Community Arms Project ‘Loses’ Funding for Security Upgrades

[Editor’s Note: The following article has been edited from the original version. Originally the story said that the funding was broken down into two groups of funding, one from HUD and the other from the city and that the city funding was a loan structured as a grant. However, that was not correct, in fact, all of the funding came from one source, it was a HUD grant and there was no city funding involved.]

In a turn of events which Councilmember John Kennedy called “a loss for the whole city,” a $420,000 project that would have been brought new security upgrades to a challenged Pasadena housing development has been halted because the Housing and Urban Development (HUD) money which had been set aside was been refused by Community Bible Community Development Corporation (CBCDC), the general partner in the transaction.

The refusal of the money means that, as Mayor Terry Tornek explained, “It’s gone. Game over. Time expired.”

The HUD funds needed to be used by August 31, otherwise they would be returned to the government, and the city funds would not exist without the Community Arms project, thus the disappearance of the funds.

The Community Arms complex, at 131 E. Orange Grove Boulevard, was built in 1973 with funds from the US Department of Housing and Urban Development (HUD) as affordable rental housing for low-income residents, and is currently owned and operated by Community Bible Community Development Corporation.

According to Pasadena Housing Department’s Senior Project Manager James Wong, when the council took action on August 15, the total amount of funding approved by the city for this project was $420,000, all of which was HUD grant funding.

But according to John Burch, vice president of development for CBCDC, the church’s limited partner, Alton Torch Finance, based in Denver, and acting as the group’s “co-signer,” in the project, was in the middle of exiting their partnership with the group, and wanted no more encumbrances of any kind, though the HUD money would have come with no strings attached.

Wrote Burch in a letter to Wong, “While the offer is generous, and would definitely assist us in our security efforts for the safety of our residents, it was decided by our limited partners that the timing of the grant and additional encumbrances that are attached would not be wise at this time.”

“The partner wanted a clean break,” said Wong.

The last-minute refusal of the funds came as a complete surprise to the Council, especially since the project itself would have been begun construction September 1.

“It’s hard to imagine you could have gotten this far without knowing,” Mayor Tornek told Burch, adding, “This is a serious dropped ball,” after Councilmember Kennedy commended the Housing Department staff for their work.

“No one should be commended,” Tornek continued. “The communication from CBCDC was not what it should have been. This is a huge disappointment.”

“This does not make sense to me,” said Councilmember Margaret McAustin, who questioned the idea that a limited partner, who generally holds a very small financial interest, could control the transaction.

But as Tornek admitted, following the meeting, “I have been the treasurer for non-profits and this is not unusual. Many times the limited partners have a tremendous amount of power in making decisions like these.”

The Housing Department recommended that in the future, more attention be paid to identifying the limited partners before agreeing to similar deals, and also committed to an investigation of the Community Arms transaction.

Councilmember Steve Madison agreed, saying, “I should hope so. If I had lost $382,000, I would hope you would investigate me.”

Following the meeting, Burch said CBCDC would be investigating the possibility that money for the security upgrades might be worked into its exit agreement with Alden Torch.