Three Council Members Oppose Sale

Three members of Ogdensburg City Council said Monday that they will oppose the sale of 819 Knox St. to its current tenants for $2,000 in closing costs alone. An agreement with the city allowing the family of Brett A. Burke to buy the home is structured to allow grant funding to pay the entire $51,000 purchase price.

"They've been in that home for three years. They've gotten a pretty sweet deal, but the party is going to end," said Councilor Nicholas J. Vaugh. "It is not fair to the other people in the city who work hard for a living and pay their taxes."

The city allowed the family to live rent- and tax-free in the home since the city foreclosed on the property for back taxes in 2008. The city spent more than $85,000 in grant money to renovate the home while the family was living there.

Councilor Daniel E. Skamperle said that he would not support the sale.

"I can't imagine that we went in, rehabbed a house for someone, and then would give them the house using grant money," said Mr. Skamperle. "That's ludicrous."

Councilor Douglas G. Sholette agreed.

"I'm not using grant money to sell that house," said Mr. Sholette. "This is not over. When it comes in front of us, I will not vote to approve the sale."

Documents obtained under the state Freedom of Information Law show that the city has extended an opportunity to buy the house, appraised at $51,000, to the family by covering the sale price with state and federal grant funds.

"We're in the process of buying the property," said Mr. Burke, who lives at the house with his wife, Barbara Seguin.

In June 2011, outgoing city planner J. Justin Woods submitted a property close-out form to the state Division of Housing and Community Renewal. According to the document, using $40,000 from a state Affordable Housing Corporation grant and $11,000 from a U.S. Department of Housing and Urban Development Neighborhood Stabilization Program grant, Ogdensburg offered to cover the purchase cost of the house at 819 Knox St. for its current tenants. The family would be required to pay $2,000 in closing costs and pay the city taxes and insurance on the house.

"They don't have to make any mortgage payments as long as they abide by those terms," said James A. O'Neill, president of C.W. Augustine, the DeKalb Junction firm that oversees Ogdensburg's housing programs. "That is what a grant is all about. It is not a loan. It is a grant."

According to Mr. O'Neill, the sale constituted an appropriate use of grant funds.

The program is available to households that make less than 50 percent or less of the local HUD area median income. In St. Lawrence County, the median income for a four-person household is $55,300.

"The program's purpose is to stabilize neighborhoods for low- and moderate-income people," Mr. O'Neill said.

The house became the center of a controversy after it was revealed Ogdensburg allowed the tenants to live rent-free there for three years. In August, Mayor William D. Nelson called for an investigation into the matter. After conducting his own review of the situation, Mr. Nelson on Thursday called for City Manager Arthur J. Sciorra to resign.

"It is starting to go from a problem with the housing program to a huge event," said Mr. Sciorra. "In all fairness we should put all the information together in one place at one time before making judgments."

In April, Mr. Sciorra signed a purchase agreement for the house that required the buyers to secure a mortgage to purchase the home.

"The purchase/sale agreement calls for a $51,000 payment at closing by the buyer," said Mr. Sciorra. "No mention of anything other than a mortgage."

Mr. Sciorra said he was not aware that the purchase price of the house was to be covered by grant funds.

The purchase agreement says that if a mortgage was not secured, the city did not have to go through with the sale. All sales of property owned by the city are subject to the approval of the City Council.

"The final decision whether the house is sold to them with a grant or with a mortgage is up to City Council even though they had a tentative agreement in place," said Mr. Sholette.

The property is assessed at $86,200.

"We're required to sell these properties for the appraised amount, no more, no less," Mr. O'Neill said.

The grant funds become a deferred mortgage, in which the buyer's only obligation is to live in the property for a certain length of time.

"In some cases, the grant funds may be the only mortgage," said J. Justin Woods, outgoing city planner. "Keep in mind the purpose of housing programs are to help low- and moderate-income individuals or families have access to decent, quality housing."

Recently, the tenants signed a lease with the city and began paying rent on the property.

"Yes, we recently signed a lease," said Mr. Burke. "I don't think it is in the city charter to lease me the property."

Mr. Burke did not say how much his family has been paying the city to rent the house.