When "Partners" Attack!

City sued over breach of Community House contract


In a further development of the debacle surrounding the embattled homeless shelter Community House, BW has uncovered a lawsuit filed in federal court by the shelter's board of directors against the City of Boise. Among other violations, the lawsuit charges that the city breached its legally binding partnership in shelter operations.

The agreement, a Memorandum of Understanding signed in 1994 by then-Mayor Brent Coles, said the city would aid the nonprofit Community House, Inc., in providing much-needed support to Boise's homeless population. If the city were to find problems with the operations of the shelter, the contract said the city would have to notify the board of directors in writing of needed changes and provide 90 days for the board to respond.

However, when financial problems arose with the management of Community House, the board asserts it was not notified by the city to change directions. "Community House, Inc. did have issues," said Community House's attorney Howard Belodoff. "But they had reformed the staff and acquired a new director, grant writer and elected a new board president to reconstitute the board. They had done everything to make changes. But the city offered no help and in fact it did everything it could to be an obstacle."

"Once Community House hired the new director and new board, they were on their way to making things right," said Jill van Heel, the secretary of the board of directors of Community House and president of the Boise/Ada County Coalition for the Homeless. "But for whatever reason, the city decided they wanted out of the agreement. The city chose to take Community House over [in 2004]; this wasn't Community House saying, 'We need you to help.'"

Belodoff cited correspondence, submitted as evidence in federal court on behalf of Community House, that indicate the city had been in negotiations with the Boise Rescue Mission as early as 2003, forming plans for the mission to take control of the shelter.

Jim Fackrell, the former head of Boise Housing and Community Development, wrote a letter in May 2003 to then-Mayor Carolyn Terteling-Payne titled "Disposition of Community House." In the letter, he outlined "a summary of the issues the city will need to consider with respect to our desire to transfer ownership of the Community House to another entity."

A month later, Bill Roscoe, executive director of Boise Rescue Mission Ministries, contacted Fackrell in an e-mail stating, "Our board has asked me to contact you to discover what the next step would be to move on the Community House property. We have developed a plan for managing the building ... and are decided we want to make every effort to acquire the property."

Belodoff said the interchange means the city violated the partnership agreement set forth in 1994 contract. While the city later apologized for its backroom negotiations, Community House board members say the city did little afterward to hold up their end of the contract.

Van Heel blames the shelter's fiscal problems on bad press that caused corporate sponsors and donors to balk on contributions. But according to one former board member who wished to remain anonymous, the funding issues were a result of the city withholding federal grant money. This board member said Community House had historically received about 25 percent of its operating budget from the city transferring Housing and Urban Development grants. Van Heel said the city had begun withholding those funds around 2004.

In early 2004, Community House signed over its assets to the city to keep the facility running, a move Belodoff said was handled improperly. He said a non-profit agency with a 501(c)(3) like Community House, Inc. could only legally sign over its assets to similar agency, which the city is not. Also, Belodoff said Deanna Watson, president of the Community House board, illegally signed over the assets since she did not do it with the required number of board members present, and the board did not vote on the issue.

Michael Zuzel, spokesman for Boise Mayor David Bieter, would not comment on the Memorandum of Understanding or other issues cited in the lawsuit prior to the city's takeover of Community House in 2004. Boise Planning and Development Director Bruce Chatterton also said he could not comment on the matter due to the pending lawsuit. Similarly, City Attorney Teresa Sobotka, who was advising Community House during this transfer, did not return a telephone message asking for comment on the lawsuit and the city's actions during the transfer.

When the city transferred assets of the shelter in 2004, it signed a new operation agreement that included a section dealing with a roughly $600,000 outstanding loan obtained for the shelter's first building costs. In this document, the city said it would assume this loan, which it hasn't yet. According to a September 2005 letter from the Federal Home Loan Bank of Seattle, Community House, Inc. is considered the loan holder. But according to the Memorandum of Understanding, "Community House shall have the exclusive right to continue to manage and operate the building" if the bank hasn't released the board from the loan.

Van Heel said the board is not looking for monetary retribution with the lawsuit, but wants the city held responsible for its breaches of contract. Meanwhile the city denies allegations listed in Community House's affidavit.

The motion for a preliminary injunction went before Judge Lynn Winmill last month but he has not yet set a date for the injunction. Belodoff said he and the Community House board would continue gathering evidence.