A year after The Lens reported that a politically connected nonprofit had burned through more than $2 million in public funds without delivering on its promise to open a community center, the project languishes.
By the looks of the building at the corner of Washington and Broad streets, you wouldn’t know that the Family Center of Hope has paid out nearly $1.8 million on its renovation.
Last year, the architect estimated it would cost up to $1.3 million more to complete. That included about $900,000 owed to the general contractor and its subcontractors.
Now that figure could be up to $1.6 million after interest, legal fees for various lawsuits and payments for the contractor to check on the site periodically.
If the project is ever finished, it may end up costing well over $3.5 million. The original budget: $1.5 million.
No work has been done in two years, and it shows. When The Lens visited the site last week, the grass was overgrown and the rear of the lot was littered with trash and construction debris.
Despite its current condition, the building hasn’t been cited by Code Enforcement since 2009, according to the city’s online records. That year, it was found guilty of code violations in an administrative hearing.
The would-be community center has received more than $2 million from the city of New Orleans and the state. The city has been the larger benefactor, pledging $1.8 million in federal Community Development Block Grants. In addition, the city gave the nonprofit $350,000 in federal grants to buy the property in 2002.
The city has been working with the group to secure funding from the U.S Federal Emergency Management Agency to complete the project, according to Mayor Mitch Landrieu’s spokesman Tyler Gamble.
In the meantime, the city has withheld about $100,000 from its $1.8 million pledge. In an April letter Gamble provided to The Lens, the city laid out a number of conditions that the Family Center of Hope must meet in order for the city to continue its involvement.
“There are no plans to provide any additional City funds for this project,” Gamble said in an email.
Last year, The Lens reported that despite these problems, the city helped facilitate another grant for the group through the NOLA For Life Fund, the grantmaking arm of the mayor’s NOLA For Life violence reduction program. Twenty-three organizations received a total of $500,000 to “deliver high-quality social services to young men most at risk of killing or being killed.”
The Family Center of Hope got $40,000 to provide counseling to troubled youth. It received the highest grant level even though its grant application was incomplete.
The Family Center of Hope was founded in 1989 by the Rev. Tom Watson and his wife, the Rev. Pat Watson, as an offshoot of their church, the Watson Memorial Teaching Ministries.
Along with their work in the church and the connected charity, the Watsons have been actively involved in New Orleans politics.
Tom Watson, an ally of former U.S. Rep. William Jefferson, ran for mayor in 2006. The Watsons’ son, Corey, ran for the District B City Council seat in 2010. Both were unsuccessful.
Tom Watson has been a board member of the Audubon Commission since 2006. Landrieu re-appointed him in 2012.
No progress in two years
Since last June, the building at 4137 Washington Ave. has gone from looking like a stalled construction site to another abandoned building in the city.
The long-overdue renovation into a community center had been shut down for more than a year when we visited then. This is what it looked like:
The building was dark and empty. Visible through a tinted, dirty window was a placard showing the building as it was envisioned, with palm trees lining the sidewalk. Instead, one window was cracked, wires wires hung from a wall near the rear door, and a couple of signs advertising ‘Baby College Coming Soon’ lay next to litter on the ground.
Last week, the grass around the building was two to three feet high in places. Behind the building, construction debris had fallen into gaping holes in the ground, which were haphazardly marked off with orange safety fencing. A shattered window faced Washington Avenue.
The community center is the subject of at least six civil lawsuits filed since 2012. The subcontractors have sued the contractor. The contractor has sued the Family Center of Hope. And the Family Center of Hope has, in turn, sued the architect.
Pat Watson did not respond to The Lens’ requests for comment on the building, though she did talk about her group’s participation in the NOLA for Life Fund grants.
M. Slayton Construction, the general contractor hired by the nonprofit group, can’t get major work in Louisiana because of the lawsuits and liens filed by its subcontractors on the job, co-owner Jacob Krieger told The Lens. Mike Slayton, Krieger’s business partner, has moved to North Dakota for work.
“We’re not bankrupt yet. We still have some money in the bank,” Krieger said.
He estimated the Family Center of Hope owes his company and its subcontractors as much as $1.6 million, up from about $900,000 in June last year. “And possibly more,” he said.
Soon after the project began, the nonprofit didn’t pay its contractors on time, leading to several work stoppages. After a series of cost overruns due to change orders, the work ended for good in early 2012.
Bad plans from beginning?
Before construction even started, Krieger said, his company identified hundreds of thousands of dollars in additional work that was necessary due to faulty designs.
“We told the architects and the owners that the prints were incomplete. They didn’t have anything in the plans about the roof,” he said. “There were no switches for turning on the lights. There was a bunch of things that were not to code.”
The architect, Joseph St. Martin of St. Martin Brown & Associates, did not respond to repeated requests for comment.
According to city records, the permitting department raised a number of concerns with the Family Center of Hope’s 2008 application. The project failed several inspections after the permit was issued in 2010.
In a letter to The Lens, Michael Steele also blamed problems on the design. His company M.C. Steele was a subcontractor on the community center.
“The project’s Architect, (SBA & Associates) grossly underestimated the cost to complete the job,” Steele wrote.
The city’s letter refers to “errors and omissions of the project architect.”
Krieger said Slayton told the Family Center of Hope that it would cost an additional $700,000 to $800,000 above the original contract to do the work properly, rather than based on the faulty drawings. He said the group and its architectural firm told his company to solicit bids from subcontractors based on the existing plans.
“They told us, bid the print. Don’t bid any revisions,” he said. After his company won the job, he said, he was assured there would be enough money for changes.
In 2012, the Family Center of Hope sued St. Martin and his firm. The lawsuit cited hundreds of thousands of dollars in unexpected change orders due to incomplete designs.
In court, the architecture firm argued that the contract required any dispute to be resolved in arbitration. A judge dismissed the case last year.
Lawsuits on hold
M. Slayton Construction and the Family Center of Hope are named as defendants in at least five subcontractor lawsuits involving the building in Orleans Parish Civil District Court. The Family Center of Hope never responded in three of them.
All six lawsuits we found appear to be on hold. It is unclear if the nonprofit organization now has legal representation.
“My understanding is they don’t,” said Gail Snakenberg, M. Slayton Construction’s attorney. “From what I’ve seem, the attorneys have all come off, have withdrawn.”
In one of the suits, filed by Kenner-based Lopez Mechanical last year, the city was named as a co-defendant. The City Attorney’s Office filed for an indefinite continuance in September, which it received.
M. Slayton Construction has filed cross-claims against the Family Center of Hope in two of the suits. Snakenberg said the company could file for a default judgment in light of the group’s failure to respond. “But I don’t know if the money’s coming through,” she said.
Snakenberg said the company has considered suing for the nonprofit’s assets — which include the building on Washington Avenue and a church on St. Charles Avenue. But, she said, there are other people in line.
In one Civil District Court lawsuit involving the building renovation, subcontractor Boes Iron Works received a judgment of $183,000 last year. That hasn’t been paid, said H. Minor Pipes, the company’s attorney, in an email.
The Family Center of Hope reported about $2.6 million worth of assets on its 2012 tax filing, the most recent one available. It shows more than $1 million in revenues during 2011 and 2012. In 2012, almost all of its $174,000 in revenue was government grants.
But the main reason Slayton has not yet pursued a judgment, Snakenberg said, is that it wants to get back to work. The company wants to preserve its chance of being brought back on as general contractor if the nonprofit finds more money for the project.
More taxpayer money on the way?
It’s not clear what FEMA funds would be available. In late 2012, the agency announced a $445,377 award to complete construction.
Monday morning, we asked FEMA if the nonprofit has received all of that money and if the group has applied for more assistance. A spokeswoman said she would try to get an answer by the end of the day.
Last year, the state included $10,000 for the community center when it issued about $500 million in general obligation bonds. Another $90,000 is in this year’s State Capital Outlay Budget, representing the leftover from Pat Watson’s original 2007 request.
According to Krieger and the letter from Steele, “the city” has made assurances that it would provide even more funding for the project. Neither identified who made those promises.
“From time to time the City contacts the General Contractor and says they will find the money to complete the building, but nothing happens,” Steele’s letter says. “I don’t understand how a million dollar grant can be wasted like this and no one is accountable.”
The letter from Deputy Mayor Cedric Grant, however, lays out fairly stringent conditions in order to secure the city’s continued support.
Among those, the nonprofit must:
Promise to pay the city “the proceeds of the claim against the architect in an amount up to the additional funding provided to complete project.”
Gamble said The Family Center of Hope has not responded to the city’s offer.