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A HOUSE NOT IN ORDER

A local nonprofit backed by the city began building much needed low-income housing in Pine Bluff 10 years
ago. More than $500,000 later, it has built and sold just six homes.

By AmyJo Brown/OF THE COMMERCIAL STAFF

For a decade, the city of Pine Bluff has entrusted more than half a million federal low-income housing dollars
to Progressive Southeast Arkansas Housing Development Corporation, a local nonprofit that promised to
use the money to help the city’s poor become homeowners.

But Progressive has helped few of the families it said it would help, a Pine Bluff Commercial investigation has
found.

Instead, Progressive failed to deliver on promises of building dozens of low-income homes and selling them
to people qualified to buy them — despite spending hundreds of thousands of the tax dollars the city gave
it, according to court records, interviews and documents The Commercial obtained from Progressive and
the city through the state’s Freedom of Information Act.

The records show that of the 47 new, low-income houses and four apartment complexes Progressive’s
managers said they would have finished or at least begun building by 2009, they have completed and sold
only six single-family homes. All except one of those six came in far above budget, with tens of thousands
of dollars spent on construction costs for vacant properties and on homes years after they were sold and
occupied.

The few projects they undertook are riddled with other problems, too. Final inspections were not completed
on half of the homes Progressive has sold, according to city records and a lawsuit filed by the owner of one
of the homes. And two additional homes Progressive started building in 2005 are not yet finished, in part
because Progressive hired people unqualified to do the work, records show.

In addition, Progressive sold at least three of the homes to buyers with incomes too high to qualify for the
subsidized housing, according to city records and the homeowners themselves. It also failed to place
covenants in the homes’ deeds to ensure they remained part of the city’s affordable housing stock for at
least 15 years, as the federal government requires. And interviews and property records also revealed
contradictions and inconsistencies in the paperwork of the sales of the homes and the prices ultimately
paid for them.

In the meantime, however, while the city’s poor gained little from its work, Progressive sent thousands of
the dollars the city provided to two of its co-founders, Larry and Patricia Amos, and their relatives. One of
the homes built was sold to Larry Amos’ daughter — at a deep discount and in violation of conflict of
interest regulations stipulated by the U.S. Department of Housing and Urban Development. Progressive
also purchased a piece of property from Larry Amos’ mother. And in 2005 — a year when Progressive’s
activities were mostly idle and Larry and Patricia Amos were trying to end their personal bankruptcy —
Progressive paid more than $34,000 in commissions to the family.

The Commercial also found that, in most cases, Progressive’s activities were reported to officials with the

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city’s community and economic development department, which is charged with monitoring the
nonprofit’s spending. In others, discrepancies in Progressive’s documentation should have raised flags.

Yet the city failed to act when HUD officials said it had an obligation to do so, and continued to provide
Progressive more and more money to complete its work.

“I think there’s a lack of, on our part, a lack of accountability as we have been disbursing federal dollars,”
Mayor Carl A. Redus Jr. said after hours of questioning his staff and the president of Progressive’s board in
response to the Commercial’s findings.

Donald Sampson, the head of the city’s community and economic development department for the past
16 years, said Progressive’s managers and board of directors were ultimately responsible for the nonprofit’s
actions. He defended the city’s oversight of Progressive’s spending — and emphasized that he was not
directly involved with monitoring it, a claim contradicted by memos in his own files and interviews with
Progressive’s board members.

“All those years that involved those documents have all been reviewed and monitored by (state) audit and
by HUD monitors,” he said. “Whatever requirements worked for those periods, they were either satisfied or
were satisfactory at the time.”

HUD spokesman Patricia Campbell said indeed, HUD’s last review of the city’s managment of the program,
in 2006, found no evidence of problems.

“But ... we couldn’t possibly look at all the paperwork, and the kind of things being alleged is not something
that would show up in that paperwork,” she said.

Campbell said HUD plans to investigate Progressive’s spending of the federal money and the city’s
response.

“We’re definitely going to look into this,” she said.

Neither Larry Amos, who in addition to being a co-founder of Progressive served as its long-time executive
director, nor his wife, Patricia Amos — the current acting executive director — responded to multiple
requests for interviews made through the organization’s president of the board and at listed phone
numbers. The 7,241-square-foot house at their listed address on Faucett Road appeared vacant and
neighbors said its occupants had moved out. No one answered the door at another home where they are
reportedly living.

James Black, the third co-founder of Progressive and the board’s president since its inception, defended
Progressive’s performance.

“I think Progressive performed within the standards that were set,” he said. “We are a young organization.
There were mistakes made, but I’m sure they can be corrected.”

Looking back

Progressive got its start in the low-income housing business in 1998, the year it began receiving a share of
the grant dollars the city is awarded each year from the U.S. Department of Housing and Urban
Development.

The annual grant, obtained through the HOME Investment Partnerships program, is the largest federal
block grant given to state and local governments. The HOME program has provided more than $7 million
to the city of Pine Bluff since 1992 for affordable housing for families making below 80 percent of the area’s
median income.

While the city has used most of the annual grants for its own projects, it has given more than $1 million to
local nonprofits certified by the Pine Bluff City Council as community housing development organizations,
according to historical data provided by HUD, which requires a portion of the money the city receives to be
reserved for such nonprofits. Progressive, which has received roughly half of that amount, is one of only

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two nonprofits to ever receive the certification. The city stopped providing funding to the other, an
organization run by former alderman Billy Freeman, in 2003 after Freeman was suspected and later
convicted of misusing city funds.

The city did not run background checks on Freeman and others running his organization — nor did they
run one on Progressive’s managers, even after they became the sole beneficiary of the annual grant.
Sampson said it was not part of the city’s policies.

In their application to the city for the certification, Progressive’s founders, Larry Amos, his wife, and Black,
promised the city expertise in administering federal programs. They provided a brochure and flier detailing
services they had been providing to poor, rural families in Jefferson County who needed help building their
own homes. And they sold the city on the qualifications of Larry Amos, who was running another nonprofit
that administered federal funds passed through it from the state Department of Health and Human
Services to local daycare providers.

“Larry L. Amos, executive director program operations, is well informed and experienced in accountability to
program goals and financial reporting and accounting for federal, state and local funds,” they wrote in the
application, which Black signed.

But although Progressive had applied in the early 1990s to administer the Mutual Self-Help Housing Loan
program, run by the federal agency now known as the U.S. Department of Agriculture’s Rural Housing
Service, Black said it never received the funding it needed to help rural Jefferson County residents.

“We never did really kick off,” Black said.

And at the same time the city was reviewing Progressive’s application, state officials were questioning the
bookkeeping of the other nonprofit Progressive’s managers ran, Arkansas Federal Child Care and Nutrition
Program Services Inc.

An administrative review in February 1997 by officials with the state Department of Health and Human
Services “uncovered many discrepancies in the records,” attorneys for DHS wrote in response to a lawsuit
Amos later filed against the agency.

“Essentially,” they wrote, “plaintiffs’ records did not back up the monetary claims they had presented to
the program.”

Two years later, in March 1999, the state terminated its contract with Amos and Black after further
reviews found similar problems.

Black, the registered agent for Arkansas Federal Child Care and Nutrition Program Services Inc. said he
could not comment on the activities of that nonprofit because it was still involved in litigation — although
The Commercial found no records of current court cases.

“I wasn’t actually involved with that program,” Black added.

In his court filings, Amos disputed the allegations, saying he was expected to meet standards other similar
organizations were not asked to meet and that they were designed to “be confusing and impossible to
comply with.” He said he believed his termination was retaliation for complaints he made about racial
discrimination he encountered with the officials running the state nutrition program.

Amos’ appeal of the termination, filed in Jefferson County Circuit Court, and the lawsuit filed in U.S. District
Court for the Eastern District of Arkansas, were both dismissed with prejudice, meaning the complaints
cannot be refiled.

It was not the first time Amos had faced such allegations. In 1993, investigators for the Department of
Justice said Amos had filed false claims for reimbursement between 1989 and 1990, according to a
settlement agreement signed Jan. 13, 1993, and filed in the records of the United States District Court
Eastern District of Arkansas. The U.S. Attorney’s office agreed to settle with Amos and not file charges
under the False Claims Act if Amos repaid $5,500 plus interest, according to the agreement, which Amos

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signed.

City officials said they were not aware of the problems the state and federal government encountered with
Amos and Black’s former nonprofit or the exaggerated claims about Progressive’s experience.

Irene Holcomb, a city alderman who was on the council at the time Progressive was certified, said had the
aldermen known more about Progressive’s past, she didn’t think they would have awarded its managers
the grant money.

“You’re hoping that these people who take on these particular jobs would be honest and forthcoming,” she
said. “Sometimes that just doesn’t happen. It’s kind of hard to look at a crystal ball and determine whether
someone is going to be credible and honorable.”

Expectations not met

From the start, the city encountered problems with Progressive’s management of the money the aldermen
gave it, according to memos written by staff in the city’s community and economic development
department.

About $83,000 — the combined amount of the first two checks the city issued Progressive, one in 1998
and one in 1999 — was not spent on the sewer improvements it was intended to pay, a former economic
development specialist for the city wrote in a memo he sent to Progressive and copied to Sampson in
September 2000. The specialist recommended Progressive obtain a certified accountant.

City memos written between 2001 and 2004 detail continued problems: the nonprofit bounced checks,
paid contractors late, failed to withhold 10 percent of its payments to contractors until the job was
complete, and failed to submit closing statements for properties before submitting invoices.

Progressive was also often years behind on completing its annual audits and tax forms, city records show.
It still has not completed its 2006 and 2007 audits.

Payments to Progressive continued, however, including about $40,000 given out of the city’s general fund
in 2002, according to Progressive’s audited financial statements.

In the meantime, Progressive submitted proposals to the city promising, year after year, housing projects
it said it would accomplish by leveraging the city’s investment with other funding sources.

In a proposal submitted in November 2000, Larry Amos persuaded the city to give Progressive about
$15,000 to buy 2.92 acres at 112 S. Hutchinson St., saying the nonprofit would build six low-income
houses within a year’s time. In 2003, with the land still vacant, Black wrote in another proposal that
Progressive was applying for state funding to build a multi-million dollar apartment complex on the
property. The state funding fell through.

Yet in a plan submitted the following year, Progressive’s managers said they still planned to build it and
three additional apartment complexes, as well as 47 more homes — 27 on the city’s west side and 20 on
its north side — all by 2009. Like the times before, they said they expected to receive grant money from
the state and other sources.

But, to this day, Progressive has not been able to secure funding other than that which it receives from
the city each year.

Black said the field is competitive.

“There are a lot of people like us trying to get the financing,” he said.

The land at 112 S. Hutchinson St. is still vacant. Black said he remains optimistic that Progressive will raise
money for the multi-million dollar apartment complex he said it will eventually build.

“We’re trying to get some funding to help us fund that,” he said. “We’re talking about getting bond

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money, money from the state to help finance this.”

Costly construction

While Progressive was pitching multi-million dollar projects it didn’t have financing to build, it worked on its
first project, a group of six houses built near the intersection of South Hutchinson Street and West Short
Third Avenue. Construction progressed slowly — and far above budget, according to Progressive’s audited
statements and the original contracts the nonprofit signed with three different homebuilders.

The project started in 2000 and was completed in 2004. Five of the six homes ended anywhere from 43
percent to 118 percent over the contract amount — a change, in the latter, from about $63,000 to nearly
$140,000 in construction costs, those records show. None of the five homes sold covered all the costs.

Black, however, denied that Progressive lost money on the houses it sold.

“That would be kind of bad to build a house and lose money on it,” he said.

He said he could not explain why the audited statements reflected differently.

The audited statements also reflect that Progressive spent 7 percent of its total construction costs
between 2001 and 2005 — about $86,000 — on two pieces of vacant properties Progressive owns and on
several of the homes in the years after they were already built and sold.

Black said he could not explain the numbers.

“That was probably just an accounting situation,” Black said.

Jim Slater, community and planning director of HUD’s Little Rock field office, said such costs should have
been a red flag to city monitors. If money was spent on work not done, “they got a serious problem,” he
said.

Sampson said he could not explain why the costs were not caught and not questioned.

Progressive also had other problems with the construction of the homes.

According to records and depositions taken in a lawsuit filed by the buyer of one of Progressive’s homes,
5330 W. Short Third Ave., city officials said the home did not pass inspections before Progressive sold it.

“There was never a final inspection completed and accepted by the city,” Bill Glover, a former administrator
of the city’s inspection and zoning department, wrote in a letter he sent the owner of the home in May
2004.

Black disputes the allegation that inspections weren’t completed on the house. In a sworn deposition taken
for the case, Black said Progressive received a certificate of occupancy for the house showing all the
inspections had been approved. Glover later signed an affidavit swearing that if a certificate of occupancy
had been issued, it had been issued in error.

The owner of the home, Barbara Abraham, said in an interview that she feels taken by Black and Amos —
who she said negotiated the sale of the home. She said the house is full of problems: floors are uneven in
the dining room and kitchen, carpet is buckling, windows are drafty. There are leaks when it rains in the
master bedroom and in the kitchen, and she said the electrical wiring in the house is a constant problem.
In the lawsuit, she claims Progressive was negligent in the construction of the home and concealed its
defects to induce her into purchasing it.

“People have talked about me, saying, ‘You were just a fool for buying the house, you paid too much for it,’”
Abraham said. “But to me, it was a nice house. It was something I could afford.”

In interviews with the Commercial, Black maintained that Progressive was not at fault for construction
problems at 5330 W. Short Third Ave.

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“If Barbara’s going to sue anybody, she should sue the contractor,” Black said. “He got all the warranties,
he did all the craft work on the house, that’s the person who if anything should be sued.”

The contractor did not respond to multiple phone messages left at his work and on his cell phone seeking
comment.

On Aug. 2, 2004, Progressive filed a counterclaim lawsuit against Abraham alleging fraud, defamation and
wrongful institution of legal proceedings. Last year, a judge granted Abraham’s motion for summary
judgment on the counterclaim, throwing out Progressive’s claims.

City inspection records for two of Progressive’s other homes, 5312 W. Short Third Ave. and 5306 W. Short
Third Ave., like the records for Abraham’s house, also do not reflect that final inspections were done before
the homes were sold, although a certificate of occupancy was issued for 5306 W. Short Third Ave.

Sampson, who Abraham contacted about the problems with her house before filing the lawsuit, declined to
discuss how the city responded to the allegation that Progressive was not completing required inspections.

“I don’t plan to comment on that particular situation,” he said.

Incomes too high

Progressive also failed to sell the homes it built to the people they were supposed to help, the Commercial
found.

At least three of the homes were sold to buyers with incomes too high to qualify for the subsidized
housing, according to city records, officials with the U.S. Department of Housing and Urban Development
and the homeowners themselves.

Abraham, an industrial hygienist at the Pine Bluff Arsenal with two children, had an income of nearly
$50,000 at the time she purchased her house in 2003, according to her loan application with Simmons
Bank, which she provided. HUD’s income limit in 2003 for a three-person household was $31,200,
according to the limits published by HUD every year.

Another homeowner, Linda Brown, the owner of 5318 W. Short Third Ave., was chief executive officer of the
Community Resource Agency, a nonprofit that worked to eliminate poverty-related problems, when she
purchased her house in 2002. Her income at the time was nearly $35,000, an amount documented in a
report Progressive filed with the city and that she confirmed. Progressive also documented that she was
head of a three-person household on the report. Brown said she was alone when she moved into the
house.

HUD’s income limit in 2002 for a single person was $21,750.

Brown said Larry Amos — who she said she dealt with on the sale of the home — told her the homes were
not for low-income people, but rather those with moderate income.

“When I found out it was a HUD thing, I thought that I was not going to be eligible,” Brown said. “But
then, you know, they told me I would be eligible, and I was like OK.”

Abraham said she knew the homes were affordable housing, but that she didn’t know what the criteria
was, adding that a woman at the bank did tell her she didn’t qualify for down payment assistance.

“I didn’t know I wasn’t qualified, period,” she said.

Black, in a sworn deposition taken for Abraham’s lawsuit against Progressive, said Progressive failed to
verify Abraham’s income.

“So that is something we have to look at in the future, to verify each and every homeowner’s income in
terms of HUD guidelines,” he said.

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The deposition was taken in November 2005, a year after the last of the six homes were sold.

Sampson defended allowing the sales of the homes to go through. He said only 51 percent of the
homebuyers must qualify for the homes under HUD’s income limits. He also said the homes could be sold
to people over the limits if all the costs of building the homes were recuperated.

“It would not be a problem,” he said.

HUD officials disagreed.

“If the person is not income-qualified, they shouldn’t have the house,” said Slater, the director of HUD’s
Little Rock field office.

He said that failure to verify the income of homebuyers could result in anything from requiring the
homeowners to move out of the houses or requiring the city to pay back the HUD funds used to build the
houses.

In addition to not making sure the homebuyers were qualified to purchase the homes, Progressive also
failed to protect the longer-term affordability of the homes.

HUD requires that houses built using HOME funds remain affordable for low-income families for a 15-year
period, to protect the home’s value if the first homebuyer moves out or defaults on his mortgage
payments. But Progressive did not place the required covenants in the deeds of the homes it sold,
according to the deeds of the homes, filed in the Jefferson County Courthouse.

Black said he was not aware that the covenants were required.

“It’s supposed to be there,” Slater said. “If they’re not in the deed, then they are in violation of the
regulations.”

Sales don’t add up

Like with the construction costs, interviews and property records also revealed financial anomalies in the
paperwork of the sales of the homes and the prices the homebuyers ultimately paid for them.

The settlement statement for the sale of 5324 W. Short Third Ave., for instance, shows the contract price
for the house as $91,000, 18 percent more than what the couple who purchased the house agreed to pay,
according to the offer and acceptance contract they signed.

To pay the increased costs, the couple signed a second mortgage with Progressive for $18,200. The
mortgage was released as fully paid a month later, according to a copy of the mortgage and its release filed
with the county’s property records. Both Black and the couple — Sophia and Lamark Norton — said
payments were never made on the mortgage.

Mike Spades, a lawyer for the Arkansas Securities Department, which licenses and regulates mortgage
brokers, said the deal sounded like a type of mortgage arrangement intended to make the property appear
to be worth more than what it is.

“If the person has told you they never received any payments on it, that’s a pretty good indication that it
was not a real mortgage,” Spades said, adding that anyone from the buyer to the seller to the broker could
benefit from the deal.

Sampson, too, appeared to share the same concern. In a letter dated more than six months after the
Nortons’ received title to the house, obtained by the Commercial from Progressive, Sampson said he felt
the loan was “not an acceptable and legal use of HOME funds.”

In an interview earlier this month, Sampson said he could not answer questions about how he followed up
on his concerns about the legality of the second mortgage. He reviewed a copy of the letter but said he did

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not remember writing it.

“I couldn’t even find the file that addressed that situation,” he said.

Records regarding other home sales also do not add up.

According to copies of mortgages filed in the Jefferson County Courthouse for Brown’s purchase of 5318
W. Short Third Ave., Brown received a $3,000 second mortgage through a down payment assistance
program. But that amount was not deducted from her sales price, according to the settlement statement
signed at closing and the first mortgage she signed. She said she is continuing to make payments on the
$3,000 loan to Simmons Bank, and did not realize her sales price had not been adjusted.

The price of her home, too, was discounted, according to the HUD appraisal and the offer and acceptance
contract Brown signed. Those records show her home sold for $83,900, less than the $89,000 it
appraised for. Brown said Amos told her she was getting a discount on the house; she said she could not
remember why.

The city, meanwhile, was not holding Progressive accountable for the money it received from sales of at
least half of the homes, according to interviews with Sampson and Black.

HUD requires that proceeds from the sale of houses built with HOME grant dollars be either returned to
the city or spent according to restrictions set by the city. Although Sampson said Progressive was
permitted to use the proceeds to build other houses, only one written agreement — signed in 2003 after
half of the homes were built and sold — gave Progressive permission to keep a percentage of the sales,
according to records the city provided in response to a state Freedom of Information Act request.

“If it’s not covered in the agreement, we’ve got a significant issue to deal with with the [city],” said Slater,
of HUD’s Little Rock field office.

Family benefits

While Progressive’s promises to the city went unfulfilled year after year, Progressive often did business
among its own, sending thousands of the tax dollars into the pockets of the Amos family and their
relatives.

Property records show that a piece of property Progressive bought in 2004, a 14,500 square-foot corner
lot at 3701 W. 12th Ave., was owned by Ruby Lee Amos — Larry Amos’ mother.

Progressive paid $11,500 for the land, a sale price recommended by an appraiser three years before the
deal took place. Even then, the appraiser cautioned that the amount may not be reliable because it had
been based on comparable sales two to three-and-a-half miles away.

“This is a very difficult assignment due to a paucity of vacant residential land,” the appraiser wrote.

The purchase violated HUD’s conflict of interest regulations, which prohibit real estate deals between
officials with the community housing development organization and family members.

“That’s a clear-cut no,” said Slater, of the HUD Little Rock field office.

Sampson said he saw things differently.

“Conflict of interest is really something that is looked at on a case-by-case basis,” he said. “It’s not just a
generic thing that you just throw out and say.”

Larry Amos’ mother was not the only relative to benefit from Progressive’s deal-making. A year earlier,
Progressive rented one of the houses it built to Larry Amos’ daughter, Amiri Amos. She lived in the house
for about a year and a half, staying rent-free for four of the months, according to a record of her payments
provided by Progressive. She later purchased the house for $45,500, a significant discount compared to
the sale of the other five homes, according to the offer and acceptance contract she signed, interviews

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with Black and property records.

Amiri Amos, contacted in person at her house, declined to comment.

Black said when first interviewed that he didn’t see a conflict in allowing Amiri Amos to rent and then
purchase the home.

“She was just like other homebuyers,” Black said. “Her name just happened to be Amos.”

Later, in following interviews, Black said the sale of the house did not violate HUD regulations because Amiri
Amos did not live with her father and stepmother at the time of the sale. He also said she was given a
discount on the purchase price of the home, which was originally $76,500, because the house was one of
the first two Progressive had built and was not selling. He said, too, that because the home had been
rented, it was considered used and could not be sold at a new home price.

“We had to come up with a creative way of selling it,” he said.

Sampson, too, said he didn’t think the sale or the price was improper, citing the same reasons Black gave.

But Slater said that, like Progressive’s purchase of Ruby Lee Amos’ lot, the sale of the house to Amiri Amos
violated HUD’s regulations.

“Regulations state that if you are in a position to receive inside information, then you are not qualified to
acquire properties the [community housing development organization] owns,” he said.

He said the only exception would be if Progressive had requested a waiver from the field office.

Progressive has never submitted a waiver request, HUD officials said.

The nonprofit also provided other benefits to the Amos family, which was deeply in debt during most of
Progressive’s building and selling, according to the Chapter 13 bankruptcy petition they filed in November
2000 and the record of discharge filed in June 2006.

Two other daughters of Larry Amos — Kizzy Amos and Shatara Amos — were paid at least $790 in 2006
for work on Progressive’s bookkeeping, according to Progressive’s financial records and an interview with
Black.

And in 2005, Progressive paid Patricia Amos, a full-time school teacher, more than $34,000 in commissions
from the sale of Amiri Amos’ house and two others that sold in 2004.

Future progress

Earlier this month, Progressive was still building for the city, and still progressing slowly and over budget.

Two new homes it is working on near the group of six it sold have been under construction for nearly three
years. The city, to date, has invested more than $141,000 in their construction, according to copies of city
checks issued between 2005 and the end of 2007 — and while one was close to going on the market at
press time, the other was far from complete.

Black said the long delay and high costs are, in large part, because Progressive originally hired an
unlicensed contractor. He was also uninsured. Progressive terminated his contract in a letter dated Aug.
30, 2006, after it appeared he had abandoned the project.

“It is evident now that there was a breakdown in policy by awarding the two contracts to you,” Black wrote
in the letter, adding that it was on his recommendation that Progressive’s board agreed to allow the builder
to begin work on the project without first checking the contractors’ performance bond and comprehensive
general liability insurance certificate.

“Now it has been recognized that was a mistake,” Black wrote.

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Black, a corrections officer who said he took over the day-to-day operations of Progressive following Larry
Amos’ resignation in 2004, said in an interview that he is hoping to receive more funding from the city
through its 20/20 visioning process. He said he would like to continue building low-income houses, and
possibly expand to the north side of town.

He said the mistakes Progressive made in handling its first and second project for the city were not fatal.

“Construction, that’s part of it,” Black said. “You work around the problem and continue on.”

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