Sue H.O.M.E. for what? Attorney says no grounds, but BCC votes to let county attorney decide

Commissioner Hiller says $427K in assets already turned over, times up on 7 year old grant

By Gina Edwards

Naples City Desk

A majority of Collier Commissioners voted to let the county attorney decide whether to file a suit against the closed-down charity H.O.M.E. if county officials can’t persuade HUD to back off a demand for the return of $427,472 on the 7-year-old grant.

Collier Commissioner Tom Henning pushed for the suit against H.O.M.E., which was founded by his political rivals including John Barlow, who ran for office against Clerk of Courts Dwight Brock in 2012. Commissioners Henning, Penny Taylor and Tim Nance voted to give the county attorney latitude to sue.

Commissioner Georgia Hiller, previously a critic of H.O.M.E. and supporter of Brock’s action to pursue H.O.M.E., said she couldn’t see how “now or in the future that a lawsuit against H.O.M.E. could happen.”    

Hiller said a lawsuit could be barred by the statute of limitations and the county doesn’t know the extent to which H.O.M.E. may be responsible for a claw back of federal funds.

“The taxpayers are on the hook for almost a half million dollars,” Henning said.

But H.O.M.E. gave Collier County $427,472 worth of notes in 2011 — four years ago — on the houses it bought and resold to low-income buyers. Brock didn’t tell commissioners about the notes in his January 2014 presentation to commissioners when he asked them to join him in pursuing H.O.M.E. with HUD.

The notes are worth money —$427,472, or the total amount of the federal grant.

“I’m wondering how this is going to work,” Hiller said. “When these houses sell, we will be getting all those federal dollars back … You’re going to sue to recover from a party that has turned over the assets?”

The notes were designed to do something government rarely does: Recoup investment. Repayment of the zero-interest notes is due in 30 years or whenever the house resells, whichever is sooner. So, if the buyers flip the houses at market value, they have to pay back the notes that secure the charitable and government benefit they received. 

The 11 blighted houses purchased and rehabbed by H.O.M.E. collectively are now worth almost $1.9 million based on Zillow estimates reviewed by Naples City Desk, or almost $1 million more than the low-income buyers owe on their monthly mortgages.

If the buyers sold their houses today, they would be required to pay back to Collier County all $427,472, plus state remodeling grants. Based on Zillow estimates, the low-income buyers would still come out ahead by $400,000.

Brock told Naples City Desk last year H.O.M.E.’s assignment of the $427,472 in notes to Collier County didn’t count as a return of income to Collier County because Collier Commissioners hadn’t voted to officially accept the notes. In his letter to HUD, Brock wrote that H.O.M.E. attempted to assign the notes to Collier County “with no evidence of acceptance.”

An investigation by Naples City Desk in 2014, “Good Deeds: Punished,” found that Brock’s staff urged county officials to not accept the notes in 2011 and pull a vote to accept the notes from Collier Commissioners’ agenda.

Brock did not respond to Naples City Desk questions on Tuesday asking why his office has not asked Collier Commissioners to accept the notes. The notes are an asset and Brock is the custodian of all county funds and the notes are worth $427, 473.

In an interview, Henning said his pursuit of H.O.M.E. isn’t political. Barlow and H.O.M.E. board member Gina Downs filed a successful Ethics Commission complaint against Henning that resulted in a $500 fine in 2013 related to missing information in Henning’s financial disclosures. Downs ran against Hiller in 2010.

“I want to make sure that we capture everything we can to make sure the taxpayers are whole on this,” Henning said in an interview. “And that we don’t have to take money from other resources to deal with the $427,000.”

Brock lobbied HUD to take action on the nearly 7-year-old grant in May 2014 and many of the issues identified in HUD’s letter track concerns raised by Brock then. Brock shifted gears on his allegations in May 2014 after a Naples City Desk investigation showed Brock had made misleading and false allegations against Barlow and H.O.M.E., and attorneys for H.O.M.E. went on the offensive and said Brock should be investigated for misusing his public office and position as auditor to settle a political vendetta.

Brock says H.O.M.E. officers had conflicts of interest and HUD in its recent letter said H.O.M.E. officers benefitted financially. H.O.M.E. denies it and says officers of the all-volunteer charity with no paid staff did not benefit financially and they thought they were doing H.O.M.E. favors.

County Manager Leo Ochs said his staff had a conference call with HUD officials and his staff is preparing additional responses.   

Jeff Fridkin, an attorney for Barlow, told commissioners he sees the possibility of the U.S. Justice Department pursuing action against the county as “slim to none.”

Fridkin passed out a copy of a story by Naples City Desk about the homes current value to commissioners.

“The Justice Department isn’t going to bring this because the purpose of the federal funds has been satisfied immensely here,” Fridkin said. “Low and very low income people are in homes, very comfortable homes, and are in a position to actually better their lives upon the sale of those homes. And if they are in a position to better their lives upon the sale of those homes, all the federal money … will come back.”

Nance asked the County Attorney Jeff Klatzkow if he thought any money was missing and Klatzkow said “No.”

“I don’t know that we owe any of this,” Klatzkow said of HUD’s demand.  

Reporting By: Gina Edwards

Date: June 24, 2015

Contact Gina Edwards at ginavossedwards@gmail.com or by phone at 239-293-3640.