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Perdue aide voted on project criteria

CHARLESTON, W.Va. -- Last fall, state Treasurer John Perdue's designee to the West Virginia Housing Development Fund voted to approve the rules, selection criteria and scoring system ultimately used by the state agency's staff to award a $3.67 million federal stimulus grant to a Charleston developer with ties to Perdue, records show.

Three months later, Perdue and his wife sold an 11-acre property to the developer, Douglas E. Pauley, for $215,000, according to Mason County property records. Pauley, a longtime friend and Perdue campaign donor, is building a 32-unit apartment complex on the Perdues' former farmland property.

The U.S. Attorney's Office and FBI are investigating the land deal. Pauley is cooperating with federal authorities.

Perdue, who sits on the state Housing Development Fund's board, said Wednesday that federal investigators have asked him to provide "documentation" about the land he and his wife, Robin, sold to Pauley last December.

"I am confident all documents on record clearly show we followed all legal procedures during the land transaction," Perdue said in a prepared statement. "As a member of the West Virginia Housing Development Fund board of directors, I plan to fully cooperate with federal authorities when I'm asked to do so." 

Housing Development Fund officials have previously said Perdue's designee to the board recused himself from a vote on Pauley's project, but they didn't disclose that the designee -- state Assistant Treasurer Danny Ellis -- took part in the discussion and voted on the "competitive selection criteria" used by agency staff to choose projects and distribute $18.3 million in federal stimulus funds last year.

At a Sept. 28, 2010, meeting, Housing Development Fund board members first voted to award a $256,000 loan to Pauley for his Mason County project, called Milton Place, meeting minutes show. Ellis stepped out of the room during the discussion and did not vote on the loan.

Minutes later, Ellis voted with board members to approve the selection criteria and scoring system for projects eligible for stimulus funding through a federal "tax-credit exchange program."

Under the stimulus package, the U.S. Treasury provided the state Housing Development Fund with $25 million in grant money. 

State Housing Development Fund board members never voted to approve the projects that received stimulus funds, the meeting minutes show.

The housing fund's scoring system gave the most weight -- 300 out of 830 total points -- to projects whose developers already had purchased land or were in the process of buying property.

Other factors used in the selection included whether projects were "shovel-ready" -- with construction contracts and regulatory approvals.

Milton Place's scoring sheet wasn't immediately available for review Wednesday.

It was unclear whether Housing Development Fund board members knew what projects would seek stimulus funding when they approved the selection criteria and scoring sheet at the September 2010 meeting.

On Dec. 29, Housing Development Fund staff members selected 11 projects and awarded $18.3 million of the $25 million in funding allocated to West Virginia from the federal stimulus package.

Pauley's project received $3.67 million, the second largest grant. A Jefferson County apartment complex project, Willow Spring Farm, was awarded $4.3 million, the highest amount.

The Housing Development Fund's meeting minutes also show that Pauley's Mason County project came before the agency's board as far back as 2006.

At a meeting in May that year, Housing Development Fund lawyer Samme Gee told board members that state law prohibited them from "having a personal financial interest in a public contract," according to the meeting minutes.

"We have a board member who has an indirect financial interest in that his spouse is part owner of land that would be purchased by a partnership that intends to construct a multi-family housing development," Gee told board members. "This interest would require the board member to be recused from voting on this proposal."

Gee, a lawyer with Jackson Kelly who has a contract with the Housing Development Fund, said state law required the disclosure. She also talked about the possible conflict during an hourlong closed-door executive session held moments before she publicly addressed the board, according to the minutes. 

Perdue's designee to the board at that meeting -- former state assistant treasurer Paul Hill -- also took part in the closed-door meeting, meeting minutes show.

At an August 2009 meeting, Housing Development Fund board members gave preliminary approval for a $750,000 low-interest loan for Pauley's Milton Place project through the U.S. Department of Agriculture.

After a brief closed session during that meeting, Housing Development Fund Executive Director Joe Hatfield disclosed that the Perdues were selling the 11-acre property needed for Pauley's project. Perdue's designee, Hill, stayed out of the room and did not vote on the loan, the meeting minutes show.

The Housing Fund's chairman at the time, Larry Puccio, could not be reached for comment Wednesday. Puccio, former chief of staff for former Gov. Joe Manchin, now works as state Democratic Party chairman.

Housing Fund officials would not answer questions about Ellis' vote on the selection criteria Wednesday. 

Last week, federal agents raided Pauley's Charleston office near the state Capitol, seizing hundreds of boxes of documents.

The FBI returned the documents to Pauley Tuesday. A short time later, Pauley declared that the U.S. Attorney's Office "cleared" him of any wrongdoing.

His lawyer later released a letter that states the U.S. attorney wouldn't pursue federal charges against Pauley, provided he cooperates with an ongoing investigation.

Mason County commissioners and administrators plan to speak with federal prosecutors in Charleston today.

Assistant U.S. Attorney Steven Ruby summoned Mason officials to the meeting, said Mason County Commissioner Rick Handley.

Mason County Administrator John D. Gerlach and County Clerk Diana Cromley also are expected to travel to Charleston for the meeting. They plan to bring documents related to the property deal.

Last year, the three-member commission rejected a request from Pauley and the Perdues to write a letter of support for the Milton Place housing project. Commissioners said the project was "out of character" with the rural neighborhood, six miles north of Point Pleasant.

After one meeting, Robin Perdue scolded them for not writing the letter, commissioners said.

Pauley later filed a discrimination complaint against Mason County commissioners. The U.S. Department of Housing and Urban Development's Office of Fair Housing investigated, but never released a report on its findings.

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.

 


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