To his list of achievements, the Rev. Richard A. Stenhouse can now claim a development company

that is among the biggest recipients of local government largess in Buffalo.

And with that title, the former member of the city control board has become one of the key

housing developers on Buffalo's East Side.

The road from pastor to developer hasn't always been easy.

Yet with City Hall providing $1 million for commercial development projects and another $4

million for housing, Stenhouse's dream has become possible.

Not without controversy.

As Stenhouse finishes building 25 houses in the neighborhood around his Bethel AME Church

on Michigan Avenue, some view the strong relationship he has developed with City Hall as a

success story for a faith-based organization trying to rebuild a run-down neighborhood.

Others think Stenhouse has too much influence in City Hall, citing his successful

opposition to a Cleveland developer's plan to build 50 rental homes on the city's East Side.

And they say that while Stenhouse's Bethel Community Development Corp. has built some

nice homes, Stenhouse's inexperience as a developer has resulted in thousands of taxpayer

dollars being wasted, citing, for example, a home that had to be rehabbed twice before being

sold because vandals destroyed the work the first time around.

Bethel ended up spending almost $200,000 to purchase and rehabilitate the run-down Woodlawn

Avenue house, which ultimately sold for $59,900 and is now assessed at $35,000.

Beyond that:

Bethel was hauled into court for housing code violations against several of its

properties and continues to own a dilapidated building on Ada Place that neighbors called an

"eyesore."

One of Bethel's chief contractors, Savarino Construction Corp., has filed almost

$500,000 in liens against Bethel for nonpayment, including a $225,000 lien related to houses

Savarino is building for Bethel that were fully funded by the city.

Bethel has missed deadlines on many of its houses, in one case resulting in a new

home buyer pleading to get into one of the houses. Six of the 25 houses Bethel was contracted

to build are near completion, but not yet finished, despite contractual deadlines that have

long past in some cases.

So far, two of the 19 occupied houses Bethel built have been foreclosed on, and

another has received notice of foreclosure proceedings.

Without always having a paid, professional staff, Bethel has, at times, relied on

the Buffalo Urban Renewal Agency to perform functions typically done by developers —

even though Bethel was getting a developer fee and administrative stipend from the city,

according to City Hall sources.

Bethel, since 2005, has received about $50,000 a year in federal funds doled out by the

city to operate its development corporation, for a total of almost $250,000 so far.

Additionally, it received about $90,000 in developer fees, according to contracts between the

city and Bethel.

"BURA is suppose to just monitor [construction], but instead it [had been] running the

job, doing the day-to-day stuff," one City Hall source said. "Making sure the contractor is

doing his job. Making sure the work gets done on time, working on the problems."

In fact, some at BURA have questioned if Bethel has always met qualifications for its

$50,000 annual stipend, given that it hadn't had an executive director since October 2007 and

given that one of the funding requirements was that Bethel be capable of developing a project.

The Buffalo News analyzed subsidized housing in Buffalo as part of its review of how the

city is spending federal money distributed by the Buffalo Urban Renewal Agency.

That analysis found Stenhouse has emerged as a powerful player when it comes to

redevelopment of Buffalo's East Side — with lots of help from City Hall.

"He is a politically connected reverend," Council President David A. Franczyk said of

Stenhouse. "And sometimes that is how it works. It's a political decision, where the money

goes. I'm not saying that's right or wrong. That's just the way it is."

Stenhouse silent Stenhouse declined to comment for this

article. In an interview with The News last summer, Stenhouse acknowledged his stint as a

developer hasn't been without mistakes, but said he has learned along the way. He spoke with

pride of the business development his organization has brought to Jefferson Avenue and the new

homes his development agency built, particularly those around the Academy for the Visual and

Performing Arts, improving the atmosphere for children walking to and from school.

Janet Penksa, the city's finance commissioner and a member of the Urban Renewal Agency,

described Bethel as a young organization that has needed nurturing from City Hall.

Nonetheless, it has had success in building houses in a section of the city that hasn't

attracted a lot of development, she said.

"There aren't all that many organizations interested in going to deteriorated neighborhoods

and turning them around," Penksa said. "You have to give new groups a chance, to nurture them

along."

But others note that while the administration of Mayor Byron W. Brown supports projects

presented by East Side clergy — Stenhouse as well as the Rev. Darius G. Pridgen —

it rescinded approval for a $1.8 million project proposed by another East Side organization,

the Lt. Col. Matt Urban Center, headed by Marlies A. Wesolowski. Wesolowski had publicly

complained last year of crime in the city prior to the funding being pulled.

Funding for the project was rescinded because "the numbers didn't work," Penksa said at the

time, denying politics had anything to do with the decision.

"You can make it work if the spirit is willing," Franczyk replied.

A bad start

Bethel's entrance into the city's housing market began about the time Stenhouse started

working with the Local Initiatives Support Corp., a national organization with a Buffalo

office that works with nonprofit developers to identify and support construction projects in

struggling neighborhoods.

LISC was interested in encouraging faith-based development in the Buffalo area, similar to

what has been occurring in New York City.

As an initial project, LISC loaned Bethel about $90,000 in 2001 to purchase and rehabilitate

a dilapidated home on Woodlawn Avenue.

Things didn't go well.

"The house was completed, and it was our expectation that Bethel would market the

property and find a qualified buyer," said Michael Clarke, executive director of LISC's

Buffalo office.

Instead, after initially being rented, the house eventually sat vacant. Bethel failed to

insure it, or to secure the property, Clarke said.

Vandals broke in.

"The house was stripped of all the improvements," Clarke said. "It was unsalable."

Stenhouse then turned to the city, which gave Bethel an additional $120,000 in 2007 to

rehabilitate the property, according to contract documents. HUD records show Bethel spent

about $102,000 of that — more than it initially cost to purchase as well as rehab the

house.

LISC and the city spent a combined $200,000 on the house but eventually sold it in August

2009 for $59,900, according to city records. The property is currently assessed for $35,000.

Nearby houses on the street are assessed for $18,000 and $20,000.

Most other Bethel projects focused on building new homes, not rehabilitating old ones.

$15.2 million doled out

The Buffalo Urban Renewal Agency doled out more than $15.2 million in federal affordable housing funds to nonprofit development

organizations since 2002, with the biggest chunk going to Belmont Shelter, an organization

that has been in the affordable housing business for many years. The administration of former

Mayor Anthony M. Masiello approached Belmont in 2004 and asked it to help with Buffalo's

affordable housing program. Over several years, Belmont was given $8 million to build 41

houses. Proceeds from the sale of those homes were used to build six additional houses, so

far.

The next biggest recipient of the money was Stenhouse's Bethel Community Development Corp.,

a relative newcomer to the housing development business, getting $3.7 million since 2004 to

build 20 new houses and renovate one existing house, according to city and HUD reports.

Proceeds from the sale of the new homes have been used to build five more homes.

Bethel also received $1 million from the Buffalo Economic Renaissance Corp. for commercial

development on Jefferson Avenue.

Stenhouse's organization is the biggest recipient of federal funds from BERC and BURA

combined during the Brown administration, according to U.S. Housing and Urban Development

documents. Bethel Community Development also has become one of the biggest developers of

single-family homes in the city in recent years, The News found.

Nine of the Bethel houses are on Purdy Street, off East Ferry Street near Jefferson

Avenue. Two have been foreclosed upon, including one that recently sold for $63,000 —

some $30,000 less than the original selling price of $96,250.

"This is a nice place to live," said Billie Jean Cook, shoveling snow outside her Purdy

Street home. "People keep up the street. They shovel their sidewalks in the winter. They put

out flowers in the spring."

"There used to be a lot of drug dealing," added Laverne Frazier, a longtime Purdy Street

resident. Then, she said, the abandoned and run-down houses were demolished, to make way for

the new homes. Once that happened, she said, the drug dealers left.

"It's much better," Frazier said. "You have nice houses, and the kids can play without drug

dealers on the street."

Ada Place woes

But on nearby Ada Place, residents aren't as happy. Bethel built three houses on the

street. Two are occupied; the other recently sold after sitting vacant for about two years,

according to residents on the street. A fourth Ada Street property Bethel owns, at 38 Ada, a

boarded-up, vacant house with railing, steps and shingles missing and the backyard used as a

dumping ground for an old refrigerator, television and couch.

"It is an eyesore," said Jarrod Stroud, who lives with his wife and their 7-year-old son

across from the Bethel property.

"This is a nice little street," Stroud said. "Everybody knows everybody. We are neighborly.

There's no crime. This [Bethel's boarded-up house] makes our neighborhood look bad."

Stroud said he last saw church representatives checking on the house in the summer, when

Stroud said he complained to them about the house. They responded that there are plans to

demolish the house and build a new one, Stroud said.

But nothing's been done, leaving Stroud and others frustrated.

In the past, Stroud said, when his own house needed work, city building inspectors cited

his property, requiring him to paint his home, fix his stairs and install a railing.

"Why won't they tell the church to fix up their property?" Stroud asked.

It's not the first time neighbors have been upset with Bethel.

Taken to court

Bethel Community Development Corp. was hauled into Housing Court in 2007 after city

housing inspectors found nearly two dozen violations on four houses the agency owned on

Michigan Avenue. Bethel eventually demolished the dilapidated houses and built three new

single-family houses on the site after scrapping initial plans to put eight townhouses there.

The three houses are almost completed, and likely buyers have been found.

Also almost finished is one of two homes built on nearby Woodlawn Avenue. The other

Woodlawn Avenue house is now occupied by Delphine and Kevin Washington, who became frustrated

because of delays in being able to move in.

The house was supposed to be completed June 30, 2009, the Washingtons said, but five

months later it still wasn't done. When moving day finally arrived, the house still didn't

have a certificate of occupancy, forcing the family of four to find a temporary place to stay

until the house was ready a few days later. The Washingtons have since moved into the home,

but have not yet closed on the house.

Bethel blamed the builder, Savarino Cos., for the delay.

Samuel J. Savarino, president of Savarino Cos. denied that his company was at fault.

The problem, he said, was a dispute over additional payments for work that Bethel wanted

done that was not in the initial contract.

"Would our projects have run smoother if the owner [Bethel] had an experienced

representative on their side? In my opinion, yes," Savarino said. "Indeed, the owner/builder

agreement obligates the owner to have a designated representative and that representative has

judgments to make, duties to perform and directions to give."

Savarino, in fact, filed a $225,000 lien in December against Bethel, claiming that's how

much the developer still owes him for two houses on Michigan and two on Woodlawn. That's in

addition to a $250,000 lien Savarino filed in June 2009 over payment he says his company is

owed for the Head Start building Savarino built on Jefferson Street for Bethel.

"We have a general contractor/owner reconciliation to do," Stenhouse had said last October

about the Head Start lien.

Savarino said he recently met with Stenhouse to iron out their differences. The final work

on the homes will be completed, and liens will be lifted on the homes and the day care center

when payments are made, Savarino said.

Despite the problems he encountered working with Bethel, Savarino said he supports what

the organization is trying to do.

"Projects like this are much more than building houses — they are an important

component step in rebuilding a community, and organizations like Bethel do a job of

representing the interests of the community," he said.

In fact, Bethel's community connection has helped it get additional work.

Bethel was hired in that capacity to work with a New York City company on the Packard

housing project, and Bethel was discussing the possibility of working with a Cleveland

developer, NRP Corp., on that organization's interest in building 50 rental units in the Cold

Spring section of Buffalo.

NRP has complained that the project stalled because it refused to employ Stenhouse to

oversee minority hiring on the project.

Stenhouse denied the accusation, as did Brown. Both said they opposed the NRP project

because of their opposition to scattered-site in-fill housing and because the rental homes NRP

wanted to build cannot be sold to homeowners for 15 to 30 years.

sschulman@buffnews.comnull