David Watkins demands HUD retract claims made in Farish project report
by Ted Carter
Published: October 2,2014
Watkins Development’s David Watkins is demanding the U.S. Department of Housing and Urban Development retract negative characterizations it has made about him and his partners regarding their involvement in the redevelopment of downtown Jackson’s Farish Street.
The angry reaction from Watkins stems from a Sept. 7 monitoring letter to Jackson city officials detailing what says are years of failure by the City to do sufficient oversight of the Farish Street project.
HUD’s “inaccurate, reckless” and “libelous” characterizations have caused “extreme” damage to his reputation and those of his partners,Watkins said in an eight-page letter to Stanley E. Field of HUD’s compliance division in Washington.
Further, fallout from HUD’s actions continues to cause him and his partners “significant stress, embarrassment and anxiety,” he wrote in the Sept. 29 letter.
In his retraction demand, Watkins said HUD “illegally” suspended his firm and its executives from involvement with HUD-funded projects until further notice. Watkins asks for an investigation by the FBI and U.S. Attorney’s Office “to determine whether or not criminal statutes may have been violated that would allow prosecution “of the individuals involved with the violation of our civil rights.”
He said he suspects “based upon information and belief” that employees and agents of HUD have “intentionally engaged in a conspiracy.”
They conspired, he claimed, with “yet to be named local officials/employees” to provide mischaracterizations that went into the HUD report. Watkins charged the conspiracy was aimed at damaging pending litigation he has over Farish Street Group’s removal as project developer.
The HUD suspensions include the Jackson Redevelopment Authority and former Watkins Development executive Jason Goree, who is now interim director of Jackson’s Economic Development Department.
HUD officials in Jackson and Washington declined to talk publicly last week about the Sept. 7 monitoring letter to Jackson city officials giving the city and the Jackson Development Authority until Oct. 7 to repay $1.5 million HUD spent on properties that make up the three-block Farish Street redevelopment. The agency also demands the city and JRA take a host of “corrective actions” to bring compliance with HUD rules.
A key finding in the monitoring letter is the City’s failure to certify the Jackson Redevelopment Authority as “sub-grantee” authorized to spend HUG money on the project. The letter also cites the JRA for what HUD says is its failure to use a competitive bid process in selecting Watkins Development and affiliate The Farish Group to take over the project from original developer Proforma-Mississippi.
Watkins’ strongly-worded letter to HUD does not address the “sub-grantee” issue between the City and JRA, but challenges the claim Watkins won the Farish project without a competitive process.
Watkins said the JRA engaged in “many months of efforts” in 2008 to seek interested parties to take over what was then a failing project.
“There was a competitive bidding process,” Watkins writes. The conclusion that no competition occurred “is arbitrarily in the report because there was no ‘sealed’ bid,” he adds.
Reaching a conclusion that a sealed bid would be required “in this instance is arbitrary and capricious,” said Watkins, who retired as a lawyer several years ago to become a full time developer.
“Our group agreed to assume the debt and the risk of development primarily because there were no developers anywhere willing to take on the project.” he said.
Watkins has said city government and civic leaders who prodded him to take over the project were betting he could have the same success converting Farish Street into an entertainment destination that he was having restoring downtown’s King Edward Hotel and Standard Life Building.
The wager has so far failed to pay off. The Farish Street project has been dead since the JRA board booted Watkins from the project last October over a perceived lack of progress. Watkins has talked at length about obstacles the JRA erected to progress on the project and has charged that JRA attorney Zach Taylor worked with Watkins’ Farish Street Group partners to bring in a new developer.
Watkins today says he is out $4.7 million. He has put a construction lien on the project’s properties to recover his money.
Farish Street Group was not in breach of its lease with the JRA when the Authority terminated the lease, he claimed. “The JRA, in fact, breached the lease agreement by their action,” he said.
Hinds County Chancery Judge has ordered an Oct. 8 meditation session between Watkins and the JRA on the breach of contract issue.
The Mississippi Development Authority is out nearly $5 million but so far has not acted to secure a claim on the properties.
In his letter to HUD and in previous interviews, Watkins has emphasized neither Watkins Development nor Farish Street Group used HUD money or JRA money on the project.
Addressing other claims in HUD’s monitoring letter, Watkins said no conflicts occurred in Watkins Development assessing charges to The Farish Street Group. “How the partners of FSG and Watkins decide to execute a development plan and make billing charges between or among its own members is irrelevant to any considerations of conflicts and should be beyond control by the JRA or HUD,” Watkins writes.
HUD missed its target in claiming Farish Street Group’s Goree did anything irregular in listing himself as a registered agent for Zach Harmon’s Blues club, an early subtenant signing in the project, Watkins wrote in the letter to HUD.
Goree was instrumental in negotiating Farish Street “celebrity-endorsed” subleases and the structure of the leases are “proprietary,” he noted.
However, Watkins said he routinely shared details of the sublease arrangements with the attorney for the JRA.
“Whether or not Mr. Goree was a registered agent, a manager, a real estate broker, an investor or an employee is immaterial and irrelevant” under HUD regulations, the Farish development lease and the law, Watkins said.
Where HUD missed the target, he said, is in signaling out third parties for conflicts instead of the City and JRA, the two entities it has oversight authority over as grantees and sub-grantees.
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