CCO Commentary: How HUD Funds Work to Fleece The Taxpayers

How HUD Funds Work to Fleece Taxpayers 

The City of Evansville and Hope of Evansville have a new residential project about to start at 101 East Tennessee Street in the part of Evansville commonly known as Jimtown.

The federal government is supplying $240,000 of our hard-earned tax dollars to do a complete refurbishment of a dilapidated house that has been standing since 1909.

When the $11,000 that “Hope Of Evansville” paid to an organization named Crescent Valley Capital LLC is added to the total the house at 101 East Tennessee will cost taxpayers a total of $251,000 by the time it is refurbished. This sounds great until the value proposition is examined by checking comps and the value of other homes in that neighborhood.

The Jimtown neighborhood has four houses for sale that are shown on the real estate website Zillow.com.  A recently refurbished house only a block away at 212 East Tennessee has 3 bedrooms, 2 baths and has 1,250 square feet.  The price is $65,000 but was recently reduced from $85,000 after failing to attract an acceptable offer.

Since the home slated for the taxpayer funds is only 920 square feet, a comparable value to the asking price for the $65,000 home would be only $46,000.  So on the surface, we now know how HUD works. HUD gives away taxpayer dollars to cities and housing agencies so they can spend $251,000 to raise the value of an old obsolete and dilapidated home all the way up to $46,000. In a common-sense driven world, this is considered squandering $205,000 from the taxpayers.

The other three Jimtown properties on the market are listed for $21,000, $14,900, and $30,000 but their condition is not comparable not to the property at 101 East Tennesse Street.

Quite frankly, all of the houses on the city block that contains 101 East Tennessee would not be valued at $251,000 combined. The old adage about real estate that the only 3 things that matter are location, location and location is still true.

This part of Jimtown will not support any home that has a market value of $251,000 and it probably won’t for 100 years.  This pork barrel project is a worse deal than the Front Door Pride houses that sold for around 50% of what the City of Evansville and the taxpayers invested in them.

It’s our strong opinion that the 101 East Tennessee Street house is not likely to even bring 20% of what is being planned to be spent on it.

Please take special note that the above picture of the HUD-funded dilapidated 920 square foot house located at 101 East Tennessee Street doesn’t even have a front door.

The question is why wasn’t this old obsolete house just be torn down to make way for a new home of 920 square feet that could most certainly be built for under $75,000 and it would be insulated well enough that the Vectren bill won’t be more than the house payment.

This house has been in the hands of people who did not care enough about it to do any maintenance since it was sold to an investor who purchases the property back in 2000. In 2000 the house was owned by First Union Bank that sold it to a gentleman named Tommy J. Lynn for $6,500.

After 19 years of ownership, Lynn sold the house to Crescent Valley Capital LLC for $5,000 on July 5, 2019. Just one month later Crescent Valley Capital flipped the house to Hope of Evansville for $11,000 on August 16, 2019.  Crescent Valley Capital’s management must have a crystal ball to have found a house to flip for a 120% profit after over 20 years of declining values and money-losing owners. The official address for Crescent Valley Capital LLC is 318 Main Street Suite 101 that just happens to be in the Innovation Pointe Building. As that building is a place for successful entrepreneurs, this 120% profit in a month should have been front-page Courier and Press news as a success story for the Growth Alliance for Greater Evansville (GAGE).

It is a worthy question to ask why Hope of Evansville didn’t just offer Mr. Lynn $5,000 as opposed to enriching the luckiest investor in Evansville with a 120% profit. But this is how HUD works and that is how local government works when it is taxpayer dollars at risk.

The reality of this insanity is that the federal government of the United States has been devoid of common business sense for years.  This is just another local example of how Washington destroys taxpayer dollars with rules and regulations that force the spending of $251,000 to create a value of $46,000. We consider this project to be a major squander of taxpayer dollars that Evansville has not seen the like of since the old Safe House project blew through $240,000 per small apartment.

It is time for the laws that mandate irrational and insane spending of our hard-earned tax dollars were eliminated. For that same amount of money 3 to 5 new Habitat houses or mobile units could have been deployed in Jimtown so more families could benefit from the homes.  That is not how HUD works because that would take common sense and cognitive thought. HUD is all about rules, regulations, and processes without any regard for making sane decisions.

If a private CEO did this they would be fired and possibly prosecuted for fraud. When HUD and local government team up to waste our money, it is a celebrated success. Perhaps HUD rules and local bureaucrats who execute them need a taste of tar and feathers for their excessive greasing of the lucky beneficiaries of taxpayer largesse.

FOOTNOTE: We give five (5) cheers to Channel 14 TV News for bringing this story of the “FLEECING OF THE TAXPAYERS” to light.