JEANNA DUERSCHERL The Roanoke Times

Roanoke Vice Mayor Sherman Lea and Councilwoman Gwen Mason listen during a city council meeting Thursday.

JEANNA DUERSCHERL The Roanoke Times

Councilman Alvin Nash is urging a HUD investigation of Blue Ridge Housing Development Corp.

Roanoke Councilman Alvin Nash said Thursday that a nonprofit housing group that owes the city up to $333,000 did nothing wrong under his watch.

Nash, who resigned last month as president of Blue Ridge Housing Development Corp., disputed assertions from a city budget official that the nonprofit violated federal guidelines when it failed to return grant revenues to the city.

"My reputation and the reputation of Blue Ridge is in jeopardy," Nash said at a meeting of the city council.

Nash said he plans to ask the U.S. Department of Housing and Urban Development, which funded the grants, to conduct an investigation that he said will vindicate Blue Ridge.

"We don't violate contracts. We don't break rules. We don't do anything inappropriate," he said.

To suggest otherwise "is incorrect and it is defamation of character, as far as I'm concerned."

Last month, city budget team leader Frank Baratta estimated in a letter to Nash that Blue Ridge could owe the city up to $333,329 -- money that stems from federal grants it received to help build and renovate homes for the poor.

Funded by HUD, the grants are administered by the city. That means that when the grants generate revenue, which usually happens when Blue Ridge sells a house, the extra money is supposed to be returned to the city, which maintains the funds in an account for future programs.

Blue Ridge kept the money "without the prior consent of the city, which is a violation of the contract and HUD rules," Baratta wrote in the Dec. 17 letter.

Nash resigned two days later, saying he wanted to pursue other opportunities and interests.

Although he is no longer affiliated with the housing development group, Nash told the council Thursday that he has encouraged the nonprofit to join him in requesting an investigation by HUD.

Cindy Hebblethwaite, the chief financial officer at Blue Ridge, said that she and Nash have spoken and that she has already decided to contact the federal agency.

"I am extremely confident that when HUD comes in, they will find we have not done anything wrong," Hebblethwaite said.

Although Nash agreed that money is due the city, he said he doesn't think the amount is as high as the figure cited in Baratta's letter. The bulk of the city's estimate -- $258,829 -- is for 11 homes that were sold in the Southeast by the Design neighborhood revitalization project.

Hebblethwaite said Blue Ridge and the city had a "gentlemen's agreement" that the revenues from those sales would not be returned until the entire project was completed.

She also said that the city's estimates do not fully take into account the staff costs incurred by Blue Ridge on the projects.

Baratta could not be reached Thursday. Nash's colleagues on council made no public comments after his statement.

After the meeting, Mayor David Bowers said Nash did the right thing by addressing the matter publicly. Vice Mayor Sherman Lea and Councilman Court Rosen both said they think it's appropriate for HUD to investigate.

"This has to be cleared up for a number of different reasons, not only for Alvin but also for the city and the citizens," Lea said. "Because we're talking about money here."

Since learning that Blue Ridge owes the money and is unable to pay it back right away, city officials have contacted HUD about the issue. No one has suggested that Blue Ridge did anything with the money other than turn it back into its operations.

A HUD official said last week that while a review has yet to take place, the agency agrees "in principle" with the city that regulations were violated. A final call won't be made until the review is completed, said Toni Schmiegelow, an operations specialist in HUD's Richmond office.

Long considered a leading community development group, Blue Ridge Housing Development Corp. has fallen on hard times recently. Unable to sell three houses that have been on the market for months, the agency has cut its staff and suspended some operations.

Although they cannot pay the city back at once, Blue Ridge officials have said they plan to do so over time.

Also at Thursday's meeting, Nash said he should have informed the council last spring about a potential conflict of interest between his position as president of Blue Ridge and his seat on council.

Nash was appointed in April to fill the unexpired term of Alfred Dowe, who resigned amid questions about his spending on meals and travel for city-related business.

Some council members have said that when they appointed Nash, they did not know of the potential conflict created by a member of city council also serving on a nonprofit agency that receives grant funds through the city.

After Nash's appointment to the council, Blue Ridge decided to forgo receiving the federal grants to avoid the conflict.

Nash said City Manager Darlene Burcham has been unfairly criticized for not informing council about the issue. "It was my responsibility, and I hate to see someone else criticized," he said.

As for the potential HUD violations, Nash said he would like to see the city issue a statement once an investigation is completed that absolves him and Blue Ridge of any wrongdoing.

"Owing money and being in debt is one thing," he said. "But to say that we were doing something improper is something that I just can't ignore."