homeless services outreach city — AI-generated illustration
Fresno City Council Votes to Sue Nonprofit Over Failed Tiny-Home Project, Nearly $2 Million at Stake
On August 14, the Fresno City Council voted in closed session to sue Poverello House over a tiny-home project that never materialized, leaving nearly $2 million in public funds unaccounted for.
The city committed roughly $2 million to build about two dozen modular homes — $965,000 from federal pandemic relief funds and $1 million from California’s Encampment Resolution Funding grant. None of the homes were built.
City Attorney Andrew Janz said the city has demanded the full amount back. “They are well aware the City has requested the full amount to be returned, totaling nearly two million in tax payer dollars,” he wrote in a text to Fresnoland. “Poverello has asked us to forgive the remaining balance which we have communicated is unacceptable especially when the FBI and Attorney General are involved.”
Poverello House CEO Zachary Darrah and spokesperson Cary Catalano told Fresnoland the nonprofit didn’t abandon the project — the contractor did. Through a bidding process, Poverello House hired Fresno-based PreFab Innovations Inc., run by Dave Clevenger. The city had worked with Clevenger successfully in 2023 on modular homes for at-risk youth.
But this time, Poverello House says, Clevenger failed to deliver and stopped engaging in good faith. The FBI interviewed Poverello House leaders about their experiences with Clevenger and PreFab Innovations. In February 2026, California Attorney General Rob Bonta’s office filed a licensing complaint seeking to revoke Clevenger’s contractor’s license.
Poverello House says it offered to return the $1 million in state funds while working with the FBI to recover the federal ARPA money that went to the contractor. “The city is well aware of this. Our counsel has been in contact with the City Attorney. This is not new information to them, so again I’m a little confused about everything that’s going on here,” Darrah said.
Even if the federal funds are recovered, ARPA deadlines have passed — meaning the money may have to go back to the federal government rather than being used for another local housing project. The community could be left with no homes, lost time, and fewer resources to address homelessness.
An unnamed source told Fresnoland: “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.”
The Breakdown
- The Fresno City Council voted Aug. 14 to pursue a lawsuit against Poverello House over a failed tiny-home project funded with nearly $2 million in public money.
- About $965,000 came from federal pandemic relief (ARPA) funds; $1 million came from a California grant for clearing encampments.
- Poverello House hired contractor Dave Clevenger through a bidding process. The city had worked with Clevenger successfully in 2023 on a different modular housing project for at-risk youth.
- Poverello House says Clevenger failed to deliver and stopped engaging in good faith. The California Attorney General filed a complaint in February 2026 seeking to revoke Clevenger’s contractor’s license. The FBI interviewed Poverello House about their experience with Clevenger.
- The city is demanding full repayment. Poverello House says it offered to return the $1 million state grant while working with the FBI to recover the federal money sent to the contractor.
- ARPA deadlines have passed — even if the federal money is recovered, it may have to be returned to the federal government rather than redirected locally.
What This Means for You
The City Council committed $2 million in public funds — federal pandemic relief and a state homelessness grant — to a project that produced nothing. Now they’re deciding whether to hold a nonprofit accountable for the full amount or accept a partial return while federal investigators pursue the contractor. If the federal money can’t be redirected locally because of missed deadlines, that’s nearly $1 million in potential housing assistance lost to the community for good.
What to Watch
The city’s own successful 2023 partnership with the same contractor raises questions about this failure. Poverello House is caught between a contractor the FBI is looking into and a city demanding full repayment. That raises a stewardship question: should a nonprofit be held fully liable when it followed the city’s own bidding process to select that contractor — especially when the city had worked with the same contractor successfully just a year earlier?
An unnamed source told Fresnoland they’d been “trying to sound the alarm” on Clevenger “for years.”
