• Despite two groundbreakings and more than $1.2 million spent on the Tucker’s Walk veterans housing project since Community Quest bought the property in 2008, no substantial progress has been made.
  • Community Quest publicized Tucker’s Walk with a second groundbreaking seven months after it defaulted on a $1 million loan and one month after a construction manager brought concerns of mismanagement to the board of directors. The property is now in foreclosure.
  • Besides the loan default, some of the work to be completed by a Community Quest contractor resulted in a $30,000 lien against the property. Another contractor has sued the nonprofit group for unpaid bills.
  • A boyfriend of the project’s chief proponent, Kerrie Kelly, was paid $50,000 to work as a contractor. Their relationship was not disclosed to the board of directors, and he left the project several months after receiving payment.

TUCKERTON — The only evidence today of Tucker’s Walk, an ambitious project announced in 2007 that would house 24 low-income veterans, is a weed-choked gravel clearing and a sun-faded sign off Route 9 in Ocean County.

Six years later, more than $1.2 million has been spent. Two well-publicized groundbreakings have been held. And still, the veterans that Egg Harbor Township-based Community Quest set out to help have no home there. The land, meanwhile, faces foreclosure over a defaulted mortgage.

Tucker’s Walk is the nonprofit group’s second housing project for veterans to unravel. Last year, it pulled out of a plan to house veterans at The Gates at Somers Point, claiming the apartment complex’s owners wouldn’t make necessary repairs. Veterans who signed leases under the “Veterans Point” banner at The Gates were left stranded amid crime and squalor.

Community Quest has operated group homes and job-training programs for the state for decades, but in 2007 it expanded into affordable housing with Tucker’s Walk. Former contractors, employees and advisers say the nonprofit group was ill-equipped for such ambitious projects.

Filling a need

Like the Somers Point project, Tucker’s Walk was met with much fanfare from local officials and advocates for veterans.

For Tuckerton, it would have satisfied state requirements for affordable housing. For veterans advocates, the project offered hope for a segment of the population that often has trouble securing housing.

Jay Smith, a 59-year-old Air Force veteran, was one of those who could have benefited from Tucker’s Walk.

For several years after he moved back to New Jersey from Texas, Smith parked his 1971 Mini Winnebago at campgrounds and relatives’ homes. Sometimes he slept in parking lots and public parks, trying to avoid the police.

Despite attending both Tuckerton groundbreakings, in 2009 and 2010, Smith finally secured federally subsidized housing in 2011.

“I finally had to find a place to live,” he said. “They did what they could to help me. It’s just that time ran out.”

With its finance officer, Kerrie Kelly, leading the effort, Community Quest embarked on its first housing project in 2007 with a search for suitable properties. She found that property in Tuckerton.

Tucker’s Walk had originally been approved as 24 age-restricted units in 2007. The site seemed to fill many of Community Quest’s criteria: It was near public transportation, within a mile of the town center and located in an area with little affordable housing.

To expedite the process, the nonprofit group hired the original developer, Crest Engineering Associates, as a consultant and began corresponding with the New Jersey Housing and Mortgage Finance Agency, or HMFA, to secure funding. According to emails obtained through the Open Public Records Act, or OPRA, the HMFA completed an appraisal of the property that October.

In April 2008, Tuckerton planners unanimously approved a site plan calling for a 23,000-square-foot, single-story building consisting of two wings connected by a 3,500-square-foot central community area. Each wing included 12 single-bedroom apartments of 650 square feet. While Community Quest would provide some support services to residents, the site would not feature a full-time nursing staff.

The same month, Community Quest secured a $3.3 million commitment from the HMFA, the quasigovernmental entity that reviews and coordinates funding for affordable-housing projects. That funding never materialized despite ongoing discussions between the nonprofit group and the HMFA over the course of nearly two years.

Community Quest did receive in 2008 a $963,000 “bridge loan” from New York-based Corporation for Supportive Housing, or CSH, a nonprofit organization that works with the HMFA and other entities to issue grants and loans for projects such as Tucker’s Walk. The loan was meant to cover costs until permanent financing could be secured.

On May 16, 2008, Community Quest bought the land from Manasquan, Monmouth County-based 375 Main Street LLC for $612,000. The balance of the bridge loan was to be used for the “soft costs” — such as engineering and permitting fees — associated with developing the site.

Within a year and a half of closing, Community Quest would default on the loan. Within five years, the property would be in foreclosure.

Signs of trouble

Richard West, the project’s construction manager, said signs the project was too unwieldy for Community Quest were ignored before the property was purchased.

Community Quest’s critical mistake was not completing a feasibility study before choosing the Tuckerton site, West said. West, who had advised Kelly on her 2007 business plan and was brought on full time in early 2008, said his advice went unheeded.

“There was not a word about feasibility,” he said. “It was all about selling the idea that it was going to be great to put veterans in these apartments.”

Kyle Van Dyke, the nonprofit group’s architect during the early years of the project, said he advised his clients that the land was too expensive.

“We told them we liked the property and we wanted to build on it, but we asked them to hold off and think about continuing to negotiate the (price) while looking at other properties,” he said. “If we waited another year, the economy would be going down, and I’m sure they could’ve got the land cheaper.”

Site problems, including the need to extend utilities across Route 9, made the project an expensive proposition, Van Dyke said. Site improvements alone would cost more than $500,000.

“I think they had really good intentions, and they were excited about having this property right in the area where they needed housing,” he said. “Even though some advice was given, they decided to go in one direction because of optimism.”

Community Quest’s intention to build to the standards of the U.S. Green Building Council’s Leadership in Energy and Environmental Design, or LEED, was another cost factor. LEED guidelines call for the use of environmentally friendly building materials and energy-saving technology. Eventually those plans were pared down, but budget and financing still proved difficult. Van Dyke left the project in 2009, after more than two years of work.

Similarly, West said, the project never had a firm budget. The $3.3 million figure provided to the HMFA and others was based on an early calculation that placed construction costs at $150 per square foot for a 20,000-square-foot building. That calculation didn’t account for the added costs associated with site improvements or LEED certification, costs later estimated at $6.6 million, West said. It also didn’t reflect the larger footprint — 23,000 square feet — approved by Tuckerton.

Changing gears

Community Quest officials cited a long permitting and financing process for the project’s delays, but former employees and borough officials say the nonprofit group contributed to those delays.

Kelly said she eventually abandoned pursuing public funding because of the additional costs associated with the requirements of the HMFA and the U.S. Department of Housing and Urban Development. Instead, Community Quest began meeting with private lenders in 2009. According to a timeline created by the nonprofit group, the banks that reviewed Community Quest’s proposal — and ultimately rejected it or didn’t respond — were Commerce, Susquehanna, Wachovia and a number of private developers.

One of the developers Community Quest approached, Robert Kahan, principal of Trenton-based Tara Developers, said it was clear the nonprofit group was in over its head. The whole project was a “bad scheme,” he said.

Tara Developers, which had overseen affordable-housing projects in Philadelphia and Trenton, offered to develop Tucker’s Walk in exchange for a percentage of ownership.

“I don’t think they had the level of experience of a developer that has done this before,” Kahan said. “We tried to work with them ... but they didn’t want to go in that direction.”

Around this time, in May 2009, Kelly introduced Thomas Hale, her boyfriend at the time, as a possible contractor to oversee the project, West said. They were taken to a house on Leipzig Avenue in Hamilton Township and heard a pitch that Hale and his associates could build the project using green technology that would generate money to help run the facility.

“You never got to meet anyone that Tom knew. We just saw all these plans laid out like he had an office there,” West said.

Hale was paid $50,000 and, for a short time, given control of the project, West said. But Hale disappeared almost as quickly as he arrived.

Dan Kelly, Community Quest’s president, said that the relationship between Kerrie Kelly and Hale wasn’t disclosed to the board of directors and that the contractor was terminated for performance reasons several months after Hale received payment. Dan Kelly is not related to Kerrie Kelly.

In August 2009, Absecon police reponded to a domestic-disturbance call involving Hale and Kerrie Kelly. According to the police report, Hale drove to Kelly’s home and harassed her to let him inside.

The Leipzig Avenue home that had been used as Hale’s office was destroyed by fire in May 2010, after being “abandoned and unoccupied for a long period of time,” Hamilton police reports show. The property was owned by Preserve at Hamilton LLC. Thomas Hale had signed the mortgage and other documents.

Hale could not be reached for comment.

More recently, Kelly said she was in negotiations with a private financier, Bishop World Wide Holdings LLC, to pick up the project. She said the company is run by Robert Colson, an investor.

Despite paying a $750 application-processing fee and reaching an agreement for a loan with no interest for the first year and a 20-year term, Kelly said she didn’t know much about the investor’s background. She didn’t, for instance, know the company’s location or whether it has a background in funding projects such as Tucker’s Walk.

Kelly said Colson connected Community Quest with other contractors, including H. Construction, whose work resulted in a construction lien against the property. Colson was willing to take a risk on the project when most other lenders would not, she said.

“I don’t have anyone else to choose from, do I?” Kelly said. “I got to go with that one chance that this funder is who he says he is and will fund me.”

Colson and others said to be associated with Bishop World Wide could not be reached for comment. Messages sent to a Hotmail account provided by Kerrie Kelly were not returned. The company’s website has been shut down since February 2011.

Debt and foreclosure

In November, New York Supreme Court — the rough equivalent of New Jersey’s Superior Court — issued a $1.2 million judgment against Community Quest in relation to its $963,000 loan from the Corporation for Supportive Housing.

According to court documents, the loan included an agreement that the nonprofit group would repay the entire loan plus 7 percent interest upon securing permanent financing or by Dec. 31, 2009, whichever came first. Community Quest missed that deadline and an extension, prompting a lawsuit in December 2010.

“Although CSH and Community Quest negotiated a possible resolution ... Community Quest ultimately failed to follow through with the proposed resolution,” reads an affidavit by David Profost, CSH’s chief financial and administrative officer. The nonprofit group hadn’t made a single payment to CSH, the affidavit states.

Other developments include:

  • A $30,000 lien was filed against the property in April by United Rentals related to equipment that had been rented by Felton, Del.-based H. Construction. According to the lien, a chipper, excavator and trailer hitch had been rented to complete work on the site, but the bill was never paid.
  • Crest Engineering Associates, a Millstone Township, Monmouth County-based firm hired by Community Quest to complete permitting and other work for the project, filed a complaint in New Jersey in May for $6,000 in unpaid fees. According to the Superior Court filing, the organization didn’t pay an agreed-upon final installment of a $23,600 bill.
  • Also at stake is a $440,000 HOME Investment Partnership grant awarded to Community Quest by Ocean County, using HUD funds that were awarded in May 2009. Documents obtained through an OPRA request show $265,000 was disbursed, in part to reimburse Community Quest for work conducted by H. Construction — work that would eventually lead to a construction lien.
  • McClennon R. Holmes, the owner of H. Construction, and his wife filed for bankruptcy in Delaware in January, citing nearly $500,000 in secured claims, $360,000 in unsecured claims and $29,000 in back taxes and penalties.
  • In October, after nearly three years of negotiation and legal wrangling, CSH filed foreclosure proceedings against Tucker’s Walk. An attorney for CSH did not respond to requests for comment, but this final development could mean the death of the project.

“The project isn’t viable,” said West, the former construction manager. “That property cannot be developed feasibly and get a return on a dollar on it unless it is developed as a high-end luxury condominium like it was supposed to be in the beginning. The trouble is you own a piece of property you have no money to develop.”

According to Community Quest’s 2011 IRS 990 tax form, the most recent available, the nonprofit group brought in $3.8 million in revenue, compared with $3.6 million in expenses. The revenue came mostly from state contracts for existing programs (i.e., job training, halfway houses for the mentally ill, etc.), plus some fundraising.

It did not disclose the salaries of its chief officers. In 2009, the last year that information was disclosed, the president, Dan Kelly, earned $92,450.

Unclear future

Tuckerton officials say they waited a long time for Community Quest to provide easements for water and sewer on the property.

“We haven’t seen much movement on it,” Mayor George Evans said.

The easement finally came last week.

On Wednesday, after six years with little progress, the city received mylar copies of the project’s signed final site plan.

But the issuance of building permits for the project’s first phase may still be a long time coming, said Land Use Board Secretary Carol Sceurman. It requires the posting of nearly $734,000 in performance bonds and inspection fees before it can receive the signatures of Sceurman and the board chairman.

“The plan meets the requirements of the (board’s original) resolution, but they can’t do anything with it until the bonds are posted,” she said. “So right now, it’s just in limbo.”

Community Quest remains optimistic about its prospects, despite the foreclosure proceedings and missed deadlines.

“Once that’s up and running, you’ll see,” Dan Kelly said in an interview last year. “The people in there, they’re benefiting, they’re happy and you’ll say, ‘I guess it was worth it.’ ”

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