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Carol Holley

 

From: Carol Holley. 

Sent: Tuesday. May 22. 2007 11:46 AM

To: 'thann_young@h ud.gov'

Cc: 'rnonica.m.wailace@hud.gov'

Subject: Danny Johnson Heart of Fire Ministries HUD Guaranty Loan

Stock Yards Bank feels it necessary to give HUD an update on the above loan, since our last communications of
February and 81" which expressed our concerns and issues regarding the budget, and funding process
guidelines and the effect, if any, on the HUD Guaranty. As a result of our phone conference call on February 8?h 
with yourself. Jackie Williams and Evelyn Wrin. the Bank honored the request-to fund outside the normal
policy and procedures as outlined in the loan documents. It has been made clear to Stock Yards Bank by HUD
that the primary goal of HUD in this matter is-to fund the project and Stock Yards Bank was not to permit their
non?nal concerns with funding procedures to inhibit such funding. Stock Yards Bank is continuing to follow cur
understanding of HU D's directive in that regard. but in view of continuing concerns which we have with the failure
of the Church to respond to Stock Yards Bank and comply With normal procedures, we deem in necessary and
appropriate to provide you with this update. .

In the past three months since. we continue to have concerns and have made every attempt to work with the
Church to ensure completion of the project. To date the following has Occurred:

a As of May 15?, there was approximately $80,000.00 in budget tine item overruns. At the site
inspections through out this time frame this was discussed. 

The Bank had funded draw requests against the recommendation of the inspecting architect to keep the
.project going. . . . 

6 Questions raised regarding in?ated dollars amounts for werk being done and required items not included in 
budget 

Funds from the construction proceeds checking element being deposited into the Church's'General fund
account. 

Receipt of a revised budget as of 5/4107 to reflect all items needed to complete the project. The total
re?ected the doilars'remaining to fund on the loan. However, after review by the Bank and inspecting
Architect, there were questions 1)based on the invoices submitted that line items would have over
runs already, 2) concerns that possibly some items were missing or the budgeted amount did not appear
adequate to cover the scope of work.

0 No responsereceived to our emails sent on 5/10, 5/11, 5117 and 5/18 requesting-additional information and
clari?cation of these items. . 

.When a response was received, the Church suggested there is a "bias" in the way their account has been
handled and did not address any of our questions or requests for clari?cation. Any bias would definitely be an
af?rmative bias, as we have deviated greatly from the normal process allowing ongoing funding with the budget
overruns, paying prior to work being completed on preposals only from contractors and manually tracking draws
and payments on a budget spread to allow everyone an overall view of the project. As we Want to be as flexible
as possible and wishing to Work with the Church to the fullest extent. without jeopardizing the Guaranty. the Bank
will continue to fund the draw roguests eVen if we receive no responses to our questions, concerns or issues
unless we home a directive from HUD by 3:00 pm today advising differently.

Thank you.

Carol Hoiicy

Vice Presidenti'Construction Manager
Stock Yards Bank Trust

Direct (502) 625 ?9 195

Fax (502) 6250843


I

5/22/2007

SYB-SUBP-001444