HUD, Congressman Visit Troubled Housing Units : Corruption: Berman hears residents’ complaints of management accepting bribes, failing to make repairs and fomenting racial tension.

Federal scrutiny of alleged corruption and mismanagement at a low-income housing project in Lake View Terrace intensified Friday, as housing officials conducted a surprise paperwork review and a congressman walked the grounds to hear complaints.

Rep. Howard L. Berman (D-Panorama City) listened to residents’ allegations of bribery and excessive rent increases at Lake View Terrace Apartments, even as officials of the U.S. Department of Housing and Urban Development conducted the extraordinary management review.

For the past two weeks, federal officials have been investigating allegations that the project’s staff accepted bribes from apartment seekers to bypass a waiting list, provided unauthorized housing for friends and relatives and fomented racial tension by pitting Latino newcomers against established black tenants.

The 128-unit complex is privately owned and managed by Richard Tod Spieker of Palo Alto, but HUD, which provided the financing, oversees it.

In addition to the previously disclosed investigation by the federal Office of the Inspector General into potential criminal violations, a team of HUD officials went to the complex Friday morning for what spokesman Scott Reed termed a “special visit” to determine whether the owner is keeping accurate records and otherwise complying with the terms of his regulatory agreement with HUD.

“This wasn’t scheduled in the regular routine,” Reed said. “It is very rarely done.”

The officials looked into various issues, including allegedly improper rent increases, Reed said. He said the results would be known next week.

The same issues prompted an afternoon visit by Berman, whose aide, Rose Castaneda, has been working closely with the tenants and a legal aid lawyer in their ongoing conflict with Spieker and his management company, Spieker Companies Inc.

HUD granted SCI temporary approval to manage the complex in February, despite opposition from tenants and the recommendation of a HUD loan specialist. The specialist said the company did not appear to have the necessary experience in “handling troubled complexes,” according to HUD records.

As Berman toured the complex in the hot afternoon sun, tenants recited a litany of complaints: alleged bribe taking from prospective tenants by employees of current and former management companies; steep rent increases, with rents doubling in some cases; inadequate maintenance that has left holes in ceilings and tattered carpets in generally tidy, well-kept units.

In a cramped apartment with a picture of Muhammad Ali taped to an otherwise bare white wall, retiree Timothy Shanks explained to Berman that he was informed his rent will go from $280 a month to $434 a month in August.

“It seems like it shouldn’t be so much,” said Shanks, who said he makes about $11,000 a year in pension and Social Security benefits.

Berman agreed.

“I’m real concerned about the rent increases,” he said in an interview. “There appear to be serious problems in a complex that is basically a nice place to live.”

SCI resident manager Mike Damron said he will check to see whether the increase is proper.

Rent increases are permitted under a complicated agreement worked out last year by Spieker and the federal government. The owner agreed to maintain Lake View Terrace Apartments as a low-income project in exchange for HUD-secured financing, deregulation and other incentives.

But legal aid lawyer Pamela Brown said several tenants have been victimized by new rents that she said violate a law requiring that the increases be phased in over three years and not exceed 30% of a tenant’s income. She said she is preparing a formal complaint to HUD.

Berman also questioned Damron about tenants’ suspicions that no proper waiting list exists and about how applicants are selected, alluding to allegations that some tenants paid bribes to bypass other applicants.

“The potential for corruption is strong,” Berman said.

Damron said SCI has a waiting list but that problems have resulted from the refusal of a previous management company, which ran the complex until March, to provide their waiting lists.

The current federal inquiries are expected to have some bearing on an ongoing HUD review to determine whether SCI should be retained as the project’s management company.

Berman said it would be premature to comment on what that decision should be. But he noted that some problems at the complex predate SCI and that some complaints have been remedied, such as the dismissal of a controversial resident manager.

And the congressman said there may be advantages in retaining SCI. “There may be value in the owner having management responsibility,” he said. “You can point the finger in one place.”