Two Pasco County developers sued the St. Petersburg Housing Authority Monday, accusing it of illegal and "covert and clandestine negotiations" in a pending sale of two apartment buildings for low-income residents.
Village Partners and JHM Investments are asking a judge to stop the sale of the 486-unit Graham-Rogall Apartments on Dr. Martin Luther King Jr. Street S to Vector Realty & Management. They say the Housing Authority violated federal regulations in handling sealed bids for the property.
Earlier this year, the housing agency decided to sell the 150-unit Rogall Congregate and 336-unit Graham Park _ both built in the 1970s _ because of costly structural problems including narrow hallways and outdated elevators.
Vector, based in downtown St. Petersburg, submitted the highest bid _ $12.2-million _ for the apartments, according to the lawsuit filed in a Pinellas County court. Village Partners and JHM submitted the second-highest bid of $11-million.
The housing agency signed a sale agreement with Vector on June 21.
But the lawsuit, citing a July 19 e-mail from Darrell Irions, the Housing Authority's executive director, alleges Vector was unable to get financing and tried to lower its offer to $10.3-million.
Irions told Vector that its lowered bid would force housing officials to begin negotiating with Village Partners and JHM, according to a copy of the e-mail attached to the lawsuit. "Vector agreed to work with our staff to increase their price to a level higher than that of the 2nd place bidder," Irions wrote in the e-mail to housing commissioners and city officials.
But Frank Killgore Jr., an attorney for Village Partners and JHM, said the Housing Authority should have immediately started negotiating with his clients after Vector lowered its price.
"The concept of renegotiating the purchase price to make sure (Vector) remains in first place just over the second place bidder completely violates the spirit of a sealed bid process," Killgore said.
Irions on Monday defended the housing authority's handling of the bids saying Vector lowered its offer after discovering "deficiencies" at Graham-Rogall and arguing they would cost about $1.9-million to fix.
"We agreed to deficiencies that brought the adjusted amount down to about $11.4-million for the sale," said Irions. Housing officials, however, didn't agree with all of the problems Vector outlined, he said.
Irions said telling Vector to keep its bid higher "was a negotiation tactic in order to get the most money we could" for the apartments.
But negotiations over repairs were not part of the Housing Authority's agreement with Vector, Killgore said. "They were to take the property as is" or withdraw the bid, he said.
Corey Carver, Vector's chief financial officer, denied Monday that Vector was unable to secure financing for the project. The company has agreed to keep the units as subsidized housing for the disabled and elderly residents who currently live in them.
The U.S. Department of Housing and Urban Development must approve the sale of Graham-Rogall. HUD still is reviewing the sale, according to Anthony Britto, an official in HUD's regional Miami office.
Marcus Franklin can be reached at mfranklinsptimes.com or (727) 893-8488.