BREWER, Maine — A U.S. Department of Housing and Urban Development review of the financial books at Brewer Housing Authority revealed that only local revenues were used in a recent land purchase between the housing authority and its former board chairman.
“No federal funds were used in the land deal purchase so there is no conflict of interest in HUD regulations,” Kristine Foye, HUD deputy director for Region 1, said Tuesday.
Brewer city leaders became concerned there was a possible conflict of interest in early October after being approached for tax-increment financing for a $6 million project planned for the land. City councilors held an executive session Oct. 1 to discuss the matter, and at their Oct. 13 meeting voted to ask the state Attorney General’s Office to review the case.
The Brewer Housing Authority is supported by state and federal funds and funds from renters. Gordon Stitham, the housing authority’s executive director, has said the land in question was purchased only with local program funds.
“I think that’s what Gordon has said all along,” Bangor attorney Edward Gould, who represents the housing authority, said Tuesday.
After a recommendation of the Attorney General’s Office, city leaders hired Portland attorney James Cohen last week to investigate whether any laws — particularly the state’s conflict of interest law — were broken when the housing authority purchased land from Calvin Bubar, a former board chairman who resigned in July.
HUD’s findings were not unexpected, City Manager Stephen Bost said.
“I’m not all that surprised,” he said. “The [concern] has been less about the origin of the funds than … the process by which the funds were used. Those questions will be addressed in a separate inquiry,” done by Cohen, Bost said.
The Maine conflict of interest law states: “No employee or commissioner of any authority may, within two years of that service … voluntarily acquire any interest, direct or indirect, in any contract, project or property included or planned to be included in any project of that housing authority over which the employee or commissioner has exercised responsibility, control or decisions during tenure with the authority.”
Any violation of the state’s conflict of interest law is a Class E crime, which is punishable by up to six months in jail and a $1,000 fine.
Chief Deputy Attorney General Linda Pistner told Brewer that any possible law violation involving the land sale did not rise to the level of crime the agency typically investigates. However, she added the Attorney General’s Office “would be happy” to review the results of an independent investigation.
The results of Cohen’s investigation will be provided to the Attorney General’s Office for review, Bost said last week in an e-mail to councilors.
Bubar’s attorney, Joseph Ferris, who also is a City Council member and deputy mayor, said last week that his client did have a conflict of interest, but that Bubar dealt with the conflict legally.
“Cal excused himself [during discussions] and recused himself from the vote” on whether the housing authority should purchase his land, Ferris said. “Then he resigned from the board. I think he applied all the rules properly.”
Bubar and his wife, Nancy, purchased the Chamberlain Street land for $120,000 in mid-September 2007, and one month later Bubar was appointed to the board of commissioners. He was made chairman in January 2008, and according to board meeting minutes, discussed the possibility of selling his property located on Chamberlain Street to the housing authority at least twice.
In addition, Bubar technically still was on the board when the purchase and sale agreement was signed on July 9. He had hand-delivered his resignation letter to the city the day before, but still was a board member until the Brewer City Council accepted his resignation on July 14.
The 4.16-acre parcel on Chamberlain Street is valued by the city for property taxes at $88,000 and the housing authority purchased it on Oct. 7 for $280,000. The purchase price is more than three times the assessed value and $160,000 more than what the Bubars paid for it.
The housing authority, in partnership with the social services agency Penquis of Bangor, plans to build a $6 million, 32-unit elderly housing project on the land. The housing authority would own the land and operate the facility, which would be built by Penquis.
Both Penquis and the Brewer Housing Authority rely on federal HUD money to operate.
Penquis also has agreed to “buy the land from Brewer Housing Authority” for the full $280,000 purchase price if it fails to develop the land within two years, Stitham has said.
The residential property would need to be rezoned high-residential, which requires approval from both the planning board and City Council, for the project to go forward.