AUBURN — City councilors want to make sure federal penalties aimed at neighbor and HOME program partner, the city of Lewiston, won’t affect Auburn’s chances.
Last month, Lewiston approved a settlement with two federal agencies, agreeing to pay $180,000 over fraudulent loans paid to a developer through the federal HOME program.
The HOME program is funded through the federal Housing and Urban Development department to target low-income housing problems in poor neighborhoods in both cities. Auburn is the lead agency, however.
“If (Lewiston) accepts a reduction, it could affect the amount both cities receive for administrative money,” Reine Mynahan, Auburn’s Community Development director, said. “But this amendment makes us whole. Lewiston would absorb all of that reduction.”
Auburn councilors accepted the proposed amendments by a 6-1 vote.
Mynahan said Auburn’s staff will also manage home renovation grants in Lewiston going forward.
“We think it’s a good thing for Auburn,” Mynahan said. “We have the staff; they are trained and have the capacity to take on these tasks.”
Lewiston agreed in 2007 to loan developer Travis Soule $200,000 in HOME funds through his company, Pine Properties LLC, to help him renovate three Pine Street apartment buildings.
According to the agreement, Soule was supposed to submit contractor invoices for the work after it was finished. The city issued Soule $180,000 in two-party checks — requiring signatures from Soule and his contractor before the checks could be cashed. City officials never inspected the properties to make sure the work had been completed.
Lewiston staff members learned in 2008 that much of the work Soule had submitted claims for had not been completed. The developer was accused of forging the contractor’s signatures and he pleaded guilty to fraud and embezzlement in federal court in 2011.
No charges were filed against any city employees, but both the federal departments of Housing and Urban Development and Justice came after the city to pay a penalty and to reimburse part of what had Soule received.
According to the agreement, Lewiston will pay $180,000 in claims — $140,000 in reimbursements to the Housing and Urban Development Department’s HOME program and $40,000 to the Department of Justice.
The HUD claim will be paid by reducing the city’s HOME grant by $46,000 per year for three years. The city gets about $175,000 each year to promote building and renovating affordable housing.
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