Hodge rent, cont..

Since April 2002, the four-term Dallas Democrat has been living in the Rosemont at Arlington Park Apartments, a taxpayer-subsidized project built by developer Brian Potashnik's Southwest Housing. CBS 11 News first reported in August that Hodge moved into the complex near Parkland Memorial Hospital after using her elected position to help Potashnik gain millions in federal tax credit subsidies between 2000 and 2005, including for the project in which she now lives.

Hodge and Potashnik, who is the subject of an FBI bribery investigation, refused to answer last September when CBS 11 asked whether she has been paying her own rent and utilities in light of her years of help to the developer.

But now, CBS 11 has learned through interviews with three former Southwest leasing personnel and internal company records that Hodge had been living for three years in her apartment under a special corporate subsidy authorized by Potashnik, in a unit he personally helped her pick out.

Public records show Hodge lent crucial political support, both in official correspondence under her State Representative letterhead and in public testimony to a half dozen Potashnik projects before and after she began accepting $700 monthly rent and an estimated $100 monthly utilities payments. The records show in some cases she lent Potashnik this support despite strong opposition from her own constituents and for Potashnik projects that were not in her Dallas District 100.

In total, Hodge was the beneficiary of more than $32,000 in rent and utility benefits she has never disclosed on personal finance statements as required of state legislators by law, records show. The FBI has refused to discuss its interest in Hodge or say whether the bureau knew of Hodge's special rent arrangement with Potashnik, but agents have spoken to none of three former employees interviewed by CBS 11.

CBS 11 launched its investigation of Hodge's ties to Potashnik in August when her name surfaced in an FBI subpoena that is part of a more global bribery, extortion and money laundering corruption probe into a City of Dallas affordable housing boom underway for several years. The FBI bribery sting investigation has explored the complex interrelationships between developers like Potashnik and Dallas city council members, plan commissioners, state legislators, construction contractors and social service non-profits.

Internal company records provide a glimpse of the arrangement between Southwest Housing and Hodge.

In April 2002, the month Hodge moved into unit 1126, she left a $699 overdue balance on her $899 rent, meaning she paid $200, according to a company rent roll from that month obtained by CBS 11. The delinquent $699 balance, according to the document, was to be paid by the corporation. A line item on a delinquent balance sheet states that complex management was "waiting on check from corporate" to pay the $699 for Hodge. Hodge continued to receive the rent and utilities support for the next three and a half years, several knowledgeable souces say.

When confronted with CBS 11's new findings this week, Hodge's criminal defense attorney acknowledged the $700 monthly payments and utilities from Potashnik but said she ended the arrangement shortly after CBS 11 aired its September stories. Attorney Mike Snipes said the state lawmaker is now paying all of her own bills.

Snipes said Hodge and Potashnik believed all along there was nothing improper about the rent arrangement. He said Hodge was a poor, relatively unsophisticated elderly woman who accepted at face value a favorable lease provided to her and with no expectation of providing anything in return.

"The explanation is that she thought it was okay to do this. They thought it was okay to do this," Snipes said. "Now that we realize what's going on, she's paying the whole thing here."

Snipes said the FBI did request an interview with Hodge once after CBS 11 aired its first stories in September. He said she refused the voluntary interview with FBI agents on his advice.

"There's no misconduct here," he said. "Ms. Hodge is innocent."

Attorneys for Potashnik declined to comment for this story. Previously, Potashnik's attorneys had refused to release rent information about Hodge, citing privacy concerns.

"Terri's a friend, and we just want to help her out."

One former high-ranking Southwest Housing employee, who was in position to know about the Hodge lease, said Potashnik and his wife, Cheryl, openly acknowledged supporting Hodge financially and that this rent support was well-known within some circles of the company.

Hodge still lived in the complex through last month.

The former Southwest Housing employee said the Potashniks once provided this explanation about the Hodge rent subsidy: "Terri's a friend, and we want to help her out.' It was, Terri's going to move in here and this is what is going to happen. There really wasn't much to talk about. It was, 'here's what the deal is and this is the way it's going to be.'"

Another former Southwest employee said Hodge showed up with Potashnik to pick her apartment shortly after the project opened for leasing in early 2002. Given her pick of units, the state representative selected a premium upstairs unit overlooking the complex's swimming pool, the employee said. And, when the employee informed superiors that the unit was already under contract, the employee was ordered to break it and give the keys to apartment 1126 to Hodge that same day.

An angry dispute broke out with the jilted tenant who was preparing to move in, two former employees said.

Hodge was not required to fill out the standard application forms or documents that other tenants are routinely required to fill out. She did not have to submit to any of the routine vetting required for approval and eventual move-in, nor did she work with a leasing agent, the employee said.

Instead, three former employees said, Hodge's lease file received virtually unprecedented special handling. Unlike the lease files of hundreds of other tenants in Southwest Housing properties, Hodge's file was managed at corporate headquarters - under tight wraps. At least for awhile, any checks written or sent by Hodge went straight through corporate headquarters for processing, rather than to the on-site complex leasing office like all others, the sources said.

"Nothing was done like normal procedure," said one former employee, who requested anonymity. "It wasn't in the office, none of it, from Day One. It was so secret. I didn't like the feeling of it."

Another former employee recalled inquiring into the whereabouts of Hodge's missing lease file, which was expected to be on location at the Arlington Park campus office. The employee called corporate headquarters and was told it was there "at the request of the corporate owner," Brian Potashnik.

The employee said many Southwest Housing employees in the leasing and management division knew about the Hodge arrangement but feared openly discussing such an obviously sensitive topic.

"The questions were there but you didn't say those questions. You'd lose your job," the former employee said. "Everybody treated it with kid gloves."

Said another former employee: "There were discussions about that, but everyone just kind of looked at each other and shook their heads and said, 'what else are you gonna do?'"

NO GIFTS, INCOME REPORTED ON PERSONAL FINANCE STATEMENTS

Personal finance statements on file with the state ethics commission do not list a $699 gift from Potashnik or Southwest Housing in April 2002, nor are any other gifts or income from him listed in Hodge's 2003, 2004 or 2005 reports.

Tim Sorrells, Deputy Counsel of the Texas Ethics Commission says state law provides for misdemeanor criminal charges and civil fines if a lawmaker knowingly and willfully fails to file an accurate financial statement.

The Texas' Ethics Code also prohibits lawmakers from "accepting or soliciting any gift, favor, or service that might reasonably tend to influence the officer or employee in the discharge of official duties." The law's felony criminal provisions enforcing the state ethics code are overseen by the Travis County District Attorney's Office.

Former U.S. District Judge Joe Kendall presided over the trial and bribery conviction of former Dallas City Councilmember Al Lipscomb in 2000. Today, he is a criminal defense attorney. Presented with CBS 11's findings, Kendall said prosecutors could pursue violations of federal and state laws against Hodge if they had reason to believe she accepted something of value before or after providing a benefit to the giver.

He said authorities should be particularly interested in Hodge's rent arrangement if she failed to report any of the benefits she received from Potashnik on her income tax reports or state personal finance reports - and for ending the arrangement after CBS 11's initial reports.

Kendall also pointed to what he considered as another red flag for investigators: Hodge's televised reaction when CBS-11 asked her directly September whether she paid all of her own rent. Hodge, who is almost never at a loss for words, stared blankly for 21 seconds without speaking, then declined to answer.

"The deer-in-the-headlight look was not good. It would indicate that the person does not have a legitimate answer," Kendall said. "I saw that as another thing that the FBI is going to be interested in because they all have TV sets as well."

A RECORD OF HELPING DEVELOPER WHO PAID THE RENT

In the years and months before and after moving into Potashnik's complex, Hodge used her position as a state legislator to provide important political support for his building proposals. Informally at the time, support from local and state lawmakers was considered an indispensable prerequisite for developers to win taxpayer subsidies from the Texas Department of Housing and Community Affairs board. Conversely, a letter of opposition from a state legislator could delay or even kill a multi-million-dollar affordable housing project.

In fact, the political support of area elected leaders was considered by the housing board so important to its process of distributing tax-credit subsidies that requiring such support was codified as a law in 2003. Thus, letters of support from political leaders took on real currency in a point-system evaluation process that had developers like Potashnik straining for every possible point to meet minimum the housing board requirements. So a letter of strong support from Hodge had real value, while a letter of opposition, or any opposition from her, could have proved devastating.

Hodge filed formal letters of support for Potashnik's developments, and appeared in her legislator role at housing board hearings to speak in favor of Southwest's proposed projects from 2000 through this year, including the one in which she would later live. In two instances, she offered support for Potashnik developments that her own constituents strongly opposed.

Just five months before she moved into her unit, in November 2001, Hodge appeared at a housing board hearing to testify on behalf of one such Potashnik development that her own constituents strongly opposed, a project known then only as "Hillside." The name was later changed to Rosemont at Pemberton Hill. In that November 14, 2001 appearance, she sang Potashnik's praises in support of it. She also spoke in favor of a second Potashnik project on the table that day.

Residents near the Hillside project had furiously opposed the proposal, citing fears that Potashnik may let the low-income housing deteriorate and become crime-ridden. But Hodge asked the housing board to disregard those concerns.

"I have been able to see that these people are taking state dollars and doing exactly what it is we want them to do," Hodge testified after being introduced as a state representative. "Had that not been the case, I guarantee you I would not be sitting here this morning before you asking your strong consideration to approve these two projects."

Potashnik also attended the November 14, 2001 hearing and testified. He spoke highly of Hodge, calling her someone "who we're very fortunate to have as our state representative in Dallas," and calling her "a big supporter of affordable housing."

Five months later, in April 2003, she was moving in to his Arlington Park apartments, for which Hodge also supported in testimony before the state housing board when it was still in the proposal stages. Some residents in the Arlington Park area of Dallas had expressed opposition to the low-income housing project Hodge would later call home.

For a June 2000 TDHCA hearing on the Arlington Park complex, Hodge provided refreshments to the board and later spoke after introducing herself by her State Representative title and saying she was speaking on behalf of constituents.

"Arlington Park is a neighborhood that is an older neighborhood with little new economic development," she testified. "What this project will do, it will bring affordable housing to the community. It will bring additional people to the area. It will give us an opportunity in that area to seek economic development growth. I ask your support for that project."

Se Gwen Tyler, a neighborhood activist, said she would be deeply disappointed to learn that Hodge might have gone against her constituents in exchange for free rent.

"It wouldn't be fair, and that's a fact," she said in a recent interview. "It just wouldn't be fair, not fair to the people."

Hodge supported Potashnik's Southwest Housing after she moved in and began taking rent money from him too. For instance, she provided a letter of support in 2004 for the proposed Cherrycrest Villas in the 2500 block of John West Road. Potashnik's wife, Cheryl, is listed as one of the development's contacts, state housing records show. Hodge provided a letter of support to the Potashniks on Jan. 28 of this year for Southwest Housing's Fairway Crossing development in East Dallas.

But an unknown state housing bureaucrat wrote by hand in the margin of her Fairway Crossing letter, the project "not in her district. No points, just enter."

Hodge's attorney, Mike Snipes, said his client has a well-known history of supporting affordable housing for many developers - not just Potashnik - and that she routinely provided letters of support and testimony at housing board hearings for them.

"She was trying to do numerous housing developments throughout South Dallas to make it where poor people didn't have to live in slums anymore. That's what her objective was," Snipes said.

Records show that Hodge did indeed write letters and offer testimony in support of other affordable housing developers besides Potashnik. But public records show that at no time did she ever live in any of the apartment complexes she helped them build, and Hodge would not have needed rent payments from these other developers. Hodge has owned her own $200,000 home in Dallas for many years.

FEELING PRESSURE TO MOVE BUT UNDER BURDEN OF DEBT

Before she moved into her new apartment in April 2002, Hodge was under pressure to find a new residence as a result of a legislative redistricting that left her $200,000 home – with its mortgage - outside the new boundaries of District 100. She was up for re-election in 2002, and state rules require candidates to live within the district they will represent. The Arlington Park apartment complex was in her newly drawn district.

If she wanted to maintain her central Dallas home while running for reelection, Hodge would have to take on the burden of an additional mortgage or rent for new living arrangements inside the district.

Based on her financial disclosure records and other records, two house payments would seemingly burden Hodge's personal finances as she ran for reelection. Hodge is a retired Southwestern Bell pensioner who earns about $7,200 a year in state legislator salary, plus $128 a day when in session or on official business.

But Hodge also has struggled under a bankruptcy and the burden of two tax liens totaling $145,000.

Hodge's apartment and political efforts on behalf of Potashnik's Southwest Housing are not her only ties to him. Until recently, Rep. Hodge served on the board of a non-profit social services organization seeded by Potashnik's company. Subsidy rules for tax-credit projects require that developers provide a social services component to future tenants.

The solution for Potashnik's company was to create a non-profit called Housing Services of Texas, which provides programs for children and seniors at 35 Potashnik properties, including the one Rep. Hodge lives in.

Hodge served on the non-profit's board of directors until this year. Her name suddenly disappeared from the Housing Services of Texas website after CBS-11 began asking questions about the lawmaker's ties to Potashnik.

Marty Mascari, executive director for Housing Services of Texas, said board members, including Hodge, were never compensated in any way.

Mascari said Hodge left the board recently because she was too busy to serve effectively.

Asked how Hodge helped the non-profit as a board member, Mascari paused and with a slight chuckle said she helped "bring about what you need for the organization. We had to do fundraising and different things."