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State trying to recover $100,000 grant for failed Englewood garden

A $100000 grant from then-State Sen. Barack Obam2001 was supposed help turn this lot Englewood inbotanic garden. This was how

A $100,000 grant from then-State Sen. Barack Obama in 2001 was supposed to help turn this lot in Englewood into a botanic garden. This was how the site looked in 2008. | Rich Hein~Sun-Times

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Updated: February 8, 2013 6:04AM

Back when former Gov. George Ryan was letting lawmakers pass out grants to boost the economy and build political support, a young state senator named Barack Obama secured $100,000 in state money to help a not-for-profit group create a botanic garden in Englewood.

Now, more than a decade later, Illinois state officials are still trying to recover that grant, which they say the garden’s developers misspent. And the effort isn’t going well.It was in January 2000 that Obama and Kenny B. Smith, president and chief executive officer of the Chicago Better Housing Association, laid out their “Englewood Beautification Plan” — a $1.1 million “botanical walk, garden and fountain” that would span 6

1/2 blocks under the CTA’s Green Line tracks near new homes that the group had been building in the crime-plagued South Side neighborhood.

Obama arranged for the grant the following year so the association could begin work on the project’s first phase: preparing a vacant lot at 61st and Princeton for planting.

But by the time Obama first ran for president in 2008, the site had become overrun with weeds and garbage, the Chicago Sun-Times reported then.

In addition, the newspaper examined state records and found:

The housing association’s board had hired K.D. Contractors — owned by Smith’s wife, Karen D. Smith — as its subcontractor for the garden. The company, which the association claimed was the low bidder on the project, was to oversee construction including a $20,000 catch basin, $20,000 of drain tile and $18,600 of sewer pipe. But the only improvements on the garden site as of 2008 appeared to be that some trees had been cut down and a gazebo — which wasn’t part of the original grant agreement — had been built.

Smith wrote $65,000 in checks from the grant proceeds directly to his wife, whom he later said hired another subcontractor to do the bulk of the work. He wrote another $20,000 in grant-related checks to his wife’s company, which has since gone out of business.

The subcontractor identified by Smith, a man named Rodolfo Marin, told the Sun-Times in 2008 that his company, Marin Construction, did only about $3,000 of work at the site, leveling it with a Bobcat earthmover and cutting down trees.

The Illinois Department of Commerce and Economic Opportunity, which oversaw the garden grant and hundreds of others like it, questioned the hiring of Smith’s wife’s company in late 2003 but months later signed off on the way the grant money was spent, records show. The state agency retained the right, though, to recoup the grant funds if it found future evidence of “ineligible expenditures” or “fraudulent or false” information.

Prompted by the Sun-Times’ findings, Illinois Attorney General Lisa Madigan’s office began investigating the association in September 2008 — a move that Obama’s campaign said he supported.

In a Dec. 16, 2008, letter to Smith, the commerce department’s general counsel wrote that the state wanted its $100,000 back, saying “the green-zone garden was not completed” and the “expenditure of grant funds was contrary to the express and implied conditions of the grant agreement.”

In another letter the same day, the department said it had concluded that a separate state grant of $20,000 — which the not-for-profit won in 2006 with the backing of another Chicago Democrat, state Sen. Jacqueline Collins — also should be returned. That money was for an assisted-living facility in Englewood the state says never was built.

The association appealed both findings, saying that everything the state had paid it do at the garden site and on the assisted-living project was done.

For instance, the association’s lawyer said in a 2009 response to the state’s grant-recovery effort, “We have pictures of the catch basin — it was installed and exists on the site.” In another filing, the association included two photos of a hole at the northwest corner of the site, saying that this was the catch basin that Smith’s wife had hired Marin Construction to install in 2003.

According to City Hall, though, no one ever took out construction permits required for such work. And Chicago Department of Water Management records show that the infrastructure that the association photographed and identified as a catch basin is actually a basin for a city water valve that was installed decades ago, department spokesman Thomas LaPorte says.

The Sun-Times asked the water department to check the basin after noticing recently that it is capped by a city of Chicago manhole cover. A valve inside the basin allows crews to stop the flow of water to a nearby water main should the main need maintenance or repair, according to LaPorte.

The lawyer who represented the association — and now represents Smith — says the water department is wrong. The association, not City Hall, installed the basin, he says.

Still, the association has lost multiple legal battles to prove it did the work it promised. In 2009, a state hearing officer ruled that all of the grant money must be repaid, and last March the attorney general’s office won a $120,000 judgment against the housing group from a Cook County judge.

But the money hasn’t been paid. The attorney general’s office is trying to determine what, if any, assets the association might have so the state can attempt to seize them.

It appears likely to be difficult to find any. In a November 2011 court affidavit, Smith said the association stopped operating “after the project involving the park in Englewood was completed” and that he resigned from the group in 2009.

Records show the Illinois secretary of state dissolved the group two months ago.

Nonetheless, “We’re pursuing enforcement of the judgment and any other legal option that would allows us to recover the funds owed by the organization,” Madigan spokeswoman Maura Possley says.

Regardless of whether the state ever recoups the money, Englewood residents have at least seen a garden bloom at 61st and Princeton.

That’s thanks to neighborhood volunteers from a group called the Sherwood Peace Association and two not-for-profits — NeighborSpace, which was given the garden site by City Hall, and Openlands. They spruced up the gazebo, planted plants and put in walking paths.

The cost, according to NeighborSpace: $9,799.

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