A week after Homestead officials approved the sale of an old bowling alley with the uncertainty of possible financial liability, a representative from U.S. Department of Housing and Urban Development asked for repayment of a 21-year-old federal grant.
Mayor Jeff Porter called an emergency meeting to reassess the $2.3 million sale to turn the alley into a Hyundai car dealership after Nora Casal, a local representative from HUD, called the city to pay back a federal grant because of the change in commercial use for the site.
While the city has received conflicting information from HUD over the years, the most recent letter, received in 2011, states the city is no longer liable to repay the Community Development Block Grant used in 1994 to rebuild the property after Hurricane Andrew.
“She was asking a staff person how the city intended to pay back the money once the sale of the bowling site was consummated,” City Manager George Gretsas told the council at an emergency meeting called on April 30. “Now she’s not sure one way or the other and she would have to go to her superiors.”
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The original contract included a provision that indemnified the city and the HUD liability, if any, would fall under the buyer. But the council ultimately ignored the city attorney’s advice amended the contract to strike out the provision after James Rivchin, owner of RT Automotive LLC, requested it.
Although the city has not received a definitive answer from HUD, the majority of the council members approved the sale once again and Gretsas, who held off finalizing the deal, signed the contract.
“We gotta be aggressive and tell them we’ve done everything we could do,” Councilman Jon Burgess said. “We got a letter that we relied on, we got a buyer that’s going to create jobs.”
Other council members mentioned that the car dealership may still fall under the national objectives of the HUD’s economic development program, which would require the dealership to offer a certain number of jobs for people of low-to-moderate income.
Councilman Jimmy L. Williams III, the most vocal supporter of Rivchin’s offer, questioned Gretsas’ authority to “question” the council’s vote and “refuse to execute” the contract as soon as he received it.
“He says it’s new information, but there’s nothing new about it,” Williams said.
The majority of the council disagreed with Williams, and commended Gretsas for exercising caution and seeking further guidance.
“To me that is new action taken by HUD that could or could not have an effect,” said Vice Mayor Stephen Shelley.
The profit from the sale of the bowling alley will be used to pay off a loan given out to an agency within the city — the Community Redevelopment Agency — for 4.2 acres of the rundown homes in 2007 in an effort to bring more development.
Follow Rebeca Piccardo on Twitter: @rpicc002.