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Published: Sunday, December 18, 2011
Page: 1A

West Virginia Treasurer John Perdue didn't always sit on the sidelines while serving as a board member of a state housing finance agency that reviewed an apartment project being built on property owned by Perdue and his wife in Mason County, documents suggest.

On March 9, 2007, a West Virginia Housing Development Fund administrator fielded a phone call from Charleston developer Doug Pauley, according to the employee's notes about the conversation.

"John Perdue. Sewer ran to his site. He's angry," wrote Housing Fund Multi-Family Programs Director Sherry Bossie at the time.

Pauley, who planned to purchase Perdue's land and build a 32-unit low-income apartment complex on the Mason County property, suggested Housing Fund Executive Director Joe Hatfield might be able to solve Perdue's sewer problem, according to Bossie's note.

"Joe [Hatfield] should help him out on this," Bossie wrote. "He's been a good friend of the Fund."

Pauley later shelved the project - called Milton Place and named after Perdue's late father-in-law - until April 23, 2009.

That night, Pauley asked Mason County commissioners to approve the development. Perdue attended the meeting, Mason officials said. Commissioners wouldn't support Pauley's proposal.

The following morning, Perdue called the Housing Development Fund and left a message for Hatfield. Perdue left his cellphone number and asked Hatfield to call him back, according to a copy of a phone message slip obtained by the Sunday Gazette-Mail.

Agency officials would not comment last week on the reason for Perdue's call.

"Why would he be calling [the Housing Development Fund]?" asked Mason Commissioner Rick Handley, who opposed Pauley's project. "The decision was in our hands, not the Housing Fund's."

The FBI and U.S. Attorney's Office are investigating Perdue's land deal with Pauley. The developer paid Perdue $215,000 for the property in December 2010.

Perdue's lawyer, Mike Carey, declined comment last week. Perdue has said he followed "all legal procedures" while selling his land to Pauley, a longtime Perdue campaign donor.

Pauley, who is cooperating with federal prosecutors, repeatedly has refused to answer the Gazette-Mail's questions about his dealings with Perdue.

In 2007, the Mason County Public Service District did not provide sewer service to Perdue's property - near the county fairgrounds about six miles north of Point Pleasant. Pauley had first proposed the Milton Place project a year earlier. Mason County commissioners wouldn't support Pauley's proposed apartment complex for the elderly and handicapped, citing the lack of sewer service and a host of other reasons.

"The sewer project was only in the planning stages at the time," Handley recalled last week. "Doug Pauley had talked about building a 'package' sewage plant."

Pauley never built a package plant - a smaller sewage treatment facility that typically serves a limited number of customers. Sewer service wasn't extended to Perdue's land and the surrounding area until 2009.

Handley said last week he didn't know what to make of Pauley's March 9, 2007, phone call to Bossie at the Housing Development Fund. Bossie later forwarded her notes about her conversation with Pauley to Hatfield.

Handley said Pauley and Perdue never spoke to the Mason commission about the Milton Place project in 2007. However, the Housing Development Fund was reviewing Perdue's property and Pauley's project at the time, records show.

On April 4, 2007, Housing Development Fund Director Lonnie R. Stringer wrote a two-page memo to Hatfield about the site. That year, Stringer headed the real estate development division at the Housing Fund, which owns properties throughout the state.

The Gazette-Mail requested a copy of Stringer's memo under the state Freedom of Information Act last week. The Housing Development Fund provided a copy, but redacted - blacked out - all but the first sentence of Stringer's memo.

"I have reviewed the market study conducted for the previously proposed Milton Place Apartments, as well as the Phase I Environmental Study," Stringer wrote to Hatfield.

An agency lawyer said the rest of the memo included "pre-decisional analysis" that the Housing Fund could keep secret.

Housing Development Fund Deputy Director Erica Boggess said last week that she wasn't familiar with the contents of Springer's memo and why he wrote it.

"It's inappropriate for me to comment at this time," Boggess said. "It's related to the U.S. attorney's investigation, and we're cooperating with that investigation."

Asked whether the Housing Development Fund considered purchasing Perdue's property in 2007, Boggess said she didn't know. Stringer could not be reached for comment.

Boggess said she also was unfamiliar with Bossie's note about the March 9, 2007, phone call from Pauley. Bossie repeatedly has not returned phone messages and emails.

The Housing Development Fund is paying Tim DiPiero, a Charleston criminal defense lawyer, to represent Bossie amid the grand jury investigation.

In recent months, Housing Development Fund officials repeatedly asserted that Perdue recused himself from all discussions, decisions and votes about his property while the Fund reviewed Pauley's project.

In December 2010, Bossie and her division staff awarded $3.67 million in federal stimulus money to Pauley, even though the state's grant agreement with Pauley states that no Housing Fund board members can have a financial interest in the developer's project.

Pauley is using the money to build the Milton Place project on the 11-acre property Perdue sold to him.

Pauley's agreement with the Housing Development Fund doesn't include any exceptions for board members with potential conflicts.

The conflict-of-interest section says board members can't have any "family or business ties" to the stimulus-funded housing tax-credit project while they sit on the board - or for a year after they leave the board.

The West Virginia Housing Development Fund wants to keep secret the contents of this April 2007 memo about Treasurer John Perdue’s property in Mason County.

lawrence pierce | Sunday Gazette-Mail file photos
These photos show work progressing in November at Charleston developer Doug Pauley’s Milton Place low-income housing project in Mason County. Pauley bought the land from state Treasurer John Perdue. Now the FBI and U.S. Attorney’s Office are investigating the deal.

Reach Eric Eyre at or 304-348-4869.

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