The Yampa Valley Housing Authority has ended its agreement with The Michaels Organization in the wake of an indictment accusing the firm’s CEO of racketeering charges in a case filed last week by the New Jersey Attorney General.

The Michaels Organization, a real estate firm that is considered the largest developer of affordable housing in the country, was selected by the YVHA to construct a proposed affordable housing project at Brown Ranch under a memorandum of understanding signed in July 2023.

The plans at Brown Ranch called for the phased construction of 2,264 units on 420 acres of land bought by the housing authority with an anonymous donation in 2021. However, an annexation agreement to bring the property under the jurisdiction of the city of Steamboat Springs failed in a special election in March.

Even though voters rejected the ballot measure, the memorandum of understanding between the housing authority and Michaels remained in place until that agreement was terminated by the housing authority last week, according to the YVHA Deputy Director Elliot Lawrence.

“At this time, we obviously kind of prioritize integrity and transparency and obviously ethical business practices, and so we are committed to that,” Lawrence said. “There is a provision in that (memorandum of understanding) where we can terminate that agreement and so we have moved forward. We sent (The Michaels Organization) a notice (Friday) afternoon just letting them know that we are going to exit (the agreement), and that is really for a variety of reasons.”

The housing authority’s break with the real estate developer comes after New Jersey Attorney General Matt Platkin filed a 13-count indictment naming The Michaels Organization CEO John O’Donnell as part of a criminal enterprise accused of exerting control over Camden County officials to steer development work to preferred investors while punishing individuals who did not cooperate.

The charges allege The Michaels Organization’s CEO played a part in a scheme concocted by Democratic power broker George Norcross III to take advantage of tax incentives designed to steer investment to financially struggling cities in New Jersey. The charges also allege the scheme worked to provide financial benefits to Norcross, O’Donnell and four others named in the indictment.

The other defendants are Sidney Brown, CEO of the trucking company NFI; Dana Redd, who served as Camden’s mayor between 2010 and 2019; William Tambussi, a partner in the New Jersey-based firm B&C Brown & Connery and a prominent Camden County Democratic attorney; and Philip Norcross, a public finance attorney and CEO of Parker McCay, another New Jersey-based firm, who is the brother of George Norcross III.

The 111-page indictment outlines alleged efforts led by Norcross to wrangle a lucrative development deal from a Camden-based nonprofit in order to put a team of chosen developers in place. It also traces alleged actions taken to terminate projects of another developer using untoward political influence.

The Michaels Organization released a statement Thursday saying O’Donnell would take “a leave of absence to focus on vigorously defending himself” against the allegations.

Reached for comment Saturday, Lawrence said the YVHA staff became aware of the charges against O’Donnell on Thursday, prompting members of the housing authority’s executive team to act.

“That is kind of where we landed as a board and certainly we will see what kind of things shake out with this case … but we remain committed to trying to move forward with something that is the best solution for the housing authority, as well as the folks and the workforce that live here in Steamboat Springs,” Lawrence said.

According to Lawrence, the decision to terminate the agency’s agreement with The Michaels Organization was made without an official vote or meeting by the YVHA board, and came at a time when YVHA Executive Director Jason Peasley was on vacation outside the country and the housing authority board’s president, Leah Wood, was unavailable.

Lawrence said Wood was involved in the decision to terminate the agreement, but Peasley was not. Reached via text message, Peasley referred questions to Lawrence.

Lawrence said some YVHA board members — including Wood, Michael Ann LaMotte and Cole Hewitt — coordinated with YVHA attorney George Eck and other staff last week before deciding to send notice to The Michaels Organization that the housing authority’s agreement with the company would be terminated.

“It was a board decision with input from staff,” Lawrence said. “It wasn’t a board meeting. It was more of a conversation than deliberations, if you will, between myself, the executive team and with some input from our staff.”

The memorandum of understanding between the YVHA and The Michaels Organization was approved by the housing authority board in July 2023. Lawrence, who joined the YVHA as its deputy director in April 2023, said that, from his perspective, interactions with The Michaels Organization have always been “above board.”

“Our experience working with them was one of cooperation and problem-solving, trying to figure out how to make this work in order to provide housing for our local workforce,” he said.

On Sunday, Kathi Meyer, a member of the housing authority board, said she also had no personal knowledge of any inappropriate interactions between the housing authority and The Michaels Organization in the context of the Brown Ranch development.

Meyer said she was under the impression that, after the annexation vote failed in March, the memorandum of understanding with The Michaels Organization was terminated, but she found out that was not the case Friday.

“What our attorney recommended was to put it in writing and notify The Michaels Organization so there was no misunderstanding that we wanted to document without a doubt that the MOU was terminated,” Meyer said.

Along with the charges filed in New Jersey, Meyer said the decision to cut ties with Michaels reflected a different approach from the housing authority when it comes to developing attainable workforce housing at Brown Ranch.

“The other thing that I think is really important is that the housing authority is very sensitive right now in working with the city of Steamboat to come up cooperatively with a new path for Brown Ranch,” Meyer said. “We want to make sure that we are starting very clean with the city on moving forward with Brown Ranch in some form. We have heard loud and clear that any proposal will have to be smaller, fiscally responsibility … and will have to address the major concerns that the community had as a result of (the annexation) vote.”