HUD tells Fayetteville Housing Authority to end contract with consultant

FAYETTEVILLE -- The Housing Authority cannot hire a consultant the board brought on to help "right the ship" of the authority's operation, according to a letter from the U.S. Department of Housing and Urban Development.

The federal agency's field office in Little Rock sent a letter to the authority Sept. 30 saying the authority needed to rescind a 60-day, $19,500 contract with Gerald Turner's HEAL Collective in Little Rock. The contract involved Turner and a subcontracted accountant, Lisa Curry McCullough of Springdale, regularly meeting with authority staff and board members to help stabilize the organization.

HUD launched an investigation into the authority in August over compliance with federal rules and regulations, particularly pertaining to financials involving the authority's development nonprofit, FHA Development.

The authority improperly used federal public housing money to pay expenses of the nonprofit, HUD said in previous letters. The authority's interim deputy director estimates the nonprofit may need to reimburse the authority more than $100,000.

Call, response

HUD said in the letter the authority's policy for making purchases is outdated. The board's policy is it does not have to solicit bids or quotes for any purchases below $20,000. The agency said the threshold should be $10,000, per federal rules.

The authority needed to get at least three quotes because the contract exceeded $10,000, according to the agency. The contract also does not meet federal requirements for noncompetitive contracts, it said.

HUD also said it appeared Turner helped write the terms of the contract and therefore he cannot render his services. The contract also involves work related to FHA Development, and the authority cannot use public housing money for FHA Development matters, according to the letter.

HUD told the authority to rescind the contract with Turner and recommended it update its purchasing policy to reflect current rules and regulations.

The letter marks the second time HUD has reached out to the authority about a contract with Turner's HEAL Collective. The authority board originally hired Turner on a 60-day, $24,000 contract in August under an emergency procurement policy. HUD told the authority the contract did not meet the federal requirements for an emergency. The board subsequently reconfigured the contract with Turner, lowering the amount to $19,500, below its threshold for soliciting bids.

The authority's attorney, Jim Crouch, responded to the letter Oct. 1. Crouch argued the $10,000 threshold applies only to government entities, and the housing authority is a nonfederal entity created by the city, which is different. Its self-imposed $20,000 threshold is lower than the $35,000 threshold for small purchases that state law requires, he said.

Crouch also said HUD told the authority previously to follow its own purchasing policy to hire Turner, which it did. Putting the contract out for bids would delay the process, and the authority needed Turner's help immediately, he said.

Melissa Terry, chairwoman of the authority board, wrote the contract without help from Turner, Crouch said. The only involvement with FHA Development included in Turner's contract is him attending FHA Development board meetings, he said. The authority can remove that part from the contract, Crouch said.

Crouch asked HUD for advice on how to meet agency demands. He asked HUD to respond to his email this week. The agency had not responded as of Thursday.

Pro bono for now

Turner said during an authority board meeting Oct. 7 he would work pro bono until the issues with the contract are straightened out. He said he would not charge any retroactive payments.

"All the work since approximately August 2021 is pro bono, so no fees have been earned and/or can be expensed given there is no contractual agreement with FHA," Turner said in a text message Friday.

Terry said HUD reviewed the authority's purchasing policy after the first attempt to hire Turner, so hearing the policy was outdated surprised her. If the authority needs to update its policy, it will, she said. She refuted the other reasons HUD gave to rescind the contract.

Terry said she did not know Turner before the board decided to hire him. Representatives of regional housing agencies recommended Turner, she said. The authority needs Turner's outside perspective to help get its operation on track, Terry said.

The board agreed 4-0 on the first contract with Turner on Aug. 19. Board Member Kristen Scott was not in attendance. The board voted 4-1 on Aug. 30 to lower the dollar amount of the contract to $19,500. Scott was the lone no vote. All meetings were held online.

Past is present

Strife among board members and staff brewed since a February board meeting in which public housing residents and former staff members lodged complaints against then-Executive Director Angela Belford. The board subsequently fired Belford, and interim Directors John Berry and Victoria Dempsey resigned over the course of the next few months, citing board conduct as the reason.

Audra Butler, who previously served as director of housing, is leading the organization as interim deputy director while the board searches for a permanent executive director.

HUD's field office in Little Rock has notified the authority that it could not use public housing money on apartment complexes the development nonprofit owned that have no public housing units.

The nonprofit's board, which has the same membership as the regular authority's five-member board except for Scott, agreed in June to sell the five properties it owned.

Ownership of two of the apartment complexes reverted back to its previous ownership. One complex south of Deane Street and Porter Road closed Tuesday for $1.35 million to BDM Realty LLC in Elkins. The nonprofit bought the property in June 2020 for $1.32 million. The board is trying to sell another complex at 12th and Deane streets.

On Friday, the nonprofit signed a contract to sell the former Hi-Way Inn and Motel property it owns, which also includes Cafe Rue Orleans, to AMR Architects in Springdale for $900,000. Target closing date is Dec. 7.

Additionally, the board has been trying to collect rent in arrears from tenants at those properties using the federal Emergency Rental Assistance program. Terry has said the development nonprofit has about $210,000 in unpaid rent that resulted from tenants being unable to pay during the pandemic. FHA Development has received about $16,000 in unpaid rent through the program, according to Terry. An additional $58,000 has been approved, but is pending payment, she said. Washington County administers the program.

Amount owed

As of Sept. 1, FHA Development owed the regular authority more than $106,000, according to Butler. The number may be lower if HUD allows the development nonprofit to receive about $47,000 from a federal grant to help move residents from public housing complex Hillcrest Towers to the former Hi-Way Inn & Motel property while emergency renovations were being done at the towers in 2019.

The authority is about to have an audit, so the amount FHA Development owes to the regular housing authority may change, Butler said.

Terry said she believes the dollar amount FHA Development owes to the regular authority differs from the $106,000 staff reported. However, the audit should clarify the amount, she said.

The board hired Barrale Renshaw CPAs and Advisors in St. Louis, Mo., for $30,380 to do the audit. The auditors are scheduled to start work next week, Terry said.

"My opinion is that both the staff and the board are working together in good faith to determine the actual amount, and we'll do the next right thing accordingly," she said.