Durham authority threatened with fines

Durham authority threatened with fines

Staff WriterDecember 22, 2004 

Federal officials have warned the Durham Housing Authority that it faces hefty daily fines if its $35 million redevelopment of a blighted section of East Durham doesn't get back on schedule.

According to a letter dated Dec. 10, the authority has missed 11 important "milestones" -- dates by which significant portions of the new housing being built with a federal Hope VI grant were supposed to be done. If the agency does not meet these requirements by March 10, then the U.S. Department of Housing and Urban Development will fine Durham $10,000 a day until they are met.

In a written statement, officials with the local authority blamed the delays on an outdated construction schedule from December 2000.

"With major projects of this scale, you can expect some delays," Gwen Simpson, Durham's planning and Hope VI director, wrote in the statement. "We fully expect these delays will not affect the project completion date of September 2006."

Simpson said that the authority had sent HUD another construction schedule with later dates for the milestones but that the new guide had not yet been approved by officials in Washington. She also said that at least some of the delays have been caused by the "unique circumstances" in Durham, as well as HUD's withholding of money the authority needed to buy land for the ambitious Hope VI plan.

Sections of the Hope VI project's first development, Main Street Townhomes, were completed last month and ground has been broken for the next phase -- a "senior village" off Alston Avenue. Overall, the Hope VI project is intended to replace the now-razed Few Gardens public housing complex with 425 homes in five sites scattered east of downtown.

The housing authority has been the target of at least three federal investigations since April 2003, when former executive director James Tabron was ousted for making personal charges on an agency credit card. Auditors have since alleged that $5.8 million in federal money and improper loans was misspent on outside development ventures.

Following the audits, HUD temporarily froze some Hope VI money, and the authority must now receive written federal approval before it can spend any money, slowing down construction. Durham officials concede, however, that the project lagged behind the original schedule well before news of the critical audits broke.

An executive with The Community Builders, the development partner for Durham's Hope VI project, said that he is still confident that the new neighborhoods will be completed and that Durham will be able to rectify the scheduling differences with the federal officials.

"It's not that unusual when working with HUD that different parts of the elephant might move at different speeds," said Willie M. Jones, a senior vice president for the Boston-based nonprofit developer. "We're proceeding like this is going to be resolved, We're not going to throw up our arms and quit work."

Still, Jones said that revelations about the Durham authority's shaky finances had made it more difficult to secure investors and loans for the project -- which could translate to further delays.

"Durham right now is not the easiest sell," Jones said.

Staff writer Michael Biesecker can be reached at 956-2421 or mbieseck@newsobserver.com.

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