News and Tribune

July 10, 2013

Coffey persistent on Midtown audit

Fire station conveyed for Kroger expansion deal



New Albany City Councilman Dan Coffey continued his scrutiny Tuesday of the agency in charge of the $6.7 million Neighborhood Stabilization Program. 

A resolution sponsored by Coffey that was passed last month was reaffirmed by the New Albany Redevelopment Commission. It calls for an audit of the NSP program, which has resulted in the rehabilitation of 32 vacant and dilapidated properties in the Midtown neighborhood. 

Coffey said the audit — which would be performed by the Indiana State Board of Accounts — should focus on how the nonprofit New Directions Housing Corp. has managed the project. 

“I’ve got some real questions about how some of the money was spent,” said Coffey, who is a council liaison on the redevelopment commission.  

One of the properties was turned into a neighborhood center, and another a community gardens. The structures on the remaining 30 properties were refurbished or rebuilt, and the majority have been sold to low-to-moderate income homeowners. 

But the cost of saving some of the houses has been questioned by Coffey and other city officials. 

About $5 million was spent on construction for the properties. As of May 1, the city recouped about $1.9 million by selling 23 of the 30 homes. New Directions’ estimated total gross from the initial phase of the NSP project will reach $2.4 million when all the homes are sold. 

Though most of the houses were sold for between $55,000 and $109,000, the city and New Directions spent on average between $112,000 and $200,000 to repair the homes. 

But redevelopment member and Councilman John Gonder said such expenditures fit the federal program’s design. 

“It’s not an efficient process, but what you’re dealing with is trying to maintain the fabric of a neighborhood,” Gonder said. 

Though the financial investment to refurbish the homes was typically much more than the asking price, Gonder referred to the houses redeveloped through the NSP program as “seeds to rejuvenate those neighborhoods.” 

New Albany’s NSP program is regularly audited by the state, but Coffey said he would call the State Board of Accounts and request it pay special attention to how the project has been managed. Though it may fit within federal guidelines, Coffey said he’s uncomfortable with how much of the grant has been spent on administrative costs. 

According to documents provided by the city and New Directions, developer fees for the project totaled $712,800 as of May. 

“They made a huge profit,” Coffey said. 

In 2011, city officials said New Directions could claim up to $660,000 in developer fees and $342,823 for program delivery activities or costs they incur associated with the project. Also in 2011, state officials said up to 10 percent of the federal grant could be spent on administration costs. 

David Duggins, director of economic development and redevelopment for the city, said that with some grants winding down, the administration is reviewing how they have been managed. He didn’t specifically address how the administration views New Direction’s handling of the NSP project during the meeting, but has said in the past he’s pleased with the results of the effort in Midtown. 

In May, New Directions Chief Operating Officer Lisa Thompson said the NSP project has cut down on vacant properties and improved conditions in the Midtown neighborhood. 

“Investments will continue to benefit New Albany from what has already been accomplished,” she said. 

According to Thompson, New Directions has been informed that, along with the city, it will receive a regional historic preservation award from Indiana Landmarks for the Midtown project. 

After incentive assistance and other fees were paid, the city has collected about $983,000 that can be used to redevelop other vacant properties. 

Duggins said the administration has been acquiring some properties at cheap costs through tax sales, as well as receiving donated houses from banks and other sources. Those properties can be redeveloped through another wave of NSP work driven by the money collected from the initial phase. 

For example, on Tuesday, the commission voted to accept ownership of a four-plex building at 617 E. Eight St., which is within the NSP boundary for the project. It was donated to the city by a bank, as Duggins said financial institutions receive credits for making such contributions. If refurbished in conjunction with the NSP project, Duggins said the four-plex will be converted to a single-family residence. 



Though the final financial numbers are still being determined, the city took another step toward closing a deal with Kroger for its Green Valley Road fire station. 

The station would be sold to Kroger so that it can expand its State Street shopping center. The city would use the proceeds from the sale toward constructing a new station off Daisy Lane near where the new aquatic center will be located. 

On Tuesday, the board of works voted to convey the Green Valley Road station to the redevelopment commission so that it can conduct the deal with Kroger.

It’s been estimated Kroger would pay the city $1.5 million for the firehouse and property.