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Posted: January 2, 2013 12:04 p.m.

Settlement in the works for NSP homes

A settlement is in the works for a contractor who worked with the Independent Educational Community Development Group - an organization the county partnered with to purchase 12 homes for rehabilitation under the Neighborhood Stabilization Program.

Ken Colado, owner of Properties of the Southeast, was contracted with IECDG to do work on 12 properties. However, materialman liens were placed on five of the homes at 370 Crestfield Circle, 75 Chandler Trace, 418 Smith Store Road, 455 Freeman Drive and 45 Trelawney Avenue for a total of $75,000, with a claim that Colado wasn't paid for all of the work that was done on the homes.

The liens have delayed the county from transferring all of the homes to Habitat for Humanity, a process that was approved by the board of commissioners at an Aug. 7 BOC meeting. The county and IECDG had trouble with placing qualifying families in the homes, and it was decided by the county to transfer the homes to Habitat for Humanity because the organization had a list of several families that met the NSP requirements for the home.

Scott Sirotkin, director of Newton County Development Services, said the county was awarded a NSP grant in March 2009. NSP was a program developed by Congress to help address foreclosure problems. Under the program, communities could buy foreclosed homes, rehabilitate them and offer them to income qualifying individuals.
Sirotkin said the county received $1,742,760 in grant funds from the program. He said a portion of the grant funds were used to create Fairview Community Park.

Jenny Carter with the county attorney's office said the park portion of the project was completed and the next step was purchasing 12 foreclosed homes, rehabilitating them and selling them to lower income families that met NSP qualifications. However, Carter said the county was limited in how they could sell the homes, so they had to partner with IECDG, which served as an asset manager for the homes.

"When the county buys property, there's a restriction on how the county can sell the property. Typically, it has to be auctioned off either on the courthouse steps or by sealed bid. There are some exceptions to that, but in general, if the county goes to sale property it has to sell it to the highest bidder. That obviously was a problem with this program," Carter said.

Carter said it was the responsibility of IECDG to rehabilitate the homes on behalf of the county. She said five homes - 275 Mountain Way; 545 Jack Neely Road; 110 Landing Lane; 185 Heaton Place Trail; and 130 Chandler Fields Drive have been sold by IECDG; two of the homes - 315 Barshay Drive and 35 Zelina Court - that were successfully transferred to Habitat for Humanity, were sold to qualifying families in December 2012.

She said the last five homes that were held by IECDG and were in the process of being transferred to Habitat for Humanity, have these materialman liens placed on them.

Carter explained that materialman liens are placed on homes when someone provides materials and labor for a job, but they are not paid. Carter said the properties can not transfer unless the liens are released or satisfied.

"There was arbitration between IECDG and the contractor and the arbitrator determined that the amount was owed to the materialman in the amount of $75,000. The county was not involved with that arbitration," Carter said.

Though the arbitrator determined that Colado was owed $75,000 for the homes, he said he was actually owed $116,000 for the work. Colado said he put in new carpet, new appliances, new air conditioners, flooring and a number of other items into the homes, all of which he had to pay the bills on.

He said he has done similar work in Spalding County for the NSP program, but he received all of his money for the work.

"I'm paying other people, contractors, subcontractors to do some of this work and then 30 days later, I'm supposed to get a check. Well, in Spalding County, even though it was longer than 30 days, I at least got all my money," Colado said.
"In Newton County, on the other hand, I did 12 houses. The work was good, the inspectors came out and loved the work and the nonprofit got the money directly from Newton County and never paid me in full," he said.


"They kept just giving me a little here and there and excuses of why they couldn't pay me. I think they should be in jail," he said.

"When I left there in December of 2010, I had about $50,000 in debt. All the people who worked for me and were helping out, they got paid. I paid them. But my creditors, I had to borrow money just so I can get money to pay for these houses."

After calls to several IECDG contacts, it appeared they could not be reached for comment. According to the Georgia Secretary of State's website, IECDG is still active but is listed as noncompliance, as it apparently has not paid its annual registration fee for 2012.

Carter said the county attorney's office is working with IECDG and Colado's attorney to settle the liens. She did not give any details on who would be responsible for paying money to Properties of the Southeast and said everything would be discussed in executive session. There also wasn't any mention of who was the contact person for IECDG.

"We're working with IECDG and the individual contractor who has liens on the homes to present a settlement offer to the board at their meeting in Jan. 15," Carter said.

"It will happen in executive session. If the board chooses to accept any kind of settlement proposal, that would be voted on in open session. They would need to come out of executive session to vote on the proposal."

 

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