Chattanooga coalition wants federal investigation of CHA over Tubman site

Chattanooga coalition wants federal investigation of CHA over Tubman site

February 25th, 2014 by Yolanda Putman and Joy Lukachick Smith in Local Regional News

The former Harriet Tubman Homes site in East Chattanooga is seen from Missionary Ridge.

Photo by John Rawlston /Times Free Press.

Eddie Holmes

Eddie Holmes

Photo by John Rawlston /Times Free Press.

Document: Request for CHA Investigation

Letter to U.S. Attorney General Eric Holder requesting a criminal investigation of the Chattanooga Housing Authority.

A neighborhood coalition wants federal prosecutors to investigate the Chattanooga Housing Authority for a bidding process that for two years has failed to sell the city's second-largest public housing site.

The Peoples Coalition for Affordable Housing sent the U.S. Attorney General's Office a request on Friday asking for further scrutiny of the housing authority board, citing "apparently irregular and illegal methods of attempting to sell" the Harriet Tubman housing site.

"We think the situation warrants a second look from someone outside of the political process," said Perrin Lance, president of Chattanooga Organized for Action, who acts as a liaison for the coalition. "They're not transparent; they are secretive. Someone outside needs to come in and look at this and make sure everybody is playing by the rules."

CHA Board Chairman Eddie Holmes said he hasn't seen the letter but has no objections to an investigation.

"We welcome any investigation by anybody," Holmes said. "We haven't done anything that we're trying to hide."

The request for an attorney general's inquiry came to light as the CHA board prepared to consider new bids for Tubman from Chattanooga Mayor Andy Berke and others.

Then came a development that surprised even the coalition.

Just after 4:30 p.m. Monday, the agenda for today's CHA board meeting was sent to media outlets. Agenda item No. 5 said the board would reconsider selling Tubman to Chicago-based Lakewood Realty Group for $3.3 million. The board had voted to cut ties with the company in January when officials couldn't produce the cash to close on their previous $2.85 million offer.

Minutes after the agenda was sent out, CHA Executive Director Betsy McCright termed the agenda item "erroneous" and said a new agenda would be issued.

But she acknowledged that a deal with Lakewood Realty is still on the table. Just after 5:30 p.m., a second agenda was issued that said Tubman was being removed from today's agenda because of the contingency between CHA's private broker and Lakewood Realty.

"It's just all too screwy to me," coalition spokesman Reverend Leroy Griffith said in response to the Lakewood news. "I'm amazed."

The letter from the coalition -- made up of neighborhood association leaders, residents and church leaders -- cites two Times Free Press articles, including one published on Jan. 26 that chronicled how political delays, a confused vision and repeated inaction led the housing authority to ignore millions of dollars in bids for the 36.5-acre public housing site.

An investigation uncovered documents and interviews that suggest CHA ignored the highest bids, required exhaustive documentation from some buyers but not others, and ultimately failed to sell the complex to any of the half-dozen interested parties -- all while its executive director said publicly there were no solid offers.

Griffith said the group decided to ask for the investigation after the newspaper published the results of its investigation, and after public and private meetings with CHA's board and staff left questions unanswered.

The U.S. Attorney's Office for the Eastern District of Tennessee said the agency couldn't comment on whether they received the letter or plan to respond. A U.S. Department of Housing and Urban Development official said the agency isn't aware of any impropriety with the Tubman sale.

"HUD is not pursuing an investigation, and is not aware of any wrongdoing," said Ed Ellis, acting field office director for the federal agency.

HUD grants $12 million in federal money annually to CHA and oversees the final disposition of Harriet Tubman. The agency has required CHA to accept a minimum of $2.46 million for the site, a requirement that many bidders failed to meet.

The minimum bid, along with a bidding process that the coalition has questioned, left Chicago-based Lakewood Realty in mid-January as the lone potential buyer. But that deal fell through.

The housing board reopened the bidding process through Feb. 14. At CHA's Jan. 28 board meeting, board members voted to take over from the agency's executive staff the authority to consider every offer.

After the vote, Holmes said the housing authority was divided on whether to push for multifamily housing -- which would fit the agency's mission of providing affordable homes for low-income citizens -- or to look favorably on an offer by Berke to transform the complex into an industrial site.

Berke's latest offer includes $1 million and a 20-acre tract of land that was formerly the Maurice Poss Homes property.

That site was previously owned by CHA, but the city claimed the land during a land swap two years ago. Berke then offered the property to Hamilton County Schools, which the Howard School community had hoped would one day be home to their new athletic complex. But Berke withdrew the deal after he was unable to reach an agreement with school officials.

The Chattanooga Chamber of Commerce backs Berke's industrial plan for the Tubman site, which is part of the coalition's complaint with the project so far. Coalition officials question the appearance of political influence, since housing authority board member Jim Sattler also sat on the Chamber's governing board.

Sattler left the Chamber's board a year ago and currently has no ties, he said.

"My ties are to the housing authority," he said.

If federal authorities decide to investigate, it won't be the first time Chattanooga's housing authority has come under scrutiny. HUD in 2009 cited CHA , adding it to a list of troubled agencies because of allegations that CHA mismanaged funds for low-income housing and for its Housing Choice Voucher program.

The housing authority had a $4.5 million budget shortfall in 2008. The agency also used a $3.6 million Fannie Mae loan for affordable housing to cover its own operating expenses. CHA cut a third of its staff, the senior management took a 10 percent pay cut and several staff members took on dual jobs to make up funds loss.

CHA eventually reached a settlement agreement with Fannie Mae that freed the agency of more than $2 million in debt. The agency got off the troubled list in November 2011.

Staff writer Ellis Smith contributed to this report.

Contact staff writer Yolanda Putman at or 423-757-6431.

Contact staff writer Joy Lukachick at or 423-757-6659.