A Phillips Affair

Neighborhood politics get personal.

          Ever since its inception in 1991, Minneapolis's Neighborhood Revitalization Program has been plagued by reports of infighting, dueling agendas, and a less than democratic process. With real money at stake, neighborhood politics has become vicious at times; two groups--Whittier and Longfellow--have imploded since the program began. Now the organization representing the city's largest neighborhood, People of Phillips, is embroiled in a controversy that has some residents pushing to have the group dissolved. There have been allegations of racism, insubordination, contract improprieties, and a purported conflict of interest with the Minneapolis Community Development Agency.

          Much of the fight centers around the neighborhood's housing organization, the Housing Resource Clearinghouse of Phillips (HRCP). A subsidiary of People of Phillips overseen by its own board of directors, HRCP is charged with everything from lead-removal programs to rehabilitating older houses. Last November, its board decided to add a project to help neighborhood renters buy homes. It voted to contract with Neighbors Helping Neighbors (NHN), an organization run by Phillips resident and real-estate agent Corrine Zala. Ten buyers would receive a $5,000 grant each for acquisition, closing, and rehabilitation costs. Zala would be paid an $18,000 fee.

          Zala began to work with prospective homeowners in December, but when January and February passed without a signed contract, she became concerned. She queried Doc Davis, HRCP's executive director, and was assured that a contract was in the works.

          In March 1996, Zala sent a letter to Davis stating that she hadn't received the $50,000 for her ten clients, and that delays could jeopardize some of the purchase agreements. When she still had not received the money by April, she turned to the HRCP board, which authorized emergency funding for the homeownership project. The board told Zala to go ahead with the closings, and promised to hammer out a contract with her down the road.

          That was in early April. On April 24, Zala received a memo from Davis requesting information about her fees and invoices for the ten transactions. He also stated that the money would be released on May 6. As she now had a promise in writing, Zala set the closing dates. On May 10, Zala went to the HRCP office to pick up the $50,000 for the buyers. Instead, Davis "gave me a long speech about how $50,000 was a lot of money, and that he was only going to give me $25,000," Zala says.

          Zala maintains Davis then presented her with another obstacle. "He told me, for the first time ever, that the MCDA and HRCP required an additional 'soft' mortgage attached to the properties. A number of homes had already gone through the review process--lenders had been confirmed, forms had been filed--and some had already closed," says Zala. While it's not unusual for homes to have a second mortgage, Zala says that adding one at this late date was problematic.

          While Zala was struggling to close on the homes, the HRCP board was grappling with a new problem. As public monies are dispersed by neighborhood housing organizations, contract managers are assigned by the MCDA. One of the managers supervising HRCP was Edie Oates, who has also been serving as a technical assistant to the program. And at some point within the past year Oates and Davis's professional relationship evolved into an intimate one. Some board members considered this a conflict of interest and worried about whose interests Davis was serving; they also became increasingly critical of Oates. At a recent public meeting, board member Bob Albee accused Oates of "deliberately monkeywrenching the process."

          According to Mike Norton, a Minneapolis city attorney, the guidelines for determining conflict of interest for unmarried couples are hazy at best. "Generally, if someone has a professional relationship where they could benefit personally, you are required to disclose the relationship," he says. The issue hit the headlines last year, when City Council members pointed out that Council President Jackie Cherryhomes was dating an attorney who did business with the city, and on whose contracts she had voted. The couple is now engaged, and the City Council never did pass standards for dealing with similar situations. "It's a huge grey area," says Norton.

          HRCP board members say they asked the MCDA to remove Oates from projects involving Phillips for months, but got nowhere. Member-at-large Carol Pass claims that she personally raised the issue to Oates' supervisor, Earl Pettiford, and MCDA attorney Reuben Acosta. (Pettiford, Davis, and Oates refuse to comment on the either the length or nature of the involvement.) Pass says she finally brought her concern to MCDA executive director Rebecca Yanisch, and she says Yanisch told her she would take Oates off the HRCP assignment. Yanisch says she "never had such a conversation."

          Yanisch did, however, write a letter to the HRCP board chair, Shada Buyobe-Hammond, in which she expressed concern with "the level of personal finger-pointing at Edie... I am fully aware of the personal relationship Edie has with your Executive Director. It has been fully disclosed as required by our policies." (When that disclosure took place isn't clear. In early September, Yanisch told CP that Oates had told her "a few weeks ago," right around the time the controversy started boiling over in Phillips. Oates has been working with HRCP for at least a year.) Yanisch said Oates would continue as contract manager for HRCP, but added that in addition, Pettiford would be asked to "take a more active day-to-day role in our relationship with HRCP."

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