BUILDING OWNED BY CHARITY HAD 'EGREGIOUS' VIOLATIONS

On Jan. 31, 1996, the city ordered the tenants of a Harlem brownstone to
move out, saying that a series of code violations had made the building too
hazardous to be occupied.

The three-story brownstone, on 112th Street between Frederick Douglass
Boulevard and Adam Clayton Powell Boulevard, was owned by Hale House, the
charity that provides shelter for children born to drug- addicted and
H.I.V.-infected mothers. The property had been donated to Hale House
sometime around 1987, said Colleen Roche, a spokeswoman for the charity.

City officials said that when they ordered the family of seven living in
the 112th Street brownstone to leave, exposed electrical wires were hanging
from the walls and ceilings. There was no water supply for the bathrooms or
the sprinkler system and no lights in the public hallways, and about 20
cubic yards of trash was sitting in one hallway, blocking access to the roof.

"These are egregious code violations," Carol Abrams, a spokeswoman for the
City Department of Housing Preservation and Development, said yesterday.

It cost the city $107,000 to provide temporary housing for the building's
residents. In late 1998, Hale House sold the brownstone to one of its
former administrators for $75,000, lending her the full amount.

Hale House's decadelong role as owner of the troubled property is yet
another sign of serious problems at the charity. It has battled accusations
that it has mismanaged property it was given by the city and that it has
spent a disproportionate amount of its revenue on direct-mail services and
not enough to care for children.

A spokeswoman for Hale House confirmed a report in The Daily News yesterday
that Lorraine E. Hale, the president of Hale House, had borrowed $115,800
from the charity to renovate her home in Scarsdale, N.Y. Dr. Hale, who
founded the charity with her mother, Clara Hale, known as Mother Hale, in
1969, donated her home to Hale House in 1999 but retains the right to
continue living there. She said yesterday that she wanted to make certain
that the house "was going to be in good shape when they received it."

Ms. Roche said Hale House was unaware that the loan was improper.

Ms. Roche also confirmed that Hale House spent $444,000 on a bronze statue
of Mother Hale that was placed outside its headquarters on 122nd Street,
and that Dr. Hale's husband, Jesse DeVore, is paid a salary of $110,000 as
a public relations director. These facts were also reported yesterday by
The Daily News.

Hale House has had very little to say about the brownstone on 112th Street.
Ms. Roche said the building had been occupied by squatters who were drug
addicts. "They got rid of the building because they couldn't use it," she said.

City officials were unable to identify the family yesterday.

To take the building off its hands, Hale House turned to Renee Avery, who
had run a treatment program for formerly homeless women at one of Hale
House's buildings from 1991 to 1993. Since then, Ms. Avery said, she has
worked intermittently as a consultant for Hale House.

In December 1998, Ms. Avery bought the brownstone for $75,000, with no down
payment. In February 2000, she got a bank loan for $260,000, enabling her
to repay the loan from Hale House and fix up the property. She is currently
converting the brownstone, a former rooming house, into two apartments for
herself and her son and his family.

In August, Ms. Avery said, she was shocked to learn that the city was
trying to collect $107,000 from her to cover the cost of relocating the
brownstone's former tenants. She said Hale House had never mentioned the
lien. "I want to believe that they had no knowledge of it," Ms. Avery said.

But Ms. Abrams, the housing spokeswoman, said Hale House knew that the
charity would be responsible for the relocation costs, which lasted several
years as the tenants sought public housing. "At the time of the vacate
order, they were aware there would be a lien," Ms. Abrams said.

Even with the lien, Ms. Avery acknowledges that she got a good deal. Not
long after she bought the house, property values in Harlem rose sharply.
Only a few months later, a run-down brownstone nearby, at 290 Manhattan
Avenue, sold for $500,000.

The deal may not have violated any requirements for tax-exempt
organizations, said Marcus S. Owens, a partner in the Washington law firm
of Caplin & Drysdale who specializes in tax-exempt organizations. He said
penalties are imposed only when it can be shown that the transactions
provided a significant private benefit to someone "able to exercise
substantial influence" over a charity. Ms. Avery was no longer a Hale House
employee, and it is not clear whether the brownstone could have commanded a
higher price.

"The tax code is not going to penalize bad business deals," Mr. Owens said.