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Council directs city attorney to pursue options after Bell House fails to repay HUD‑funded loan
Summary
Council members discussed a long‑outstanding $550,000 HUD loan to Bell House (city provided $500,000 to reduce mortgage plus $50,000 for rehab), documented code violations and missing rent‑roll reports; they directed the city attorney, housing director and manager to pursue legal options and possible collection actions.
City leaders directed the city attorney's office and housing staff to pursue legal and collection options after reviewing a long‑running compliance issue with Bell House, a property that received a $550,000 loan from HUD funds administered through the city.
Councilman Kevin Burns provided a detailed history: the city issued a $550,000 loan when Bottled/related organization purchased Bell House (about $500,000 to reduce mortgage principal and $50,000 for rehabilitation) with a 15‑year term and a maturity/balloon payment due in 2021. Burns said the borrower failed to make the required repayment at maturity; the city sent a demand letter and the borrower responded seeking forgiveness of $66,000 in interest and a restructured 10‑year loan with prospective forgiveness of $250,000 if future payments are timely.
Burns told the council that Bell House had not supplied the required annual rent‑roll reports since February 2016. Housing Director Albert Bazell confirmed the loan default and said staff had researched the matter and identified outstanding code‑violation issues at the property: missing certificates of use, elevator recertification, garbage in parking areas, abandoned vehicles and other neighborhood complaints. Bazell said three of the four similar loans in the earlier program had been satisfied, while Bell House remained outstanding.
Council members expressed concern that HUD could hold the city responsible if the city does not recover federal funds and that the property appears to have taken in rent while failing to meet reporting and maintenance obligations. The city attorney (name not stated on the record) told the council the city would reengage outside counsel previously used on similar collection matters, explore legal remedies — including liens or sale if appropriate — and return to council with settlement options or next steps. The council gave staff direction to proceed; no settlement was approved at the meeting and no forgiveness of principal was granted.
Council members asked staff to return with a report and recommended steps; staff said they would proceed with negotiations and bring proposed settlements back to the council for approval.
