Habitat for Humanity Shasta Cascade and its sister organization havestopped all building even as the North State'shousing problems escalate, instead spending almost a third of their combined budget on the CEO's salary and much of the remainder on a variety of programs in Africa, the Record Searchlight has found.
Meanwhile, housing construction has begun to recover in the region —for those who can pay. Prices are back on an upward slope. But waitlists are above 1,000 for affordable rentals, and the last time a home was built in Redding that a low-income person could afford to buy was in 2014, according to city records.
Habitat for Humanity Shasta Cascade has built nothing since 2011 when it moved two families into new homes in Shasta Lake.
Innovations Housing, a second organization Habitat president and CEO Jim Koenigsaecker launchedin 2007 to develop apartments, prefabricated modulars and compact single-family homes at a faster rate than the one or two homes a year he could raise under Habitat's self-help home building model,also has not built in about six years. At its founding, Koenigsaecker said Innovations also established a mission of service in Africa.
Koenigsaecker says the Habitat board split the corporation into three separate entities in 2007 to expand charitable activities. Innovations Housing was established to pursue projects that did not fit into Habitat's mission and Building Innovations Group, the for-profit subsidiary, was set up for licensing, insurance, liability and tax purposes.
In the most recent public financial disclosures available, for fiscal year 2016, 97percent of the combined revenues of the two nonprofits was attributed to Innovations Housing. Innovations pays all of Koenigsaecker's salary.
Koenigsaecker, 47, left the newspaper industry in 2002 to run Habitat.Today, he is largely focused on newcauses in Africa, including traveling to Kenya to trainpolice reservists and rangers in combat techniques to fight wildlife poachers.
Koenigsaecker says his Habitat chapter-related duties are primarily office work, such as receiving mortgage payments, paying property taxes and property insurance premiums and preparing various governmental reports.
As for Innovations Housing, Koenigsaeckerdivides his time between the maintenance of the homes already built in Shasta County and the projects in east Africa.
At $100,000 a year, his pay represents 28percent of the two nonprofits'2016 expenditures, according to W-2 forms he provided and IRS tax forms for the charity.
In addition to the shift away from providing new housing in local communities, amonths-long investigation by the Record Searchlight found:
- Despite promoting an array of programs, Innovations Housing invests only about a third of its budget directly into charitable work, according to its three most recent federal tax filings, known as Form 990s.
- Koenigsaeckeris among the highest paid of North State nonprofit CEOs who serve economically disadvantaged people, according to a comparative analysis of 2015 tax filings.His compensation is well above the national median for executives who run nonprofits with approximately $250,000 in revenue, but is close to the California median for such organizations.
- A leading charity expert who reviewed the 2016 and prior years' reports at the newspaper's requestsaid Innovations Housing lacks transparency in how it reports some fundraising activities, program expenses in Africa and executive compensation.
- Although Koenigsaecker insists the organizations cannot build in the current environment, numerous other small nonprofits, including other North State Habitat chapters, are doing just that.
- Koenigsaecker, while expressing no specific plansto focus on housing in the region, hassaid he has no plans to relinquish the Habitat chapter to anyone else, although he also said no one has stepped up.
- Habitat for Humanity International recently stopped listing the Shasta Cascade chapter among California affiliates. A spokesman for the international organization responded to requests for explanation or comment by referring the newspaper back to Koenigsaecker.
The local Habitat chapter's most recent tax filings show little fundraising activity for future projects.The nonprofit reported less than $10,000 in revenue in fiscal years 2013, 2015 and 2016. What money it did raise for the past three years mostly went to administrative costs.
Although Innovations Housing raises more than $200,000 each year from a raffle started by the Habitat chapter in 2001, overhead costs consume about two-thirds of the budget. In fiscal year 2016, the nonprofit reported a loss of nearly $86,000 after paying Koenigsaecker's salary.
That financial situation stands in sharp contrast to 2007, when theHabitatchapter spent $1.2million to build seven homes and rebuild a cottage in Shasta County and spent just under $63,000 on administration costs.
Koenigsaecker defended the work of Innovations Housing over the past decade, which coincided withthe worst economic downturn in recent history.
The organization reluctantly had to put many of its plans on hold, he said, and then was dealt another blow with the loss ofredevelopment agencies in 2011, one of the key funding sources for affordable housing in California.
Koenigsaeckerstressed the obstacles small organizations like his face to build affordable homes. Unless new funding sources open up, there are no plans to take on new construction, he said. Before redevelopment was abolished, its funds providedlocal financing for about a dozen homes the Habitat Shasta Cascade chapter built in Redding.
"They have not yet figured out a way to fund affordable housing. We had to go from building projects to maintaining projects because the funding is not there," he said.
All told, Koenigsaeker said, Innovations Housing has developed and maintained 19 projects, including two community centers in Nairobi, Kenya, seven affordable homes in the North State, scholarships to about 200 students who attend a school in Kyebando, Uganda, and the mixed-usebuilding on Pine Street that houses the Coffee Bar on the first floor and two apartments on the second floor.
That two-story building, built in 2009 and partially funded by raffle proceeds, helped revitalize a part of downtown that needed the boost. In an interview, Koenigsaecker called it "a problem spot and people were doing bad things." Since the coffee shop opened, it has become a gathering place for residents while also providing employment to eight people.
The board, Koenigsaeckersaid, also encourages him to be active in the community. He is the co-founder of the political action committee Citizens for SmartGrowthand the Redding Affordable Housing Loan Fund. He completed the Leadership Redding program, served on its steering committee and donates $1,000 annually through Innovations Housing.
Regarding his new effortto protect wildlife, he said his job as CEOis to implement the board's vision.
"Our board has a passion for protecting wild places and animals. Our founding mission statement was 'To protect and foster natural and human habitats forliving, working and playing in Northern California and East Africa.'"
Koenigsaecker also said the board had changed course because of public criticism.
"It seemed to me that we were being criticized for not doing enough in Redding when we had redirected our efforts in part because we had previously been criticized — in certain circles including in the newspaper — for trying to do too much in Redding," he said.
Koeningsaecker is aformer Record Searchlight assistant managing editor of photos and design. He was named executive director of the Habitat chapter in 2002, after spending free time volunteering there.Koenigsaecker said he was driven in part by remorse about the impact of his own journalism, which he said helped propel the city to close down troubled residential motels but also cost their residents a place to live.
In numerous emails since August 2017, both in direct response to questions and unsolicited, Koenigsaecker expressed alarm at the newspaper's interest in how Innovations Housing spends its money and time. He warned that the organization is represented by international law firm BakerMcKenzie and can bring a libel claim in Great Britain, Kenya and Uganda, where laws, he said,are more favorable to plaintiffs.
Brad Eltin from Baker McKenzie said in an email that the law firm "handled a few small matters for the organization aboutfive years ago."
"Your reporting has already caused me and several of the other board members significant mental anguish and emotional distress," he wrote in one of the most recent. "It is also reasonable to expect that publication of your story will cause further harm to our reputations and future economic opportunities. But, worst of all, your continued harassment has distracted us from our important work."
The Shasta Cascade chapter has four directors on its board and Innovations Housing has five.
David Twyman of Twyman Plumbing isa longtime directoron both the Habitat chapter and Innovations Housing boards. In an email, he said he was one of the people who hired Koenigsaecker 16 years ago and expressed the board's support for him.
"Jim is a good man who works hard and has the full support of the board and our sympathy for all the flak he takes as the face of our organization. Another negative article in the newspaper will not change any of those things," Twyman wrote.
Terry Topolski, an architect and the only other longtime director who serves on both boards, declined to comment and referred questions to Koenigsaecker, who he said speaks for the organizations.
The Record Searchlight also sought comment from Habitat for Humanity International about its expectations for affiliates. But Bryan Thomas, a Habitat spokesman at the organization's Atlanta headquarters, responded after repeated requests for comment with an e-mail:
"I believe you have been in touch with Jim Koenigsaecker at Shasta Cascade. He’s best suited to respond to your questions."
Locally, most of Innovations Housing's services revolve around downtown, the Parkview Avenue area behind City Hall and Clover Creek Preserve in east Redding.
It rents the two market-rate apartments on Pine Street and the cottage at 4014 Saffron Way in the preserve. Koenigsacker said these units house low-income people at affordable rent prices. One of those apartments in 2013 was advertised on Craigslist as a 964-square-foot, two-bedroom "luxury loft" that rents for $1,100 a month.
The three most recent tax filings show Innovations Housing reported expenses of about $26,000 in low-income rental annually.
The Coffee Bartrains eight low-income people and pays $16 an hour on average, Koenigsaecker has said. It operates under Innovations Housing's for-profit subsidiary and all its after-tax profits go to Innovations Housing. He estimated that amount to be about $9,500 a year.
The raffle keeps Innovations Housing going financially.
Almost $9 of every $10 the organization reported in revenue in fiscal years 2015 and 2016 were tied to the annual raffle, according to IRS filings. The raffle winner can accept an RV or$250,000 in cash.
The local Habitat chapter started the raffle to fund home construction. The fundraiser passed to Innovations Housing in 2008. Last year, it made$578,700 on ticket sales, according to a raffle report submitted in September to the California Department of Justice.
The winner, Reuben Bigger, 74, of Pahrump, Nevada, received $250,000.
In marketing emails, Innovations Housing says the proceeds from its raffle enable it to continue to work on community projects around the world. But the Nonprofit Raffle Reports for the past five years to the DOJ say the proceeds are used for "construction and management of community projects including affordable housing."
Just over a decade ago, the housing market crashed, dealing a devastating blow to the local economy and forcing an unprecedented number of homeowners into foreclosure. But the drop in real estate prices had one positive effect: It reversed the price inflation that had been fueling an affordability problem through the early 2000s.
For buyers who could stay in the market and hadn't lost out in foreclosure, homes were relatively cheap.As Koenigsaecker put itin 2012— the yearInnovations Housing submitted a proposal to run Castle Crags State Park because it was in danger of closing due to state budget cuts — the Redding area didn't need new homes.
MORE:Two residents sue Shasta County to tackle housing crisis
The market has since rebounded.
Homes in Redding's largest new subdivision, Salt Creek Heights, start at $471,000. But developer Jeb Allen has said some salesexceeded $700,000.
The city's blueprint for housing,the Consolidated Plan for 2015 to 2019, shows 86 percent of low-income homeowners spend more than 50 percent of their income on housing expenses.
MORE:Redding eyes partnerships to add affordable housing
The rental market also has gotten more expensive. Among working poor households who rent, nearly three in four live in overcrowded, substandard housing in Redding, according to the Consolidated Plan.
The Shasta County Housing Authority in 2016 had about 2,000 people on its waitlist for rental assistance and is closed to new applications. In Redding, the waitlist ofabout 1,015 local applicants is still open.
Habitat chapters are autonomous nonprofit groups directed by their boards. Their projects are based on the needs they see in their region, such as constructing homes, apartments or undertaking rehabilitation work.
Habitat homeowners work with volunteers to build their houses while being mentored onhomeownership responsibilities. Habitat requires chapters to offer interest-free mortgages to home buyers.
Koenigsaecker, however, expressed concerns about Habitat. In a March 22 email he sent to community activist and retired Turtle Bay CEOJudy Salter, which he then forwarded to the Record Searchlight, he said in his 16 years working with Habitathe has learned its model has "serious limitations."
"On average it takes more time and money for Habitat to construct a house using volunteers than for a similar market-rate house to be constructed by a for-profit builder. More importantly, decent, existing houses in our community usually sell for less than the cost of new construction," he wrote.
Habitat certainly isn't the only local organization working to provide housing.
For example, Northern Valley Catholic Social Service last May opened the Woodlands, a 54-unit gated community on Polk Street in Redding for families trying to make ends meet and residents with a mental illness.
Redding-based Community Revitalization and Development Corp. develops low-income housing throughout the state. In Redding, it is working on projects on Veda Street near the Good News Rescue Mission and Azalea Avenue off Hilltop Drive.
Its president, Dave Rutledge, confirms there's little local funding for affordable housing, and that's especially problematic for large developments.
The city of Redding has a pool of money to allocate in support of housing projects, and it has committed all of it through 2020 to the K2 Development Co.'s mixed-use proposal in downtown, Redding Housing Manager SteveBade said. The four-story building will have 56 of its 82 units designated affordable housing.
"We are trying to scrape and claw what we can," Bade said.
Cathy Taylor said she began to ask about the local Habitat affiliate shortly after she founded the California Heritage YouthBuild Academy in 2012. The charter schoolis a campus of YouthBuild USA, a pre-apprenticeship program funded by the U.S. Department of Labor.
In most of California and the rest of the country, Habitatand YouthBuild programs work together to provide affordable housing. The construction schedule is slowed down to be at the right pacefor amateurs.
Taylor and her staff want to put more students to work and tried reaching out to Habitat Shasta Cascade. Over the past six years, she said, they have sent emails, left voicemails and visited Koenigsaecker's downtown office to discuss working together. She and school Principal Lane Carlson even left a note onKoenigsaecker's office door, she said. But, she said, they have yet to get a response.
Koenigsaecker said he was unaware the school is trying to contact him and is open to a meeting. But, he said by email,"since we do not have the funding to build new affordable housing at this time, we are not sure why we would need to partner with them. And if they have the funding to build new affordable housing, we do not understand why they would need us."
Asked why he holds on to the chapter if he no longer believes in the Habitat model and he does not see a more affordable way to build through the organization, Koenigsaecker wrote of the legal, financial and ethicalresponsibilities to the Habitat mortgages originated by the chapter and related governmental reporting requirements.
"No other individual or organization has volunteered to assume those responsibilities and liabilities," he said.
Without Habitat, Taylor said, the school cannot secure enough jobs in Shasta County to enroll more students.
"We continue to build partnerships within the community," she said, noting efforts to workthrough the Shasta Builders' Exchange, attendance ofcommunity meetings on housing and YouthBuild's own personal connections. "But I think Habitat is the main partnership."
In the past few years, Innovations Housing turned more of its attention to projects in east Africa. That work is part of its founding mission.
One of the original board members of Innovations Housing, Jim Warnemuende, said around2013he came tohis fellow board members and Koenigsaecker to ask for financial assistance for a school his wife, Carolyn, had started near Kampala, Uganda, about a decade before. The God is Good Preparatory School is a K-8 school once supported by the Water and Stone Center in Mount Shasta, a nonprofit run by John Cunningham. Cunningham said he handed over the support for the school to Innovations Housing about five years ago. He served on the Innovations Housing board of directors from 2014 to 2015.
Today, Koenigsaecker said Innovations Housing provides $20,000 in scholarships to about 200 students at the school.
"It was a great fit because Jim Koenigsaecker, he has an affinity for Africa and he goes over there,” Cunningham said. “That was one of the things we did;we sent somebody there for boots on the ground.”
Koenigsaecker said he fell in love with Africa on his first trip because it was like an Ernest Hemingway novel. He wrote in an email aboutthe wildlife killed by heavily armed poachers and urban sprawl that have been changing that.
The Innovations Housing board last year started an anti-poaching pilot program in Kenya and Koenigsaecker traveledthere last Julyto train Kenya police reservists and Kenya Wildlife Service rangers to take up arms against poachers. Koenigsaecker said he worked with the Kenyans on physical fitness, rifle maintenance, marksmanship and tactics. Since leaving, he said, he has continued to "send messages to the rangers on their mobile phones for daily workouts, drills and moral support."
Asked about his qualifications, he wrote in part, "let’s just say that I have lived an adventurous life. And at 47 I can still run a mile in under 6 minutes, deadlift 420 pounds, squat 320 pounds and bench press 240 pounds. I can also put 15 rounds in a tight group at 25 yards with a pistol from the holster in under 5 seconds. And I am equally proficient with a rifle out to 500 yards, a blade or hand-to-hand."
Additionally, Innovations Housing is advocating for theKenyan and U.S. governments to put more effort into combating poaching and habitat destruction, Koenigsaecker said.
“For a few thousand dollars a year, we can have a real impact on this situation in East Africa, while it takes hundreds of thousands of dollars to build just one home in Redding for one-low income family,” he said.
At the Record Searchlight's request, the president and founder of a Chicago-based organization that monitors and ranks charities reviewed the 2016 tax filings for both Innovations Housing and Habitat for Humanity Shasta Cascade. At the time of that review, the 2017 figures had not yet been publicly posted.
Daniel Borochoff of CharityWatchraised concerns about transparency in IRS-mandated disclosures, including the Coffee Bar's sales revenue,executive compensation and donation expenses.
In 2016, Innovations Housing spent less than 30 percent of its $344,778budget on program services. The previous year, the share was 38 percent and in 2014, 22 percent.
Program expenses are those that achieve a nonprofit's mission. “The better groups are able to get 70 percent into the programs,” Borochoff said.
He also was unable to determine what Innovations Housing earns at the coffee shop, how much it sets aside for the student scholarships to the school in Ugandaor what Koenigsaecker’s salary was, because it was reported as zero on the compensation schedule.
The local Habitat chapter and Innovations Housing filed their Form 990s for fiscal year 2017 in November, about three months after the Record Searchlight began to inquire about the nonprofit’s expenses. That most recent Innovations filing, now available through GuideStar.org, contains more detail than the years immediately prior.
It shows Koenigsaecker’s salary as $100,000.
A checklist on the IRS Form 990 requires nonprofits to note if they provide financial aid of more than $5,000 to an foreign recipient. For the first time since 2012,Innovations on the 2017 form checked the box "yes." That triggers the requirement for additional information. On that other schedule, Innovations reported student scholarship expenses in sub-Saharan Africa as $20,180, but did not name the school.
Tuition expenses could not be identified in previous filings, although Koenigsaecker said the organization took over the scholarships in Uganda in 2013.
Nonprofit attorney Paul Dostart, a partner at Dostart Hannink & Coveney in La Jolla who also reviewed the 2016 federal tax filing, was left with unanswered questions.
Like CharityWatch, he questioned the lack of compensation for Koenigsaecker. He asked why Innovations Housing appears to have reported its raffle proceeds in a line that corresponds to its charitable purposes, such as low-income housing. He also noted the gross receipts amount from theraffle reported to the IRS and California Department of Justice are different.
“When you have questions of this type raised, it is the duty of the board to conduct an investigation," Dostart said."Typically, they retain somebody outside of the organization because frankly the board may be implicated in lax oversight, not having done its job.”
Board of directors member Warnemuende emailed to clarify the boardin 2006 set Koenigsaecker's salary at $100,000.
In fiscal year 2015, his salary was reported to the IRS as $125,000. But for the tax years of 2015, 2016 and 2017, personal W-2 forms Koenigsaecker provided show he was paid just over $100,000 each year.
Acompensation analysis by economist Linda Lampkin, the former director of the National Center for Charitable Statistics at the Urban Institute, shows the median pay nationally for an executive who runs a housing- and shelter-related nonprofit generating revenues of $250,000 is $74,767. Lampkin's analysis shows Koenigsaecker's salary as on par with the California median, which includes high-cost regions such as the Bay Area and Southern California.
The data comes from ERI Economic Research Institute.
Nonprofit boards have wide discretion in what they pay their executives. Innovations Housing's IRS filings state it consults charity benchmarks in setting Koenigsaecker's salary.
In contrast to Habitat Shasta Cascade, three other Habitat chapters in the North State have found funding to keep building. They lean ongovernment agencies for land. They turn to trust funds, fundraisers, corporate donors, banks, volunteers and any grants they can scoop up for construction.
The Yuba/Sutter County affiliate recently broke ground on a 36-home subdivision paid for in partby a $6.8 million grant from the U.S. Department of Agriculture. The homes will cost from $120,000 to $140,000 to build, with savings coming from volunteer labor.
“Every grant that we get is that feeling … we are going to do amazing things,” said Chief Administrative Officer Morgane Brown. “It’s like wow. It’s an incredible opportunity.”
MORE:Affordable housing prospects looking sunnier in Redding
In Butte County, Habitatbuilds about two homes a year. In Siskiyou County, the all-volunteer organization threw itself into helping Weed rebuild from the Boles Fire, which in 2014 destroyed 150 homes. Volunteers finished their first home last year, are working on two more homes this year and want to build another in 2019.
Butte County Habitat for Humanity spent more than $500,000 in fiscal year 2016.
Its executive director, Nicole Bateman, said it’s taken her Habitat affiliate 25 years to get 30 homes built.
“But we do feel like we’re making a little dent in neighborhoods,” she said. “It’s one house at a time, one family at a time.”
