Problems may force EOB to sell property

Wednesday, March 31, 2004 | 11:31 a.m.

In a meeting called by federal officials last week to "convey the seriousness" of the many problems facing the Las Vegas Valley's largest nonprofit agency, one of the moves the agency said it was making to pay back the balance of $2.1 million in missing funds was to sell off some of the property it owns.

The meeting between Health and Human Services Department officials and Economic Opportunity Board members was held in San Francisco March 23 to prepare the nonprofit agency for an upcoming federal inquiry into its finances and Head Start programs, according to the federal agency's summary of the meeting. The April 4-8 inquiry has been prompted by ongoing problems with the Head Start programs run by the EOB, the missing millions and other issues.

The agency owns at least 32 properties in Clark County, according to the assessor's Web site. A review of minutes for last year's board meetings and a conversation with a board member indicate that one of the properties the nonprofit would try to sell is at 708 S. Sixth Street.

The property apparently has been vacant since at least 2001, raising the question of whether taxpayer money has been used for several years to carry a building with no apparent use and environmental and financial problems.

There has been a series of failed attempts at trying to sell the property dating to late 2001, but it is a tough sell because there is asbestos, lead paint and mold in the building, and there may be federal strings attached to the property.

A 1997 federal review noted that the EOB should reimburse the federal agency $140,000 that the EOB had obtained to add to the property. But the EOB didn't make the additions, the review noted. That issue apparently was never resolved, officials said.

Also, the 1993 purchase price for the property was $475,000, according to county records -- nearly $600,000 in 2004 dollars -- but recent attempts to sell the property have never drawn offers higher than $400,000. When the previous owner of the property, GLR Investments Inc., bought it in 1992, the property's value was $325,000, according to county records.

Repeated calls seeking comment from Sen. Joe Neal, D-North Las Vegas, the appointed spokesman for the agency, and Claude Logan, chairman of the agency's board, were not returned.

The Sixth Street property was built in 1934 and "has had at least four additions along the way," according to Richard Stewart, sales analyst for the Clark County Assessor's office. Those additions were made in 1970, 1988, 1991 and 1995, but it is unclear whether some or all of the $140,000 was spent on the 1995 addition.

The EOB, with a $60 million budget largely comprised of federal and state funds, was created in 1964 to help the poor through such programs as child care, Head Start, senior day care and drug addiction treatment.

Problems uncovered by the Sun in recent weeks include the agency's inability to account for $2.1 million it received from the state for its child care assistance program. The program is the agency's largest, with more than $20 million in federal and state funds.

Additionally, it has been revealed that the agency's second largest program, with more than $12 million in federal funds -- the Head Start and Early Head Start centers -- has received years of negative reviews from the federal government.

And, the agency has lost its executive director and chief financial officer since January.

So when these and other issues were laid out at the San Francisco meeting, Hannah Brown, acting executive director, "described agencywide actions to stabilize the agency financially," according to the HHS summary of the meeting.

One of the actions listed -- along with "controlling agency spending" -- was "liquidating property assets."

After the meeting, board member Chester Richardson said the Sixth Street property was one of those being considered for sale. The building at 708 S. Sixth St. was used from about 1993 to some time in 2000 as the central offices for the child care assistance program, according to Jerry Allen, who directs the program for the state welfare division. It was also used for the Head Start program.

It is unclear if families with children used the building, a concern given the lead paint.

A review of 2003 board minutes from the agency shows that the board gave approval to list the property for sale as far back as November 2001.

Minutes from EOB meetings in March and April 2003 indicate the board had received offers of $390,000 and $358,750 for the property. The March 2003 minutes also note that there was "an estimated outstanding mortgage of $200,000" on the property at that time.

Separate documents regarding the March 2003 offer indicate that the EOB "fully disclosed environmental issues" with the building to the buyer, including asbestos, lead paint and mold.

For unexplained reasons, the EOB turned down those and other offers.

Jim Marquez, a Las Vegas business consultant, said he is currently representing a potential buyer for the property. He said he saw reports that indicate the asbestos, lead paint and mold in the building would be "very costly" to clean up.

Windy Hill, associate commissioner for the Head Start bureau in Washington, said the EOB's assets will be one of the issues examined in the bureau's upcoming inquiry.

She said a 1997 review of the EOB's Head Start program may have left an unresolved issue involving the property.

"There seems to be an issue of whether money intended for the expansion of Head Start (at the site) was used for that or something else," Hill said.

Additionally, Hill said that "tax dollars were certainly used to renovate the (Sixth Street) property, but I don't know if they were used to purchase it."

That's an important question because an issue with any property the EOB owns is whether federal funds were used to buy, renovate or add onto the property. If federal funds were used, the money must be repaid when the EOB sells the property.