The Homestead Housing Authority rehired its outside management firm Tuesday after the U.S. Department of Agriculture said the authority could not self-manage its farmworker housing.
The decision came at the conclusion of an hourlong emergency meeting held just days before the housing authority had planned to resume responsibility for the day-to-day operations of the roughly 300 units of farmworker housing for which it receives nearly $500,000 a year in USDA rental assistance.
Between USDA and U.S. Department of Housing and Urban Development funds, the housing authority manages about $20 million in public funds each year.
The HHA first relinquished control of those properties over to outside management company Nelson & Associates back in 2012, after a blistering federal audit in 2011 revealed the housing authority had grossly mismanaged the properties since at least 2006.
This January, the HHA reversed course. Its board voted to dismiss the outside company and start transitioning toward self-management, with Nelson & Associates set to turn over all operations by May 1, a year before the firm’s contract was to expire. HHA board members said at the time that the company was doing a good job, but that the company’s fee would be put to better use in improving units.
On March 26, the authority received word from new USDA area director Angela Prioleau that it was moving quickly toward self-management without having first submitted the proper paperwork to get official federal approval. The HHA responded with an application to self-manage, which the USDA rejected less than two weeks later, saying that HHA executive director Oscar Hentschel lacked the proper housing management experience and that the application itself was submitted too late for the proposed start date of May 1.
Though the board ultimately decided on Tuesday to reinstate Nelson & Associates, the decision came after a discussion of whether to go ahead with self-management anyway.
Hentschel assured the board at the meeting that he had requested and secured an informal review from the USDA for the following week. It was very likely, he told them, that approval would follow. (USDA spokesperson Ellen Boukari says that the HHA has requested such a review, but that no meeting has been set.)
Board members asked lawyer, Gilberto Pastoriza, if they couldn’t just self-manage in the interim between May 1 and the informal review meeting.
“My recommendation is to cover your bases. Do the safe approach. . . . Because if the USDA says no and you have to file a formal appeal, then you come in with clean hands,” he told them.
Later in the meeting, HHA chairwoman Audelia Martinez wondered aloud about whether the USDA would cut off funding if the housing authority went ahead with self-management.
“You can’t draw the money down, the business stops?” she asked Hentschel.
When Hentschel appeared to equivocate, saying “no, no the business doesn’t stop,” Ramona Nelson, the management company’s president, jumped in.
“Even if you draw on your reserves . . . you need approval from the USDA,” she said.
USDA regulations state that borrowers — such as the HHA — who self-manage without prior agency approval will be placed in “non-monetary default status.”
The board finally moved to vote on rescinding Nelson & Associates’ termination notice to reinstate the firm’s original contract. It passed, with four voting yes, Arturo de Leon voting no, and recent board appointee Carmen Rodriguez abstaining, saying she wasn’t opposed to the motion but couldn’t “in good conscience” vote on a contract she hadn’t seen.
That contract includes a stipulation that it can be terminated with 60 days’ notice, and HHA board members made it clear that they would be using the stipulation if approval to self-manage came through. Earlier in the meeting, Pastoriza asked Nelson & Associates representatives if they would accept a condition to “leave immediately” if the HHA received USDA approval.
HHA board member Lois Jones says she’s glad the HHA ultimately voted to comply with their funder’s directive, but is angry that the board even considered going ahead with self-management without approval.
“There are different rules when you’re dealing with taxpayer money; there are things you don’t do. That’s why you need government experience. They don’t have a clue. It’s like they were children in a sandbox, afraid their toys were going to be taken away,” she said after the meeting.
Jones has long been critical of her colleagues on the HHA board, and especially of their 2011 decision to hire Hentschel despite his lack of experience with public housing.