During a recent commission meeting, Finance Director Anthony Morgan stated
that a certain citizen or citizens actions cost the city "$50 to $60
thousand" in holding up a 108 HUD loan that was to pay for a sewage run out
to Dollar General. When pressed by Planning and Zoning board member
Wallace Cain about the identity of those responsible, Mr. Morgan stated that he
did not know who the person was, and suggested that HUD might be able to give
Mr. Cain that information. At that point Robert Perez volunteered that he knew
who it was, and preceded to answer Mr. Cain. The issue might have been settled
there, but Mayor Coerper objected to the way Mr. Perez was answering. After a 3
(Lewis, Hills, Coerper) -2 (Robbins, Burgess) vote, the commission continued the
meeting without hearing the response.
What follows is a letter from the Alachua Leadership Alliance addressing this
issue.
The Alachua Leadership Alliance, as well as the Investigation Support Division of the U.S. Department of Housing and Urban Development in Washington, DC has been investigating the City of Alachua’s HUD 108 loan because they have violated two Federal Statutes.
How? According to 24 CFR Part 58 .22(a) "A recipient may not commit HUD assistance funds under a program listed in 58.1(b) on an activity or project until HUD or the state has approved the recipients RROF (Recipients Release of Funds) and the related certification of the responsible entity." In other words, the city can’t spend money on a project until they have the check in hand.
The city has completed the Dollar General project as outlined in the HUD contract, yet they have not received the HUD 108 loan. The HUD 108 loan is for $2.25 million. The City of Alachua has spent $2.3 million on Dollar General construction costs and intends to use the HUD 108 loan to repay the debts they incurred for the construction costs. The Investigation Support Division at HUD has said that this is unlawful.
What did the City of Alachua spend $2.3 million on for Dollar General? To date, the city has spent: $825,000 on a fire suppression facility; $872,000 on a water and sewer main; $312,000 to purchase 250 acres of land from WACO; $100,000 to move an agricultural irrigation system; and $140,000 on engineering, consulting, and relocation costs.
Where did this money come from? The City of Alachua took out 2 loans from the First National Bank of Alachua for $1.2 million, they transferred $412,000 from the Electric Fund to the Capital Projects Fund, as well as an additional $1,077,134 from the Electric fund - totaling $2.6 million.
The HUD 108 loan is also not intended to be a "general tax obligation" of the city. The $1.2 million short-term cash loans from the First National Bank are also secured with a second lien on the city’s sales tax income.
The other Federal statute that the City of Alachua violated is CFR Part 58.22. This statute states that at least 50% of the funds from a 108 HUD loan must benefit the public. The City of Alachua spent $1.2 million on private costs, (which is more than 50%): $825,000 fire suppression facility, $312,500 to purchase the 250 acres, $100,000 to move the irrigation system. The Investigation Support Division at HUD has said that this is also unlawful.
To qualify the fire suppression facility as a "public" facility so that they would not be over the 50% mark, the City of Alachua passed Resolution No, R-00-61 which "Directed the City Manager, Mayor, Staff not to transfer ownership of the fire suppression facilities to Dollar General or other interested parties before administrative close out of the Small Cities CDBG (Community Development Block Grant) Section 108 Loan Guarantee. This appears to be unlawful.
Yet another aspect of the Section 108 Loan Definitions that the City of Alachua did not follow is that communities must show that 70% of their CDBG expenditures are allocated to the benefit of lower to moderate income citizens" in blighted areas if "The person or the business resides in an Empowerment Zone, Enterprise Community or Enhanced Enterprise Community" The Dollar General facility is not located in a blighted area or in any of these "communities" and the city does not have an unemployment problem. Alachua County has an unemployment rate of 2.2 %, the lowest rate of 65 counties in the state of Florida. This also appears to be unlawful.
In a letter from Jim Nichols of the Department of Housing and Urban Development, Mr. Nichols stated that the City of Alachua should pay for a portion of the sewer line (12") because a 16" line was not necessary for the Dollar General project. A 4" sewer line is all that Dollar General needs, but according to the WACO contract, the city must provide WACO "with a 16" line to fulfill requirements for Alachua West (page 7, paragraphs 3 & 4). The City of Alachua intends to pay for the entire 16" sewer line with 108 HUD loan funds. This also appears to be unlawful.
The HUD 108 loan has been under investigation for the above reasons. If you would like more facts or information regarding this issue, please feel free to contact members of the Alachua Leadership Alliance, or the HUD Inspector General in Washington, D.C.
Thank you
Alachua Leadership Alliance
Busy Kislig Shires, vice-president
Robert Perez, president
Wayne & Elaine Bell, members |
