State lawmaker: Graziano said in January deal was near for city housing authority to pay lead judgments

By now, Del. Samuel I. Rosenberg says he expected big news from the Housing Authority of Baltimore City — that it had found a way to resolve the millions of dollars in court-ordered judgments it owes former public housing residents who suffered lead paint poisoning as children.

Housing Commissioner Paul T. Graziano told him in early January that the agency was "close to an agreement with the feds to work this thing out," Rosenberg recalled.

Based on Graziano's assurance, Rosenberg says, he held off pursuing a remedy in the legislature when the General Assembly's annual session began days later. But with the session winding to a close and no deal in sight, the vice chairman of the Ways and Means Committee says he's been let down.

"I would have considered what options I had as a legislator, through the introduction of a bill, to try and move the issue forward — to have a positive impact," the Baltimore Democrat said. It would be "very difficult" to raise the issue now, given that the 90-day session is so far along, he added.

Nearly a year after Mayor Stephanie Rawlings-Blake pledged to find a solution to the unpaid lead judgments — an issue that housing officials have said threatens to bankrupt the agency — Rosenberg isn't the only critic growing increasingly frustrated. Other legislators say they are losing patience. An attorney for plaintiffs who suffered lead poisoning says the housing authority is acting in bad faith.

Housing officials and the mayor's office insist that efforts to resolve the matter continue. But as time passes, the inability to do so is creating further problems. According to documents obtained by The Baltimore Sun, state officials effectively blocked a $1.65 million loan to the city for affordable housing over concerns that the money could be seized by lawyers trying to collect for clients in lead poisoning cases.

"This thing has been going on for a year," said Sen. James Brochin, a Baltimore County Democrat. "It's poor kids who are brain-damaged as a direct result of the Baltimore City Housing Authority's negligence. It's a year later and the kids are still suffering and nobody wants to help."

Graziano was unavailable for an interview Wednesday or Thursday. In a brief statement, he said he recalled meeting with Rosenberg to discuss legislation the delegate was considering. But Graziano's statement makes no mention of an imminent agreement with the federal government, merely that he expressed a "desire that a fair and equitable resolution be reached in partnership with [the Department of Housing and Urban Development] and our other federal partners."

Mayoral spokesman Ryan O'Doherty said efforts to address the court-ordered judgments are continuing and that the housing authority is "pursuing all viable options." O'Doherty did not provide details.

A spokeswoman for HUD, which largely funds the Baltimore housing authority's $300 million annual budget, said it is up to Graziano's agency to negotiate and agree upon settlements, which must then be approved by a federal housing lawyer in Philadelphia.

Scott Nevin, a private lawyer who represents plaintiffs in 23 pending lead-poisoning lawsuits filed against Baltimore's housing authority, said he approached Graziano's staff in January to initiate settlement talks. Authority lawyers expressed interest but said they would need federal approval, Nevin said, yet they would not tell him who in the U.S. government could give that approval.

"The housing authority is just dragging its feet and playing a shell game," Nevin said.

The lead paint judgments — a legacy of substandard public housing that exposed vulnerable children to highly toxic lead paint flakes and dust — have cast a shadow over the housing authority since a Baltimore Sun article nearly a year ago brought the issue to light.

Today the authority owes $8.7 million in court-ordered judgments. About 185 cases are pending in the courts, and Graziano says those could cost the agency $800 million, a figure dismissed by plaintiffs' lawyers as a gross exaggeration.

Graziano, who came to Baltimore in 2000, has pointed out that the cases date to the early 1990s, before passage of the state's 1994 lead paint risk reduction law. He has said that his agency has been "fully compliant" with that law.

A driving force behind the law was Rosenberg. In a letter to the mayor last April, he and two fellow legislators criticized the housing authority for using "frivolous and delaying legal tactics" to avoid paying the judgments, even in cases where the authority agreed to the amount. Since 2005, the authority has paid lawyers more than $4 million to fight such claims.

"Many of these victims will endure lifelong disabilities due to the negligence of HABC, an entity that is not above the law and is legally obliged to comply with court orders," the lawmakers wrote.

Rosenberg said Graziano had requested the January meeting and suggested that a resolution was "not months away but in the near future."

"It left me with the impression that they were having fruitful discussions with HUD that would have resulted in money being available to meet their legal liabilities," Rosenberg said. "Therefore, there was no need for me to do anything at the legislature."

Rosenberg said he did not have a specific legislative remedy in mind. Technically, the housing authority is an independent entity that gets most of its money from Washington, not the state. Graziano, its director, wears a second hat as the mayor's appointed housing commissioner.

For months, the housing authority has contended that it cannot and will not pay all of the court-ordered judgments. Yet in recent months there have been developments affecting several judgments.

Last fall, the authority paid three judgments totaling $907,000. In January, the Baltimore housing authority scored a legal victory when the Court of Special Appeals, the state's second-highest court, overturned a $2.6 million jury award to a brother and sister who contend they were poisoned by lead in the early 1990s. The siblings have asked the Court of Appeals to review the ruling.

Graziano has insisted that his agency, the nation's fifth-biggest, would need federal approval to pay all of the judgments. He has also said that, federal approval or not, the agency would effectively be bankrupted by present and future judgments.

In January, Graziano said his agency "is committed to addressing lead paint judgments in a fair and responsible way; however, we also have responsibility to defend against unfounded lawsuits to protect limited resources for the 50,000 low-income housing residents we serve today."

One secondary effect of the unpaid judgments has evidently been to derail the $1.65 million loan from the state Department of Housing and Community Development. The city's housing authority had expected the money to help pay for 22 affordable housing units in Baltimore.

In June, a state official sent Graziano's agency a letter modifying the terms of the loan, which was approved initially in October 2010 and would have been forgiven had the money been spent properly. Under the revised terms, the housing authority was required to prove that there was no pending litigation or "existing judgment liens" that would put its real estate or project funds at risk of seizure.

Clarence J. Snuggs, the state's deputy housing secretary, declined to say why the state changed the terms of the loan. But email messages obtained through a public records request indicate that state officials were worried that the loan could be seized by private lawyers trying to collect lead paint judgments.

In August, Anthony J. Mohan, a state housing department lawyer, sent an email to a city housing authority lawyer suggesting that the state "no longer was funding the project due to the pending lead paint litigation and the existing judgment awards." Mohan also referred to the state's concern "that its loan proceeds would be vulnerable to collection because of the litigation and judgments."

Assistant City Housing Commissioner Peter Engel said the state loan was not ideal. Even before the terms were modified, state requirements would have reduced the net proceeds by several hundred thousand dollars. The housing authority has since found funds internally to move ahead on the 22 housing units.

Still, Engel said the loan was attractive. And he acknowledged that the money used to finance the project is money now unavailable for some other purpose.

And even though the lead paint cases seem likely to keep the loan from ever being made, the authority still could receive the money. The state has given the authority until April 25 to meet its conditions.

"We'd love to get that money," Engel said.

Rosenberg, meanwhile, said the housing authority's continued inaction on the lead paint cases is unacceptable.

"The city needs to address the judgments," he said. "They can't ignore the judgments. They have to address the judgments in an appropriate, legal way."

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