Originally created 01/08/97

Former city mismanaged HUD loans, Audit says



A federal HUD audit has criticized the former city of Augusta for its lack of record-keeping and oversight on several loan projects and land deals, as well as potential conflicts of interest involving public officials.

Auditors found the city funneled loans and grants to elected officials, sold property bought with federal money to private individuals at less than fair-market value, co-mingled the revenue in the city's general fund and never reimbursed the housing and neighborhood development department.

Specific findings include:

  • A concern about "several instances" of loans or grants to "elected officials" or people in "positions where their receipt of assistance could be construed as a possible conflict of interest."
  • The audit did not name the officials. Also, the CSRA Business League, which the department gives money to for a loan program to help small minority businesses, has made loans to several elected officials.

    State Sen. Charles Walker received a $30,000 facade grant for the Pilgrim Life Insurance building at 1143 Laney-Walker Blvd. several years ago. He also received a $75,690 facade grant for B.L.'s Restaurant at 1117 Laney-Walker Blvd. and an $83,222 "forgivable loan" from Community Development Block Grant funds to renovate the interior of that building, according to department records.

    Augusta Commissioner Henry Brigham received a $115,494 facade grant for the Laney-Walker Business Technology Center at 1201 Laney-Walker Blvd. and a $40,736 CDBG grant to renovate the interior, according to the records.

    Mr. Brigham also borrowed $13,050 from the CSRA Business League, which he paid back.

    Former state Rep. George Brown borrowed $25,000 from the business league, which filed suit in 1995 for nonpayment. He also borrowed another $6,000, which he had not repaid, according to the league's records.

    Mr. Brown filed for business bankruptcy last year, according to U.S. Bankruptcy Court records.

    The league also sued Zachary Howard, the son of state Rep. Henry Howard, to recover a $15,000 loan made in 1989.

    Housing Department Director George Patty and spokeswoman Sirena Perkins-Rogers said when Mr. Brigham received funds from the city, he was a Richmond County commissioner, so technically, there was no conflict.

    Also, the money to rehabilitate his and Mr. Walker's buildings did not go directly to them but to architects and contractors.

  • The city's failure to maintain a proper oversight of the Laney Walker Development Corp. and its income generated by a CDGB-funded project.
  • The former city provided CDGB funds to the corporation for the $1.6 million Armstrong Galleria. It was completed in 1992, but the project generates income through the lease or sale of properties within the Galleria that were to be monitored by the city. The income was to be paid to the housing department.

    Minus operating expenses of the corporation board, which were not to exceed $13,000, the amount due the housing department as of Dec. 1 was $15,860, according to Ms. Perkins-Rogers.

  • In reviewing the city's HOME program, auditors found two properties previously bought by the city with Urban Development Action Grant money had been sold to Laney-Walker Development for less than fair-market value. Several others in the Twiggs Street housing project were also sold to private individuals at less than fair-market value.
  • The properties were sold in December 1995, along with other excess city property to raise money to ease the former city's budget crisis, officials said.

  • The city provided 100 percent of the down payment to assist qualified low- and moderate-income applicants with the purchase of a first home, although HUD only allows a 50 percent contribution.
  • Also, the city helped some home buyers with both down payment and closing costs, which is against the rules. The city must reimburse HUD $73,000 for the closing costs and $26,000 for down payments, Ms. Perkins-Rogers said.

    Mr. Patty said the city made a mistake in some instances cited by the audit but that most of it was just "nitpicking" by "bureaucrats" and "paper nuts."