Vermilion County Housing Authority board resigns in wake of lawsuit

Vermilion County Housing Authority board resigns in wake of lawsuit

ROSSVILLE — All five members of the Vermilion County Housing Authority Board of Commissioners resigned Monday night out of frustration with federal officials' handling of an unpaid loan that's resulted in Longview Bank and Trust filing suit against the housing authority.

Former Commissioner Terry Prillaman announced at the close of Monday night's regular meeting in Rossville that he was resigning, even though he was not a commissioner when former Executive Director Tony Hasbargen arranged a $1.6 million loan that has resulted in a lawsuit against the housing authority and four commissioners who served during Hasbargen's tenure.

Prillaman, of Rossville, said he is no longer willing to serve and do his best when he believes federal officials and Hasbargen were the negligent ones but local citizens serving voluntarily were also named in the lawsuit, filed March 5 in Vermilion County Circuit Court.

Along with the housing authority and Hasbargen, the suit names the commissioners at the time the loan was arranged: James L. Miller, Lawrence L. High, John L. Nalett II and Tyrone J. O'Riley.

The Department of Housing and Urban Development's Chicago Regional Office "is basically just throwing everybody under the bus to cover their own mistakes," Prillaman said Tuesday, adding that the other commissioners decided during Monday's meeting to follow his lead and resign.

In his resignation letter, Prillaman states that he recommends HUD Chicago "take over the entire management of this agency, which would allow them to operate the HA (housing authority) as they see fit, since it is obvious there is no need for a 'Board' except to function as puppets of HUD/Chicago and to be 'scapegoats' for their own mistakes."

Only one current commissioner, O'Riley, was on the board during Hasbargen's tenure. O'Riley, along with current commissioners Greg Shepard, Jim Kiser and Brad Wheeler, wrote and signed their own resignation letter Monday night stating that they feel like "puppets" of the Chicago HUD office.

"Serving on this board in a public-service capacity is not worth the agony of worrying about being sued over technicalities and errors and 'being thrown under the bus' by Chicago HUD," their letter states.

In 2005, Hasbargen arranged the $1.6 million loan for renovations to housing authority properties through Hoopeston Capstone Bank, which later merged with Main Source Bank. Hasbargen used federal funds to make some payments on the loan, and in 2012, he had it refinanced by Longview Bank and Trust, which has locations in Georgetown, Paris and Chrisman.

In 2013, Hasbargen was fired following allegations of improper spending, and an audit by HUD's Office of Inspector General turned up the loan, which it determined was not valid because federal property cannot be mortgaged. Payments to the bank ceased at that time and have not been made since.

Prillaman said the current commissioners have tried various ways of resolving the situation, including appealing to HUD officials for a waiver of regulations to allow the housing authority to use its federal funds to repay the loan, but they have refused.

In his resignation letter, Prillaman wrote of his frustration at "how HUD/Chicago could get such enjoyment from disallowing the repayment of a loan to a local bank, that acted in good faith, for approximately $1 million due to a small technicality or error and punishing the local bank to set an example."

Bank officials were hoping a waiver would be granted. When it was not, bank board Chairman Perry Albin and other officials informed the current commissioners at a Feb. 27 housing authority meeting that the bank was out of options and a lawsuit was its only course of action to recoup its investment.

Housing authority commissioners are appointed by the Vermilion County Board. On Tuesday, county board Chairman Mike Marron said his first priority is to ensure that residents in the housing authority's properties are taken care of, then address the vacancies. But he said before he tries to recruit new commissioners, which he believes will now be very difficult, he wants a face-to-face conversation with HUD Chicago officials to "hash out an end game" to come to a resolution with the bank.

"We need to get a strategy for getting the issue resolved. The five board members who resigned were very frustrated," Marron said. "It's just an unfortunate situation, and I support the board members. They've been really doing their best to come up with a good solution to this. It's just a bad situation, and they were caught in the middle of it, and I fully support and understand their frustrations."

Marron said he had put in a call to HUD officials, and after consulting with local officials about the situation, he intends to request later this week a face-to-face meeting. He said the housing authority's current executive director is still on the job handling day-to-day operations.

According to the San Benito News in Texas, Hasbargen was hired in Spring 2015 to a multiyear contract as the executive director of the San Benito Housing Authority but was fired "without cause" in May 2016.

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