Northampton County Council Makes Bad Bet on Shiloh Baptist Church

Last week, Northampton County Council Prez Ann McHale asked representatives of Easton's Shiloh Baptist Church to make a pitch for the public funding of renovations to a halfway house on Canal Street, estimated to cost $295,000. Council agreed to kick in the final $50,000. The Northampton County Bulldog, Ron Angle, usually snarls at requests for public money. But instead of doing that, he actually hugged one of the presenters.

Perhaps the real reason why council members were so receptive is because Shiloh, a great church is the voice of Easton's proud African American community. It's no secret they vote in large numbers, and this is an election year.

I think a halfway house is a great idea. But last week, I expressed my concern that their program, as described, tears down the wall separating state from religion. People who agree to go there must consent to "spiritually based" recovery programs. No mention was made of a secular alternative.

Now I have a new concern. Apparently, Shiloh is lousy with money. Council would do just as well to take the $50 thousand promised to Shiloh and just flush it down the toilet. You see, Shiloh did business with the county a few years ago, and the result was a financial disaster with the state eventually deciding to cut off the gravy train. Here's a report prepared by the Northampton County DCED, which has been sent to all council members. It speaks for itself.

Overview

The Northampton County DCED traditionally had a good working relationship with one of the few housing services providers in the Easton area: Shiloh Community Services, Inc. (“Shiloh”). Shiloh received small amounts of funding through the DCED for projects, including funds to provide HUD-certified counseling for first-time homebuyers.

In 2002, the County received money through the PA DCED to create a “revolving loan fund” (RLF), whereby money would be used to acquire and rehabilitate homes that could later be sold to income-qualified buyers at a reduced price. At the point of sale, the funds would return to the RLF to be used for future acquisition and rehab. Based on the past relationship, the Northampton County DCED sub-awarded the $123,141 in state “Brownfields for Housing” grant funds to Shiloh. In addition, the county contributed $40,000 in matching funds to Shiloh from its Affordable Housing Trust Fund, derived from fees assessed to deed and mortgage transactions. In addition, the County secured another PA DCED Brownfields for Housing grant in the following year for $142,945, with the county Trust Fund match totaling $100,736. These funds were once again sub-awarded to Shiloh.

Issues

On 10/3/06 and 12/1/06, the County Controller’s Office released independent audits which found deficiencies in the administration of these grants, both by Shiloh and the County DCED. The findings for the first audit were inconclusive in that Shiloh could not substantiate over $140,000. Little paperwork could be provided verifying costs or substantiating the eligibility of the buyers. The auditor further found that Shiloh had submitted estimated costs for payment rather than actual invoices, and could not account for where the differences in costs were applied.

From the release of the report in 2006 through March of 2008, the County attempted to close out the contracts with Shiloh. Shiloh maintained two acquired properties but had not rehabbed them. Based on the negative findings, the PA DCED refused to allow the County to drawdown any remaining funds.

During this time period, many letters and two meetings occurred with the new Director of SCS and pastor of Shiloh Church, Philip Davis. While he did terminate the employment of the Housing Manager and reassigned the duties, he indicated that the projects would be completed and funds returned to the County. That said, various requests for reports and updates were disregarded.

Unfortunately, Shiloh Community Service’s financial troubles led to obligations that mitigated their ability to repay the County upon the sale of these properties. Shiloh owned other properties that were delinquent in mortgage, tax, and utility payments, thus liens were placed on the two properties purchased with the County funds. Further, it was discovered in February 2008 that a mortgage for the purchase price of one of the two properties never had been satisfied, despite the fact that the County gave Shiloh a check for over $81,000 to pay off this mortgage. During this time, two of Shiloh’s other properties were sold off at Sheriff Sale and they no longer have their certification through HUD as an approved housing agency.

Therefore, on March 7, 2008, several representatives of the County, including Executive John Stoffa and County Solicitor Karl Longenbach, met with the representatives of Shiloh and their counsel to establish a reimbursement plan. As such, Shiloh entered into a mortgage agreement on with the County for $180,000. In order for this money to be returned, Shiloh Church (which remains financially healthy), refinanced another structure so as to allow for repayment. The mortgage was finally satisfied in full in June 2008.

Effects

There was negative press emanating from these findings as first reported on 11/23/06 in an Express Times article by Sarah Cassi: “Shiloh misplaces grant paperwork.” Further negative press included accusations that homes were sold only to church members with work done primarily by church members through non-competitive selection, and suspicion that the former NC DCED Director’s participation on the church’s Board was the reason for the large grants and lack of oversight.

The 2003-2006 Brownfields grant could not be closed with the state and we continue to negotiate closure of this with the state’s DCED. Further, during the two-year period od 2006-2008, any County department was limited in receiving state funding through PA DCED as we were red-flagged until Shiloh sold the properties. This led to significant delays in receiving both a Veteran’s Memorial grant and a tax reimbursement grant.