Property purchased by HealthFirst board member part of state audit investigation

mmeehan1@herald-leader.comJune 22, 2013 

The state auditor's office is reviewing the $180,000 purchase by a member of the HealthFirst Bluegrass Board of Directors of an empty lot adjacent to the proposed $11.7 million, tax-funded health clinic on Southland Drive.

Don Hurt's purchase is part of larger, complex land deal involving HealthFirst, developer Ted J. Mims and his partner, Greg McDonald, that prompted the Kentucky State Auditor Adam Edelen to announce an investigation in May.

Hurt, owner of Old Kentucky Chocolates, said he talked with the auditor's staff for more than hour earlier this month about an August 2012 purchase of 476 Southland Drive which shares a border with the HealthFirst clinic site at 496 Southland Drive.

Hurt joined the board in January, 2013 but didn't disclose his ownership of the land in a conflict of interest statement he signed at that time. The statements were obtained through an Open Records Request by the Herald-Leader.

Hurt, who represents Southland business owners on the board, said he had long wanted to use the empty lot he purchased to ease access for trucks supplying his business at 450 Southland Drive. The Old Kentucky Chocolates property is valued at $1.2 million for tax purposes in records filed with the Fayette County Property Valuation Administration

Mims, HealthFirst Executive Director William North and Board Chairman T.A. Lester declined to comment on Hurt's purchase. Hurt declined to discuss specifics of the transactions although when first asked about the property purchase he referred questions to North.

HealthFirst's conflict of interest guidelines state board members should disclose any business or personal activity that might be a perceived conflict. The guidelines also state board members should not have any "direct or indirect financial interest" involving business or person being paid by HealthFirst to provide a service.

Mims was hired by HealthFirst project manager for $15,000 a month on Aug. 2, 2012. Hurt signed the deed for the property on Aug. 3, 2012.

Hurt did not purchase the property directly from Mims, but obtained the lot as part of a larger transaction. Four individual parcels were consolidated into a single plat filed with the Fayette County Clerk on June 19, 2012. The plat was created as former owner Charles Moore concluded a deal with Mims to buy the three other parcels in the plat for use by HealthFirst. Hurt's parcel, now called 476 Southland, was identified as Parcel 4.

Mims and his partner had been formally negotiating for that land with HealthFirst since at least May 1, 2012. They ultimately signed the lease with HealthFirst designating the land for use as health clinic on June 21, 2012. Mims and his partner, operating as 496 Southland Drive, a limited liability company, purchased the other three parcels on July 25, 2012 for slightly more than $1 million. HealthFirst has signed a lease to rent the space from Mims but will ultimately use tax dollars to purchase the property at 30 percent above the purchase price.

Records filed with the clerk's office show Hurt obtained ownership of the property through a Quit Claim deed. The deed states Hurt received the property "in consideration of" $180,000 but there is no mortgage on file with the deed. If Hurt paid cash, no mortgage document would be required.

Stephenie Steitzer, a spokesman for the state auditor's office, said she had no comment on the specific scope of the ongoing investigation other what has already been announced.

When the audit was announced in May, Edelen cited concerns raised in articles in the Herald-Leader about the HealthFirst arrangement with Mims that paid him $15,000 a month to be the project manager, paid him and a partner $23,000 a month in rent and set a multimillion-dollar payout for the purchase of the land. The duo also get to retain a "developer's lot" big enough to hold a 10,000 square foot building.

Through May 31, according to documents from HealthFirst, Mims has been paid $120,000 for managing the construction project.

He told the HealthFirst Building Committee June 19, that construction will not begin until at least October.

HealthFirst received the $11.7 million grant in 2010 as part of the Affordable Care Act. The tax-funded clinic, when complete, is designed to provide medical care for mostly the poor or those without adequate health insurance.

Mary Meehan: (859) 231-3261. Twitter: @bgmoms. Blog: BluegrassMoms.com.

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