Weeks ago, Mayor Sylvester Turner said he would provide a complete explanation for allegations of interference in a $15 million contract that would have benefitted his former business partner. Many people thought that would happen today at a joint meeting between the Budget & Fiscal Affairs and Housing & Community Development Committees. But it didn’t.
The Mayor didn’t appear. His representative didn’t speak. And Tom McCasland, the fired director of Housing & Community Development wasn’t even invited. Instead of explanations, we got more bombshells and even bigger, more troubling questions that pointed to what Mayor Pro Tem Dave Martin called “a train wreck” that was years in the making.
The Longest Three Hours Ever
Keith Bynam, the department’s Interim Director, and Temika Jones, Assistant Director and Chief Financial Officer (also a former auditor) sat in the hot seats for three hours. They gave a presentation about the department’s finances.
The meeting almost ended before it started. Council members received the presentation from Bynam and Jones less than an hour before the start of the meeting. The members had so little time to prepare that several wanted to postpone. Based on their initial review, some also called the presentation a “diversion.” The acrimonious discussion about whether to adjourn the meeting consumed the first 33 minutes and set the tone for the rest of the day. One council member, Mike Knox, walked out.
While the presentation was certainly not what council members expected, it also wasn’t a “diversion.” It more closely resembled open heart surgery on an entire city department in front of live TV…using hand grenades instead of scalpels.
Most of the presentation focused on budget shortfalls in the department, and who knew what about those shortfalls when.
Sadly, Bynam and Jones had planned to talk about a “corrective action plan” for the department, but never got to their recommendations because of persistent interruptions from council members whose jaws were scraping the floor.
At the end of the meeting, the City Attorney said the internal investigation that the Mayor assigned to him had been turfed to outside counsel – former US attorneys. He knows a hot potato when he sees one!
If this presentation was an attempt to support the mayor (who was reportedly at an Astros game), it backfired. Bynam and Jones spent half their time fielding questions from council members about why they didn’t turn whistleblower years ago. They claimed: 1) that they repeatedly raised spending issues with McCasland, 2) that McCasland supposedly discussed them with the Mayor, and 3) that they weren’t really sure if he ever did.
Bombshell Revelations
Among the bombshells:
The department’s annual administrative budget for ongoing HUD Community Development Block Grant (CDBG) programs (separate from Harvey programs) went over budget during the last fiscal year by 175%. It budgeted $3,987,480 and spent $11,084,775.
TIRZ (tax increment reinvestment zone) money made up the difference, but by law TIRZ money is supposed to be spent within the zone where the tax increment is collected.
During the last 5 fiscal years combined, the department overspent its admin budget by 143%. It budgeted $21,088,015 and spent $51,322,491 on admin.
Admin expenses for the Harvey CDBG fund exceeded the four-year budget of the program by 14% in the first year of the program.
For the department’s Homeowner Assistance Program (HoAP), the department incurred $70 million in expenses as of the end of the third quarter, but has only had reimbursements approved and/or paid that totaled $12,475,085. They missed that one by almost 6X. As a result, they are now $22 million short in their project delivery funds.
Only one of nine programs in the Harvey fund is on track to meet its performance benchmarks by the end of the year.
The former director’s wife owns a company that was doing business with the department to reduce “duplication of benefit” (DOB) gaps for HoAP applicants. But the company actually increased the gap for each applicant, according to the GLO. To cover the difference, the department will have to reduce each homeowner reimbursement request.
The GLO capped Relocation Assistance at $6,000 per applicant, but the department is spending $8 to 10K.
Change orders were not accounted for properly.
Virtually all city council members appeared to be surprised by the revelations.
12 Bigger Questions Remain
Compared to his role in one dubious financial transaction, Mayor Turner now has many bigger questions to answer.
Did the Mayor provide proper oversight to the Housing and Community Development Department?
Why did he continue to back McCasland when management issues arose years ago? HUD and the GLO had warned him. The problems were widely reported in the media.
Are the numbers reported today accurate and complete, or are there more surprises waiting?
How could admin expenses swell so much? Previous GLO and HUD audits suggested that the department was understaffed. And McCasland claims he held admin expenses below 13%. And typically, first-year admin startup costs for a new program run about 20-30% of the total allocated for the entire program. They don’t consume 4+ years of budget in one year.
Does the City’s accounting software need improvement? The City doesn’t even recognize liabilities incurred to HUD and the GLO. It only covers the general fund.
Were these numbers being timely reported to the Mayor? Bynam and Jones say they reported them to McCasland every month, and that McCasland supposedly discussed them with the Mayor. But Bynam and Jones claim McCasland kept them out of meetings with the Mayor. So they don’t know what McCasland told the Mayor.
Did McCasland make the Mayor aware of the overages?
What is McCasland’s side of the story?
How is it possible that the City Controller was writing checks and these overages did not show up on a balance sheet?
The City’s general fund advances cash to complete projects in anticipation of reimbursements from the GLO once the work is approved. Are there audited financials that show more detail on how these funds were spent AND additional liabilities which may be accruing?
Why did the City sue the GLO to keep these programs last year if they were losing so much money?
Rule #1
Rule #1 in business is that when you’re in a hole, stop digging. Evidently, NO ONE at the City got that memo.
Posted by Bob Rehak on 10/7/2021
1500 Days after Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2021/06/20210626-RJR_8687.jpg?fit=1200%2C800&ssl=18001200adminadmin2021-10-07 22:05:122021-10-08 10:52:11Bombshells in Council Meeting Raise More and Bigger Questions about Housing and Community Development
The agenda is scant. It entails a Housing and Community Development “Financial Update” with three speakers:
Keith Bynam, Deputy Director, Housing and Community Development
Temika Jones, Chief Financial Officer, Housing and Community Development
Andy Icken, Chief Development Officer, Mayor’s Office
I asked Mayor Pro Tem Martin for more detail. He replied, “Fiduciary update on City of Houston Housing, specifically CDBG and DR-17, and the status of the investigation from the City Attorney regarding his decision to bring in outside Firms and appropriate resources to ensure independence and completeness.”
Turner Vigorously Denies Allegations
The last part about the City Attorney refers to a self-investigation Mayor Sylvester Turner launched in the wake of explosive allegations by Tom McCasland, Housing and Community Development’s former director. Turner fired McCasland two weeks ago after McCasland accused the Mayor of improperly influencing the award of a housing grant. The Mayor skipped over the top seven recommendations by McCasland’s department to pick the eighth ranked project. The Mayor’s selection would have delivered one quarter of the affordable housing for basically the same price as the four projects recommended by the Department of Housing and Community Development. It just happened to turn out that the Mayor’s former law partner, Barry Barnes, is also a stakeholder in the eighth ranked project.
I spent the better part of the day reviewing complex documents in this case. I will post them below with some brief comments for those who like to refer to original source materials.
The 110-page contract between the GLO and City of Houston for $835 million. This is a subset of the $1.2 billion original contract that became the subject of a lawsuit between the same two parties last year. It lays out the expectations for each party, allocates totals to each program, sets performance goals for each, and lists deadlines. The Mayor signed it on Page 104.
The agenda for a review and a list of requested documents. Some of the acronyms in this may be puzzling. MQA stands for “Monitoring Quality Assurance.” MFRP stands for Multi-Family Rental Program. Page 4 lists the purpose of the review. Page 5 lists the scope. Page 11 lists the items that the City had not yet supplied as of 9/30/2021. Page 12 explains regulations that could penalize the City if it fails to provide the requested records.
The 40-page 2021 Notice of Funding Availability (NOFA) refers to Round 3 of the Disaster Recovery (DR-17) and Multifamily Program. It lays out the ground rules and selection criteria for the controversial Clear Lake apartment complex preferred by the Mayor. This was the “report card” for companies submitting proposals. It told them how they were going to be graded – i.e., what would increase or decrease their chances of success. It includes such factors as “flood resilience,” “experience,” “project readiness,” “cost reasonableness,” “disaster-recovery construction standards,” “location relative to the floodway,” and more.
Significantly, in the last document, the City’s Chief Procurement Officer, Jerry Adams, promises, “Bid proposals will be reviewed, underwritten and scored to select awardees based on a predetermined set of criteria outlined in the NOFA.”
Is There a Contract?
Yes and No.
No, in that a contract has not been signed with the Mayor’s hand-picked developer. The developer has not been paid any money. GLO has not even received a recommendation yet as to the developer. Everything blew up on the launching pad before things got that far.
However, the GLO and HUD contend that the NOFA is a contract. It obligates the City to solicit proposals according to criteria that have been agreed to beforehand.
The documentation calls into question whether bypassing seven higher scoring proposals in favor of a lower scoring project might violate the NOFA and federal procurement process regulations.
Here are some important federal requirements listed in the Code of Federal Regulations under 2 CFR Part 200:
Appendix I to Part 200 – Full Text of Notice of Funding Opportunity: “The intent is to make the application process transparent so applicants can make informed decisions when preparing their applications to maximize fairness of the process.” (E. Application Review Information)
§ 200.319 Competition: “All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320.
From that perspective, there was and is a contract. As this controversy plays out, the contract question will likely play a central role. Don’t be fooled if someone says, “There was no contract.” Clarify what that means.
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2021/10/20210520-RJR_6964.jpg?fit=1200%2C800&ssl=18001200adminadmin2021-10-06 21:52:062021-10-07 08:15:30Special City Meeting Thursday At 2 PM Will Address Multi-Family Housing Flap
The Houston Chronicle and Ted Oberg, ABC13’s investigative reporter, both filed new stories Tuesday about the controversy surrounding Houston Mayor Sylvester Turner and the City’s troubled Housing and Community Development Department. The story blew up on September 22 and immediately triggered a fraud investigation by the Texas General Land Office and the US Department of Housing and Urban Development. According to today’s stories, Harris County District Attorney Kim Ogg has also opened an investigation into the multi-family housing deal at the heart of the controversy.
Mayor Recommends Deal with 4X Less Bang for Bucknbg
Tom McCasland, the former department head, accused the Mayor in an open City Council Meeting of unduly trying to influence the outcome of a grant. The Mayor promptly fired McCasland. The deal favored by the Mayor would have sent millions of dollars in business to the Mayor’s former law partners although McCasland explicitly said he was not accusing the Mayor of fraud.
In the “what was he thinking department,” the Mayor also asserted that it was his right to award the project to the firm of his choice and overrule McCasland’s recommendation even though four times more affordable housing units could have been built for the same amount of money had Turner followed the recommendations of McCasland’s department.
Ogg Investigation Reportedly Looks Back into Old Deals Too
Allegedly, the investigation is widening. Oberg’s story said, “13 Investigates has also learned the District Attorney is asking for more – and this time far more detailed information – about contracts, agreements, invoices and all available payment information related to payments to Barry Barnes and Associates in 2018 and 2019.”
Mayor Turner’s office said in a statement, “The City has received no notice of an investigation. The DA asked through an informal request for all city policies and procedures related to procurement and the letting on contracts.” The mayor denies having done anything wrong.
McCasland declined to comment, as did Ogg. “Out of fairness to all involved, we neither confirm nor deny potential investigations into any matter until and if a charge is filed,” said Dane Schiller, Ogg’s spokesperson.
In separate news, the City’s Housing Committee will reportedly hold a hearing Thursday, October 7, at 2 pm on this matter and broadcast the meeting on its internet site. The Mayor is expected to tell his side of the story at that time.
More news to follow.
Posted by Bob Rehak on 10/5/2021
1498 Days since Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2019/03/Turner.jpg?fit=1500%2C1125&ssl=111251500adminadmin2021-10-05 21:22:402021-10-05 22:13:41Chronicle, ABC13 Report Harris County District Attorney Opens Investigation into Mayor
Bombshells in Council Meeting Raise More and Bigger Questions about Housing and Community Development
Weeks ago, Mayor Sylvester Turner said he would provide a complete explanation for allegations of interference in a $15 million contract that would have benefitted his former business partner. Many people thought that would happen today at a joint meeting between the Budget & Fiscal Affairs and Housing & Community Development Committees. But it didn’t.
The Mayor didn’t appear. His representative didn’t speak. And Tom McCasland, the fired director of Housing & Community Development wasn’t even invited. Instead of explanations, we got more bombshells and even bigger, more troubling questions that pointed to what Mayor Pro Tem Dave Martin called “a train wreck” that was years in the making.
The Longest Three Hours Ever
Keith Bynam, the department’s Interim Director, and Temika Jones, Assistant Director and Chief Financial Officer (also a former auditor) sat in the hot seats for three hours. They gave a presentation about the department’s finances.
The meeting almost ended before it started. Council members received the presentation from Bynam and Jones less than an hour before the start of the meeting. The members had so little time to prepare that several wanted to postpone. Based on their initial review, some also called the presentation a “diversion.” The acrimonious discussion about whether to adjourn the meeting consumed the first 33 minutes and set the tone for the rest of the day. One council member, Mike Knox, walked out.
While the presentation was certainly not what council members expected, it also wasn’t a “diversion.” It more closely resembled open heart surgery on an entire city department in front of live TV…using hand grenades instead of scalpels.
Sadly, Bynam and Jones had planned to talk about a “corrective action plan” for the department, but never got to their recommendations because of persistent interruptions from council members whose jaws were scraping the floor.
At the end of the meeting, the City Attorney said the internal investigation that the Mayor assigned to him had been turfed to outside counsel – former US attorneys. He knows a hot potato when he sees one!
If this presentation was an attempt to support the mayor (who was reportedly at an Astros game), it backfired. Bynam and Jones spent half their time fielding questions from council members about why they didn’t turn whistleblower years ago. They claimed: 1) that they repeatedly raised spending issues with McCasland, 2) that McCasland supposedly discussed them with the Mayor, and 3) that they weren’t really sure if he ever did.
Bombshell Revelations
Among the bombshells:
Virtually all city council members appeared to be surprised by the revelations.
12 Bigger Questions Remain
Compared to his role in one dubious financial transaction, Mayor Turner now has many bigger questions to answer.
Rule #1
Rule #1 in business is that when you’re in a hole, stop digging. Evidently, NO ONE at the City got that memo.
Posted by Bob Rehak on 10/7/2021
1500 Days after Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.
Special City Meeting Thursday At 2 PM Will Address Multi-Family Housing Flap
City of Houston called a special joint committee meeting for Thursday, October 7, at 2PM between Budget & Fiscal Affairs and Housing and Community Affairs. Mayor Pro Tem Dave Martin will chair the meeting.
The agenda is scant. It entails a Housing and Community Development “Financial Update” with three speakers:
I asked Mayor Pro Tem Martin for more detail. He replied, “Fiduciary update on City of Houston Housing, specifically CDBG and DR-17, and the status of the investigation from the City Attorney regarding his decision to bring in outside Firms and appropriate resources to ensure independence and completeness.”
Turner Vigorously Denies Allegations
The last part about the City Attorney refers to a self-investigation Mayor Sylvester Turner launched in the wake of explosive allegations by Tom McCasland, Housing and Community Development’s former director. Turner fired McCasland two weeks ago after McCasland accused the Mayor of improperly influencing the award of a housing grant. The Mayor skipped over the top seven recommendations by McCasland’s department to pick the eighth ranked project. The Mayor’s selection would have delivered one quarter of the affordable housing for basically the same price as the four projects recommended by the Department of Housing and Community Development. It just happened to turn out that the Mayor’s former law partner, Barry Barnes, is also a stakeholder in the eighth ranked project.
Turner vigorously denies any charges of impropriety and asked the City Attorney to investigate. However, the appointment of an appointed official to do the investigation was panned by the media.
Since then, the Texas General Land Office (GLO), HUD and the Harris County Attorney have each launched separate investigations. And now it appears that the City Attorney will also bow to public pressure by appointing an outside investigator.
Documents At Heart of Controversy
I spent the better part of the day reviewing complex documents in this case. I will post them below with some brief comments for those who like to refer to original source materials.
Significantly, in the last document, the City’s Chief Procurement Officer, Jerry Adams, promises, “Bid proposals will be reviewed, underwritten and scored to select awardees based on a predetermined set of criteria outlined in the NOFA.”
Is There a Contract?
Yes and No.
No, in that a contract has not been signed with the Mayor’s hand-picked developer. The developer has not been paid any money. GLO has not even received a recommendation yet as to the developer. Everything blew up on the launching pad before things got that far.
However, the GLO and HUD contend that the NOFA is a contract. It obligates the City to solicit proposals according to criteria that have been agreed to beforehand.
The documentation calls into question whether bypassing seven higher scoring proposals in favor of a lower scoring project might violate the NOFA and federal procurement process regulations.
Here are some important federal requirements listed in the Code of Federal Regulations under 2 CFR Part 200:
Additionally, in CONTRACT NO. 21-134-000-C788 above (section 8.05, page 19), the City of Houston agreed to strictly adhere to sections 318-326 of 2 CFR Part 200.
From that perspective, there was and is a contract. As this controversy plays out, the contract question will likely play a central role. Don’t be fooled if someone says, “There was no contract.” Clarify what that means.
To View Special Meeting Thursday At 2PM
To view the Microsoft Teams Live Meeting, go to: https://tinyurl.com/JOINTMTGBFAHOU.
Presentation handouts may be available at: https://www.houstontx.gov/council/committees/bfa.html. As of this posting, no handouts were available.
This meeting will also be broadcast on HTV, the City of Houston’s Municipal Channel.
Posted by Bob Rehak on 10/6/2021
1499 Days since Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.
Chronicle, ABC13 Report Harris County District Attorney Opens Investigation into Mayor
The Houston Chronicle and Ted Oberg, ABC13’s investigative reporter, both filed new stories Tuesday about the controversy surrounding Houston Mayor Sylvester Turner and the City’s troubled Housing and Community Development Department. The story blew up on September 22 and immediately triggered a fraud investigation by the Texas General Land Office and the US Department of Housing and Urban Development. According to today’s stories, Harris County District Attorney Kim Ogg has also opened an investigation into the multi-family housing deal at the heart of the controversy.
Mayor Recommends Deal with 4X Less Bang for Bucknbg
Tom McCasland, the former department head, accused the Mayor in an open City Council Meeting of unduly trying to influence the outcome of a grant. The Mayor promptly fired McCasland. The deal favored by the Mayor would have sent millions of dollars in business to the Mayor’s former law partners although McCasland explicitly said he was not accusing the Mayor of fraud.
In the “what was he thinking department,” the Mayor also asserted that it was his right to award the project to the firm of his choice and overrule McCasland’s recommendation even though four times more affordable housing units could have been built for the same amount of money had Turner followed the recommendations of McCasland’s department.
Turner Unleashes Firestorm
The Chronicle reported today that an investigator from Ogg’s office was seen knocking at the door of McCasland’s home. When there was no answer, he left a business card with a neighbor. The headline read: “Harris County DA Investigating deal at center of allegations that Turner steered money to developer.”
Oberg’s segment on the evening news led off with, “Harris Co. DA asks for documents on City Hall spending, payments to Mayor’s former law partner.” Oberg said he had obtained a copy of Ogg’s request, though he did not post the document.
Ogg Investigation Reportedly Looks Back into Old Deals Too
Allegedly, the investigation is widening. Oberg’s story said, “13 Investigates has also learned the District Attorney is asking for more – and this time far more detailed information – about contracts, agreements, invoices and all available payment information related to payments to Barry Barnes and Associates in 2018 and 2019.”
Mayor Turner’s office said in a statement, “The City has received no notice of an investigation. The DA asked through an informal request for all city policies and procedures related to procurement and the letting on contracts.” The mayor denies having done anything wrong.
McCasland declined to comment, as did Ogg. “Out of fairness to all involved, we neither confirm nor deny potential investigations into any matter until and if a charge is filed,” said Dane Schiller, Ogg’s spokesperson.
In separate news, the City’s Housing Committee will reportedly hold a hearing Thursday, October 7, at 2 pm on this matter and broadcast the meeting on its internet site. The Mayor is expected to tell his side of the story at that time.
More news to follow.
Posted by Bob Rehak on 10/5/2021
1498 Days since Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.