Should Pinellas County pay $740,000 for this? Auditor concerned about a "windfall'' profit

For years, Wood Acres had a reputation as one of the roughest mobile home parks in Pinellas County.

Residents lived in squalid trailers. Arrests were common for drug dealing, sex crimes and assaults. "Horrific,'' said one online review.

So county officials were pleased this year when a nonprofit company bought the park with plans to demolish the aged trailers and replace them with new manufactured homes with affordable rents.

"It’s a really exciting, interesting pilot project,'' said Kathryn Driver, executive director of the county’s Housing Finance Authority. It approved buying the land at 3901 46th Avenue N, just outside of the St. Petersburg city limits.

But Pinellas Clerk of Court and county auditor Ken Burke has declined to release payment, citing several "questions and issues'' about the transaction. Among them:

• The nonprofit paid $300,000 for the property. It deeded it to a related for-profit company that wants to sell it to the county for nearly $740,000 — a 146 percent profit.
• A principal in both the nonprofit and for-profit companies is the son of assistant Pinellas County Administrator Jacob Stowers.
• An appraisal done for the companies and used to set the sale price to the county valued the property at two-and-a-half times what the county property appraiser says it is worth.
• One document had the wrong address for the property.

"In order to clearly illustrate that this transaction meets the definition of a public purpose and to ensure the expenditure is transparent, I will not authorize the payment until corrective documents are provided and questions sufficiently answered,'' Burke wrote to the Housing Finance Authority on Oct. 14.

Built in 1940, the Wood Acres Mobile Home Park still had 26 decrepit trailers and more than $1 million in code violations when the nonprofit Contemporary Housing Alternatives of Florida bought the park in January.

"There had been meth labs, every kind of drug deal,'' said Joseph Lettelleir, president of the company. "It brought tears to your eyes if you went through it.''

The company, which currently has 14 affordable housing projects in Pinellas, relocated some residents to its other communities and helped the remainder find new homes. The trailers contained asbestos but were so dilapidated they couldn’t be moved. The company had to pay for asbestos remediation before getting a demolition permit.

In March, Contemporary Housing Alternatives deeded the property to Oasis Acres LLC, formed a month earlier as a for-profit company. The two companies have some of the same managers, including Lettelleir and Jacob Stowers, son of the assistant county administrator with the same name.

Lettelleir said the reason they created another company was because they had a new project — Oasis Acres, as it will be called — and the sale of the property could go through faster if if the seller was a for-profit limited liability company.

"It’s easier to set up an LLC than a nonprofit,'' he said.

In May, Contemporary Housing Alternatives approached the county with its plans. The Housing Finance Authority would buy the land, then lease it back to Oasis Acres LLC to put up 34 manufactured homes that meet federal wind resistance standards. The one- and two-bedroom homes would rent for $700 to $750 a month.

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The authority approved the transaction in September. Burke, however, withheld the $737,524 payment to Oasis Acres LLC, noting among other concerns the "windfall'' profit it stood to make and questioning the relationship between one of the company’s principals and a top county official.

The younger Stowers said he never discussed the project with his father.

“There was no conflict of interest,'' the younger Stowers said. ”To say there was any favoritism is just ludicrous.''

The county told Burke that the elder Stowers recused himself from all conversations related to the Oasis Acres project and that a deputy county administrator reviewed and approved the purchase. The elder Stowers confirmed that, telling a reporter "I stayed out of the loop.''

Burke wasn’t satisfied with the county’s response.

"Conflicts of interest include the appearance of a conflict of interest,'' he wrote to the Housing Finance Authority on Oct. 21. "Having the son or any relative of a county employee, particularly a high-ranking employee, involved in any county transaction where there is monetary gain (salary or investments) is a conflict.''

While county officials appeared to be aware of the conflict, Burke added, it was unclear whether any steps had been taken to "protect the County from perceived or real accusations of inappropriateness.''

Burke also wanted proof of the amounts Contemporary Housing Alternatives claimed to have spent for demolition and other costs. And even if it could prove the costs, which bring its investment in the trailer park property to $579,000, Burke noted that the company would still make a 24.4 percent profit on the sale to the county.

"We recommend that the County assess whether 24.4 percent is reasonable and prudent,'' he wrote to the Housing Finance Authority on Oct. 21.

Driver, the authority’s executive director, said she and other county officials have been gathering documentation to address the clerk’s questions. Burke said he will issue a check when "additional information.'' is provided

"We will meet at some point with all involved to figure how we can improve the process,'' Burke said. "That is a desire on all of our parts.''

As for the project itself, Lettelleir of Contemporary Housing Alternatives said the county has a dire need for affordable housing. He still hopes to have the first four manufactured homes in place by Christmas.

"As fast as we can put them in,'' he said, "they’ll be rented.''