City Sues Poverello House Over Missing Tiny Homes as Contractor Faces State, Federal Scrutiny

The Fresno City Council voted Thursday to sue the Poverello House, seeking to recover nearly $2 million in public funds meant to build about two dozen tiny homes for homeless residents that were never delivered.

The 6-0 vote, taken in closed session with Councilmember Mike Karbassi absent, marks a sharp turn in the city’s relationship with one of its most prominent homeless service providers. At the heart of the dispute: a 2023 contract that promised modular housing but produced nothing, and a contractor who may now be under investigation by both state and federal authorities.

The money came from two sources — roughly $965,000 in federal pandemic relief dollars (ARPA) and $1 million from the state’s Encampment Resolution Funding grant. The city now wants it back.

Advertisement

But the Poverello House says the real problem is Dave Clevenger, owner of Fresno-based PreFab Innovations Inc., the contractor chosen through a competitive bidding process to build the homes. Clevenger, they say, failed to deliver and stopped responding in good faith.

California Attorney General Rob Bonta’s office filed a complaint in February seeking to revoke Clevenger’s contractor’s license, citing similar claims from other business partners. And according to Poverello House CEO Zachary Darrah and spokesperson Cary Catalano, the FBI has interviewed nonprofit staff about their dealings with Clevenger and his company.

Darrah and Catalano say they’ve been in constant contact with the city about the project’s troubles for years. They’ve offered repeatedly — as recently as “a few weeks ago” — to refund the $1 million in state funds while working with the FBI to recover the federal ARPA money that went to Clevenger.

“That’s why we’re caught off guard by this,” Catalano told Fresnoland. “The city is well aware of this. Our counsel has been in contact with the City Attorney. This is not new information to them.”

The two say the city has refused that partial refund.

Fresno City Attorney Andrew Janz disputes that account. In a text to Fresnoland Friday, he said the city has requested the full amount back, “totaling nearly two million in taxpayer dollars,” and that the Poverello House “has asked us to forgive the remaining balance which we have communicated is unacceptable especially when the FBI and Attorney General are involved.”

The FBI declined to comment, citing its policy of neither confirming nor denying investigations.

Clevenger and PreFab Innovations have a complicated history in Fresno. The city successfully partnered with Clevenger in 2023 on a separate modular housing project for at-risk youth in northwest Fresno. But multiple sources across the Central Valley describe a different pattern — one of unpaid bills, broken promises, and bad-faith dealings.

Matt Dildine, CEO of the Fresno Rescue Mission, housed PreFab Innovations in a downtown warehouse on Santa Clara Avenue on what he calls a “sweetheart deal,” hoping to support what looked like an altruistic vision for affordable housing. Clevenger failed to pay rent for months, Dildine says, and strung him along with talk of buying the property outright.

“Looking back,” Dildine said, “it was all just a ruse to try and get more time.”

Dildine eventually went to court and evicted Clevenger in 2025, winning about $80,000 in past-due rent and damages. “He left a bunch of trash and environmental waste and all this stuff,” Dildine said.

Dildine is one of several past business partners who describe similar experiences. Some of them brought their complaints to Attorney General Bonta’s office, resulting in the February filing seeking to strip Clevenger of his license.

One source listed in that filing, speaking on condition of anonymity, told Fresnoland they were “sad but not surprised” to hear about the city’s lawsuit against the Poverello House. “We’ve been trying to sound the alarm on this guy for years. This man is taking public and private funds and he’s wasting them. He’s defrauding people and cities.”

Clevenger did not respond to requests for comment.

Even if the city wins its lawsuit, it may not be able to redirect the federal ARPA funds. Local governments had a deadline, now long past, to allocate and spend that money. Any unspent funds must be returned to the federal treasury — meaning the city might recover the $965,000 only to immediately send it back to Washington.

The Breakdown

• In 2023, the city contracted with the Poverello House to build about two dozen tiny homes, committing nearly $2 million — $965,000 in federal pandemic relief (ARPA) and $1 million in state Encampment Resolution Funding.
• The Poverello House selected PreFab Innovations, owned by contractor Dave Clevenger, through a competitive bidding process to build the homes. The homes were never delivered.
• The City Council voted 6-0 Thursday to sue the Poverello House to recover the funds. The nonprofit says it has repeatedly offered to refund the state portion while working with the FBI to recover the federal money given to Clevenger.
• Attorney General Rob Bonta’s office filed a complaint in February to revoke Clevenger’s contractor’s license, citing claims from other business partners. The FBI has interviewed Poverello House staff about Clevenger, according to the nonprofit.
• Multiple past business partners describe similar patterns of unpaid bills and broken promises from Clevenger, including the Fresno Rescue Mission, which evicted PreFab Innovations in 2025 and recovered $80,000 in damages.

What This Means for You

This lawsuit is about more than one failed project. It’s about whether elected officials and the nonprofits they fund can be trusted to deliver on promises made with public money — money that voters approved through taxes and that the City Council chose to spend this way. Nearly $2 million meant to house homeless residents never became housing, and now a second round of public resources will go toward litigation instead of shelter. When you weigh whether the council handled this responsibly, or whether the city should continue partnering with the Poverello House on future projects, this is the record to consider.

What to Watch

The city and the Poverello House both describe themselves as victims of the same contractor, yet the city is suing the nonprofit, not the man they both say took the money and failed to deliver. Why isn’t Dave Clevenger named in this lawsuit? The city has the Attorney General’s February filing, the nonprofit’s repeated warnings, and a trail of past business partners who say they tried to sound the alarm. A lawsuit against the Poverello House might recover some funds, but it doesn’t answer the question of who else knew what, when — or what accountability looks like for a contractor who, by multiple accounts, has been taking public and private money for years while leaving unfinished work and unpaid bills behind. If the FBI investigation is real, when will we see charges? And if the city recovers the federal ARPA money only to send it straight back to Washington because the spending deadline has passed, what did this lawsuit actually accomplish?