King-Garvey shareholders protest land grab by bailed out bank


    by Mary Ratcliff

    A Yes We Can Coalition of Asian and Black King-Garvey shareholders chanting, “Stop the land grab; yes, we can!” marched outside Citibank subsidiary Citi Community Capital in the heart of San Francisco’s Financial District on Thursday, Nov. 13. They are determined to stop a deal by Citi, HUD and the San Francisco Redevelopment Agency to financially enslave the owner-residents of the King-Garvey Co-op, formally known as the Martin Luther King-Marcus Garvey Square Cooperative Apartments, Inc. Standing on the shoulders of the giants whose names grace their homes, how could they not demand their civil rights and self-determination?

    Leading the large and spirited crowd were King-Garvey Board President Carlos Levexier and his board colleagues, joined by King-Garvey founder Dr. Oba T’Shaka of San Francisco State University, along with San Francisco State students and community activists. Dr. T’Shaka, who also serves as national vice chair for organizing and training of the National Black United Front, explained to reporters: “Citibank and their subsidiary are trying to take over a co-op that is community owned in the Fillmore. The people owe only $3.5 million on it. What they’re attempting to do is refinance it for $40 million. The people will end up losing it.”

    “Will they get any money?” a reporter asked. “No,” Dr. T’Shaka replied. “The developers will get the money.” “And the people who invested in it?” asked the reporter. “The people who invested – in 10 years they’ll own their property (if they aren’t refinanced), their shares worth $500,000 to $700,000. With the refinancing, they won’t get any of that because it will take 40 years to pay and it will cost too much to pay,” said Dr. T’Shaka. “They’ll end up losing it. Citibank will end up owning it.”

    Poor people versus the biggest bank in the country makes this a David and Goliath struggle, but Dr. T’Shaka is hard to intimidate. The professor marching at One Sansome St., the meant-to-impress address of Citi Community Capital, with the “swagger” students love him for, brings with him 48 years of Black community organizing. In 1963, just two years after graduating from SF State, he not only headed the San Francisco chapter of the Congress on Racial Equality, negotiating in that one year 260 job agreements with major San Francisco employers and leading a Christmas boycott that opened jobs in all the department stores to Blacks, he also founded the Afro-American Institute, which became the Pan African Peoples Organization.

    A community leader who supported the longest student strike in U.S. history, the SF State strike in 1968, which led to the first Black Studies Department at a four-year college, a movement that spread nationwide, Dr. T’Shaka has taught in that department, now called Africana Studies, since 1972. Yamina Washington, writing in the campus magazine [X]press, said his presence “has helped inspire young Black minds to become more conscious.” She quoted former student Rachel Bates, who said: “I truly view him as a living history book, and he speaks with such passion about Black issues, you can’t help but to listen and take heed. Plus, he just makes you feel proud to be Black.”

    King-Garvey shareholders are no pushovers either. Unlike Congress, they understand the financial high jinks and “poli-tricks” pulled by Citibank and its subsidiary which helped cause the mortgage meltdown with unrealistic refinance deals that have caused millions to lose their homes and now are among the banks being bailed out by taxpayers to the tune of $700 billion. King-Garvey’s residents should not have to pay twice to finance Citi Community Capital: through taxes and also through an unfair refinance deal. Why should they strengthen a financial system that would then turn around to take unfair advantage of these low-income elderly minority heads of disadvantaged households?

    As Carlos Levexier, president of King-Garvey Cooperative observed, “This struggle is about preserving the ownership rights of low-income inner city African American and Korean American landowners.” Carlos has used his degree in real estate from SF State and his fighting spirit as a champion wrestler and organizer to put a lockhold on HUD, the Redevelopment Agency and Citibank to “stop the land grab now!”

    ‘Operation We Are Family’ opposes refinance land grab

    The 211-unit King-Garvey Co-op, a landmark at 1680 Eddy St., is owned by the shareholders under a 40-year deed of trust with a fixed interest rate of 7 ½ percent that will be paid off on Nov. 1, 2019. At a time when the real estate market has collapsed under sub-prime loans and millions of Americans are losing their homes, now King-Garvey shareholders, too, could lose their homes through an unnecessary refinance scheme fronted by Citi and backed by HUD, Redevelopment, a private developer and the gullible local leaders they have duped.

    King-Garvey is among the last pieces of valuable real estate owned by African-Americans and one of the first also cooperatively owned by Korean- and other Asian-Americans in the historic Fillmore district of San Francisco. In uniting to oppose this land grab, Blacks and Asians are strengthening an old alliance born of a common history of cruel displacement from the Fillmore – internment of the Japanese during World War II and a few years later the bulldozing of the Fillmore, known worldwide as “Harlem of the West,” when the Redevelopment Agency’s urban removal, aka Negro removal, destroyed the homes and businesses of tens of thousands of Blacks.

    In response to that travesty, through activism led by Dr. T’Shaka and other community organizers over 40 years ago, the Martin Luther King-Marcus Garvey Cooperative was created to provide homes for people who were being disenfranchised and displaced. Today the Redevelopment Agency has returned to the scene of its crime to grab back King-Garvey’s land in order to finish driving poor people of color out of the now upscale, gentrified Fillmore.

    African-Americans and Korean-Americans have united to oppose the land grab refinance scheme at King-Garvey. This new Black-Asian unity is being forged under a national and international campaign entitled Operation We Are Family, a national and international program of the National Black United Front, to expose corporate greed that is creating homelessness.

    In a cooperative, the will of the majority rules. A majority of King-Garvey shareholders have signed a petition indicating they are not willing to support refinancing of their property at this time. They stand firmly in opposition despite threats from the Redevelopment Agency and HUD to terminate their Section 8 contract, an action federal and local officials keep falsely claiming would so reduce the co-op’s income it would be unable to make its mortgage payments and be forced into foreclosure. Even without Section 8 subsidies, however, each family’s own monthly payments add up to enough to cover the current $38,407 per month mortgage, utilities, insurance and all mortgage requirements.

    Thomas Butts, an architect whose firm assessed King-Garvey’s needs in 2003 and 2007, provided a list of emergency and other longer term needs the co-op’s current operating funds and reserves are sufficient to meet. King-Garvey has already spent over $5 million as Butts recommended, and the emergency and other work done has enabled it to satisfy Section 8’s requirements for “safe and sanitary” housing since Aug. 15, 2005.

    The co-op could do all the remaining non-emergency work that Butts listed without refinancing, borrowing or HUD tripling its Section 8 contract at taxpayers’ expense. If the vastly increased federal subsidies HUD is promising the co-op to carry out the partial rehab and refinancing are ever cut or eliminated, the shareholders would lose their property, because they couldn’t possibly pay the new $500,000 per month mortgage note without them.

    Earlier this year HUD Secretary Alphonso Jackson resigned after being accused of engaging in a fraudulent housing scheme similar to that being forced on King-Garvey. During the Bush administration, HUD has supported the destruction of countless thousands of low- and moderate-income homes, including the demolition of 4,500 units of public housing in New Orleans that remained habitable after Hurricane Katrina.

    Long time King-Garvey shareholder and director Sharon Jones believes Secretary Jackson was “just the tip of the iceberg. HUD has worked with local officials and developers all over America to control affordable housing like a housing Mafia.” HUD’s threat to cut King-Garvey’s federal subsidies to force it into this refinancing and rehab deal is, in her opinion, “part of a criminal conspiracy to defraud its minority, senior, female and significantly disadvantaged owners of extremely valuable property.”

    In the case of King-Garvey, HUD in December of 2004 gave the cooperative a rating of 70 – a passing grade is 60. A month later HUD repeated that same inspection, giving King-Garvey a score of 37, a score so low HUD claimed it justified selling the property to make repairs. Did King-Garvey’s conditions truly decline that much in one month or was it being set up for a land grab?

    In September, attorney Carl Williams orchestrated the second of two illegal board elections, which violated California’s Davis-Sterling Act by not providing adequate notice and in a host of other ways. This year’s election also violated the state corporation code by barring write-in votes. Citi Community Capital is thus contracting with an illegal board of directors, making its proposed refinance scheme illegal. A previous potential lender, the National Cooperative Bank, had pulled out after learning the board was illegal.

    Citi Community Capital, an arm of Citibank, must stop its efforts to refinance King-Garvey. Dr. T’Shaka notes: “The American people voted for change in electing Barack Obama to the presidency of the United States. We must end land grab schemes that are more of the get-rich-quick schemes of bankers and other interests more concerned about making a profit than in seeing that the American people are free to exercise the rights of home ownership.

    “King-Garvey shareholders through Operation We Are Family are doing the kind of bottom-up grassroots community organizing practiced by Barack Obama and the Civil Rights Movement that inspired him to see that the poor, including people of color – African-Americans and Korean-Americans – are able to build strong families and communities through cooperative housing ownership. We call on Citi Community Capital to place human rights before material profit and end this refinancing scheme.”

    Disguising a land grab as refinancing is an ironic use by Citi Community Capital of money from the $700 billion bailout allegedly designed to get banks to once again provide housing loans. The bailout is supposed to keep people in their homes, not drive them out.

    “Resident-owned housing cooperatives were established in response to the Watts riots to give inner-city residents and those displaced by urban renewal a stake in the community and a decent living environment,” explains Sharon Jones. “Yes we can block this loan and stop the Housing Mafia from its last-minute rush to fatten the fat cats and steal King-Garvey from its low- and moderate-income African-American and Asian owners!”

    She added: “Yes we can build our own future from the bottom up, America. King-Garvey can help the Obama Transition Team show America how it’s done!”

    For more information, contact Board President Carlos Levexier at or (415) 994-6898. Listen to excellent, well balanced coverage of the march by Wendell Harper on KPFA News for Nov. 13, about 40 minutes into the program.


    1. This letter from San Francisco Redevelopment Agency Director Fred Blackwell came to the Bay View by mail today. It was scanned and is reproduced here exactly as it was sent, without editing. – Ed.

      December 11, 2008

      Letter to the Editor
      San Francisco Bay View Newspaper
      4917 Third Street
      San Francisco, CA 94124

      RE: ‘King-Garvey shareholders protest land grab by bailed out bank’

      Dear Editor,

      This letter is in response to your November 24th article entitled ‘King-Garvey shareholders protest land grab by bailed out bank’. There is a serious housing crisis facing the residents at Martin Luther King / Marcus Garvey Square Cooperative Apartments (“Co-op” or “King-Garvey”) but is not from a “bailed out bank”. Rather a crisis comes from a dissident group of shareholders who have illusions of realizing windfall profits if they can wait out the existing the U.S. Department of Housing and Urban Development (“HUD”) affordability term and sell their shares in King-Garvey for hundreds of thousands of dollars. This is an incorrect assumption on their part and is the speculative mentality that has contributed to our current financial meltdown in the mortgage industry.

      King-Garvey has a long and troubled history. The Co-op and its shareholders have been struggling in their efforts to resolve deferred maintenance issues for the past 10 years. Due to various obstacles and challenges, the Project has come close to losing its valuable project-based Section 8 rental assistance subsidy because of the inability to adequately maintain the Co-op at the standard that is required under the Section 8 rental assistance program. Many of the shareholders at King-Garvey have resided there for 20-40 years. Over the life of Co-op, the Section 8 rental assistance has permitted everyone, regardless of their income, to afford the rent of approximately $1,699 per month for a three bedroom unit. A large percentage of the units are occupied by very low income elderly households who would otherwise not be able to afford this level of rent and would definitely not be able to afford market rents in San Francisco. Seventy-seven percent of the residents at King-Garvey currently rely on a HUD Section 8 subsidy, which allows them to pay 30% of their income for housing. The loss of the Section 8 rental assistance would result in King-Garvey going into foreclosure and would result in many low income seniors losing their housing and the community they have called home for decades.

      On January 3, 2005, HUD threatened to abate the Section 8 rental subsidy due to various concerns over physical conditions, security, and the property’s failure to attain a passing score of 60 in the last 6 out of 7 Real Estate Assessment Center (“REAC”) inspections. (Since 1999, King-Garvey earned scores ranging from 37 to 70.) If the Section 8 rental subsidy is cancelled there will not be sufficient resources to cover operations, maintenance and mortgage obligations and foreclosure would be imminent.

      In response to HUD’s threat to cancel the Section 8 rental assistance, the City family, including Mayor Newson, Supervisor Mirkarimi, Speaker Pelosi’s Office, and the Redevelopment Agency mobilized to help the Board and shareholders save their homes.

      To fix the deferred maintenance issues cited by previous HUD REAC inspections and to address aesthetic concerns raised by shareholders, the Co-op needs to borrow money. The agreement between King-Garvey and HUD requires that the property undergo construction rehabilitation to make it safe and habitable. This required the selection of a developer to prepare the scope of work based on inspections and to arrange for the financing of the project.

      The Board issued a competitive Request for Proposal (“RFP”) on September 29, 2005 for a development partner to assist them in determining what rehabilitation was needed; obtaining the necessary financing; obtaining necessary approvals; and supervising the rehabilitation. With the assent of the majority of shareholders cast on November 9, 2007, the Board selected Related MG Development Co., LLC, a California limited liability company (“Related”) (an affiliate of Related Companies of California) to work with them to meet the HUD required rehabilitation goals for King-Garvey.

      In April 2008, the Redevelopment Agency Commission authorized a $1 million predevelopment loan to the Co-op. This loan enabled King-Garvey to undertake the design and engineering work needed to obtain new financing and rehabilitate the property. One of the conditions of the Redevelopment Agency loan is that the project must remain affordable for 45 years. In addition to the Redevelopment Agency funds, a loan from a conventional lender such as Citibank is also required to refinance and rehabilitate this property. The cost of this loan will be supported by new Section 8 rent levels after construction is completed. For those shareholders assisted by the Section 8 program there should be no rent increase. This planned rehabilitation will improve the living conditions for all residents at King-Garvey. Furthermore it will preserve the long-term affordability at King-Garvey and it will prevent the foreclosure of the Co-op.

      It is in the interest of the residents and the City that we insure that King-Garvey be saved not only for the current residents but all future residents in need of affordable housing in San Francisco. That “bailed out bank”, Citibank, has been a great partner of the City’s affordable housing efforts and should be lauded rather than criticized by your inaccurate article.


      Fred Blackwell
      Executive Director

    2. The “City family” you seek to serve with all the bald-faced lies in your letter to the BayView’s Editor is the Housing Mafia, Mr. Blackwell. You want to defend Citibank for not having yet declined your latest scheme, but can’t defend the Redevelopment Agency’s long history of “helping” steal homes and businesses from their Black owners. The Fillmore was the heart of San Francisco’s Black community before the Agency you now head made it so nearly a no-man’s land for Black ownership it had time to then also add its name to every property title in the BayView.

      The RFP you mention was for its previous attempt to steal King-Garvey. You feign concern for our low- and moderate-income minority owners, especially seniors contending with illness, disabilities, and a lifetime of King-Garvey’s troubling history under HUD’s appalling oversight, but your agency is still paying folks to come lying to them in two languages to terrorize them into believing they’ll be homeless out in the streets if they try to stop those stealing control and ownership of what’s theirs.

      Like other governmental entities that claim they’re here to “help,” the Redevelopment Agency is actually trying to keep those who own our 211 shares from being able to create a decent reality for themselves and their families with their valuable property and its rental business. It is no illusion that our Shareholders have a legal right to own King-Garvey free and clear of the restrictions and affordability requirements you seek to illegally extend. You and others spewing Housing Mafia lies want to rewrite our agreements, to give the City, HUD, and your Agency rights they don’t have–by stealing them from our minority owners!

      Make the Pelosi mansion and your homes affordable housing for 45 years, not ours! Our Shareholders know the foul secret far too many indictments ought to reveal: “affordable housing” has been an excuse for others to profit at the expense of our owners and other taxpayers for 30 years. We didn’t have “deferred maintenance issues for the past 10 years” but fraud and corruption issues since 1968, when HUD began overseeing the design and construction defects built-into this property.

      Before the initial minority owners could collect an $80,000 arbitration award against the contractor, HUD terminated their rent subsidies, forced them into foreclosure and bankruptcy, and used the mortgage insurance HUD required them to purchase to take title to their property in 1973. That $80,000 was to travel with the property, but HUD didn’t disclose it, nor the property conditions it was awarded to correct, when HUD was forced to make King-Garvey one of the federal programs that were created for disadvantaged residents to purchase a share in the corporation that acquired the property from which they rented homes.

      By 1998, only six of 36 Bay Area housing co-ops formed to give those displaced by urban renewal and otherwise disenfranchised a stake in the community had not yet been forced into foreclosure or tax credit deals. Title to all the cooperatively owned properties HUD took from their low- and moderate-income minority owners was either conveyed to the cities in which they were located or to wealthy businessmen and community non-profits who benefited from rental subsidies and also gained tax credits to help themselves to ownership of these properties. King-Garvey has faced the same fate annually since 2002 but HUD has been unable to place it on the auction block with the same tactics used on others who bought shares based on the government’s promise that one day those who owned them would own property free and clear of all the restrictions in effect while their mortgage was being paid off.

      Like you, HUD wants us to ignore the blatant reality that HUD-approved Management Agents perjured themselves monthly for thirty years, by certifying King-Garvey’s apartments were all decent, safe, and sanitary. HUD gave them over $30 million in federal funds to “manage” and yet not do much to improve property HUD knew had been defectively designed and constructed. HUD oversight only ensured that the flex subsidies King-Garvey sought and obtained in the mid-‘80’s were paid out without correcting the problems they were allocated to address.

      When our Shareholders succeeded in getting a federal audit initiated in 1998, HUD discontinued it after preliminary report of a few offenses—e.g., staff kept no mileage log for a van. HUD’s auditors and officials said nothing about vast amounts of supplies and materials bought at top dollar, that little or nothing indicated were used or stored at King-Garvey. Expense reports HUD received monthly indicate King-Garvey purchased in one year alone enough paint to paint each unit four times, enough glass to install a door and window in every unit quarterly, etc.

      When 75% of our Shareholders voted to remove our entire Board of Directors and elected a new Board in 1999, the removed Board would not step down. Yet HUD threatened to cancel our Section 8 contract if there were any legal dispute as to our elections. In 2002, HUD let the Board most of our owners voted to remove to hire an attorney at site expense to remain seated despite another removal effort. Yet HUD still tries to fault the owners and their past Boards for the conditions HUD sold us without disclosing, and ignored for decades! On 03-06-02, HUD cited the very same issues HUD used thirty years earlier to declare the prior owners in default to declare our Shareholders in default of their federal agreements and threaten them with subsidy and property loss for conditions they couldn’t make HUD or its approved agents repair!

      Shareholders finally seated a new Board in 2003 but HUD’s approved Agent still claimed we needed to agree to a tax credit deal because our $3.5 million/year annual income wasn’t enough to make repairs. In November, 2004, unaware that about 40 owners filed complaints with the Human Rights Commission and Department of Justice, HUD held a R.E.A.C. inspection on which our property received its highest score in history—70! HUD invalidated that inspection in December 2004, as soon as inspectors from the Health and Building Departments began citing one abysmal unit after another. The R.E.A.C. re-conducted in February 2005 reported our lowest score in history—37! The media coverage of our deplorable conditions resulted in HUD in Washington D.C. ordering a health and safety inspection of every subsidized unit. Two thirds failed, with long lists of atrocious problems! To avoid losing our Section 8 contract and help cover up the fact that HUD knew most of our units were never decent, safe, and sanitary, the Management Agent did more work in three months than had been done in 30 years!

      King-Garvey spent over $5 million making emergency repairs and fixing or replacing its roofs and siding. We have passed every annual health and safety inspection since August 2005. We also improved on every other performance measure until HUD held and reported a R.E.A.C. inspection in September 2007 your Agency and others it and the City paid used to terrorize all our disadvantaged owners again with loss of Section 8 and foreclosure. Like HUD, you want the world to believe King-Garvey hasn’t done the work we were finally able to force our HUD-approved Management Agents to do. Your Agency helped a developer present a confidential proposal, NEVER competitively bid out, enabling him to pick who will feast at the trough your agency paid to help create as a rotten excuse to force our owners to abandon our current agreements for another 45 years of subsidies rarely before 2005 spent achieving the purposes for which they were provided. Why should we replace appliances already replaced and re-do work already done to make our units decent, safe, and sanitary? Why bilk taxpayers for additional work we planned to do and can afford to do using our current income? Why increase our Section 8 to pay a new note of $ ½ million per month instead of $36,093/month? R.E.A.C. scores can be rigged. How else could a 70 score drop to 37 in less than two months?

      If you’re not actually a housing Mafioso why not request a federal investigation to find out how we failed a R.E.A.C. after spending $5 million to get all our units repaired? The state-credentialed inspector who failed a majority of our units in May of 2005 has passed them annually since August of 2005. We can prove all our units have met Section 8 habitability requirements since August 2004! HUD’s reasons for threatening to terminate our Section 8 due to HUD’s 2007 R.E.A.C. inspection are as suspect as its reasons for giving us passing scores when more than half of our units were in absolutely foul condition.

      Besides subjecting us to another 45 years of HUD control what other terms are in the $1 million loan the Redevelopment Agency insisted on giving King-Garvey although we had $1 million in savings and it received Legal Notice that it was dealing at its own risk with an illegal Board? I requested that loan agreement in April 2008 but still haven’t received it; even the CAC hasn’t seen it! Isn’t that $1 million loan secured by our property—worth over $100 million? How many of those involved in obtaining it have received money from your Agency and/or the City?

      If Citibank is a great partner in the City’s affordable housing efforts why laud it in a letter as full of lies as yours? You know very well we can pay our mortgage note even without Section 8. Our note is $180 per month per household; our out-of-pocket payments are over $500 per month per household! We can also cover utilities, insurance, and mortgage requirements. We have enough in savings and reserves to do other work to achieve energy efficiencies the developer you want the public to overpay with Citibank’s help didn’t even propose. He doesn’t intend to significantly improve accessibility in doing work for a co-op that has an increasingly senior population and joins you in pretending we need to refinance to afford work even those of us with brain tumors know shouldn’t cost what’s estimated and can’t last as long as claimed.

      In December 2003, an architect the new Board hired to inspect 105 units said we’d need to spend $16 million over 5 years. In 2004, our Management Agent claimed $20-$24 million was needed. In early 2005 Oily Lee and Michelle Devious had someone walk through six units and opine $64 million was needed. In 2006 the developer whose pockets they are still trying to fill said $43 million was needed but proposed we agree he could walk off if he learned more funds were needed and we didn’t agree to the terms he negotiated. The pre-development work you want us to believe you did to help us out was supposed to be done by the commercial lender and/or the developer. I know you just drove up, but you should be embarrassed by the work done on your Agency’s dime since the lies in your letter based on it, can be readily disproved. In case you don’t know it yet, you work for the citizens of this city and state, not the commercial enterprises your Agency promotes and lauds!

      I don’t think you’re trying to save King-Garvey, Mr. B, but trying to bury it under a rug of deceit woven by those with really dirty secrets to hide! It’s bad enough to call me a dissident for not wanting King-Garvey to borrow over $43 million I can prove we don’t need! But blaming the mortgage industry meltdown on people like me requires far more of a stretch of the imagination than any honest man could achieve. I look forward to telling a grand jury you and yours are now bilking the public with another boondoggle like those for which Citibank and others were bailed out! You ought to be ashamed of yourselves for trying to steal from widows and orphans, among others. We need what we own.

      Very truly yours,

      Sharon Jones

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