Former Farish Street developer David Watkins says he suspects bad faith motives are behind the Jackson Redevelopment Authority’s agreement to cover a $1.5 million repayment the U.S. Department of Housing and Urban Development has demanded from the City of Jackson.
Watkins says the motive is clear to him: Paying HUD could clear the way for the JRA to get a new developer for the first block of downtown Jackson’s Farish Street, an area the City has tried unsuccessfully for more than 15 years to convert to an entertainment destination.
The JRA voted Wednesday morning to pay the $1.5 million HUD says it wants returned for regulatory missteps the City made in trying to redevelopment Farish Street. Jennifer Johnson, JRA board chair, said the Redevelopment Authority would borrow the money on a note backed by the City.
JRA board members went into executive session to discuss the repayment. Johnson said the closed discussion was necessary because the talk would include David Watkins “which includes litigation.”
The $1.5 million HUD has demanded be returned was awarded to the City in 1998. The City gave the money to the JRA to buy 17 parcels that spanned the three blocks of Farish Street targeted for the redevelopment. The problem, HUD says, is that the City never certified the JRA as a “sub-grantee” entitled to spend HUD money.
The JRA’s willingness to pay off HUD stems from its belief that the payment will lead the federal agency to lift an indefinite suspension it put the JRA under in a Sept. 7 monitoring letter. The suspension applies to any City projects in which HUD is involved. JRA board members agreed last month that the suspension poses a huge impediment and the sooner it is lifted the better.
Work on Farish Street has been stopped since last October, when the JRA booted Watkins’ Farish Street Group from the project.
HUD has also handed indefinite suspensions to Watkins’ companies Watkins Development, though Watkins insists the development company had no involvement in Farish Street. An affiliate, the Farish Street Group, which had partners separate from Watkins Development, undertook the redevelopment, he noted.
Watkins has said he wants back in as developer, and has had a $4.7 million lien on the Farish Street properties for money he says he has put into the project.
But he can’t get back in while suspended. And that circumstance, says Watkins, is why the JRA wants to pay off HUD.
“We have been advised by reliable sources that the JRA is now trying to work a deal to pay back the $1.5 million, in order for the City and JRA to be taken off of the “suspension” list for HUD, but not to take off the private developers,” Watkins said in an email to the Mississippi Business Journal.
“They will then take the position that they can’t deal with us any longer because we are suspended.”
That sort of thing, said Watkins, “doesn’t even pass the smell test.”
He said it is difficult to believe that JRA would spend $1.5 million just to come up with “a bogus excuse not to deal with FSG and Watkins, all through some convoluted and unfair process.”
Watkins has insisted since the start of the suspensions in September that the JRA never informed him of any HUD involvement with Farish Street.
The JRA and its law firm, Jones Walker, “failed to even disclose to FSG or Watkins that there were HUD restrictions on the property,” Watkins said. “No restrictions or requirements were ever put in any contract with FSG and JRA.”
Watkins recently sent a letter to HUD expressing anger at the agency’s treatment of him and his partners and demanded a full retraction of the claims it has made against him. HUD, he said, has greatly damaged his reputation as a developer.
In summing up his complaints with HUD, Watkins wrote:
>>> The process is fundamentally flawed – no notice, no hearing, no right to give evidence was ever provided.
>>> Neither FSG nor Watkins Development ever had any kind of contract with HUD or any kind of relationship, period.
>>>JRA (or the Jones Walker lawyers) never advised us that the property might be subject to any kind of HUD restrictions. It’s not in the lease or in the land records.
>>>Watkins Development never even had a contract with JRA. The lease was with FSG. Watkins was providing services to FSG, not to the JRA or HUD.
>>> If HUD had ever bothered to talk to us and looked at the vast library of development and architectural plans and the huge amount of reconstruction work done on the structures of the buildings, and the infrastructure for the buildings, they would have realized that we were, in fact, working on a comprehensive plan that would met any kind of HUD “national objectives.”
In making the suspensions and repayment demand, HUD cited a failure by the City to meet any “national objectives” through the Farish Street project. The objectives would have included creation of 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.”
The $1.5 million that will come back to HUD will be designated for later use in “certified” HUD projects in Jackson, the agency says.