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Originally published Tuesday, September 18, 2012 at 8:02 PM

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Development agency hits rough stretch

SouthEast Effective Development, the economic-development agency credited with a long string of successes in Southeast Seattle, is in turmoil — with the executive director on leave, the finance director gone and results of an audit investigation expected soon.

Seattle Times staff reporter

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As the granddaddy of Seattle neighborhood economic-development agencies, SouthEast Effective Development is credited with reviving the historic Columbia City business district, improving access to health care for residents, and nurturing a vibrant arts scene in Rainier Valley.

But the agency known as SEED is now in turmoil.

Its longtime executive director, Earl Richardson, is on leave, and its former finance director is gone. The board of directors has ordered an audit investigation with the results expected later this month.

A former Department of Housing and Urban Development regional administrator, Mark Flynn, is serving as interim director.

Earlier this year, SEED stopped payment on a $925,000 construction loan for the retail space in its new 68-unit Claremont Apartments at the former Chubby & Tubby store site on Rainier Avenue.

The overdue payments were brought up to date in May, but questions remain about the organization's financial health and future direction.

"Their 2011 audit was clean, but for them to have another audit going on, that's a huge red flag," said Wayne Lau, executive director of the Rainier Valley Community Development Fund, which loaned SEED money for the retail portion of the Claremont project.

The storefronts below the Claremont are still vacant. In contrast, Lau said, other new retail space, even some off main thoroughfares in Rainier Valley, has been leased successfully.

Richardson, 64, a former city of Seattle housing director, took over at SEED in 1995 and has led the organization's increased focus on building affordable and workforce housing.

Under his leadership, the nonprofit development agency increased the number of units it owned from 33 to more than 700.

Reached by phone, Richardson said he couldn't comment on the situation at SEED, other than to say that he was dealing with personal health issues. He did note that multiple audits over the past few years have turned up no problems.

"There are no financial issues," he said.

The city's Housing Office has loaned SEED almost $13 million for seven projects dating back to 1991, according to city records.

"We've considered SEED to be a great housing partner. They've not only provided new housing through construction, they've taken over rundown housing and successfully renovated it," said Office of Housing Director Rick Hooper, who previously worked under Richardson at the city.

Tim Ceis, former deputy mayor under Greg Nickels, said Richardson was a "can-do" administrator who took over the crime-ridden Lake Washington apartments near Rainier Beach High School, kicked out the bad tenants, brought in new tenants and changed management.

"He cleaned it up," Ceis said.

Neighborhood improves

Rainier Valley is one of the city's most ethnically and economically diverse areas but also one of its poorest. In the 1970s, when SEED was created, the valley had the highest rate of teen pregnancy, few opportunities for youth, no medical clinic and few doctors, said Virginia Kenyon, a registered nurse and 37-year SEED board member.

And there were almost no thriving businesses.

"Columbia City was a ghost town," she said.

The valley was already home to two large public-housing projects, Rainier Vista and New Holly. Kenyon said SEED asked the city to put a moratorium on new low-income housing for fear that a concentration would hamper efforts at economic revitalization.

In 1987, SEED attracted a Group Health clinic. It recruited doctors and other health-care providers, and won grants to create jobs for young people, including neighborhood-beautification projects, Kenyon said.

The organization also purchased and remodeled derelict buildings, converting one to the Columbia City Gallery and another to the Rainier Valley Cultural Center. It launched many arts programs including the Columbia City and Rainier Beach art walks and an annual Heritage Festival and parade.

"They've been instrumental and very effective in improving the life of the valley since the '70s," said Jeffrey Taylor, president of the Columbia City Business Association and an insurance agent.

Shift of focus

But as federal funding for urban-renewal projects dried up in the 1990s and 2000s, Kenyon said, the organization shifted its focus to building housing, which was Richardson's interest and expertise. In 2004, the city lifted its moratorium on low-income housing.

The Seattle Office of Housing said that SEED has had only one audit finding in the past three years. But the city also issues annual compliance letters. Its most recent on the Claremont Apartments contains three findings, including failure to replace funds in a reserve account and failure to detail how the building will be managed and maintained.

One observer close to the situation, who would speak only on condition of anonymity, said compliance letters are standard in nonprofit housing development and that SEED addressed all the problems that were raised.

This person suggested that Richardson had gotten sideways with a relatively new and inexperienced board of directors.

Of the nine directors listed on SEED's 2010 IRS filing, only three remain on the board.

Kenyon suggested that the organization might need to return to its roots of more diversified economic development. It wants to save the Columbia City Cinema, shuttered by the city for safety violations. It wants to attract an assisted-living center for a community that has none.

Said Kenyon, "The board has a lot of thinking about what we're going to do about our programs, where we're going, who we're going to hire and what we're going to invest in."

News researchers Miyoko Wolf and Gene Balk contributed to this report.

Lynn Thompson: 206-464-8305 or lthompson@seattletimes.com. On Twitter @lthompsontimes.

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