Brown skirted protocol in Eureka Gardens deal

Then-Mayor Alvin Brown approved property purchase outside usual channels

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JACKSONVILLE, Fla. – The board that approves bonds that finance affordable housing in Jacksonville was bypassed in the deal that green-lighted Global Ministries Foundation's purchase of its six properties in Jacksonville, including the troubled Eureka Gardens complex.

Mayor Alvin Brown signed off on the deal in 2012 in a highly unconventional move, according to Mark Hendrickson, a financial adviser hired by the Jacksonville Housing Finance Authority.

Hendrickson has worked with JHFA for eight years and has been in public housing since 1976.

He said in his eight years' experience in Jacksonville, he's never seen a deal like the one approved for GMF, which is owned by the Rev. Richard Hamlet.

The tenants of Eureka Gardens, who brought attention two months ago to their deplorable living conditions, have sent a letter to the U.S. secretary of Housing and Urban Development in Washington asking that Hamlet be fined. The letter says that the tenants "believe that practices in place at our complex may involve abuse and waste of HUD resources" but ask that the property be repaired, not condemned.

READ: Eureka Gardens tenant letter to HUD secretary |
City financial advisers' report on Eureka Gardens | JHFA letter to Mayor Lenny Curr

WATCH: Uncut interview with JHFA financial advisor

That property and five others in Jacksonville were purchased by GMF in 2012 through a bond deal approved by Brown that took the properties off the tax rolls, because GMF is a nonprofit. The previous owner paid property taxes.

Hendrickson said the board only became aware that Tennessee-based GMF was attempting to buy the Jacksonville properties in 2012 because a city employee spotted an ad in the newspaper, alerting the public to a hearing for the proposed financing.

Hendrickson said the board contacted the general counsel to encourage Brown not to approve the purchase.

Hendrickson said the process is normally very transparent and involves financial experts and the City Council taking steps like credit underwriting, appraisals, physical needs assessment, proposals and background checks on the proposed owner.

"Why didn't they come to the JHFA if they were legitimate? What is it about our process that someone didn't want to deal with? I think that in and of itself is a red flag," Hendrickson said.

He said the JHFA has a system in place that makes sure the money is spent as it's supposed to be, that the rehab is done as it's supposed to be and that includes ongoing monitoring.

"The best we could tell on this transaction, none of those things took place," Hendrickson said.

In a letter to Mayor Lenny Curry, current JHFA chairman Tripp Gulliford said bond issuers not based in Jacksonville often issue bonds regardless of the public purpose for the property and absent proper monitoring.

"Eureka Gardens was financed as part of such a bond issue – an issue that the JHFA opposed for exactly the reasons noted above," Gulliford wrote.

Hendrickson said after attempting to contact the city's general counsel about the proposed purchase, the next the JHFA board heard about the deal was that it had been approved. He said that was surprising from a public policy perspective but not from a political one.

"You lose property taxes and best that I can tell you just flipped a property to an owner who took it off the tax rolls, to an owner without any kind of adequate rehabilitation taking place or valid resident programs or anything you'd want with this type of financing," Hendrickson said.

Hamlet and GMF have come under fire since Eureka Gardens residents complained to News4Jax and city leaders about the inaccuracy of the passing Department of Housing and Urban Development score the complex received. Those complaints led to a two-day city code inspection sweep that uncovered violations in 163 of 400 units.

HUD has since voided that passing score and inspected all 400 units last week. The results of those inspections have not yet been released.

"The Section 8 program is a lifeline for a lot of elderly people and families that without it would be on the street," Hendrickson said. "The thing people should be angry about is not that the programs are bad but that people take advantage of them.

"If you don't vet the owner and you don't make sure there is enough rehabilitation and you don't inspect it, then what do you expect at the end of the day?"

Hamlet used bonds funded by the Capital Trust Agency, which is based in Santa Rosa County, Florida. Through public records, News4Jax confirmed the Capital Trust Agency paid a high-powered lobbying group in Florida in 2012 -- the Southern Strategy Group -- somewhere between $40,000 and $100,000.

That is the lobbying group founded in part by John Thrasher, who was working as a state senator representing the Jacksonville area at the time.

In his letter to Curry, Gulliford warned against any similar deals in the future.

"If such a financing is proposed in the future, the JHFA urges you to utilize our expertise to analyze the proposal, and to provide informed guidance before any approvals are granted or denied," Gulliford wrote. "In any case, most legitimate developers would utilize the JHFA for such a proposed financing -- if it can pass the prudent level of scrutiny that should be employed by a bond issuer."

News4Jax contacted Brown for comment on this story, but he has not responded.

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