Syracuse, NY - Syracuse common councilors balked at a planned vote Monday on a $28.2 million lease for temporary classrooms at the former Syracuse Developmental Center after learning that a partner in the deal has a history of court judgments and was once charged with mail fraud. Councilors said they needed more time to discuss the new information and...
Syracuse Schools Superintendent Dan Lowengard and the district administration is coming under fire from common councilors for their handling of the proposed $28.2 million lease of the Syracuse Developmental Center. Lowengard stands in front of the SDC complex in this photo taken April 6, 2010. Councilors said they needed more time to discuss the new information and put off voting on the 15-year lease with Health Consortium-USA, which has an option to purchase the sprawling SDC site on Wilbur Avenue.
Superintendent Dan Lowengard has been urging council to approve the deal so that the district can use part of the SDC site to relocate students during a citywide schools renovation project. Beginning in 2011, the district plans to move about 1,500 students from H.W. Smith K-8 and Dr. Weeks Elementary schools to the SDC site.
The Post-Standard reported Sunday that the school district’s background check of the principals involved in the deal failed to uncover that one of them, Maurice Hoo, of Florida, has had $1 million in judgments and that he fought off a federal mail fraud charge and home foreclosure. Health Consortium is a joint venture of Hoo’s REIT-Americas Ltd. and Houston-based Davico Realty Group.
The FBI charged Hoo in 1999, alleging he defrauded an Indianapolis investor of $124,000. The case was dismissed due to insufficient evidence, according to the U.S. Attorney’s Office in Indianapolis. The FBI agent who investigated Hoo said a prosecutor dismissed it in part because there was only one victim, which can make fraud cases more difficult to win.
Councilors said Monday they were worried about the blemishes in Hoo’s history. Councilor Bill Ryan made two requests of the district: that the school board reaffirm its vote in favor of the lease, given the new information, and that district staff present an alternative plan to be used if the lease fails to pass council.
Several councilors criticized the school district for not doing more research on the buyers and speculated the deal would have been voted down if a vote was held.
Councilor Lance Denno said the district administration failed city taxpayers and needs a dramatic change in course.
“In spite of repeated demands from councilors that district officials thoroughly vet the proposed partners in this lease, we learned more by reading the newspaper than from submitted documents,” Denno said.
Education Committee Chairman Nader Maroun said he will schedule a committee meeting to discuss the new information about the buyers and other lease details before the matter comes to a vote.
Lowengard said the delay of at least three weeks concerned him, but that it was better than a no-vote.
“A no-vote means we delay the project six months and we reduce the scope of renovations at Dr. Weeks and H.W. Smith,” Lowengard said.
He described Hoo as a peripheral partner in the deal and argued the lease protects the city, even if the developers fail to complete renovations.
Health Consortium’s April 7 purchase agreement on the site identifies Hoo as its “managing member.” But Davico provided excerpts from a May operating agreement amendment that says Davico is now the controlling partner.
Health Consortium promises to invest $13 million to renovate three buildings on the campus. The company also pledges to pay more than $1 million in property taxes owed by the current owner. State taxpayers would pay for most of the lease. The city’s cost would be $1.84 million.
Meghan Rubado can be reached at mrubado@syracuse.com or 470-3260.