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City officials Tuesday froze funds to Jubilee Restoration Inc., its third largest non-profit housing developer, after reports submitted by the organization in response to a federal probe revealed that the organization had diverted federal funds. 

In a Nov. 30 letter addressed to Jubilee, Berkeley Housing Director Steve Barton wrote that the organization had not refuted allegations from a Department of Housing and Urban Development (HUD) report that it had failed to fully implement a program for homeless youth and instead used federal funds to support other programs including its housing development business. 

“Indeed [Jubilee’s] response provides evidence that supports HUD’s charges and contradicts previous statements made to the city,” wrote Barton, who declined to comment for this article. 

HUD is expected to respond to Jubilee’s disclosure within the next two weeks. Acknowledging that the charges against Jubilee were grave, HUD spokesperson Larry Bush said that if HUD concludes there is a clear showing of wrongdoing, Jubilee could be barred from any federal funding. HUD froze all funding to Jubilee in October following its three-month investigation. 

Jubilee is the charitable arm of Berkeley’s Missionary Church of God in Christ, headed by Pastor Gordon W. Choyce Sr.  

Choyce, who also serves as Jubilee’s executive director, owns numerous properties in Berkeley and Oakland and has used local and federal funding to position Jubilee as a leading affordable housing developer. In addition to the youth drop-in center, Jubilee also runs a recovery center for released inmates, which isn’t funded by HUD. 

Jubilee officials did not reply to telephone calls this week, but it appeared that Jubilee has closed its drop-in center. 

Since April 2002 HUD had supplied Jubilee with an annual $121,633 grant to pay for three full-time counselors at the drop-in center, called the Jubispot. 

In the city’s letter, Barton questioned why, from April 2002 through June 2004, Jubilee billed HUD $19,780 for work done by Housing Project Manager Todd Harvey and $55,483 for work done by Deputy Director Gordon Choyce II, both of whom Jubilee stated in its contract with the city were fully dedicated to housing development. Former Jubilee Development Director Mia Medcalf confirmed to city officials that neither Choyce nor Harvey performed youth counseling during her tenure from 2002 through January 2004, Barton wrote. 

Barton was also concerned that Jubilee billed HUD $2,527 for Harvey in 2003, even though the city had contracted to pay Harvey’s entire $40,000 salary through separate funds given to the city by HUD. 

Adding that Jubilee had failed to document any youth counseling services provided by Harvey and Choyce II, Barton wrote that even if Jubilee managed to support claims that they had provided those services, “It would then be evidence that Jubilee misrepresented the work of the project managers...in its contracts with the city.” 

Barton also backed HUD’s assertion that Jubilee should not have billed all of Medcalf’s time to the federal grant which was supposed to go only for direct counseling services, not program development or fundraising. Although Jubilee had claimed that Medcalf was involved solely in supportive services, Barton said that directly contradicted Jubilee’s documentation of Medcalf’s time, the observations of the city’s contract monitor and Medcalf’s own statements. 

Among Medcalf’s job duties that were ineligible to be billed to the federal grant were donations coordination, newsletter development, community outreach, political events and city meetings. 

The city’s contribution to Jubilee’s homeless youth program in the past has been a $26,000 annual grant to pay for an outreach worker. Barton wrote that although Jubilee had claimed that the city grant would fund an outreach worker’s entire salary, from March 2003 through April 2004, Jubilee then billed the city and HUD for a portion of the outreach worker’s time. Between the two sources, the outreach worker was apparently paid $35,818, even though the position was budgeted at $25,400 and Jubilee could only document that the outreach worker worked between 27 and 30 hours a week, Barton wrote. 

The decision to freeze funds reverses a decision by the City Council last month to provide Jubilee with $13,000 to help the organization answer HUD’s allegations. Jubilee had not received any of the funding, Barton said, nor had it provided the city with a letter authorizing HUD to share its findings with the city, a condition for the city to release the funds. 

HUD began monitoring Jubilee earlier this year after receiving complaints about its operations, Bush said. He added that Jubilee will be required to repay HUD for any ineligible expenditures. 

Berkeley had assigned a contract monitor to oversee the functions of the city-funded outreach worker, but did not oversee the entire homeless youth program, Barton said.›