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Docs show Delta Apts to cost County > $5 MILLION

Thursday, August 26, 2010, 10:15 pm News Flash Archive

The Leflore County Board of Supervisors is considering signing a contract with HUD to spend $5,000,000 in local taxpayer money to renovate and maintain the run-down Delta Apartments low income housing complex.

Though HUD will sell the complex to the county for $1, documents from HUD indicate that the county will have to spend around $5,000,000 to comply with the sales contract and HUD regulations. See .

In addition, the county will be obligated to spend whatever additional funds are necessary to maintain the complex as low-income housing for 25 years.

The Delta Apartments, built in 1972, are dilapidated and mostly uninhabitable. For over a year, HUD has been advertising to find a buyer to repair the 100 unit complex and continue it as low income housing. So far, nobody will buy the properties, even for a token sum, because of HUD's impossible demands.

The terms that HUD seeks to impose on Leflore County include the following:

1. The County must completely rehab the complex within 24 months. HUD's estimated cost: $4,300,000. See Exhibit 3.

2. The County must immediately provide HUD with a bond for $1,074,562. This bond will be returned to the county upon completion of the rehab. Rider 3.

3. The County must immediately pay into a fund controlled by HUD the sum of $100,000. Thereafter, every year for 25 years, the County must pay into that fund $30,000. These funds may only be used at HUD's approval to pay for capital maintenance and improvements. Rider 9.

4. The County must assume all liability for any damages to occupants that may result from lead paint residue in the complex. See Rider 6.

5. The County must assume all liability for any damages to occupants that may result from asbestos in the complex. See Rider 5.

6. The County may never increase the rental price to occupants above the HUD-approved rates for low income units. See Rider 2.

7. The County must pay any occupants their moving costs and part of their rent and utilities while they are re-located during repairs to the complex. Rider 4.

8. HUD has the explicit right, under the contract, to sue Leflore County to force it to spend taxpayer money to fulfill the above requirements. Rider 1.

9. In addition, the County will lose the property taxes which normally would be paid to it by the owners, since the county will own the property. At this time, those taxes amount to $18,000 per year.

10. It is unlikely that any insurer will agree to insure the property so long as it is uninhabitable and contains asbestos residue.

11. Leflore County may only sell the property to HUD-approved buyers who are also bound by all the above terms. Rider 7.

As of Thursday, nobody willing to purchase the property from the county has been identified. In addition, no grant money is being offered to the county by HUD to pay for these costly renovations.

However, even if such a buyer were found, the contract does not release Leflore County from the obligations above. All the above requirements will continue to bind Leflore County and the taxpayers for the next 25 years.

Thus, if the hypothetical buyer fails to perform these duties, they will fall back on Leflore County. There are no provisions in the contract by which Leflore County can pass along the property and absolve itself of future obligations. See Contract.

It appears that HUD is seeking to find a "deep pockets" buyer in Leflore County that cannot default or declare bankruptcy, and therefore may be compelled by court order to maintain this property no matter the cost for the next 25 years.

Here is an index of the entire HUD document package: Document Index.

John Pittman Hey
The Taxpayers Channel

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