The roofing program, formally known as the Roof/Envelope Program, was budgeted to use $466,000 of a $2.1 million block grant the city received as part of the 2009 national economic recovery act. Instead, the city spent about $849,000 on the program -- an overrun of more than 80 percent.
City officials said the roofing program exceeded its budget because of high demand and lax oversight.
"The demand within the community far exceeded the expectations of the original staff," said Jen Sorgenfrei, spokesman for Mayor Mike Bell. She later added, "I think we've identified several areas where management and oversight was not as tight as we'd like it to be. The Roof/Envelope Program is one of those areas."
The U.S. Department of Housing and Urban Development, which awarded the block grant to the city, identified a more specific reason for the overspending.
"It was our understanding that they went over budget because all projects were not put into the system," one HUD official wrote in an internal email obtained by The Blade.
Laura Feldman, HUD's regional spokesman, said the email referred to the Integrated Disbursement and Information System. HUD uses the system to monitor the activity of federal grant recipients, and recipients use it to draw down grant money. Ms. Feldman said HUD is working with the city to determine how many activities were not entered.
The city's Department of Neighborhoods, which receives millions of dollars in HUD funding every year, has been rocked in recent months by accusations of bid-rigging, favoritism, and poor oversight. One of those accusations involved a city employee giving preferential treatment to a subcontractor in the roofing program. The department's top two officials have been fired and two other employees have been suspended, demoted, and moved to other departments. City and federal investigations are ongoing.
HUD has given the city permission to shift unused money from other programs funded by the $2.1 million block grant into the roofing program to make up the difference. But that means several other programs, including home weatherization, lead abatement, and rental rehabilitation will receive less money than originally anticipated.
The city has told at least one nonprofit organization -- the Northern Ohio Development Agency -- that promised funding for its emergency home repair program is no longer available. Ms. Sorgenfrei said the city is working to identify another source of funding for the agency. In the meantime, though, some low-income Toledo residents' homes will not receive badly needed repairs, said the agency's president and chief executive officer, Kathy Broka.
The roofing program provided new roofs and other improvements for low and moderate-income homeowners, primarily in neighborhoods near the Dorr Street corridor south of downtown. The program was expected to assist about 90 housing units at an average cost of $5,000 a unit, according to plans the city filed with HUD. Instead, the city assisted 134 homes at an average cost of $6,335 a unit.
The massive cost overruns are just the latest problems in the roofing program.
In November, The Blade reported that on one street alone -- Woodland Avenue -- more than two dozen homes received new roofs or other improvements. On paper, those jobs went to more than a dozen different general contractors, but in reality more than 40 percent of the $175,000 spent on the street flowed to a single individual -- Leon Jackson, Jr., an unlicensed subcontractor with a long criminal history that includes convictions for stolen construction materials.
Although the city estimated the cost of those roofing jobs to be $6,944 to $7,498, contractors who used Jackson's services bid $7,500 every time -- the maximum amount allowed by the city for each project. In all cases, the contractor paid Jackson $6,500, according to interviews and city documents. The contractors who got the bids made $1,000 on each roof for filling out the paperwork and pulling the permits. Jackson provided the materials and labor.
Ms. Sorgenfrei said Wednesday she was unsure whether the contracts involving Jackson were a factor in driving up the cost of the program. "Without further investigation into all the contracts in the program, I can't answer that," she said.
No license required
The city does not require subcontractors to be licensed and does not ban felons from participating in federally funded construction work.
While some contractors said they used Jackson because he worked hard and did a good job, at least one contractor, Craig Gordy of Continental Construction, said a city rehab specialist, Toni Thomas, steered him to use Jackson as a subcontractor. She also instructed him not to list Jackson or his company, Big Boy Construction, on a required subcontractor list, he said.
Ms. Thomas has acknowledged she violated the city's ethics policy but has denied instructing Mr. Gordy not to list Jackson. She was suspended, demoted, and moved to another department earlier this month, as was the roofing program's supervisor, Housing Manager Jody Prude. The department's director, Kattie Bond, and Housing Commissioner Mike Badik were fired.
Unlike more expensive rehab projects, the city did not require multiple bids for the roofing projects. Instead, a sole contractor was selected from the neighborhoods department's bid-rotation list to submit a bid. That bid had to be within 15 percent of the city's in-house estimate.
But in at least one case, for a new roof at 1059 Woodland Ave., the city received two bids -- one for $6,450 and one for $7,500. Although both were within 15 percent of the city's estimate, the job went to the more expensive contractor, who in turn hired Jackson for $6,500, according to city documents. City officials could not explain why the more expensive contractor received the work.
"The new [neighborhoods department] director has made policy changes," Ms. Sorgenfrei said. "Staff is following different procurement policies than in the past in the hope we can prevent some of those practices from occurring in the future."
Jackson refused to speak with The Blade for this story, telling a reporter to "quit trying to [expletive] call" him.
But in a Toledo Journal article last month, Jackson said he received roofing jobs because he worked quickly, often finishing a roof in a single day. He said his criminal past was behind him and he hired those in Toledo who otherwise would be unemployable.
Past convictions
Ms. Thomas told The Blade during an interview earlier this month that Jackson tried to obtain his contractor's license but was unable to pass the required tests.
Jackson, who is also known as "Fruit Loop" according to police records, served several stints in prison during the 1980s and '90s for breaking and entering, retaining a stolen motor vehicle, drug abuse, and aggravated cocaine trafficking.
While his last drug-related conviction was in 1998, he has continued to rack up misdemeanor convictions for crimes related to the construction business. In 1996, he was sentenced to six months in jail for retaining stolen property after police found him with a circular saw and power drill stolen from local building supplier Lumbermans.
In 2006, he pleaded no contest to attempting to commit a crime after police said he illegally dumped three truckloads of roofing materials in a vacant lot. And in 2008, he pleaded no contest to unauthorized use of property after police said he tried to cash a credit voucher at Menards that was obtained by stolen goods.
The mayor's office is expected to conclude its investigation of the neighborhoods department late this week or early next week. Federal authorities would not comment on the status of their investigation.
In the meantime, low-income residents who depend on programs funded through the neighborhoods department are hoping the city gets its house in order.
"I'm sort of like running against the clock," said Cassandra Putbrese, 43, of North Toledo. Her roof is leaking and she has spent much of the winter without heat.
She was supposed to receive a new furnace at the end of December through Northern Ohio Development's emergency home repair program, but those plans were canceled when the city stopped funding the agency. Ms. Putbrese had to continue heating her home with her stove.
"It's so dangerous," she told The Blade earlier this month. "I'm in a heck of a situation."
Eventually, she received a new furnace through another organization, but the intervening weeks were excruciating, she said.
Ms. Broka of the Northern Ohio Development Agency said the funding problems have had a multiplying effect because the agency used the $40,000 grant promised by the city to secure $80,000 in matching funds from the state.
Ms. Bond, the former neighborhoods director who wrote the August, 2010, letter to the agency confirming the grant, could not be reached for comment.
Ms. Sorgenfrei, the city spokesman, blamed the problem on the failure of neighborhoods department staff to identify a source of funding when they promised the money to the agency. But she acknowledged the city had already paid $15,000 of the $40,000 grant using funds from the $2.1 million recovery act block grant. The city also mentioned the possibility of funding the Northern Ohio Development Agency with the block grant in the plan it submitted to HUD.
"I have to think they wouldn't have obligated the money unless it was there," Ms. Broka said. "It's just a matter of new people taking over. At least that's what I'm going to think unless someone tells me otherwise."
Staff writer Claudia Boyd-Barrett contributed to this report.
Contact Tony Cook at: tcook@theblade.com or 419-724-6065.