Federal government seeks another refund of revitalization money from city

Sunday, April 15, 2012 9:25 PM
Last updated Friday, April 20, 2012 7:25 PM
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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.”

Comments (29) Add comment
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dichotomy
37489
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dichotomy 04/15/12 - 08:42 pm
7
0
We have got to quit getting

We have got to quit getting tangled up with these flakey "non-profits" amd "not-for-profits". We should quit giving them SPLOST funds and the city should quit getting involved with them in HUD projects. They are mostly run by incompetent people who do not read and understand the rules of how the money must be used. Either that or something a little more sinister. At any rate, we get stuck for thier mishandling of the funds.

scott-hudson
10
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scott-hudson 04/15/12 - 09:11 pm
7
0
I have been broadcasting

I have been broadcasting these discrepancies for YEARS on the radio. Now, it is time to ask Congressman Mr. Barrow (now an Augusta resident) about the 1 million dollars he gave JR Hatney's group in a rider on a transportation bill.

The chickens have finally come home to roost, and we are about to find out the content of their eggs.

Scott Hudson

roblever59
48
Points
roblever59 04/15/12 - 09:13 pm
2
0
dichotomy! I agree 100%!

dichotomy! I agree 100%!

raul
5729
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raul 04/15/12 - 09:29 pm
5
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Need a forensic audit on this

Need a forensic audit on this whole bunch. Yea, incompetency or worse.

KSL
143859
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KSL 04/15/12 - 09:37 pm
4
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More than likely, "worse."

More than likely, "worse."

Hucklebuck
43
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Hucklebuck 04/15/12 - 09:59 pm
3
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I never understood how these

I never understood how these "organizations" get all this money anyway. If were to purchase a new home in Augusta why in the hell would I buy a home in or around Laney Walker BLVD??

double_standard
166
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double_standard 04/15/12 - 10:00 pm
1
0
What's going on with Tom Beck

What's going on with Tom Beck why is it so hush hush.

sjsypien
33
Points
sjsypien 04/16/12 - 12:47 am
2
0
Me thinks somebody is playing

Me thinks somebody is playing the system for all it's worth.

Riverman1
93728
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Riverman1 04/16/12 - 03:53 am
3
0
Once again the Richmond

Once again the Richmond County taxpayer will end up footing the bill.

Austin Rhodes
2989
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Austin Rhodes 04/16/12 - 06:23 am
4
0
Richmond County taxpayers?

Richmond County taxpayers? The few...the proud...LOL.

If you only knew how FEW they are in comparison to who votes there, it would make you sick...

David Hopper
46
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David Hopper 04/16/12 - 06:36 am
2
0
A 'forensic' audit is not

A 'forensic' audit is not really needed. In and of itself, forensic audits have no base guidelines on how they should be conducted. It is the proverbial needle in a haystack x 10. It can sometimes end up in the same wasteful spending as the groups it would investigate.

Audit them for their failed tax returns, yes. Wasting 60k-100k on a 'consulting fee' for a forensic audit, no.

Little Lamb
49080
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Little Lamb 04/16/12 - 06:38 am
1
0
You know, ultimately Housing

You know, ultimately Housing and Community Development Director Chester Wheeler reports to City Administrator Fred (What, me worry?) Russell. This is another example of how he is not managing his people – not holding them accountable to follow laws, rules, or policies. This failure results in what was supposed to be federal funds now being paid by Augusta taxpayers.

This is another example of Russell's being derelict in his duty. He should be fired for cause and granted no severance. After his firing, an ordinance should be passed that the city should have no business dealings with Russell nor any of his family nor with any business he has a relationship with. Russell has been pure poison for the people of this city. We are getting sicker and weaker by the day as the poison saps us of life.

Little Lamb
49080
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Little Lamb 04/16/12 - 06:41 am
3
0
Hey, RM, do you remember how

Hey, RM, do you remember how Commissioner Hatney embarassed the mayor in a commission meeting when Hatney used the term "payoff" or "bribe" to describe the hotel tax money being granted to these non-profit Laney-Walker redevelopment groups? Well, now we see that Hatney is a recipient of some of these payoffs.

double_standard
166
Points
double_standard 04/16/12 - 08:35 am
1
0
A pay off before he was

A pay off before he was commissioner sounds fishy. I'm going to look at this for what it is a payback article for calling out the bribe.

Bouganvillea
0
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Bouganvillea 04/16/12 - 08:37 am
2
0
Oh it gets worse... and I
Unpublished

Oh it gets worse... and I believe the FBI should launch an investigation into Wheeler. Maybe they already have. Plus, this whole Hyde Park think stinks to high heaven as well as this Laney-Walker redevelopment that Deke keeps taking credit for with these various awards he touts. That is one big money pit right there. The Chronicle really needs to do some digging into this 30901 devt corp. Something doesnt smell right there.

daviddunagan
343
Points
daviddunagan 04/16/12 - 09:05 am
1
0
Simple Solution- Mr. Hatney

Simple Solution- Mr. Hatney pays back the money owed to HUD for non-compliance. Problem solved.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 09:08 am
0
0
I wonder if any of these
Unpublished

I wonder if any of these churches that have these side redevelopment non profits getting these federal dollars were some of the same churches help get out the vote for Deke? You know he did surprisingly well in these precincts... and getting the support from the right "churches" has been a big part of the success of the Copenhaver-Boardman machine. Look at what consulting company got the contract to design and manage this Laney redevlopment and who they have connections to. Look at what local realestate company has the contract to market the homes.. and who they have connections to.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 09:17 am
1
0
Anyone know why the mayor
Unpublished

Anyone know why the mayor took such a personal interest in that overlay district for Laney-Walker several months ago? I watched that meeting on cable he was desperate to get that thing passed despite the objections of some residents. You would have thought it was the ballpark. I have always wondered why this was of such particular interest to him.

raul
5729
Points
raul 04/16/12 - 09:35 am
2
0
@DavidHopper. Maybe a

@DavidHopper. Maybe a forensic audit isn't the correct method. Whatever it takes, my man, to get to the bottom of this.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 09:37 am
0
0
I think this would involve
Unpublished

I think this would involve the FBI and audits would be part of a larger investigation.

double_standard
166
Points
double_standard 04/16/12 - 10:02 am
0
0
2003 was the last filed

2003 was the last filed return. Was Hatney a commissioner then? The last section of Slyvia Cooper's column yesterday has set the stage for this. The Tee Center group looks like their gonna do everything possible to take the heat off them.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 10:10 am
1
0
dbl-standard.. I see your
Unpublished

dbl-standard.. I see your point, but this has been building for some time.. and lets not forget that this may end up leading to some of the big players involved with the TEE Center. Remember, they both use the same bond financing and the same attorney. They are tied together. I noticed Scott Hudson posted on this. I'm glad he has taken an interest in getting to the bottom of this but I have to ask why he has taken so little interest in the TEE center mess? He's pretty much just shrugged it off as much ado about nothing, but it involves tens of $millions, a lot more than this.. and there is ample evidence that certain govt officials have been downright deceitful over this project. Just curious why there is no outrage over that?

David Hopper
46
Points
David Hopper 04/16/12 - 10:21 am
1
0
Raul, to be honest I'm of the

Raul, to be honest I'm of the opinion that you could do a forensic audit if you wanted to, but do so in a cost effective manner. I'm not saying I have the perfect solution, but I do have one option.

We have plenty of people in the Hull College of Business right here at ASU that need practical experience in accounting and auditing. Have the city work with a volunteer team from ASU. Let it count for a practicum college credit. Both sides get what they want, an in-depth look at possible problems and WE the tax-payers or whomever funds it, need not pay for anything more than 2 pizzas a night and a couple bottled drinks. We could spend a grand or two AT MAX, get the audit done, see if there is fraud and abuse and report it, and save us money. We would not need to spend tens of thousands on this.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 10:29 am
1
0
sorry David.. but outsourcing
Unpublished

sorry David.. but outsourcing this to a "local" firm would defeat the whole purpose of the audit. It has to be handled by someone independent with no political or business ties to the people running the show here. There too much incest in Augusta politics. I dont care if it costs a little more to get an outside firm, because in the long run it will save us a lot more.

raul
5729
Points
raul 04/16/12 - 10:30 am
0
0
@DavidHopper. Sounds like a

@DavidHopper. Sounds like a plan.

David Hopper
46
Points
David Hopper 04/16/12 - 10:33 am
0
0
I would think it would be

I would think it would be hard pressed to find deep political or business ties with the graduate or under-graduate students I'm talking about, Bouganvillea. But hey, it was just a suggestion. I do not see how spending 60k-100k on a consulting firm is by default the better option.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 10:41 am
0
0
well you cannot get a
Unpublished

well you cannot get a forensic audit done by college students..plus the Hull College of business has too many close ties to local politicos.. but as a class project looking into the city's budgets, that may be an idea woth looking into. If this involves Federal money, the Feds will do their own audit. They have people to do that.

Riverman1
93728
Points
Riverman1 04/16/12 - 11:30 am
1
0
LL asked, "Hey, RM, do you

LL asked, "Hey, RM, do you remember how Commissioner Hatney embarassed the mayor in a commission meeting when Hatney used the term "payoff" or "bribe" to describe the hotel tax money being granted to these non-profit Laney-Walker redevelopment groups? Well, now we see that Hatney is a recipient of some of these payoffs."

Sure do, but that just shows you how most of them are getting something. Whether it's the TEE or this scam, they find a way to get federal, state and local tax money.

Bouganvillea
0
Points
Bouganvillea 04/16/12 - 11:38 am
1
0
Like I said.. Deke took an
Unpublished

Like I said.. Deke took an inordinate interest in the Laney-Walker redevelopment. You gotta wonder why.

David Hopper
46
Points
David Hopper 04/16/12 - 12:36 pm
2
0
You are right, that is a

You are right, that is a federal matter. I wonder how much money will be wasted investigating people wasting or stealing money. They know what they are looking for, start with the unfilled tax returns, peel the threads and see where that leads.

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