Military News

How AFRH chief sold beachfront land, homes

GULFPORT — The plan was to provide a peaceful sanctuary for military veterans and their families.

The Armed Forces Retirement Home purchased several acres of property, which included a three-acre beachfront parcel with two large homes and a small cottage. The idea was to divide the two-story homes into private rooms, creating a comfortable setting where the sons and daughters of America’s aging sailors, Marines, soldiers and airmen could be with their mothers and fathers when death was near.

But that plan was scrapped when the AFRH’s newly hired chief operating officer, Timothy C. Cox, decided to sell the beachfront parcel in August 2003, according to a former director of the retirement home.

The AFRH sold the beachfront property to local businessman Brent Warr, who was elected to the mayor's office two years later.

Jack Zink, a retired Navy captain and director at the AFRH in Gulfport from 1998 to 2003, told the Sun Herald he believes Cox decided to sell the property to help replenish the AFRH’s shrinking trust fund.

"This thing happened very, very quickly," Zink said. "I think it was certainly sold under market value."

The AFRH sold the land and the two homes — a 6,033-square-foot house with multiple kitchens and a 3,966-square-foot house with a swimming pool — to Warr as a package deal for $1 million. After extensive renovations, Warr now lives in one home and his parents live in the other.

According to the AFRH’s annual Performance and Accountability report in 2004, the federal government sold the beachfront property and two large, two-story houses to Warr for "approximately $1 million."

Other beachfront properties listed in Gulfport around the same time include a 4,000-square-foot home on 1.5 acres that sold for $804,000 and a 5,300-square-foot home with eight bedrooms and eight bathrooms that sold for $2.3 million.

The AFRH has campuses in Washington and Gulfport. Both homes had a combined population of 1,500, all of whom are now housed in D.C. while the Gulfport campus is rebuilt. It was destroyed in Hurricane Katrina.

Cox was hired to oversee both campuses in 2002 when Congress approved legislation co-sponsored by former U.S. Sen. Trent Lott abolishing the board that had governed the AFRH for more than a decade.

The law required that the AFRH be managed by civilians with backgrounds in senior care, rather than having the government oversee daily operations.

The Sun Herald attempted to reach Cox several times by phone and e-mail through the AFRH’s public relations staff, seeking comment on the sale of the Gulfport property.

Sheila Abarr, spokeswoman for the AFRH, responded by e-mail, saying, "Mr. Cox has no comment regarding the sale of the properties."

Zink, who retired from the AFRH and is now the director of the Hancock County Port and Harbor Commission, said Cox sold the Gulfport property to the first available buyer because he wanted to make an impression on his new boss, former Defense Secretary Donald Rumsfeld.

"What ended up happening, in my opinion, is that when Mr. Cox came into the agency and he saw that the (AFRH) trust fund was losing money and as a way to make a big hit with the Secretary of Defense, he decided to unload the property," Zink said. "Beachfront property (proceeds) would give the trust fund a shot in the arm and he’d look like a hero right off the bat."

The AFRH is supported by 50-cent-a-paycheck deductions from active-duty military, as well as money from fines and forfeitures as part of disciplinary measures. Between 1995 and 2003, the home's trust fund dwindled from $156 million to $94 million.

"It’s been my experience, in the Navy, that there was a very strict protocol to liquidate government property," Zink said.

Federal agencies must adhere to stiff requirements from the General Services Administration when selling government property, such as offering it through a public auction or through a sealed-bid process.

However, David Sienicki, who works for the House Armed Services Committee told the Sun Herald that the AFRH is not bound by GSA regulations.

"The retirement home folks actually have their own authority to execute real estate transactions," Sienicki said. "What’s interesting here is that they are also required to provide the Armed Services Committee with a 120-day notification, and that’s what I don’t know, whether that was ever done."

For his part, Warr said that the sale was legitimate and that there was nothing questionable about it on his end.

"There was a 'For sale' sign out front, so I made an offer on the property," Warr said. "That’s it. I don’t know how much clearer you can get."

What's more, Warr said, is that after he made an initial offer on the property, someone else — another interested buyer — made a higher offer. Warr said he later raised his offer and won the property.

Warr said the real estate agent who brokered the deal contacted him directly to let him know that the AFRH was selling the property. The agent was Sherry Owen, a well-known Coast Realtor.

Zink said Cox made just a few trips to Gulfport between the time he was hired and when he sold the property to Warr.

He "called Sherry Owen on the phone and she came over there," Zink said. "They looked at the houses and the next thing you know, he’s selling the property off."

Owen said she contacted Warr about the available property because she knew the then-Coast businessman was in the market for land in Gulfport. Owen also confirmed Warr’s assertion that there was at least one other offer made on the property.

"I told him that I had this listing of a property that was just down the street from where his mother was living and he said he was interested in looking at it," Owen said.

A local real estate broker who asked not to be named said the beachfront property was sold to Warr without ever being listed on the Multiple Listing Service.

However, Owen said she listed the property with MLS, but declined to provide the newspaper with the listing application because it contained sensitive information about her client: the U.S. government.

An employee at the local MLS office could not find the listing in the service’s computer system, but said the system automatically deletes records after so many years, which could mean the listing of the AFRH property had been erased from the record.

There is no law requiring brokers to list properties with MLS, but the service is widely used by real estate agents looking to move property quickly. Stephen Peranich, chief of staff to U.S. Rep. Gene Taylor, said Cox’s refusal to comment on his decision to sell the property is puzzling at best.

"Cox is the administrator over that office and why he wouldn’t defend a decision he’s made, I don’t know," Peranich said. "Public accountability would dictate that a public official respond to questions about why and how he made a certain decision concerning public assets."

Taylor recently pushed new legislation through Congress that assures the old Veteran Affairs property, which the federal government plans to give to Gulfport later this year, will remain public property for at least 50 years.

Taylor said he championed the legislation on the VA property to prevent it from being sold in a manner similar to the AFRH land. Once the government conveys the VA to Gulfport, the law will prohibit the city from selling the 90-acre site to a private developer.

"It’s certainly not a good way to handle the public’s resources," Taylor said of the AFRH sale. "These sorts of things were the reasons why I insisted on that language on the VA property, to prevent something like this from happening with that property."

As a footnote to the sale, federal investigators are looking into grant money Warr used to renovate the beach house. The grant, made through the Mississippi Development Authority, was designed to help homeowners rebuild after Hurricane Katrina. The feds are looking into whether Warr's damaged beachfront home was his primary residence.

To qualify for up to $150,000 in state homeowner grants, applicants had to prove they owned and lived in their homes prior to Aug. 29, 2005, and that the home was their primary residence.

The beach houses were built sometime around the 1940s, and both had been undergoing extensive renovations at the time Katrina struck. Warr has said he was living in another house while refurbishing the beach house, but that it had been listed as his primary residence since the day he finalized the purchase.

Joe Sam Owen, a prominent Coast attorney, is representing Warr in the federal probe. He is married to Sherry Owen, the real estate agent who brokered the sale.

Cox file

Timothy C. Cox was hired as chief operating officer of both campuses of the Armed Forces Retirement Home in 2002 when Congress passed legislation abolishing the board that had governed the AFRH for more than a decade.

Cox became the chief operating officer of the AFRH on Sept. 3, 2002.

The National Defense Authorization Act of 2002 provided for a permanent change in the home's management structure, including the appointment of a chief operating officer by the secretary of defense.

Cox's resume includes a long career in the elder care industry and experience in continuing care retirement communities.

Cox has been criticized by many of the AFRH’s residents in Washington, some of them former Gulfport residents, for what they said were poor living conditions and care.

In 2005, a group of veterans filed a class-action lawsuit against the retirement home, claiming budget cuts had put their health in danger and left them with no choice but to sue Cox and former Defense Secretary Donald Rumsfeld.

Around the same time Cox sold the Gulfport property, he also worked a deal to sell 96 acres of the AFRH’s Washington campus to Catholic University for $22 million.

Between the two sales, Cox was able to put nearly $23 million back into the AFRH’s trust fund.

The law

The following excerpt is from the U.S. law governing the transactions of property by the Armed Forces Retirement Home:

The Secretary of Defense may acquire, for the benefit of the Retirement Home, property and facilities for inclusion in the Retirement Home.

The Secretary of Defense may dispose of any property of the Retirement Home, by sale, lease, or otherwise, that the Secretary determines is excess to the needs of the Retirement Home. The proceeds from such a disposal of property shall be deposited in the Armed Forces Retirement Home Trust Fund. No such disposal of real property shall be effective earlier than 120 days after the date on which the Secretary transmits a notification of the proposed disposal to the Committees on Armed Services of the Senate and the House of Representatives.

-- U.S. CODE, TITLE 24, SEC. 411, ESTABLISHMENT OF THE ARMED FORCES RETIREMENT HOME

Response from Timothy C. Cox

Mr. LaFontaine,

You requested an interview with Timothy Cox, AFRH-Chief Operating Officer. However, you did not provide AFRH with the interview topic. Thank you,

Sheila R. Abarr Public Affairs Specialist/Marketing Armed Forces Retirement Home

I would like to speak with Mr. Cox about the AFRH trust fund and the sale of three acres of property — including two large homes — in Gulfport. Thanks for your help,

Ryan

Mr. LaFontaine,

Mr. Cox has no comment regarding the sale of the properties.

Thank you, Sheila R. Abarr

  Comments