Federal government seeks another refund of revitalization money from city

Once again, the federal government wants money back from Augusta because groups involved in neighborhood revitalization failed to meet U.S. Department of Housing and Urban Development regulations.


The bulk of the latest refund – $292,128 according to Augusta Housing and Community Development documentation – is attributed to inactivity by a charity closely associated with Augusta Commissioner J.R. Hatney.

Housing and Community Development Director Chester Wheeler, who did not respond to calls requesting comment, issued a two-page response to an open records request for documents pertaining to the refund demand.

Wheeler’s response, a copy of a Feb. 16 letter from HUD, indicates four development groups – East Augusta Community Development Corp., Sand Hills Neighborhood Association, 30901 Development Corp. and the city itself – had drawn all their federal housing funds over at least a four-year period without HUD being apprised of the resulting housing.

The letter demanded a corrective action plan detailing the status of the projects, which Wheeler did not provide The Chronicle. His request to the city to refund HUD $344,233.50, an amount larger than the city has had to repay in recent years, however, points to two groups as being at fault.

One, 30901 Development, used $52,105 in HUD HOME Investment Partnership money to build a fence around properties in the 1400 block of Augusta Avenue. Fencing would be eligible if it was incorporated into the project, Wheeler said, but it was not. Today, several new, unfenced houses sit on the lots 30901 owns.

The second, larger failure was by East Augusta Community Development, the housing development arm of Good Hope Missionary Baptist Church, where two-term Super District 9 Commissioner Hatney is pastor.

“There has been a challenge to further development due to issues of impediment,” Wheeler wrote. The “impediment” preventing East Augusta CDC from doing anything besides buying nine small lots in an east Augusta subdivision, was the need for “water and sewer drainage and infrastructure,” he said.

Built in the early 1950s, Marion Homes is a subdivision of approximately 150 homesites off Sand Bar Ferry Road abutting the levee. Several of the mostly concrete-block, two- and three-bedroom houses have been destroyed by fire; many are now cleared vacant lots while others appear to be the regular homes of Augusta residents.

Incorporated in 1999 with Hatney as chief executive officer, East Augusta CDC was a nonprofit Community Housing Development Organization, or CHDO, and like 30901 and Sand Hills, the type of entity authorized to receive HUD HOME funds to create housing opportunities for low-income people.

HUD recommends that participating jurisdictions re-certify CHDOs annually, but East Augusta CDC ceased filing tax returns in 2003, leading to its nonprofit status, a mandatory component of CHDO designation, eventually being revoked in 2011.

In 2002, the last time East Augusta CDC filed a complete form 990, the tax return for organizations exempt from income taxes, Hatney was listed as president and CEO, receiving a salary of $23,333. A listing of key officers was omitted from the group’s 2003 return, which was the last one the entity filed.

In 2011, the IRS automatically revoked the nonprofit status of entities that failed to file tax returns for three consecutive years, including that of East Augusta CDC.

The same year, East Augusta CDC amended its articles of incorporation with the Georgia Secretary of State. It continued to call itself “organized pursuant to the Georgia Nonprofit Corporation Code” but no longer listed Hatney, who refused to comment, as an incorporator.

Also in 2011, Augusta entered into a new contract with East Augusta CDC, agreeing to provide the entity $15,201 in “operating expenses” to use federal HOME funds to create housing opportunities for low- and moderate-income families.

The contract states East Augusta CDC was a designated CHDO, now with Johnny Hampton as CEO, and will submit to a mandatory audit.

The refund, expected to go before the commission for approval this week, is only the latest in a history of problems with misspending of federal HOME dollars.

In 2008, an audit by the HUD Inspector General determined more than $1 million in HOME spending involved questionable costs, although the city only had to repay $288,786 for missing documentation on activities from 2003 to early 2007.

A 2009 audit demanded an additional $95,000 back for “unsupported housing activities” after two CHDOs sold houses in 2005 and 2007, before Wheeler’s hire in late 2007, to buyers HUD determined weren’t poor enough to be eligible.

In 2010, when the commission authorized repayment of those funds, it instructed Wheeler to seek repayment from the CHDOs.

In his request for the $344,233, Wheeler reports that he’s already “discussed the option of repayment from non-federal sources with both nonprofits to no success.”



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