Here’s some good news for Jackson city government: The City won’t actually lose the $1.5 million it must repay the U.S. Department of Housing and Urban Development for not meeting HUD rules in the so-far unsuccessful attempts to redevelop Farish Street.
In a clarification, HUD said Thursday the repayment will go into a line of credit for the City to draw on for future Community Development Block Grant projects. City Council members last bemoaned the hit to the budget the repayment would require, apparently unaware the money will be returned for future use..
“The money will essentially stay in the community to be used as the rules allow,” said HUD spokesman Brian Sullivan in Washington, D.C.
HUD’s lone stipulation for allowing the money to be used for replenishing Jackson’s Community Development Block Grant, or CSBG, allocation is the money repaid HUD is not from a federal source.
The City and the Jackson Redevelopment Authority landed in hot water with HUD after the agency discovered city officials at the start of the Farish Street project 17 years ago failed to officially qualify the JRA as a “sub-recipient” of HUD CDBG money. HUD money was used to buy the 17 storefront parcels that make the now-stalled three-block Farish Street project.
In subsequent years, the City failed to monitor the JRA’s efforts to convert Farish Street into an entertainment district. A chief violation, according to HUD, was the JRA’s non-competitive award of a 45-year lease and development contract to Watkins Development and its Farish Street Group affiliate. HUD said its regulations required a request-for-proposals process, something the JRA did not do in transferring the development lease from original developer Performa-Mississippi to Watkins Development in 2008.
HUD demanded the repayment in a Sept. 7 “monitoring” letter which gave the City 30 days to pay up or make arrangements for paying. The agency also set a host of conditions for the City and the Jackson Redevelopment Authority to meet before it lifts a suspension of the JRA from involvement in current or future HUD-funded projects.
Jennifer Johnson, JRA board chair, said in an interview Wednesday that she is trying to find out the number of projects undertaken by the JRA fall under the HUD suspension.
“Farish Street is the only one that I know about” that involved non-compliance with HUD rules, she said.
Johnson gained a tentative agreement form the JRA board Wednesday to cover the $1.5 million repayment. The JRA can’t afford to have a HYUD suspension in place over the three years the city had planned to make the repayments. City officials had tentatively agreed to begin payments of $503,000 annually for three years starting in December 2016.
The City of Jackson had agreed to repay the money The JRA board agreed to pay the money but must vote either in a special meeting or at next month’s regular meeting to officially approve the repayment.
Paying the money “would free us up” to resume work on redevelopment projects throughout the city that involve HUD money, Johnson said.
The Farish Street project has been dead since the JRA terminated a 45-year-lease agreement with Watkins Development and its Farish Street Group affiliate last October.