lorig Associates] has probably worked with 25 percent of the architecture firms in town,” he says. “I think it would have been virtually impossible in this town for us not to have had other business relationships with someone on an architectural team.”

Bill Block, SHA board president, notes that most of a project architect’s work is completed before a development application is filed. In that regard, Weinstein/Copeland’s work for Lorig’s private firm was largely completed well before the Holly Park selection process. “[The Willis Condominiums] were under construction by the time the Holly Park developer selection was being made,” he says. “I don’t see, legally or otherwise, a conflict.”

But relationships considered business as usual in the construction world may still concern federal regulators. Robert Woodard of the Seattle HUD inspector general’s office hasn’t yet reviewed Fox’s documentation, but acknowledges that the department’s conflict-of-interest standards are unusually strict. They prohibit any decisionmaker from participating in a process benefiting anyone with whom he has “business ties.” Rather than simply focusing on direct financial benefit, HUD seeks to “ensure free and open competition” in any bidding process, he says.

Fox and the Seattle Displacement Coalition are well-known to federal regulators, having filed the complaint in the HUD/Nordstrom garage scandal. Fox’s complaint may have helped torpedo Mayor Norm Rice’s chances to become HUD’s head honcho.

Although Lorig admits he wasn’t aware that HUD imposes its own tough conflict-of-interest rules, he insists that the process was conducted fairly. “We try to use logic and good sense in these things.”

It’s hard to find fault with the attractive new homes that are rising at Holly Park—or NewHolly, as the redeveloped portion of the housing complex has been dubbed.

With front porches and peaked roofs showing the influence of classic Northwest home architecture, only the fact that most of the homes are duplexes tips off the observer that this Street of Dreams is public housing. The new residences will be divided into equal thirds between federally subsidized homes for the very poor, units aimed at the “working poor” (people earning 60 percent of median income or less), and market-rate housing. Public housing units and “affordable” units are thoroughly mixed, often occupying different sides of the same duplex. The few for-sale units in the first phase are likewise scattered into the mix.

Block argues that the contracting approach taken at Holly Park was an innovative departure from other projects build under HUD’s Hope VI program. Because many big-city housing authorities are notorious for being poorly run, the feds encouraged them to award the work to major national developers through a single contract. But, SHA balked at hiring a single megacontractor when McCormack, Baron & Associates, which had completed Hope VI projects in San Francisco, St. Louis, and Atlanta, wanted a $21 million development fee on the $180 million project, plus a sweetheart deal on tax credit revenues.

The SHA “panel of experts” was then assembled to investigate whether the Housing Authority should take charge of the process itself. “I was largely responsible for the Housing Authority feeling they could take on a project of this size with their own staff,” says Lorig.

But Fox contends that Lorig and business partner Harris Hoffman, a member of the SHA board, kept renovation proposals from getting a fair hearing. Housing Authority estimates showed a complete renovation could have been accomplished at a savings of $30 million, he says. “What this highlights to me is that conflict of interest intervened in one of the most significant housing-policy decisions in this region in years.”

Fox and other housing activists have also been sharply critical of the Hope VI program’s emphasis on tearing down public housing and replacing it with mixed-income developments. Nationally, Hope VI funds have been used almost exclusively for demolition rather than renovation, with only about 40 new units built for each 100 demolished, says Othello Poulard of Washington, DC’s Center for Community Change.

The mixed-income provisions of Hope VI also mean that public housing residents can’t afford to live in many of the replacement housing units. For example, only 30 percent of the new housing that replaced Chicago’s Cabrini Green projects is available to the very poor (another 20 percent was reserved for low-income residents who can afford to pay higher rents; the rest is market-rate housing). In Cincinnati, the 880-unit Lincoln Court will be replaced by a mixed-income development of 500 units, only half of which will be public housing. “You see the categorical injury inflicted upon low-income people,” says Poulard.

At Holly Park, city and housing authorities claim they have accomplished 1-to-1 replacement of the very low-income units at scattered sites throughout the city. Fox replies that these units were already in the pipeline, and therefore represent no increase in actual housing stock.

After several years of this debate, Block and Lorig are weary veterans of the “quantity vs. quality” battle over public housing. The benefits of the mixed-income approach, plus the community and education facilities created through the redevelopment process make NewHolly a model for the future of public housing, they say. “If you talk to John Fox, he might say we spent the money in the wrong place or we’re giving it to the wrong people, but that’s a value judgment,” says Lorig. “I think if you’re doing good things, you’re not necessarily free of controversy.”

Reporting assistance by Mark Worth.