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Lyons' case spurs officials to rethink grant process

The Rev. Henry Lyons may unintentionally prompt city leaders to overhaul the way they dole out grant dollars.

Nervous about a $300,000 city grant given last year for a senior housing project initiated by Lyons, City Council members Tuesday talked about the need for more oversight into how the city issues grants and loans. New procedures are necessary, City Council member Kathleen Ford said, "in light of how this was handled."

Larry Williams agreed: "We don't want to fund (such projects) unless we've got our checks and balances in place."

Despite the controversies surrounding Lyons _ including the revelation by the Times that a forged document was included in an application for federal backing of the St. Petersburg housing development _ the developer said last week the project is still on.

Consultant Martin Bakke of Clearwater-based Healthquest Housing said he expects to ask the U.S. Department of Housing and Urban Development for more time to submit an application for roughly $5-million in mortgage insurance. The insurance would back tax-exempt bonds that would be issued by the county.

"You've got to separate the project from the good reverend. It's a totally different deal now," Bakke said of the 84-bed nursing facility planned for property next to Lyons' church, Bethel Metropolitan Baptist.

Under its contract with the city, Bethel Adult Care must break ground on the project by Dec. 20 or risk foreclosure by the city.

Despite concerns about the project's financial feasibility from city housing officials, Mayor David Fischer approved the $300,000 grant last fall, months before the leader of the National Baptist Convention USA became mired in public controversy and the subject of criminal investigations.

The city money enabled Bethel to buy 2.37 acres, providing some equity to help the developers obtain long-term financing. As part of the same deal, Bethel is still making payments on an abutting piece of property and is up to date on those payments, said former state Sen. Mary Grizzle, who used to own the property.

In a preliminary application for HUD backing, the developers included a letter purportedly signed by the general secretary of the National Baptist Convention pledging up to $750,000 for the Bethel project in St. Petersburg. The general secretary, the Rev. Roscoe Cooper, told the Times last month he had never signed the letter addressed to Lyons and never heard of the Bethel project.

After a Times article about the forged document, the matter was referred to HUD's inspector general's office. "I can't comment on the status of an ongoing inspector general's investigation," HUD spokesman Alex Sachs said, when asked about the investigation Monday.

Bakke declined to comment about the likelihood of making the Dec. 20 deadline for breaking ground. But that schedule appears tight at best, considering he expects to ask HUD for another 60 days to complete its final application for insurance to back the bonds. He has been working on securing conventional financing to replace the forged NBC letter.

"We're still working on it," Bakke said.