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CITY TIES PAY OFF FOR BUYERS OF SUBSIDIZED HOMES SOME GO TO FAMILIES EARNING UP TO $70,000

When the city built, then sold subsidized homes in the Black Rock-Riverside area three years ago, one of every five buyers worked for the city.

At another Buffalo project, the city provided subsidies to home buyers with incomes as high as $70,000.

Even when City Hall did use income guidelines, the subsidies often went to single people earning as much as $33,000 a year.

That's a glimpse at Buffalo's affordable housing program -- a taxpayer-supported program that officials say has helped the city build more single-family homes than any community in the Northeast.

But the people who benefited were not always the low- and moderate-income families the program was intended to help.

They include John Doyle, a Buffalo School Board member; the daughter of Common Council Member at Large Rosemarie LoTempio and dozens of others with close ties to City Hall.

Buffalo's program, viewed by local and state officials as a model program for new housing in the inner city, has produced more than 350 new homes across the city with 800 more in the planning stage.

But some think the homes are being doled out unfairly. "It needs to be corrected," said Council Majority Leader Eugene M. Fahey. "I think it's important to make sure the process is as open and fair as possible."

Fahey says a lottery would be fairer than the first-come, first-serve approach now used by the city.

His criticism of the selection process follows earlier charges that the city is giving the bulk of its new housing work to one builder, M.J. Peterson Real Estate Corp. of Amherst.

Peterson has built or is designated to build nearly 600 homes -- about half of the homes the city plans to build. Most of the homes are in the Pratt Street and Willert Park Court area just east of downtown.

"The (subsidies) were designed to encourage investment in the neighborhood," said Dennis Penman, Peterson's executive vice president. "There was no way you could have gotten anyone to invest in that neighborhood without incentives."

Penman said the city's program was intended, first and foremost, as a means of fighting neighborhood blight.

To accomplish that, the city sought to attract buyers from all income levels, including people earning as much as $70,000 a year, he said.

Along the way, dozens of City Hall workers and people with close connections to the city benefited.

Rebecca Park in the Black Rock-Riverside neighborhood was one favorite. City workers bought 21 of the 112 homes at the subdivision. Each received subsidies of $10,000 to $25,000 on homes valued at $55,000 to $80,000.

They included Doyle, a School Board member who at the time was earning $37,183 a year as director of the city's Division for Youth.

"I don't see (any favoritism)," Doyle said. "We have federal employees, private employees, teachers, a lot of different people out there."

Doyle said he learned of Rebecca Park from an advertisement in The Buffalo News and never used his influence to get a house.

Most city employees, moreover, are required to live in Buffalo, which prevents them from seeking affordable housing elsewhere.

But some in City Hall question why Doyle and other city employees were able to buy the homes when other city residents were turned away.

The city had a waiting list for people who wanted to buy Rebecca Park homes, North Council Member David P. Rutecki said, and selections were supposed to be made on a first-come, first-serve basis.

"If the waiting list was gimmicked, yes there was a problem," Rutecki said. "But if there were problems with Rebecca Park, I think I would have heard about it."

City officials have been able to provide subsidies to middle-class buyers because the city used federal money. The U.S. Department of Housing and Urban Development does not set income limits, and federal officials said they were unaware of any problems in Buffalo.

"Generally, localities do pretty well," said Richard Tyksinski, spokesman for HUD's Buffalo office. "But I'm sure there's always room for abuse."

But the city began income guidelines for buyers only after it started using state money. Even then, the limit was raised to $33,500 and expanded to include single people as well as families.

When informed of the number of City Hall workers who bought homes in Rebecca Park, where state money was used, state officials said they were unfamiliar with the selection process.

"This is the first we've heard of this," said Jack Deaci, spokesman for the state Affordable Housing Corp. "If there is any wrongdoing in the selection process, we would be concerned."

Others with City Hall connections also got homes with taxpayer subsidies.

Linda Scott, the daughter of Common Council Member at Large Rosemarie LoTempio, bought a home at Rebecca Park. She also received a subsidy.

Mrs. LoTempio said she filed a disclosure statement in 1989 with the Common Council and asked Joseph V. Schollard, the city's commissioner of inspections and community revitalization, to check on whether her daughter's purchase violated federal guidelines.

At no point, she said, did her daughter ask her to intervene.

"I never did," she said. "But if she had asked, I would have."

Despite several requests, Schollard declined to be interviewed for this story. He heads the city's affordable housing program.

In the Pratt-Willert subdivision across town, the city did not always use income guidelines when awarding subsidies. The result is more than half the homes are filled with families and single people who earn more than $33,500.

In a few instances, the subsides went to families earning more than $50,000 a year. In one case, a family earning $70,000 a year -- although not employed by the city -- received assistance.

"We wanted an economically intergrated project," Penman said. "This is more than an affordable housing project. It's a community reinvestment and neighborhood revitalization program."

Among those who benefited was Joyce Stewert, the real estate agent who now sells homes at Pratt-Willert. She bought a $55,000 house at 407-409 Pratt St. and received a $25,000 subsidy.

Ms. Stewert said she bought her home on Pratt Street at least two years before she acquired her real estate license and began selling homes for James Management, the marketing firm hired by Penman. The firm is headed by James F. Anderson, a former high-ranking federal housing official.

"At the time, I didn't know Jim Anderson or Dennis Penman," she said. "I just wanted to buy a home in the city."

She signed her contract in 1982, moved into the house in early 1984 and went to work as a part-time saleswoman a few months later. When she was laid off by the state Labor Department in 1987, she went to work for Anderson full time.

Even when income limits were used, City Hall workers often benefited from the city's housing program.

Tom Doctor worked at the Buffalo Municipal Housing Authority for two years before signing as a free agent linebacker with the Buffalo Bills. He later injured his knee, which entitled him to the National Football League's minimum salary of $50,000.

Despite his salary, Doctor received a $25,000 subsidy. Doctor said he fit the income requirements because he applied before he signed with the Bills. The subsidy was based on his $16,000 income in 1988.

Doctor's new home is a 2 1/2 -story house on Boone Street, off South Park Avenue near the former Republic Steel plant.

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