Houston housing and your money
Several weeks ago, I started "translating" the City of Houston's council agendas for everyone's benefit over at Houblog. However, items do not "just appear" on the agenda for the first time immediately prior to a meeting of the full council. Like Congress, the City Council has thirteen committees responsible for considering matters before they come to the full council. (Some might consider it darkly humorous that the chair of the Ethics Committee is Carol Alvarado.) Unlike Congress, the chief executive -- that is, the Mayor -- has complete control over the agenda, so no item can ever be buried in committee.
Although they rarely draw any attention from the public, a lot of the nuts and bolts of governing the city goes on in them, as the committee members are supposed to investigate the motions, make a recommendation, and then the mayor puts the item on the main agenda. Recently, reader Tom Bazan brought my attention to the July 11th Housing Committee Agenda, which I repost in part below. There are just so many attention-grabbing items, it's hard to know where to begin. There are enough packed in this one agenda to raise serious questions about how our money is being handled; more than I can possibly handle in a single post.
This is a long post, especially for BlogHOUSTON, and it starts slowly. The payoff is worth it though, so head below the fold. And bring a snorkel... it's deep in there.
2. Presentation regarding LARA.
Who or what is LARA? Would anyone be surprised to find out it is yet another "Authority"?
The Land Assemblage Redevelopment Authority (LARA) is a 13-member board appointed by the Mayor, City Council, Harris County and the Houston Independent School District. The LARA Authority is organized for the purpose of aiding, assisting and acting on behalf of the City in the performance of its governmental functions to promote the common good and general welfare of the City and in undertaking and completing one or more projects, as may be defined or determined by the City Council of the City.
The presentation was probably about the recently completed Request For Proposals regarding the city taking over 130 tax delinquent properties, then selling them off to selected home builders, and then paying part of the eventual buyer's purchase cost, to make them affordable. See Item #22. This is being done by the city's Housing and Community Development Department (HCDD). Community development indeed -- the city acquires the property, sells it to whom it chooses instead of on the open market, then ensures a buyer will be found, and that he or she can pay the note. Whatever happened to private development? (Perhaps we should be happy they're not using eminent domain for this purpose...yet.)
Does this indicate a problem with the profitability of these hotels, or is this something in the normal course of business? Generally, a restructuring indicates problems making payments, doesn't it?
3. Review and possible recommendation of an ordinance authorizing amendment to the Section 108/EDI Grant Agreements for the Loan Guarantee Assistance Program and Grant Fund relative to the proposed Restructuring of the Loan Terms for the Magnolia Hotel and the Crowne Plaza Hotel.
14. Review and possible recommendation of an ordinance authorizing a contract between the City of Houston and the Coalition for the Homeless of Houston/Harris County to operate a homeless database and publish a homeless services directory.
Is it too much to hope that the Coalition will place this directory online, where all the hobos can obtain it using our world-class city-wide wi-fi, and the laptops that will magically appear to bridge the digital divide?
15. Review and possible An Ordinance appropriating $300,000 out of the Homeless Housing Bond Funds (Fund 415) and approving and authorizing a Contract between the City of Houston and Miracle Pointe Apts. (fka Glenwood Forest Apts), for reimbursement of rehabilitation on affordable multi-family housing units.
Giving $300k to a business to reimburse it for fixing up their property to make it more attractive to renters? Welcome to the U.S.A., home of the free-market philosophy! Is the HCDD seeing to it we are getting our money's worth? Two years ago, Jefferson Wells audited the HCDD, and their answer wasn't pretty:
Several program activities include some form of continuing or continuous monitoring. As a generalization, we did not identify any formal policy and procedure in place to ensure that all projects or activities, which required such regular (e.g. annual) compliance activities, including site visits, did in fact receive one. Our reviews of various annual monitoring activities also indicate that they were frequently performed on an irregular and not annual basis. (HCDD personnel located only 22 reports out of a potential total of at least twice to three times that number).
We identified multi-year gaps between HQS visits to many locations; of 69 properties listed as subject to compliance reviews, only 43% were inspected by the (sole) inspector during 2004, 23% in 2003; 17% had not been inspected since 2002 or earlier and 16% were tagged N/A or TBD.
Ow. That's not exactly quality oversight. (Minor correction: it was one year ago; the audit was completed 3/10/05. -- Ubu)
17. Review and possible recommendation of an ordinance authorizing the modification of the existing loan in the amount of $1,013,918.33 to APTDF, Ltd. converting $513,918.33 to a grant and extending the maturity date on the remaining $500,000 loan balance for an additional 30 months.
Emphasis added. Well, if first you forgive over half the loan, and then extend the other half, it's fair to say the recipient was poor risk. APTDF appears to stand for "Apartments--Deerfield," a complex probably most famous for having had some entrepreneurial guards back in 2005. But this isn't the first time their name has surfaced, attached to problems in the HCDD. I suspect the complex's owners did not like being singled out in that Jefferson Wells audit:
In our review, we noted that noncompliant entities are not subject to timely re-inspections - either to ensure prompt implementation of agreed remediation actions or to avoid further deterioration. Several properties visited for HQS compliance purposes had "violations cited" during mid 2004 which are still shown as open; The Monitoring & Evaluation section documented eight (8) findings in its March 2003 review of one apartment complex (.APTDF / Deerfield Apartments, contract #FC38968), but we have received no evidence of any follow up or subsequent review and report by the section since then.
Late inspections, no follow-up, and now we forgive half the loan? I hope they don't make a habit out of this sort of thing.
We also learned of some projects' loans, which were converted after the fact by a previous director from a repayable loan to a non repayable grant. (Note these changes required and apparently received city council approval).
Never mind. Thank you, Jefferson Wells.
18. Review and possible recommendation of an ordinance appropriating $1,632,670.10 out of the Homeless & Housing Consolidated Bond funds and authorizing the reimbursement of this amount to the City's HOPWA Line of Credit Control System (LOCCS) for unsupported HOPWA program services within the Recovery Campus of Houston, Inc. project.
19. Review and possible recommendation of an ordinance appropriating $487,792.66 out of the Homeless & Housing Consolidated Bond funds and authorizing the reimbursement of this amount to the City's CDBG Line of Credit Control System (LOCCS) for unsupported leasing costs and unreported use of program income within the Recovery Campus of Houston, Inc. project.
I don't know what that means, but it doesn't sound good. Especially in light of this item from near the beginning of the agenda:
7. Review and possible recommendation of a professional services agreement between the City of Houston and Harry Afadapa & Associates, P.C. in connection with HUD HOME Finding #8 and appropriating the funds from the Homeless and Housing Consolidated Bond Fund in an amount not to exceed $15,000.
The Finding #8 referred to here is from another 2004 audit of the HCDD expenditures of federal funds, conducted by HUD:
The City's subrecipients, Housing Opportunities of Houston (HOH) and Houston Housing Finance Corporation (HHFC) charged expenses to the HOME program that did not meet the the general principles in A-122, requiring that all costs must be reasonable, allocable, and allowable.
The City has a subrecipient agreement dated September 2003 with HHFC to administer a homebuyer assistance program. Under the agreement HHFC is paid $600 for administrative costs for each homebuyer subsidy issued under the program, and a $200 homebuyer education fee per homebuyer.
To carry out its responsibilities...HHFC entered into a subrecipient agreement with HOH under which HOH is required to perform the duties and responsibilities of HHFC under the agreement...It is unclear why the City contracted with HHFC to administer its new construction homebuyer program, since HHFC subcontracted with HOH to perform essentially all vital program functions.
Under the subrecipient agreement ... HOH is paid $340 for each loan (out of the $600 HHFC recieves for administrative costs).
The HHFC is owned and operated entirely by the City of Houston, and run by a board of directors appointed by the mayor and confirmed by council. Curiously, they have no website and aren't mentioned anywhere in the City's. So why is the city contracting with itself, shaving part of the money off, and then subcontracting the job out? Why not just contract directly with HOH? Well...it did that too!
The City also has a subrecipient agreement dated September 2003 with HOH to administer a homebuyer assistance program.
Under that agrement, the City also used the HOME program to pay:
- 90% of HOH's lease
- 100% of their computer costs
- 90% of their copier lease
- 50% of audit cost
- 50% of supplies
- A percentage of the salaries of listed employees
- Plus a fee of $200 per homebuyer for education.
Summarizing: the city paid its own private corporation $800 per loan it processed, but it didn't process any, it just handed the job and $340 of that money over to a contractor, and then the city paid most of that contractor's costs! And that $200 HOH homebuyer class? You can take it for $25. From the HOH itself, no less--a fact HUD noted.
They were not amused.
REQUIRED CORRECTIVE ACTION: The City must reimburse its Treasury HOME account from non-federal funds for the amounts disbursed since January 1, 2001 to the HHFC and HOH....i.e., the $600 and $200 fee per homebuyer under the HHFC agreement, the $200 per homebuyer agreement, as well as lease, computers, copier, audit, and supplies charges.
Non-federal means "out of the Houston taxpayer's pocket" of course, since no one seems interested in making HOH and HHFC cough up the dough. Now tell me again, for what are we paying Harry Afadapa & Associates, P.C. up to $15,000? It doesn't really say.
So don't let this next item worry you--I'm sure the Housing and Community Development Department has fixed everything and your money is in good hands now. Really!
10. Review and possible recommendation of an amendment to the Single Family Home Repair Program Administrative Guidelines to allow the Housing and Community Development Department to process contracts over $25,000 up to $140,000 in a like manner as allowed for contracts under $25,000.
Translation: The Department will have the authority to disburse up to $140,000 without council review or authorization. Nor will such acts appear on any public agenda or be subject to public comment. This will remove a significant amount of spending from public scrutiny, burying it inside the Housing Dept. where nothing short of a TPIA request can even find out that there was a disbursement.
And now that you've read all that, circle back to the first item above, where LARA is obtaining a 130 new properties to start development of more subsidized housing. Now I'm not saying that there's a stench of corruption here. No sir, not at all.
But you might want to invest in air freshener, because I'm still digging, and there is more where this came from.