Little Rock's public housing authority has until the end of the day to terminate or prove the legality of a contract with a local attorney to investigate allegations of wrongdoing levied by the agency's executive director.
The Little Rock field office of the U.S. Department of Housing and Urban Development, which funds the Metropolitan Housing Alliance, sent a letter to Kenyon Lowe, chairman of the agency's board of commissioners, on Monday outlining several reasons the Alliance's contract with Leon Jones Jr. appeared to be "improperly procured."
Lowe declined to tell the Arkansas Democrat-Gazette which action the board will take, but commissioners did not discuss or move to terminate the contract with Jones at a special meeting on Tuesday.
Under the contract, Jones' firm, Pinnacle Strategy Group, is tasked with investigating agency Director Nadine Jarmon's claims, listed in a memo to the field office and the Little Rock mayor's office on June 23. Jarmon claimed the commissioners repeatedly engaged in unnecessary spending, sidestepped federal approvals and had conflicts of interest with parties involved in transactions with the housing authority.
One problem with the contract, according to the letter from Little Rock field office Director Anthony Landecker, is that it does not name the source of the funds the agency will use to pay Jones.
"If the Board's intention is to pay for the Contract with restricted Section 9 Public Housing funds, then this Contract must meet all the requirements for a Public Housing contract, including proper procurement," Landecker wrote.
Additionally, the $160,000 maximum payment to Pinnacle Strategy Group exceeds the housing authority's "small purchase threshold" of $100,000, listed in the agency's procurement policy. Any purchases above $100,000 should be put out for bids and competitive proposals, according to the policy.
Landecker's letter to Lowe asserts that the contract with Jones also does not comply with the portion of the Code of Federal Regulations that requires federally-funded entities to include a clause explaining "termination for cause and for convenience" in contracts with nonfederal entities.
The contract between the Metropolitan Housing Alliance and Jones' firm, Pinnacle Strategy Group, began July 1 and will last through May 1 if the housing authority does not terminate it.
The authority will pay Pinnacle Strategy Group $275 per hour for a maximum of 20 hours per week. The total would amount to $160,000 if the investigation takes 10 months, the maximum time allowed under the agreement.
During Tuesday's meeting, Lowe read aloud his response to the field office on behalf of the board.
"We are not above reproach and correction in being stewards of public funds," Lowe wrote. "However, in dealing with this conspiracy, the board's actions are transparent with no hidden agenda but to provide the truth that has all been spoken, as well as [to] hold all accountable."
The email reiterated Lowe's past urging for an investigation from the federal Housing Department's Office of Inspector General into Jarmon's allegations. A spokesperson for the federal agency has said that officials were trying to substantiate Jarmon's allegations, which could eventually be referred to the inspector general.
Lowe's message did not address the problems with the contract that Landecker outlined.
Lowe told the board at the meeting that he believed housing authority policy allowed the board to choose whomever they wanted for the investigation, even though the field office believed the board should have used federal law as its guide.
He said the board should transfer the "authorities and powers" outlined in the contract with Jones to the board's attorney, Khayyam Eddings, who was present at the meeting. Eddings said he had only just received a copy of Jarmon's memo on Tuesday and had not yet read it, so he was not in a position to provide legal advice about it.
Jones was not present, and he later told the Arkansas Democrat-Gazette in a phone interview that Lowe had told him about the letter and that he would get back in touch with him after the meeting. As of Tuesday evening, Jones said, Lowe had not updated him.
Landecker's letter stated that any payments to Jones using restricted Section 9 Public Housing funds must be rescinded immediately. Jones said he has not yet been paid for taking the initial steps of the investigation.
Jarmon also was not present at the meeting because the board voted unanimously in June to suspend her with pay for the duration of Jones' investigation. The board tapped financial Director Andy Delaney as interim executive director during that time.
Jarmon's memo to Landecker and Mayor Frank Scott Jr. in June called for the removal of all five commissioners. The board is self-appointing, subject to approval by the Little Rock board of directors and mayor.
Scott previously told the Arkansas Democrat-Gazette that the federal Housing Department is the governing body in charge of overseeing and disciplining the Metropolitan Housing Alliance.
He cited the same reason for his decision not to dissolve the board last year after receiving an anonymous letter from housing authority staff with similar complaints to Jarmon's and the same request to remove the board. The anonymous letter also lacked supporting documentation, he said.
Jarmon's memo included a collection of emails, bank statements, board minutes, board resolutions and other documents as evidence to back up her claims.
Commissioner Leta Anthony said she was suspicious of Jarmon and previous staff sending their complaints directly to the mayor when Scott has said his power over the housing authority is limited and when the Office of Inspector General exists to investigate such issues.
She said such behavior appeared to be "public corruption" and "a conspiracy" to undermine the board's integrity, both issues that she wants to be investigated separately from the allegations in Jarmon's memo.
"I'm not even worried about the stuff that's in the report because it's easily disputed," Anthony said. "I'm concerned about the practice of end-running to the mayor's office."
Lowe said after the meeting that an investigation into personnel matters, as Anthony called for, does not need a resolution from the board in order to happen. He declined to comment further on Anthony's statements or the potential for another investigation.
Jarmon's letter in June marked the latest episode of strife between the Metropolitan Housing Alliance's chief executive and its board. The agency has seen four different directors in the past three years. Anthony Snell, the executive director before Jarmon, left the post in July 2020, writing in his resignation letter that the board had harmed and micromanaged the agency. Jarmon was then appointed interim executive director before the board hired her to take over the post in April.
CORRECTION: A federal housing official took issue with a Metropolitan Housing Alliance contract to investigate claims against the agency’s board because it did not identify the source of the funds that would be used to pay attorney Leon Jones Jr. A previous version of this story incorrectly identified the recipient of the funds.