Finance Authority Denies Housing Firm's Loan Application

Article excerpt

Political clout failed to overcome a lack of equity this week when Jack Hudson of Henryetta knocked on the state's door for a guaranteed loan.

Hudson was seeking $200,000 from the Oklahoma Industrial Finance Authority to re-start his manufactured housing firm, Insta-Structures Inc. of Henryetta.

"They only had $500 in equity. They were seeking $1.1 million in financing," said John R. Baker Jr., the authority's loan officer.

The authority can loan only up to 25 percent of a project's total cost, according to state law.

Joe Fitzgibbon, former majority leader of the Oklahoma House of Representatives, sat quietly during the loan hearing.

"I'm a salesman for Mr. Hudson," Fitzgibbon said.

Fitzgibbon once was one of the state's most powerful politicians. That was before he and then-House Speaker Dan Draper were convicted in 1983 of vote fraud. Their convictions were later overturned.

Jerry Conrey came with Hudson for the hearing.

Congressman Jim Jones' constituents know Conrey's name. He previously ran Jones' Tulsa office.

Now a Tulsa tag agent, Conrey also is president of Insta-Structures, the Henryetta manufactured housing firm.

That bothered Frank Kliewer, a Cordell banker and new member of the Oklahoma Industrial Finance Authority.

"I just don't see how a man can live in Tulsa and run a business in Henryetta," Kliewer said.

Hudson, vice president of Insta-Structures, fielded some tough questions during the loan hearing from Kliewer.

"If it failed the first time, what makes you think it will work out this time?" Kliewer asked.

Hudson, smiling, shot back:

"We weren't there the first time. I'm not a manager. But I'm a good hustler," Hudson said.

Clyde Estes, Hudson's hometown banker, said the original owners of the firm had not done their homework.

"When it was put in, it was strictly for the single-family market. They simply hadn't done their marketing."

Hudson said he is aiming at the duplex to four-plex housing market, motels and single-family housing.

"The tax write-off for investors on the four-plexes is good," Hudson said.

"And the builders' magazines all say by the 1990s, 60 percent of the first-time home buyers will be buying manufactured housing," Hudson said.

That failed to convince Steve Matthews, a member of the Oklahoma Industrial Finance Authority.

"There just are too many people going into the manufactured housing business," Matthews said.

Matthews knows what he's talking about. He is the executive director of the Oklahoma Department of Economic Development.

After a 30-minute hearing, the Oklahoma Industrial Finance Authority turned Hudson's firm down for the loan.

"They were paying $832,000 for their facility. So they also were trying to borrow the operating capital to get started. We don't get involved in operating capital," Baker said.

The political connections were not even considered, Baker said.

"I don't care for politics. They were looking for a loan. I like to think when I make a loan that I made it on real estate," Baker said.

Baker was a mortgage banker for more than 16 years before taking the administrator's job at the state Industrial Finance Authority.

"Mortgage bankers and regular bankers look at loans differently," Baker said.

"I look at what's pawned. I look at the real estate - what I have as collateral - more than I will look at the individual. For example, with this case, when their application came in, one man's name was at the top as president. …