The City of Jackson has agreed to repay the federal government $503,603 a year over the next three years to settle violations claimed by the Department of Housing and Urban Development regarding the stalled Farish Street Entertainment District project.
Further, HUD has suspended the Jackson Redevelopment Authority and Farish Street Group headed by developer David Watkins from participating in HUD funded programs until further notice. The agency also applied the suspension to Jason Goree, interim director of Jackson’s Economic and Development Department and former executive with Farish Street Group and Watkins Development.
Goree’s suspension could stem from his listing as registered agent and manager for Zac Harmon’s Club, which Farish Street Group touted as one of the early leases for the entertainment district.
The Zac Harmon’s Club lease was for 107 W. Griffin St. and 237 and 243 Farish St. The address given for Zac Harmon’s is the same as that for Watkins Development, 300 W. Capitol St. HUD implies the the registered agent listing raises a question whether a valid lease with an existing company had ever been signed.
However, having a development executive registered as an agent for a new tenant is not uncommon, David Watkins said in an interview Thursday.
“I’m probably registered as an agent for 200 companies” from work as a lawyer and developer, he said. “We form them and they are bought out by whoever the tenant is going to be.”
The time between the registering of the company’s new name and actual conveyance of the lease, the leasing company’s representative typically receives any forms, documents and other communications sent to the registered company, Watkins noted.
Watkins, whose development company restored the King Edward Hotel and Standard Life building, said the HUD letter is a surprise to him and he is “befuddled” about why the federal agency would suspend his company from HUD involvement. He said nonetheless had no dealings with either HUD or its money during its attempt to redevelopment Farish Street.
Watkins has a $4.7 million lien on the Farish Street properties for money he says he has put into the project. He has previously said he is looking to be reinstated as developer of the entertainment district, an outcome seen as possible with Mayor Tony Yarbor’s new appointments to the JRA board and removal of Bishop Ronnie Crudup as board chair. The board under Crudup terminated Watkins’ lease for the redevelopment last fall.
HUD’s demand to the City for repayment of $1,510,810 followed a review of the troublesome Farish Street project that has been idled since the Jackson Redevelopment Authority booted The Farish Group from the project last October.
In a letter dated Sept. 8, HUD said the City and the JRA failed to meet a host of conditions for receiving and spending the $1.5 million. The agency demanded the city respond within 30 days on how it intends to meet the various conditions detailed in the letter.
JRA used the $1.5 million of HUD money to buy 17 store-front parcels in a three-block area of the downtown portion of Farish Street. The purchases occurred from 1997 to 2002.
HUD’s overall gripe is that the City failed to ensure the JRA complied with requirements for the money. In fact, the City never established the JRA as an entity legally entitled to receive HUD money for purchase of the parcels, the federal agency says.
Further, city officials didn’t keep an eye on what the JRA was doing once the Redevelopment Authority received the money, HUD says. “The City failed to maintain its files and provide HUD with documentation that it had monitored its funded subgrantee Jackson Redevelopment Authority.”
Another key unmet condition: Over the 16 years since receiving the money, the City has failed to show the Farish Street project has created jobs for low-and-moderate income residents. Specifically, HUD criteria for meeting a “national objective” mandate that “benefits are available to all residents of a particular area where at least 51 percent of the residents are low-and-moderate income persons.”
HUD gave the city a choice of repaying the $1.5 through deductions to future HUD grants for low-income housing and community redevelopment work.
The City instead has agreed to pay $503,603 in December 2016, $503,603 in December 2017 and $503,603 in December 2018.
City Hall spokesman Justice Bruce said Tuesday city officials are taking steps to comply with HUD’s conditions by the end of the 30-day deadline.