City attorney Wayne Rich, a developer himself, confirms the city already has lost $267,597 on 23 uncollected loans because it is barred from collecting debts over five years old due to the statute of limitations. But on the $318,617 in loans that still fall under the five-year statute curtain, the city council has voted 6 to 1 to sue the 17 owners if necessary to collect the money.
"It's a strange situation where the city has put itself in the role of a lender and then forgotten to collect the debts," an area real estate lawyer not associated with the controversy tells GlobeSt.com. "It's an embarrassing situation for the city's administrative staff."
But city staffers in a position to know tell GlobeSt.com the language of the loan documents clearly state the money was a 10-year loan repayable without interest. To date, 17 owners have repaid their loans; 16 defaulted when other lenders foreclosed on their properties.
One owner, who asked for anonymity, tells GlobeSt.com city staffers under former administrations told him the money was considered a grant and didn't have to be repaid so long as the property was kept in good condition and rented to low-income tenants. The city's legal staff, however, maintains verbal agreements don't supersede the written loan documents.
The city started the loan program in 1985 to help owners renovate their rental properties. A total 73 loans were made through 1993. The funds came from the US Department of Housing and Urban Development. Owners had to put up a 50% matching amount before receiving the loan. Dyer was elected last year. The loans were all made during the administration of former Mayor Glenda E. Hood, now Florida's Secretary of State.
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