Shifting Foundation

Only 15 blocks long, Hyde Park Boulevard begins not as a boulevard at all but as a narrow lane, curling coyly out of Pacific Street just west of downtown and winding past an old three-story, faux-French townhouse where Clark Gable once stayed. The street has remained remarkably free of the boxy townhouse developments popping up all over Montrose; there are still plenty of front porches on Hyde Park, and people use them. Only after the street crosses Montrose do its curbs widen to admit a shady esplanade. A sign there commemorates the fact that this land once belonged to Republic of Texas president and frustrated poet Mirabeau B. Lamar.

After a brief commercial interlude -- a post office and a cozy Half Price Books -- Hyde Park circles into a gentle, quiet cul-de-sac where a white bungalow shyly hangs back behind grander houses built in the early part of the century by the city's lawyers and businessmen. Brick gateposts bracket a lanky curve of a driveway. A circular garden with a stone statue of the Virgin Mary is embedded in a smooth, green lawn. Rounding this cul-de-sac is a bit like swinging back to 1920, when Montrose was a carefully platted new settlement for the prosperous and the pioneering. The whole affair has the air of a well-kept secret, resembling an affluent private park with a small army of gardeners.

Only there are no servants here. In fact, the situation is not at all what you'd expect: Instead of housing the wealthy, this elegant, historic enclave provides a refuge where some of Houston's neediest can turn their lives around. Two Franciscan friars live in a yellow Victorian house that backs up to the Kolbe Project, a gray Victorian with a rainbow banner hanging from an upstairs porch. Here the friars operate a ministry for gays and lesbians and a home base for hospital visits to AIDS patients. In four other houses -- a red brick, a bungalow and the houses behind them -- two nuns run Wellsprings, a shelter for homeless and abused women. The next house on the cul-de-sac, a duplex, was until recently occupied by another group of Dominican sisters.

The Hyde Park enclave exists today by virtue of the Ryans, an Irish-Catholic family that for three decades lived in the yellow Victorian that now houses the friars. Over the past 20 years, the Burkitt Foundation, a private foundation run by the Ryans, bought up the Hyde Park homes and paid thousands of dollars to refurbish and maintain them. At the beginning of June, the Burkitt Foundation owned 11 properties in the Montrose area assessed at $2.6 million, all of them devoted free of charge to charitable use. In addition to the six on Hyde Park, the foundation owns two nearby houses on Commonwealth, which are occupied by the International Center for the Solution of Environmental Problems and the Houston Recovery Center, a residence for female former drug addicts. The Houston Area Women's Center recently vacated another Burkitt-owned house on Castle Court. Still another Burkitt property on Westheimer, the city's last bungalow-style firehouse, is used by neighborhood groups such as a nonprofit art gallery and the Neartown Association.

Yet while the Burkitt houses may mean the world to those who live in them, the ground they occupy is pay dirt to the many developers who have in recent years been remodeling Montrose. Contiguous lots have become hot properties for high-density housing -- Perry Homes alone has built almost 100 townhomes in Montrose during the past two years, and will soon complete another 32. The Hyde Park enclave escaped the boom only because the Burkitt Foundation stood in the way, its handful of deeds a barrier to massive change. Then, two months ago, the foundation went from preservationist to profiteer, offering up its properties for sale en masse and practically guaranteeing that much of what has made Hyde Park so special would soon be reduced to rubble.

In a city where neighborhood character has often met the wrecking ball and lost, people are just beginning to realize the long-term value of preservation. For example, it was only two years ago that a push began for Hyde Park to adopt deed restrictions. Since deed restrictions can limit a property's short-term value, the Burkitt Foundation, like a few other residential property owners along Hyde Park Boulevard, opted not to include its houses among those accepting the deed restrictions. Still, a nonprofit charitable organization such as the Burkitt Foundation was the last owner people in the neighborhood expected to cash in its chips.

That's why, when the foundation summoned Wellsprings co-founder Sister Rita Owen to a meeting in late May, she was shocked by what she heard. After all, the foundation's four houses made it Wellsprings's most crucial benefactor. The Dominicans, the order to which Sister Rita belongs, had just honored Cornelius O. Ryan, the Burkitt Foundation president, with the St. Martin de Porres award for outstanding Christian leadership. And Wellsprings seemed to be in God's good graces: The nuns were busily furnishing two cottages adjoining the Burkitt Foundation's land that the shelter had recently purchased. Accustomed to receiving help and encouragement from the Burkitt Foundation, Sister Rita anticipated only good news at the meeting. Instead, she was told that the Burkitt Foundation had decided to put all its Hyde Park properties up for sale. The 15 women living at Wellsprings had until the end of September to find themselves a new home.

As soon as the foundation put its properties on the market, real-estate agents were scrambling to put together bids for developers. A mere six days after they were listed, half of the houses -- all the contiguous ones around the Hyde Park cul-de-sac -- were under contract to be sold. Realtor Robert C. Ryan, one of six Ryan children, worked quickly: Perry Homes is already preparing the two large houses on Commonwealth for the wrecking ball, and real-estate sources say the Hyde Park enclave, most of which sold in one day to one agent, is under contract to apartment developer Jenard Gross.

Though nobody has questioned the foundation's legal right to sell its properties, some have wondered why it chose to do so now, and why so quickly. Since the Burkitt Foundation is a nonprofit trust designated for charitable purposes, the main goal of its directors is not to make money, but instead to give it away. And the directors argue that by selling, they'll have more money to disburse. But others have suggested that the uses the Hyde Park houses were being put to were perfectly in keeping with the foundation's mission, and the extra money won't make up for what's being lost.

In 1962, the childless Bess Burkitt Crane entrusted her considerable fortune to the law firm that had represented her railroad magnate father -- Kelley & Ryan. At Crane's behest, the firm set up a foundation that would annually distribute part of her money to charity. Kelley & Ryan oversaw the day-to-day operations of the foundation, managing its assets, screening grant proposals and answering requests for information. Current foundation directors say that Crane primarily intended to fund Catholic education and Catholic endeavors.

In 1967, lawyer R.H. Kelley passed away, and his son-in-law, Cornelius O. Ryan, succeeded him as president of the Burkitt Foundation. He followed in Kelley's footsteps in other ways as well, putting his legal expertise at the service of the Dominican sisters and serving as a Knight of the Sepulchre and a Knight of Malta.

Meanwhile, the firm devoted itself to investing Crane's money, purchasing some Montrose properties for her estate. When she died in 1973, those properties became part of her foundation. In the years following Crane's death, the foundation became more and more connected to the family of its president; C.O. appointed various Ryan children to the board, and by the early '80s, five of his six children served as trustees. Meanwhile, the foundation tapped C.O.'s son Robert to handle a number of the foundation's real-estate deals, for which he received commissions.

By 1986, though, internal squabbles had changed the makeup of the board. All but two of C.O.'s offspring -- Carl and Joseph -- were gone from the foundation's board, and Robert was no longer the Burkitt Foundation's real-estate manager. From 1986 on, Joseph Ryan was deeply involved with the foundation. He, attorney James McLain and another Kelley & Ryan employee, Frank Beatty, paid special attention to the real-estate side of the foundation's giving, locating appropriate nonprofit tenants and drawing up leases.

Then, in 1995, Joseph abruptly resigned from the board. At about the same time, C.O. gave up his ownership interest in Kelley & Ryan while retaining the presidency of the foundation, thus for all intents and purposes taking the foundation away from the firm to which it had originally been entrusted. "It was issues involving the succession of the foundation and its future control," is all Joseph will say of his reasons for resigning. "I wanted to diversify the board and move away from the Ryan family being in charge." At the end of December 1996, Kelley & Ryan's contract to administer the Burkitt Foundation expired and was not renewed. Instead, Texas Commerce Bank took over the administration of the foundation. Six months later, the foundation's properties went on the block.

Today, the Burkitt Foundation's board consists of C.O. Ryan, his brother Gerald, his son Carl and Bishop John McCarthy of Austin. William Ryan, another of C.O.'s sons, provides the foundation's legal counsel, and Robert once again brokers the foundation's real-estate deals. Though C.O. says "we don't want anybody to get the idea that this is an appendage of the Ryan family," in many ways the Ryans have inherited the Burkitt legacy, which today totals over $10 million.

The Burkitt Foundation money is not, of course, the Ryans' to keep. But it is theirs to give away. Many of the foundation's annual cash grants, which totaled $241,860 in 1995, go to Catholic schools, churches, missions and social service groups throughout Texas. For example, in 1995 Houston's Christ the King Church received $5,000, and in 1991 Austin's Natural Family Planning Center received $2,000. But a handful of non-Catholic organizations have also received foundation money, and at least some of those are connected to the Ryan family. In 1995, Episcopal Day School in Brownsville received $10,000 and Trinity-First Day School in El Paso received $2,000; both schools had among their students C.O. Ryan's grandchildren. The foundation also gives $5,000 annually to the religious studies department of Rice University, C.O.'s alma mater. And Rice's Phi Beta Kappa Alumni Association, which until recently counted C.O. as vice president, has been receiving $4,000 to $6,000 a year.

According to Joseph Ryan, such grants "appear to be inconsistent with the stated goal of the foundation." And according to the foundation's guidelines for submitting proposals, it "seeks to foster and promote the interests of Catholic educational organizations and other Catholic activities." Yet the articles of incorporation are so broadly drawn as to permit donations to almost any nonprofit organization. "That's because a lawyer drew the charter," explains William Ryan. "You don't want to draw them narrowly, you want to draw them broadly, which gives you the ability to change your mind and do something different."

That's just what the directors did when they decided to sell the houses they had been amassing for two decades. But almost as curious as the decision to sell was the decision to buy in the first place. Real estate is not the most common form of investment for foundations -- tenants, maintenance and taxes can put a strain on foundation management.

C.O. Ryan admits that the foundation never fully articulated its goal in amassing its properties. And while they didn't have much connection with Bess Burkitt Crane, who lived in Westmoreland, they did, through the yellow Victorian that had been the longtime Ryan home, have a connection to the Ryans. In 1982, the Ryans sold the Victorian to Covenant House, a shelter for troubled teens. Then in 1985, Covenant House sold it to the Burkitt Foundation.

Meanwhile, the whole area had gone into a slide. Throughout the '70s, homeowners had moved out and tenants had moved in. "What we figured," C.O. says now, "was that if people just came in and bought up those properties they'd tear down the nice old houses there and put up a lot of cheap apartments and it would turn into a slum."

So the Burkitt Foundation stepped in as a savior, protecting the homes while allowing them to house nonprofit organizations. "The only way the Burkitt Foundation could justify buying and holding these properties," C.O. says, "was to devote them to charitable uses." That kept the properties largely untaxed (only one, the Firehouse Community Center, fails to meet the stringent requirements for charitable use exemptions). It also kept the properties from being counted as part of the foundation's investment base, 5 percent of which must be given away each year.

Now, says C.O., "We could do more with the money that we get out of selling." Or put another way: Now that the Montrose real-estate market is headed in the right direction, the foundation is willing to bid the neighborhood good-bye. The foundation's two directors who don't live in Houston -- particularly, C.O. says, Bishop John McCarthy of Austin -- are proponents of the property sales.

William Ryan says it's his "understanding" that the houses won't be torn down. Last week, though, surveyors working for Perry Homes visited one of the Commonwealth houses. Demolition, they said, is next on the agenda.

Meanwhile, Robert Ryan has told some people that the old Ryan home, the yellow Victorian, will be moved to Sam Houston Park, though that was news to Jane Ellen Cable, the woman who runs the historical park. But whether the Hyde Park houses are moved or demolished, the likelihood is that they will be replaced by high-density housing. And area residents aren't happy about it.

Nor are they happy about losing their neighbors. While over the years Montrose residents have complained about some of the shelters and social services in their midst, the Burkitt enclave has maintained a quiet harmony with its community.

"They are the dearest neighbors," says Pat Teer, the Original Hyde Park Civic Association's block captain for the cul-de-sac. "They're really a tribute to our neighborhood. They keep up their property."

Over the years, the foundation has spent thousands of dollars to fix up and maintain the homes -- $142,000 on taxable improvements alone. Still, with tenants themselves responsible for many types of repairs, the upkeep was not a financial albatross. Last year, the foundation spent only about $50,000 -- one-half of 1 percent of its total assets -- on repairs and maintenance.

But despite the money invested in the houses, C.O. says the foundation never wanted to be "permanent landlords." The foundation, he says, has made the decision to sell. And the decision is final.

When signs reading "Ryan's Real Estate Brokers" appeared in front of the Hyde Park houses, neighbors questioned the propriety of the foundation paying a broker's fee to one of its president's sons (though it's legal to do so). For that matter, some wondered what influence the real-estate Ryan might have had in the decision to sell.

People who have known Robert Ryan over the years describe him as a wheeler-dealer. In the 1980s, he did business with real-estate rogue J. R. McConnell, who ended up electrocuting himself in jail while awaiting trial for fraud. Robert even purchased some properties from McConnell for the Burkitt Foundation. In one lawsuit (from which he was eventually dropped), Robert was accused of fraudulently borrowing money and falsifying tax returns for McConnell.

In another lawsuit, Robert was accused of forging a deed purportedly signed by his longtime lover, Eugene Checchi, awarding him the title to the home they shared. In turn, Robert accused Checchi's cousin and guardian, Natalee Holmes, of forging a deed that gave title to Checchi. The judge ruled that Holmes had the valid document.

Longtime Ryan acquaintance John Baur, who testified in the Checchi case that he witnessed Robert committing the forgery, remembers Robert's bragging about the Burkitt Foundation. "He made it sound like it was all his family's money," says Baur. At one point, Baur and Holmes say, Robert moved out of the house he shared with Checchi and into one of the Burkitt Foundation apartments (William Ryan denies this). And in the late '70s, the Burkitt Foundation loaned $42,800 to Checchi's grandmother to buy a condominium -- another unusual, if legal, investment for a private foundation. At the time, Holmes says, C.O. Ryan was Checchi's grandmother's lawyer.

The disposal of the Hyde Park homes could prove to be a good deal for Robert Ryan. If he takes the standard real-estate broker's fee of 3 percent, he'll receive $78,000 when the sales go through. In the past, C.O. has asked Robert to take a re-duced fee -- but what he'll receive this time, the Burkitt Foundation isn't saying.

While all of the Burkitt Foundation's tenants say they're thankful for the foundation's help up to now, many expressed dismay at the news that their houses were for sale.

The Kolbe Project, for instance, has a budget of $145,000 a year. With that money, the friars visit thousands of AIDS patients a year, and host potlucks and Catholic masses for gays and lesbians in the area. The project has received a request to vacate by September 30. When the Kolbe Project does have to move, director Ralph Lasher says, he has no idea where the friars will go. "I'm not sure we would even exist," he says, "if it weren't for the Burkitt Foundation."

One of the foundation's tenants has already received an eviction notice -- the International Center for the Solution of Environmental Problems, which was told to be out of its Commonwealth Street house by July 31 (so far, though, it hasn't left). A little over a year ago, center director Joe Goldman moved his organization to a Burkitt Foundation house that occupied three lots on Commonwealth. The property -- purchased as a residence for Bishop McCarthy before he became a foundation director -- was a good match for an environmental research group because the grounds afforded room for compost piles and gardens. The only problem was the decrepit condition of the long-vacant house. In the family room, the wooden walls were so rotten you could punch a pencil through them.

Nevertheless, Goldman thought the place could be restored, and says he told the Burkitt Foundation that his group would consider buying it. The foundation gave the environmental center a two-year lease, and Goldman's staff and volunteers proceeded to re-roof and dry-wall parts of the house, replace vents and install windows and build a greenhouse in the back. Then Goldman learned the Burkitt Foundation had entered into a contract with someone else to sell the property.

William Ryan says he was never aware that the Center for the Solution of Environmental Problems intended to purchase its property. "There's nothing in the files," William says. "And I asked my dad, 'Did you tell them they could buy this?' And he said, 'I don't remember saying that.' " As for the two years Goldman was promised, William says that when a tenant doesn't pay rent, their lease isn't enforceable. "You must realize," he notes, "that these are people who have received free use of this property. They have not paid anything, have not paid a dime."

For his part, Beatty insists he told C.O. that the organization was interested in the property. He points out that the lease included a non-standard provision that would credit money spent on improvements against the purchase price. William Ryan says he's read the lease, and "didn't see any

provision like that." He declined to show the lease, but a copy of the document clearly notes that "in the event the Tenant decides to make an offer to purchase the premises, it shall be entitled to have the market value of all capital improvements applied as a credit toward the purchase price."

The Ryans insist that they want to help organizations through the transition period -- though they won't guarantee them future financial support. Following questions from the Press, the Ryans met with Goldman and offered him funds for moving expenses, then, a day later, offered him the chance to purchase a Burkitt Foundation property that had not yet been sold -- a large house on Castle Court that was formerly used by the Houston Area Women's Center. Wellsprings has also been given the opportunity to buy the Castle Court property. But Wellsprings, William complains, has not been easy to communicate with.

"It just seems to me like Wellsprings has some problems with their decision-making in their organization," William says. "They have a board, it's mostly all volunteer, the founders who founded it are rather old now. It's sometimes easier to deal with change when you're young. They've been living in that Lee House now for 15 years and they just figured it would never end."

Actually, as 60-year-old Sister Rita explains during a tour of the Wellsprings facilities, the organization has been in this location since its inception in 1988. As new houses became available in the area, the Burkitt Foundation let Wellsprings convert them into places where women who are "trying to get their lives together" could do just that. During the day, the sitting rooms of the four houses are pretty much vacant; the twin beds in the old, high-ceilinged rooms upstairs are neatly made up with purple comforters. Sunlight pours through the tall casement windows. A walk-in pantry is stocked with food bank provisions, which the residents cook and serve in a family-style dining room. The reason there are no residents around, explains Sister Rita as she bustles about, is that they're all out training, looking for work or volunteering at other charities.

"Look at that!" the nun exclaims, pointing at a wooden carving of a woman from the back. "Isn't that powerful? One of our residents made that." She stops again at a sculpture of a woman's head in the living room. "That's the symbol of woman emerging, coming into her own." Looking around the living room, she cracks, "The Lord brought us donated furniture, but He made sure it all matched!"

Joseph Ryan says his brother William's statements about Wellsprings's "problems" are unfounded. After all, Joseph points out, the nuns have refurbished each of their houses. "They are a highly efficient organization, very effective," Joseph says. "They're a model program."

Continuing her tour, Sister Rita introduces Wellsprings's program director and co-founder Sister Justin Farinella, a spry, 75-year-old, salt-and-pepper-haired woman in slacks who leaps to her feet, brandishing a sheaf of newly compiled figures for a grant proposal. Asked if Wellsprings had prepared for the possibility that they could lose their location, she answers no. "We wanted all the money to go into programming," she says, "job training, education, computers." As for the Castle Court property offered up by the Burkitt Foundation, Sister Rita says it lacks a crucial feature for Wellsprings residents: proximity to a bus route.

When the nuns heard that the Burkitt Foundation planned to sell the property they consider their home, they made an appeal for help on Channel 2 that brought them a scant $3,000. Wellsprings's board is now busy scrounging up emergency capital. But the organization has yet to find a suitable new location.

Neither nun wants to talk much about the Burkitt Foundation, except to say that they "woke up when they were told" that the properties would be sold. "They're legitimate in what they're doing," Sister Rita says. She admits that Wellsprings's homey, non-institutional living situation couldn't be more ideal.

But then she places one hand atop the other to indicate a crossroads. "I think this is an opportunity for us," she says, grinning convincingly. "Every change is an opportunity. I don't know what's going to happen. That's our question.

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