FAYETTEVILLE -- The U.S. Department of Housing and Urban Development is investigating the city's Housing Authority, and the authority's interim executive director resigned Wednesday, pointing to authority board members for his decision.
The investigation and resignation are the latest turn of events in turmoil that came to a head in a February board meeting. A number of public housing residents lodged complaints against the former executive director. The board fired her and appointed an interim director. Questions over finances, toxic working relationships and finger-pointing over responsibilities fumed between board members and staff over the ensuing months.
Board members recently voted to unload multifamily properties it purchased but couldn't afford to finish renovating to recoup financial losses with its development nonprofit.
A letter dated Monday says HUD's Departmental Enforcement Center will review the authority. The purpose of the review is to assess the authority's compliance from Jan. 1, 2019, to Sunday with HUD rules and regulations, according to the letter.
The letter from the HUD regional office in Fort Worth, Texas, includes 20 records requests pertaining to the authority and its nonprofit, FHA Development, to be submitted by Aug. 30.
Requests include lists of bank accounts, bank statements, how HUD money flows between bank accounts and credit card accounts, as well information on employees and board members. The letter also asks for projects and developments owned or leased to own by the authority and its nonprofit; contracts; agreements; financial policies and procedures; and ledgers.
John Berry, the authority's interim executive director, resigned Wednesday in a letter to the authority board. His last day will be Sept. 1. He said he had a health scare brought on by the stress of working at the authority and by how some board members treat him and the staff.
"Every day I come to work and want to work on FHA business and grow the staff, but instead, I feel like I am buffering the staff from some of the board members' actions," Berry said in his notice. "The staff is growing weary, and it is hard to keep their spirits up when they feel that the board does not support their actions and questions the day-to-day operation of the housing Authority."
Melissa Terry, chairwoman of the boards for both Housing Authority entities, said she has tried to be proactive about engaging with Berry and staff. She said she wants to develop a corrective action plan between the board and staff to help steady the boat.
"The only reason this entity exists is to provide affordable and safe housing for our residents who need it the most," Terry said. "We have a waiting list, last time I looked, of like 2,200 people waiting for vouchers. We just can't lose sight of that and prioritize interpersonal issues over our mission."
Berry served as deputy director before becoming interim executive director in late February after a board decision to investigate complaints made by public housing residents and staff against former Executive Director Angela Belford. The board fired Belford in March. Belford was hired as executive director in March 2019 and was interim director starting in October 2018.
The authority's development nonprofit board has the same members as its regular authority board except for one member, Kristen Bensinger. Bensinger resigned from the nonprofit board in June because of concerns over the nonprofit's finances. The three other board members voted to remove Bensinger as chairwoman of the regular board later that month. Terry then became chairwoman of both boards.
Other board members are Ezra Brashears, Monique Jones and Kris Paxton.
The regular authority operates three public housing properties with 200 units and manages a fourth with 52 units under the federal Rental Assistance Demonstration program. It gets most of its money from the federal government.
The authority's administrative staff sent a letter to Susan Norton, chief of staff to Mayor Lioneld Jordan, on May 11 expressing concern over possible misconduct, inefficiency and negligence by the authority's board. Berry alleged the board misused public housing money to subsidize the FHA Development operation.
Terry said she disagreed with describing the board's actions as misusing public housing money.
"The board makes decisions based on information provided by staff," she said. "If the board doesn't get good information, then some of our decisions may not be square with what they need to be. So that's what we're trying to do now, is get square."
The City Council can appoint or remove members of the regular Housing Authority board but does not have any power over the operation and management of the authority, according to City Attorney Kit Williams.
Jordan said he's been in contact with HUD officials. The administration has passed on information it has received from HUD about concerns over the authority to the City Council. If necessary, Jordan said he would be open to calling a special council meeting about the board's membership but wanted to wait on the outcome of the investigation.
"We're kind of waiting for more information," he said. "We'll be very interested to see what the HUD investigation reveals. Then we'll take whatever action we've got to."
The authority nonprofit at one point was set to buy five properties totaling 133 units at a cost of $7.3 million for the purchase price and renovations.
Two of the properties -- an apartment complex on West End Avenue north of Wedington Drive and another complex on Dunn Avenue between 11th and 13th streets -- didn't close and were under lease to the development nonprofit with an option to purchase. The properties reverted back to the original owner, John Cloyed, in June.
The authority's nonprofit has been working on selling the other three properties. The former Hi-Way Inn & Motel and Cafe Rue Orleans on North College Avenue across from Veterans Health Care Center of the Ozarks is on the market. An apartment complex at 12th Street and South Washington Avenue is set to close to a buyer Aug. 26 for nearly $1.4 million. An apartment complex south of Deane Street and Porter Road also is set to close to a different buyer Aug. 26 for more than $1.3 million.
The authority's nonprofit board decided to sell or relinquish ownership of the properties in June to recoup its losses, Terry said at the time. Bank financing for the properties fell through and many residents couldn't pay rent when the pandemic hit, she said.
HUD told the Housing Authority on May 24 to immediately stop spending public housing money on any FHA Development projects, which don't have public housing units. HUD ordered the authority's nonprofit to repay its housing program for debt owed in monthly installments. The authority held a joint meeting of the two boards a day later to go over options.
Anthony Landecker, public housing director for HUD's Little Rock field office, allowed regular housing authority staff to perform administrative and operating duties for the authority nonprofit, on the condition the authority nonprofit reimburse the regular authority on a monthly basis.
An agreement was formalized between the two entities in a June 16 meeting. During the meeting, Landecker told board members it had flexibility in repaying all of the debt owed by a July 31 deadline. However, Landecker said the authority did not have flexibility in regular housing authority staff performing services for FHA Development without reimbursement.
Terry told Landecker in an email that repaying the debt to the regular housing authority was dependent on using federal Emergency Rental Assistance money to collect rent in arrears from FHA Development tenants.
In the July 26 letter, Landecker said FHA Development has received money from the Emergency Rental Assistance program, but it had yet to reimburse the regular housing authority. In addition, regular housing authority staff was continuing work to collect the emergency money from tenants on behalf of FHA Development, he said. As a result, the debt continued to accumulate, he said.
Landecker sent a letter to Terry saying he had continued concerns about FHA Development's ability to pay back the debt.
"I understand the arrears rental collection efforts are underway, but this does not constitute a pass for reverting back to utilizing Section 9 funds to subsidize FHA D operations in the interim," he said.
Landecker again instructed the housing authority to stop spending public housing money for FHA Development services without monthly reimbursements in the July 26 letter.
Terry again spoke with Landecker to clear up confusion, she said. In a July 29 letter, Landecker said FHA Development reimbursed the regular authority more than $7,300 for this month, and that HUD had no objection to the regular authority staff providing property management services for FHA Development, as outlined in the agreement. The agreement also stipulates that FHA Development will get its own credit card for its own expenses.
Terry said she believes the investigation notice from the HUD office in Fort Worth is for compliance purposes.
"I understand it," she said. "This is public money, and it's better to ask for more than you need and be able to make evidence-based decisions rather than not."
Terry acknowledged the records request from the Fort Worth HUD office will create a burden for staff. As such, she said she plans to call a special board meeting to consider hiring a third-party contractor to handle the request so staff can focus on day-to-day operations. Terry said she started speaking with the potential contractor weeks ago to help offset the load for staff. The regular authority could hire the contractor through an emergency procurement process with money unspent on vacant positions, she said.
Berry said as of Tuesday FHA Development owes the regular authority either about $61,000 or $105,000. HUD is still considering whether to award FHA Development more than $40,000 in federal grant money to relocate residents from authority-owned Hillcrest Towers to the nonprofit-owned Hi-Way Inn while renovations were going on at the towers last year. The money was part of an emergency federal grant awarded to the regular authority in 2017.
Stacy Ryburn can be reached by email at email@example.com or on Twitter @stacyryburn.
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