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SPOTLIGHT: WATCHING OUT FOR YOUR SAFETY AND POCKETBOOK
Fulton wasted HUD’s money
By ALISON YOUNG
The Atlanta Journal-Constitution (Georgia)
November 16, 2008
Senior citizens should have been living in the Nelson McGhee retirement community in College Park five years ago. At least that was the plan.
To get nearly $465,000 in taxpayer money for the project, the developer promised to start building 14 affordable homes by Dec. 11, 2001. Although half the money was delivered eight years ago and the rest by 2005, construction didn’t begin until this year — after federal auditors started investigating, government records show.
Now, the long-delayed work has stopped and a nearly complete first building has been abandoned to vandals. The developer has refused to pay its construction contractor, according to records and interviews.
The project is one of several that federal officials say has been mismanaged for nearly a decade by the Fulton County Housing and Community Development Department. As a result, more than $6 million was misspent or allowed to languish unused since 2000 — federal grant money the county may have to repay, records show.
Meanwhile, the U.S. Department of Housing and Urban Development is withholding $1.5 million Fulton County was supposed to get in 2008 until the county fixes its management problems. And 2009 funding may be delayed as well, said HUD spokeswoman Jerrie Magruder.
Fulton County Manager Zachary Williams, in an interview, acknowledged problems in how the housing department has managed the funds. The department’s director, who was responsible for overseeing the HUD program, resigned in August.
Williams, who became county manager in January, said he’s working to get the staff and expertise the department needs. “There’s just a lot of cleanup work that needs to be done for the past several years,” he said.
Beyond the misspent money is the missed opportunity for affordable housing. Fulton County has a four-year waiting list of people seeking homes through the program, which can pay for construction or renovation and provide grants, loans and direct rent assistance.
“We have school teachers and firemen and policemen who can’t go out and buy a home. For that reason it’s very important,” said Ruth Jones, who recently became Fulton’s interim housing director. Sorting out the mess is her priority.
An audit by HUD’s Office of Inspector General in March found that Fulton County officials “consistently failed” to monitor construction projects and follow rules for using federal HOME Program money.
Of $10.5 million in program money given to Fulton County since 2000, auditors questioned the use of more than $6.4 million. The audit came after HUD reviews over several years expressed concerns about the county’s ability to manage the program.
Under the HOME Program, HUD provides local governments with grant money to create affordable housing, giving them the flexibility to use the money to build, buy or rehabilitate housing for rent or purchase, or provide rental assistance. The program encourages local officials to collaborate with nonprofits. But it is the responsibility of local officials to choose development partners, monitor their progress and ensure they comply with the program’s rules — including creating housing in a timely manner.
While Fulton County violated many program rules, auditors were especially critical of the housing department’s oversight of contract developers. The county failed to follow federal requirements for approving projects, ensure they were eligible for funding, monitor progress and make sure housing was created in a reasonable time, the audit said.
The Nelson McGhee project, off Old National Highway near Flat Shoals Road, is among the worst examples of long delays cited by auditors.
In December 2000, the county gave $244,850 in federal funds to the nonprofit Intergenerational Resource Center (IRC), an offshoot of Atlanta’s Ebenezer Baptist Church that provides adult day care services to disabled people and senior citizens. The taxpayer investment ballooned to $464,850 by 2005, as the county gave more money for pre-development costs and cost overruns.
The county funding agreement called for IRC to repay the money when 11 homes were sold or within five years, whichever came first. The agreement expired in 2005. By the summer of 2006, the county declared IRC in default but never recovered the money, federal records show.
Brenda Sanford, IRC’s director, declined to be interviewed for this article. But in response to questions, Sanford e-mailed a timeline that cited difficulties with lenders, who required IRC to change the project from 14 detached homes to 29 condominiums, among the reasons for delays.
“We have experienced several challenges and indeed set-backs beyond our control,” Sanford said, adding, “Like so many others, we find our property sales stalled by this nation’s housing crisis.”
At the Nelson McGhee construction site, shards of glass cracked under foot as builder LeRoy Courseault recently surveyed damage in a nearly complete four-plex. His firm was building it from March until July, when, he said, he stopped work because IRC failed to pay his bills.
Vandals first ripped out drywall to steal copper tubing, doing about $10,000 in damage. In recent weeks they’ve smashed 15 windows, Courseault said.
IRC owes Courseault Commercial about $264,000, according to Courseault and the liens he’s filed. He said his firm’s credit line is maxed out, he’s laid off employees and lawyers for unpaid subcontractors are circling.
“I’m not going down. I will survive,” he said. “But all of this is because of this project.”
Sanford, in an e-mail, declined to discuss Courseault’s liens. She said the project will be completed, but “is being delayed until the financing can be renegotiated.” She said the county in January gave her group another two years to complete all the units.
Federal officials appear to have less confidence. In e-mails to the county, HUD officials warned that the downturn in the housing market has exacerbated long-standing problems at the troubled projects, records obtained under the Open Records Act show.
If lenders foreclose on the properties, HUD official Charles Greenfield wrote on May 22, “The County will have to repay the HOME investment.”
HUD auditors called for action against the county official responsible for overseeing the misused money.
County records show Joseph Johnson, the Fulton housing director since 2000, resigned in August and was required to vacate his office and turn over his county ID. He remains on the payroll working from home on an economic development report until Dec. 1.
Johnson did not respond to requests for interviews through a county spokesman.
Williams, the county manager, declined to discuss why Johnson resigned. “The management of the housing program was not as I would accept and was funding projects without adequate oversight to assure that the projects were eligible or could deliver,” Williams said.
HUD officials will decide early next year whether Fulton has to refund money.
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