What started out as an idealistic dream of employing inner-city youths to build a sanctuary for teen mothers and their children in Five Points has turned into an ugly legal battle pitting a grassroots activist against a multinational corporation.
Schuller House was to be the centerpiece of Schuller International's "community responsibility" corporate-giving campaign. (Schuller is the world's largest fiberglass manufacturer, and a wholly owned subsidiary of former asbestos giant Manville Corporation.) But after sinking $220,000 of corporate and employee donations into the renovation project, Schuller is now refusing to contribute further and is suing in Denver District Court to stop the project's owner and organizer--Aspen-based community activist John Reid--from selling the unfinished, financially strapped complex.
Schuller alleges Reid was planning to profit from their charitable donations. Reid fires back that Schuller was trying to squeeze him and his not-for-profit company, the Urban Living Center (ULC), out of the picture so that the giant company could have the project all to itself. Caught in the middle are the 37 neighborhood teens in the Job Corps program who were helping to build the house; they've now been laid off. Also ensnared are the hundreds of Schuller employees who donated time and money to the project, and six single teen mothers who were slated to move into the complex last February.
"It's a crock," says an angry Reid when reached by phone at the other not-for-profit he runs in Aspen. "John Reid didn't screw up. Schuller did. I went into a community in Denver with my own savings and purchased a hundred-year-old row house. As a result of some of my work here [at the Aspen Grassroots Experience], I knew some teens were getting pregnant and then had no safe place to live and continue getting education or job training. I purchased that row house with the vision that someday we could provide that." Reid's vision included six two-bedroom apartments, each complete with its own kitchen and full bath, and one additional one-bedroom unit equipped to accommodate a disabled person.
Reid put $10,000 down and financed the rest of the $60,000 complex at Humboldt and East 25th Avenue using his own name on the loan. A Schuller employee, Joni Baird, heard about the project and got the company on board. "We were looking for something to rally around as a giving project," says Schuller spokeswoman Sharon Sweet. "And this project had so much appeal. First there was the involvement of neighborhood youth in the construction. The kids would work in conjunction with professional help and learn building skills. And then there was the actual building--it really tied in with our product--and then there was the final result, the home for teen mothers."
The project had so much appeal, in fact, that Schuller wanted the house named after the company. Reid agreed to call the complex "Schuller House at the Urban Living Center." That was in the early summer of 1994. Immediately, Schuller began arranging with the United Way to collect money for Schuller House, even though neither Schuller House nor the Urban Living Center were United Way agencies. Schuller employees started volunteering their time on weekends to help with cleanup and construction. Reid obtained a $50,000 grant from the Governor's Youth Alternative Energy Program to help fund the youth salaries. In a June press release Schuller proudly announced the project and its support of it.
It was all downhill from there.
Schuller now says it was never the company's project to begin with. "We were just one contributor," insists Sweet. "It was [Reid's] project. We never said we were going to pay for it, or that we'd make it happen regardless of cost."
To which Reid replies, "Bullshit. This was their project through and through. So long as the media attention was rolling in, guess who was in front of the cameras? Guess who got a banner made that said `Schuller House?'"
A July 1994 letter from Schuller's Rick Christjansen, the company's 1994 United Way campaign coordinator, indicated that Schuller considered itself "partnered" with Reid's Urban Living Center, promising corporate matching dollars, building materials and volunteers in exchange for naming the house after the company. Two Schuller middle managers--Pam Best and Steve Perry--and Rick Christjansen's wife, Arlene, were brought on as voting members on the ULC board of directors; Joni Baird served as a "group support guest" member.
But the problems started early. Schuller felt the $50,000 grant should have been enough for the youths' salaries. But Reid says that with kids working full-time through the summer at $6.50 an hour, and then fifteen to twenty hours a week after school started, the $50,000 ran out fast. "The grant only lasted six months," Reid says. "We had a total of 37 kids at different times. Good kids. Hardworking kids. Our main priority should've been to keep these kids on board no matter what. Schuller didn't agree."
In fact, Reid says, he had a number of arguments with Baird about it. "She wanted me to lay them off," Reid says. Instead, Reid started paying them out of his own pocket.
Minutes from ULC/Schuller House board meetings early in the project indicate that Schuller employees, including Baird, Perry, Rick Christjansen, sometimes Arlene Christjansen, and even corporate spokeswoman Sharon Sweet participated in board meetings at which nearly every aspect of the project was discussed. At those meetings, it was decided to hire a general contractor to oversee the construction, commission an architect to review the renovation, and schedule volunteers.
Reid contends that it was because of Schuller's intimate involvement that a power struggle ensued. "Joni and I butted heads," he says. "It was like she said `It's my way, John Reid, or guess what, it's the highway.' She said, `Not only will I affect your ability to get funds from Schuller, I'll affect your ability to get funds from other sources.'"
Last February, Denver architect Howard Kent, after meeting with Reid, Schuller's Steve Perry and contractor Jim Bramley (whom Schuller hired and Reid later fired), reported that construction costs could run anywhere from $390,000 to $600,000, depending on donations of labor and materials--a figure far above the original estimate of $285,000. Not long afterward, Schuller began pulling back.
In a letter dated February 23, 1995--ten months after Schuller initially signed on to the project and began giving money--Perry wrote Reid "to spell out the commitment" of the company, saying Schuller would give up to $100,000, in addition to the $75,000 it had already donated. Furthermore, the letter stated, Reid could use none of the money to pay youth workers.
"One of the things I called Schuller on," says Reid, "is why in the friggin' world are you guys involved in a youth project when you don't want to pay kids? Joni would bring the media over constantly and the kids would say to me, `They don't want to pay our salary. Why should we start smiling for the cameras for them?'"
Schuller's spokeswoman Sweet takes issue with Reid's interpretation. "John Reid had gotten a $50,000 grant from the state for the youth salaries," she says. "So we were saying, `This money is for the construction materials that you're not getting funded by the state.'" And she says Schuller never sought press coverage for the venture. "I specifically avoided publicity on Schuller House," says Sweet. "We had the one splash, but then we stayed quiet. Frankly, I wanted to see the project finished first because I had some nervousness about it."
Work continued through the spring of 1995. While Schuller House started shaping up, relations between Schuller and Reid deteriorated rapidly. At one point Reid asked a facilitator who led discussion groups for the Aspen Grassroots Experience to work with the board to try to mend fences. "It worked, but only for about two months," he says. "I paid for him to come down here and work with us all because I wanted us to get aligned, to carry this through." But by summer the rift had widened.
"It's not clear that the board had full information, or that the Schuller people had access to all board meetings, especially after things got so...tense in the summer of this year," Sweet says. When told by Westword that the architect foresaw spending as much as $600,000 on the renovation, she replies, "How much would you pay for some row houses in the middle of Five Points? If we wanted to spend $600,000, we would've spent it in Cherry Creek."
Reid says that he didn't have any secret meetings, and that even when the ULC's executive committee (which has no Schuller employees on it) met, minutes were always distributed later. He contends that Baird and Perry simply didn't keep their superiors at Schuller informed about how much the project was going to cost.
Last August 9, the crisis finally came to a head. With Reid and his project director, Robert Anderson, out of town, the board-members from Schuller shut down the project, laid off the youth workers and changed the check-signing privileges on the construction accounts (which were overdrawn at the time).
Five days later, the ULC board gathered for a final meeting. According to minutes from that meeting, the people from Schuller told the other boardmembers there would be no more money coming from Schuller. In light of mounting debt--which was expected to grow over the next several months and already exceeded $58,000, not counting the cost of the property or the back pay that Reid said he was due--it was suggested that Reid look for a buyer. The board directed Reid to approach two non-profits, NorthEast Denver Housing and Family Star.
Reid says he wanted to hook up with NorthEast Denver Housing. "But Schuller's stipulation was that [the Urban Living Center] fold," he says. "Then, when the new non-profit had the property, Schuller would fund it again. They just wanted me out."
Which Reid says he refused to consider. "I had a vision," he says. "I had invested my own money, a year and a half of my own time, and now they wanted me out." So Reid says he broke off negotiations with NorthEast Denver Housing and hired RM Ventures, a for-profit real estate development firm, to find him a non-profit in the area willing to take on the project.
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But Schuller caught wind of the sale and moved to stop it. "We called and called and couldn't reach Mr. Reid. So we exercised the only option left to us," Sweet says. The company sued to block the sale. "We put $200,000 into that house, and for him to sell it to RM Ventures, a for-profit company, and make a profit wasn't our intention." The company filed a complaint in Denver District Court on November 13 charging Reid with commingling personal and ULC funds, exceeding his authority, failing to turn the property over to the ULC when he said he would, and breaking an oral contract to sell the property to NorthEast Denver Housing.
Reid insists he wouldn't have made a profit from the sale. He notes that he used his own money for the kids' salaries because Schuller wouldn't, and adds that there never was an oral contract to sell the property to NorthEast Denver Housing. "I'm just trying to cover my debt," he says.
But Sweet counters, "We put in $200,000 that presumably went into the property. If he's going to sell the property at market value, it just stands to reason that he was looking to make a profit on Schuller's donation. It doesn't take an MBA to figure that out."
Schuller representatives and Reid's attorney, David S. Oppenheim, are now in negotiations trying to settle the suit. According to Sweet, "If they don't settle in the next two weeks, they probably won't.