Martha Jackson reads over notes regarding the Pulaski apartments that were rehabilitated with state money.

Photos by SHAOZHUO CUI The Roanoke Times

Bobby Jackson shows some of what he and his wife, Martha, call "shoddy" work that was done on their Main Street apartment building.

PULASKI -- A downtown apartment renovation project funded with state grants has cost the town more than $51,000, plus an additional $120,000 in unrealized future loan repayments.

But for Bobby and Martha Jackson, the owners of a building with five apartments targeted for rehabilitation, it's not about the money. It's about accountability.

The Jacksons' ordeal of lost opportunity and time wasted, while it appears to be an isolated incident, raises questions about the ability of the town to use state programs such as Community Development Block Grants to regain its economic footing after years of manufacturing losses. The grants are generally used to rehabilitate housing for people with low and moderate incomes.

Last year, a state inquiry found widespread lapses among the town and people the town hired in administering the grant the Jacksons and two other property owners signed up for. And in April, the Jacksons came to an undisclosed settlement with the town rather than enter into an expensive legal process because they were concerned about the impact it could have on taxpayers.

On its face, the original deal looked quite good, the Jacksons said. The town had secured a $1 million grant to improve downtown building facades, buy and demolish ramshackle buildings and renovate 17 second-story apartments.

The Jacksons, along with two other landlords, agreed to invest cash up front and take on a zero-interest loan in exchange for renting the apartments to low- and moderate-income families for 10 years.

But trouble began when the Jacksons began complaining about the contractor soon after work began in 2004.

"About a month into the project, we decided the workmanship was shoddy," Martha Jackson said.

The town promised to fix it, but in September the Jacksons realized the contractor had been paid despite paint peeling off the walls, uneven ceilings and walls and carpets cut too small to fill a room.

Jackson said she and her husband were asked to sign off on the work, but she told the town's grant administrator, John White, "I'm not signing that. The workmanship is horrible."

Town Manager John Hawley said Barry Woodford, a Roanoke-based quality assurance specialist, signed off on the work.

Woodford said the rehabilitation "probably wasn't the best work I've ever seen, but he did complete the work under the contract."

The fact was, Woodford said, the $83,160 the town set aside and the $9,240 the Jacksons invested wasn't enough to secure high-quality work. And a list of materials the Jacksons had inserted into the contract that included refrigerator and toilet specifications also made executing the work difficult.

"I think there's an expectation by owners sometimes of what we can do with the amount of money that's being allocated -- the expectations are extremely high," Woodford said. "The fact they were going out and picking higher-quality materials than we were able to provide sort of indicates they thought we were doing more of a remodeling job than a rehabilitation."

The Jacksons maintain their demands were simple: Refrigerators large enough for a family and toilets high enough for someone with disabilities to use. Neither was provided, and inspectors also found the apartments were uninhabitable because they did not meet federal lead-based paint requirements.

Frustrated with a lack of response to complaints, the Jacksons took their grievances to the Department of Housing and Community Development, which began an inquiry. In documents obtained by The Roanoke Times, DHCD found an almost total collapse of safeguards built in to ensure owners are happy with grant-funded projects.

The complaint process wasn't followed, DHCD found, and the department had to step in to referee what had quickly become a simmering legal liability that appeared ready to erupt.

DHCD planning manager Jimmy Wallace also wrote in a letter that "the owners were given information from the town and agents of the town that was misleading."

Like many owners of CDBG properties, the Jacksons had signed a contract that called for a zero-interest loan to be repaid over 10 years. But they were later told that other investments they made, such as electrical and plumbing work, could be subtracted from their loan obligation, even though the Pulaski Town Council had not authorized such a deal.

Hawley blamed consulting firm K.W. Poore & Associates, hired by the town, for providing the Jacksons and others with advice that detailed how property owners could reduce loan repayments and the lengths of their loans. The information was outside the terms of the contract.

But Wallace notes that aside from K.W. Poore's "inappropriate advice," there were also "e-mails and notes of conversations that suggest that town staff were echoing similar sentiments to the owners."

Craig Wilson, a representative of K.W. Poore, declined to comment.

"Ultimately," Hawley said, "the council came back and modified the program to recognize the additional investments," which cost the town about $120,000 in future repayments.

He said money from loan repayments is helpful in gaining leverage for new projects and that not having the $120,000 could impact securing future DHCD grants.

The DHCD inquiry also resulted in a recommendation to release the Jacksons from their contract, which meant the town was barred from using grant money to pay for $51,470 already spent on the Jackson property. Hawley said he's still trying to find a way to absorb the loss using other housing funds.

The town also spent about $5,000 to send crews to the Jackson property to fix the work the contractor had performed.

Hawley acknowledges mistakes were made. But he contends that any missteps have been corrected.

"I would assure people that we have enough checks and balances in place that something like this -- you can't say it's never going to happen again," Hawley said. "But I think we have things in place to keep that from happening again."

Still, the Jacksons say going public with their story is not about the lost opportunities, and they frequently say they "are not money-hungry people." Martha Jackson said she just wants residents to know that "the people who are involved in getting us in this mess are still there and aren't being held accountable."

Charles Wade, who was mayor from 2004 until last month, said he "thought there was plenty of accountability" and said the council was kept well-informed of the problems the Jacksons had.

He added that "some people are happy [with the grants] and some aren't, and unfortunately the Jacksons weren't happy with the work that was done. I don't blame them."

Councilman Joel Burchett said he's not so sure the council was kept in the loop, however.

"Things often get spun and turned around and manipulated to make them look better depending on who's doing the talking," Burchett said. "We did get facts. We did get pertinent facts. Did we get them all and get them accurately? I don't think we did."