Financial Abuse, Mismanagement Leave Richmond Housing Agency Near Takeover

By Amy Julia Harris
The Center for Investigative Reporting

The public housing agency in the East Bay city of Richmond has been racked by years of mismanagement, financial abuse and conflicts of interest, The Center for Investigative Reporting has found.

The Richmond Housing Authority is running a nearly $7 million deficit and has to repay $2.2 million for past contracting mistakes. The federal government is threatening to take control of the housing authority this year if key financial benchmarks are not met.

In 2012, Richmond failed to collect more than $157,000 in rent from tenants, according to the U.S. Department of Housing and Urban Development’s most recent inspection.

As its finances spiraled out of control and residents’ basic needs went ignored, the authority spent lavishly, records show.

Its executive director, Tim Jones, charged hundreds of dollars on meals in New York and Washington, including a roughly $400 meal at an upscale midtown Manhattan restaurant where a strip steak with truffle fries runs $41.

The meals cost as much as many public housing tenants pay each month in rent.

Jones’ pay also increased about 30 percent over three years as the authority ran up debt.

Meanwhile, the housing authority’s finance manager improperly used public money for personal use, putting gas and meals on the agency credit card, records show. Federal inspectors in 2012 called his financial knowledge inadequate, saying he routinely failed to provide basic paperwork detailing the authority’s finances. He’s still working at the agency.

The authority also made several late payments on the agency credit card, triggering late fees, records show.

HUD discovered that the No. 2 man at the agency had steered contracts to his brother and wanted him banned from doing work with the federal government. Two years later, the housing authority paid for his retirement party, violating city rules.

These revelations come on top of CIR’s findings of deplorable conditions for residents who occupy the authority’s two largest housing complexes. Residents there are dealing with severe rodent and insect infestations, mold-ridden walls and a slow reaction to fix basic maintenance problems like plumbing leaks and broken heaters.

Lax security has enabled squatters to take up residence in some of the authority’s vacant units. Richmond now ranks among the nation’s worst public housing authorities, according to federal data.

To tell this story, CIR reviewed hundreds of pages of HUD audits, internal memos and report cards dating back a decade that show the troubled housing authority veering further and further out of control. Until now, the story of the housing authority’s financial abuses has not been told.

“The place is being badly managed, poorly managed, and something has got to change,” said Jackie Thompson, a resident who serves on the authority’s tenant advisory commission.

Jones has been in charge since 2005. He blames the housing authority’s troubles on his predecessor. He said the authority has cut its staff significantly, has a plan to get out of debt and is working closely with HUD to make fixes.

“When I arrived, we had a staff of 65,” Jones said. “Now there’s a staff of about 28. We are lean here. There is no fat.”

Jones did not respond to numerous requests for follow-up interviews once the extent of the authority’s financial abuses became clear.

Bill Lindsay, Richmond’s city manager, has asked HUD to give Jones a chance to turn the authority around.

“He inherited some terrible staff that he can’t unload,” he said. “He took something that was in dismal shape, and he made cuts and stopped this place from really heading for financial disaster.”

But the documents show how the financial problems and mismanagement have festered on Jones’ watch.

“The current executive director has been there approximately 6 years, but few improvements have been made,” according to a June 18, 2012, HUD memo. “The financial condition of the authority has gotten worse by the year, and based on audit findings from as far back as 2009 … the total lack of internal controls has contributed significantly to the authority’s current condition.”

The abuses weighed on the minds of HUD officials, who wondered in memos whether firing Jones would solve the problems. But the memos say that Mayor Gayle McLaughlin and the City Council likely would oppose such a move and that there was no qualified successor in the organization.

It’s now do-or-die for the Richmond Housing Authority.

After years of being warned about money and bookkeeping problems, it is being forced to overhaul its public housing operation. HUD says that so far, Richmond is making progress. But officials there have threatened to seize control of the authority if key benchmarks – such as turning in audits on time and getting out of debt – are not met this year.

To get out of debt and pay fines, Richmond is selling an apartment complex that was supposed to be a long-term source of funding for the agency. Officials also said they have a more permanent solution. They have a $65 million plan to refurbish four of the authority’s five public housing complexes and turn them over to private management.

The fate of its worst complex, Hacienda, is still undecided.

Improper contracts

The Richmond Housing Authority gets about $26 million a year from the federal government to provide safe and decent housing for the needy. In addition to its 715 housing units for poor, elderly and disabled residents, the authority provides Section 8 vouchers to 1,750 Richmond residents who can use these subsidies to pay rent anywhere in the city.

In 2005, the authority was in trouble.

The executive director lacked basic skills, its files were in shambles and staff couldn’t carry out rudimentary bookkeeping, documents show. Federal auditors swooped in and came up with a 250-point plan on how to turn around the agency. One of their solutions: Hire a qualified executive director.

Richmond brought in Jones, the Oakland Housing Authority’s housing management director, to fix the broken agency. For a few years, it looked like he’d turned the place around. Employees got basic training. A new activist mayor, McLaughlin, made economic injustice a rallying cry.

Then HUD got a tip that something was amiss.

Manuel Rosario, Jones’ No. 2 man at the agency, had steered $61,000 in contracts to his brother in 2008 and 2009,  HUD’s inspector general found. Rosario sat on a committee that gave his brother’s company an inspection contract. Months later, the contract was renewed for a year even though it didn’t have an option to be extended.

Rosario, HUD documents say, also arranged for his brother to get more housing authority work. Jones was supposed to sign off on these documents. But he didn’t.

In a properly run system, the absence of these basic functions would have raised red flags. HUD wanted Rosario banned from working with the federal government in 2009. Jones wouldn’t say whether he fired Rosario, but the agency did pay for his retirement pizza party with taxpayer funds, records show. City policies prohibit spending public money on these kinds of events. It’s unclear from the records how much the party cost.

Rosario could not be reached for comment.

In total, the federal investigation found the agency had misspent $2.4 million on contracts over the previous decade. While some of that activity occurred under the previous leadership, the report uncovered a host of misdeeds by the new management team.

The authority messed up its competitive bidding process for contracts, and it approved payments to contractors without proof that the work had been done.

HUD trained authority staff on how to write and manage contracts. Jones, meanwhile, began overseeing contracts. But the problems continued. In 2012, seven out of 25 housing authority payments reviewed by auditors didn’t have documents that backed up the work that was done.

“The executive director claims he is now the procurement officer, but despite attending procurement training, he lacks the procurement knowledge required to comply with requirements and disregards many requirements,” according to a 2012 internal HUD memo.

Jones, who by this point had been on the job for more than six years, continued to blame the previous administration for the breakdown in contracts. “We’re trying to find a way to fix it,” he said in an interview with CIR.

The housing authority is in the process of repaying $2.2 million for its contracting mistakes. It made its first payment in July. The agency told HUD that the payments would “severely undermine the Housing Authority’s fiscal stability.”

Excessive expenses

HUD delivers an annual report card on each of the more than 4,000 housing agencies across the country. And Richmond’s low marks have placed it among the nation’s worst housing authorities every year since 2009.

The Richmond authority repeatedly has missed its deadlines to file annual financial reports with HUD. If it had turned in the audits on time, federal officials would have seen sooner that Richmond was running out of money.

The agency has overspent its budget nearly every year since 2007. Instead of making ends meet, the housing authority regularly went to the city to help pay its workers’ salaries, gradually piling up debts.

After Richmond got low financial marks again in 2011, HUD sent in a team of specialists.

The specialists found that as the housing authority was going deeper into a financial hole, top officials were loading up the expense accounts.

On a trip to New York in November 2009, Jones got the authority to pay for a $417.34 meal at Fabio Piccolo Fiore, a high-end Italian restaurant, HUD documents show. In Washington, he had taxpayers fund $130.60 and $279.90 meals at an upscale soul-food restaurant called Georgia Brown’s in 2008 and 2010.

HUD found the charges to be excessive, according to a review that stretched from 2008 to 2011. In addition to charging the meals, Jones appears to have billed taxpayers a $40 stipend each day he traveled, records show. Government officials are supposed to limit their meals to the per diem costs, so they shouldn’t be charging meals at all.

Jones also charged taxpayers for meals closer to home. He took his staff to the Italian restaurant Salute E Vita, which overlooks the Richmond marina, three times in three weeks, racking up tabs as high as $195. In the three years reviewed by auditors, Jones charged 23 meals from this restaurant at an average of about $80 a meal, HUD records show.

The City of Richmond’s policy specifically prohibits employees from expensing work lunches with other city employees.

Jones approved all his own credit card charges with no outside oversight. “There were no internal controls to ensure that such activity does not occur,” auditors wrote. Jones declined to comment on the credit cards.

One of the few people who could have spotted the abuse was the finance manager. But he also was abusing his credit card, documents show.

Tony Taplin, the housing authority’s finance manager, used the card to fix his car, fill it with gas and buy personal meals. The city said all unauthorized purchases were eventually repaid.

Taplin didn’t respond to requests for comment.

The housing authority also catered its Board of Commissioners meetings, which consist of the City Council and advisory commission members. One catering bill in 2008 came to $2,142.24.

City officials have since canceled the agency credit cards.

As the finances worsened, Jones’ salary kept rising. The city’s community and economic development director gave Jones a total of 31 percent in raises from 2008 to 2011, at a time when the agency didn’t have enough money to make payroll, HUD auditors found. Auditors described the raises as aggressive.

In the year after the housing authority first was labeled one of the worst in the country, Jones made $205,000 in salary and benefits, according to a survey four years ago of housing authority executives in California. He was in the top third of the highest-paid housing heads in the state, according to the HUD survey.

His pay since has dropped as the housing authority’s budget has gone down. In 2012, he made almost $187,000 a year in salary and benefits, according to city payroll records. HUD no longer ranks executive director pay.

In 2012, the agency ran $5.8 million into the red. By 2013, it owed the city almost $7 million.

Jones would not answer questions about his pay or his expenses.

He said the agency’s finances are getting better. “Our mission is our mission. It can be done as long as we’re trending north,” he said.

HUD found problems beyond the staff. Its inspectors faulted the board, which includes the mayor, for allowing the agency to rack up debt year after year.

“The Board of Commissioners do not appear to have sufficient knowledge of Housing Authority operations, programs, financial condition, or activities, and as a result, have not provided proper oversight of the Executive Director,” according to a 2013 HUD document.

The executive director reports directly to the city manager. The City Council occupies seven seats on the nine-member authority board. An advisory board of residents and community members can make recommendations. And HUD inspectors audit and inspect the housing units annually.

Lindsay took over the housing authority’s finances in 2012. McLaughlin, who as mayor serves as board chairwoman, said she was not aware of the financial abuses at the agency or Jones’ pay increases.

She said once Richmond completes the sale of one of its buildings, it will be debt-free and off HUD’s troubled list. She also pointed the finger at HUD for cutting public housing budgets.

“HUD needs to realize that the federal government is being negligent in its responsibility to provide public housing funds for cities that have experienced decades of economic injustices,” she said.

When later confronted with questions about Jones’ expenses and pay, McLaughlin deferred to Lindsay.

There is only one other housing authority in California that is currently on the troubled list: San Francisco. After it was labeled troubled, Mayor Ed Lee cleaned house. He replaced most of the members of the board of commissioners and hired a new executive director.

There has been no such change in Richmond.

Troubles with rent collection                                                                                  

Richmond’s most recent federal report card is its worst yet.

Housing agencies are rated on a 100-point system, and Richmond got a 47 on its report released in 2013. Anything below 60 is failing. In addition to financial problems, HUD gave the authority failing marks for its management.

The housing authority is essentially a landlord: It’s supposed to collect tenants’ rent, ensure properties aren’t in disrepair and make sure that people in public housing qualify for the subsidy. But hundreds of thousands of dollars of rent has gone uncollected. The authority also has fallen behind on checking residents’ incomes.

Last year, the Richmond Housing Authority was one of the only agencies in California that hadn’t completed the minimum number of income checks for residents, according to federal data. Without checking these finances, tenants could be charged too much rent, or they might make too much money to qualify for public housing.

The dysfunction trickles down to tenants living in the housing projects.

Residents say the agency routinely misplaces their checks and slaps residents with a $25 late fee even when they pay on time. For residents on a fixed income, they say that can mean five meals.

Juanita Hasnat is a double amputee and former nurse. She has lived in Richmond public housing for more than three years. She said she’s paid her $233-a-month rent on time each month since she moved in. But last month and this month, she got a note from the housing agency that she was late on rent and had to pay a penalty.

“If your people put it in late, it’s not on me,” Hasnat said at a public meeting in January.

Jones told her that he’d look into the issue and, if Hasnat was correct, he’d give her an apology in writing.

The Housing Advisory Commission, a group of tenants and community members that airs resident complaints, repeatedly has brought up the late rent issue to no avail.

“It’s management,” said Commissioner Sylvia Gray-White. “They don’t seem to have a clue what they’re doing.”

This story was edited by Andrew Donohue and Mark Katches. It was copy edited by Nikki Frick and Christine Lee.

This story was produced by the independent, nonprofit Center for Investigative Reporting, the country’s largest investigative reporting team. For more, visit cironline.org. Harris can be reached at aharris@cironline.org.