Author Topic: State audit finds conflict of interest in housing program -- urban core suffers  (Read 8376 times)

sheclown

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When the city missuses the federal and state funds given it to take care of the poor in its midst, it is no wonder the city is in the mess it is in.

100s of millions of dollars of federal and state money flow through Jacksonville each year.

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Audit finds 'significant' conflicts in city housing program

By Christopher Hong Sun, Sep 27, 2015 @ 11:30 pm | updated Mon, Sep 28, 2015 @ 5:57 am

An audit of a city housing program for poor residents found “significant” conflicts of interest within nonprofit groups that received the public money and raised questions about participants’ eligibility.

The report, released by the Jacksonville City Council Auditor’s office, focuses on the city’s use of state money between 2009 and 2012 and found the following:

■ Officials for nonprofit groups that were paid to oversee the rehabilitation of rental homes were also owners of construction companies that the group chose to complete the work, which appeared to be a “significant” conflict of interest. The same groups also failed to get the required number of price quotes from different construction companies before awarding a contract for the project. The report didn’t provide the names of the nonprofit groups, construction companies or the amount of the projects.

■ In many instances, the city didn’t keep documentation from participants of a foreclosure prevention program. Without those documents, which the state requires the city to keep, auditors were unable to determine whether a person was eligible to participate in the program.

■ The city also failed to keep documentation from contractors paid to perform repairs and improvements to homes. Without that documentation, auditors were unable to determine whether the companies were eligible to receive government funding or if the projects were completed as required by their contract.

The State Housing Initiative Partnership was administered by the city’s Housing and Community Development Division during the period that the audit focused on.

In its response to the audit’s findings, the city’s housing division said the report “reinforced” many issues an internal review found before its release. It said it worked with a consultant from the U.S. Housing and Urban Development agency to improve its policies.

The division also said it was pursuing a disciplinary action against the employee who oversaw the program that was found to have conflicts of interest, which was one of the recommendations made in the audit.

A city spokeswoman didn’t respond to a request for that employee’s name.

The audit recommended that city attorneys should determine whether any contract violations were made in the programs with the conflict of interest and whether the city should take action against the two nonprofits. It also recommended the city create a checklist to ensure all required documentation is submitted.

 

Christopher Hong: (904) 359-4272
« Last Edit: October 02, 2015, 06:27:35 AM by sheclown »

sheclown

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For a full copy of the audit go here:

http://forum.preservationsos.org/viewtopic.php?f=5&t=1746

page 10  --  the non-profit information

« Last Edit: October 02, 2015, 05:08:58 AM by sheclown »

sheclown

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JaxUnicorn

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Wow.  Thanks for posting this sheclown!!  I read the entire report and have noted some thoughts/questions below.

Although some of the "violations" appear minor (missing contractor documentation such as Articles of Incorporation or a P&L statement), others are way worse:
  • Failure to record mortgages
  • Backdating mortgage documents
  • Failure to obtain proof of insurance for contractors
  • Failure to ensure contractor adherence to contract documents (i.e. $42,195 in liquidated damages owed by contractors)
  • Failure to record mortgages in the Division's mortgage subsidiary ledger
  • Allowed major CONFLICT OF INTEREST when awarding contracts (blaming a single employee)
Not one audit finding was denied; Laura Stagner, Director of Finance for the Housing and Community Development Division agreed with all findings.  She also stated various checklists have been created to ensure procedures are followed.  Management is expected to ensure compliance with regulatory guidelines and this audit proves that expectation was not met.  Checklists are great if they are utilized properly.  Who will make sure the Checklists are completed? 

From the Audit:
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The State Housing Initiatives Partnership (SHIP) program is a state program that provides funds to local governments as an incentive to produce and preserve affordable homeownership and multifamily housing.

Not following official written funding guidelines for the smaller requirements leads to ignoring the bigger requirements.  As we found out during the HUD audit, ignoring guidelines is grounds for the agency providing the funding to require repayment of the original funding.
  • Are there monetary ramifications to the City for not following the SHIP guidelines (i.e. repay funds to the State)?
  • Is the City in danger of losing future program funding?
  • When will the results of the internal investigation into the conflict of interest be provided?
Oh, and one other question.  The Audit Report was prepared on April 25, 2014 and not released until September 23, 2015.  Why was it not released for almost 17 months
Kim Pryor...Historic Springfield Resident...PSOS Founding Member

sheclown

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The city has declared "war on blight" and including "human blight" -- a desperate attempt to clean up the mess from DECADES of mismanagement of federal and state funds -- money which, if spent wisely, could have prevented the blighting circumstances in the first place and certainly gone a long way to correct the problems caused by the extreme poverty found in the urban core.

How many Jacksonville children could have grown up in cleaner, safer neighborhoods?  What would the urban core look like today?

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Since 1975, the City of Jacksonville has received more than $373 million in CDBG funds that have been used to develop and implement a wide-range of programs directed toward neighborhood revitalization, economic development and improving community services.

http://www.metrojacksonville.com/forum/index.php?topic=18611.0

and then there's this stuff:

http://www.metrojacksonville.com/forum/index.php?topic=19258.0

« Last Edit: October 02, 2015, 06:32:44 AM by sheclown »

sheclown

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Basically this audit states what we saw in the federal audit.  The city lacks the capacity to handle the millions of dollars of government money poured into the city and through this mismanagement the urban core has lost out.

The main findings were that almost half of the non-profits who are trusted to spend the money to rehab and provide affordable housing used their own construction companies to rehab and build.  They did not record mortgages for the recipients, there is not adequate paperwork to prove the selection process of the recipients of the housing services were qualified to receive it.  Actually, it stated that they didn't even know if, in some cases, these services went to people who actually lived in the houses ie. investors perhaps got the program resources instead of grandma.

The report also says that the city knew these problems existed and did nothing.
« Last Edit: October 02, 2015, 05:08:40 AM by sheclown »

JaxUnicorn

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https://www.councilofnonprofits.org/tools-resources/conflict-of-interest

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WARNING
Conflicts that are not managed can result in significant penalties, called "intermediate sanctions," assessed against the person who benefits as well as against the organization. (See IRS information on inurement/private benefit, also referred to as “excess benefit transactions.”)
Kim Pryor...Historic Springfield Resident...PSOS Founding Member

sheclown

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wait a minute....

is this report saying that 9 'not for profits' took almost all the community block development grants....370 million dollars and paid themselves to build low income housing through the use of NO BID contracts to themselves?



The audit says 4 of the 9 non profits were involved in the significant conflict of interest.  It did not mention them by name nor the name of the construction firms involved.  Not too difficult to find out, I'm sure.

Also, the audit did not mention the dollar amount.  Also, not very difficult to find out.

In addition, the audit did not name the city employee that it is investigating; however, we all know this is not the work of one single employee but rather an accepted standard operating procedure when it comes to federal and state funds. 


Apache

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Unfortunately, this is the reason you have such a large group of Americans that are so opposed to raising taxes or even paying their fair share of taxes. Look at this huge waste and corruption and mismanagement in just this one program. One program in little ole Jacksonville at that. Just imagine the waste of of tax dollars like this around the country. Could do so much better, probably with less.

Have a little read on Coburns Wastebook someday when you have some free time.

http://dailysignal.com/2014/10/22/top-6-examples-wasteful-government-spending-wastebook-2014/

simms3

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^^^I don't find any of that wasteful.  Coburn, a Republican who I'm sure has plenty of wasteful spending under his own belt, frames each example in hyperbolic fashion - there is probably a lot more underlying stuff in each of those examples that we don't know about, or need to know about.

And added altogether, about $2.67M, big whoop.

People are such sheep to follow and listen to anyone lie that they will reduce wasteful spending, lower taxes, and cut bloat out of government.
Bothering locals and trolling boards since 2005

Apache

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^^^I don't find any of that wasteful.  Coburn, a Republican who I'm sure has plenty of wasteful spending under his own belt, frames each example in hyperbolic fashion - there is probably a lot more underlying stuff in each of those examples that we don't know about, or need to know about.

And added altogether, about $2.67M, big whoop.

People are such sheep to follow and listen to anyone lie that they will reduce wasteful spending, lower taxes, and cut bloat out of government.

Well, Thats just an article with a few examples, not the book. But then again, you get your hairs cut at $400 a pop and work with Donald Trumps on a daily basis in a super expensive glam city.

Edit: I removed the rest of my cheap shots at Simmsy. It's wasteful and thats a main why taxpayers don't like having taxes raised. Hard to argue that. I'll leave it there.  Have a good weekend.

Non-RedNeck Westsider

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Unfortunately, this is the reason you have such a large group of Americans that are so opposed to raising taxes or even paying their fair share of taxes. Look at this huge waste and corruption and mismanagement in just this one program. One program in little ole Jacksonville at that. Just imagine the waste of of tax dollars like this around the country. Could do so much better, probably with less.

In all fairness, it may not be a waste per se.  The contractors may quite possibly doing a decent job and just might be the lowest bid on the jobs. 

The biggest issue in my mind is the process and not necessarily the results.

The saddest part of it is that by doing this out in the open, many contractors would be less likely to respond to an RFP if they knew their pricing structure would be a matter of public record.  So if they (the double dippers) would have just followed procedure, there's a good chance they would have still gotten the work (through their secondary companies) and still followed protocol with their primar, assuming it's not the other way around.

Hell, in a good majority of projects, the base bid is irrelevant anyhow unless there's a locktight contract preventing substantial changes through the course of the job.

Edit: 

Just saw this:

from what i can tell simms, the controversy isnt over the waste, but rather the process,

Yes.  The process indeed.
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simms3

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^^^I don't find any of that wasteful.  Coburn, a Republican who I'm sure has plenty of wasteful spending under his own belt, frames each example in hyperbolic fashion - there is probably a lot more underlying stuff in each of those examples that we don't know about, or need to know about.

And added altogether, about $2.67M, big whoop.

People are such sheep to follow and listen to anyone lie that they will reduce wasteful spending, lower taxes, and cut bloat out of government.

Well, Thats just an article with a few examples, not the book. But then again, you get your hairs cut at $400 a pop and work with Donald Trumps on a daily basis in a super expensive glam city.

Edit: I removed the rest of my cheap shots at Simmsy. It's wasteful and thats a main why taxpayers don't like having taxes raised. Hard to argue that. I'll leave it there.  Have a good weekend.

You're right, fairly cheap shots.  My once a month posting on here must really ruffle your feathers for you (and others) to constantly get so personal with lame attacks on who you think I am as a person.  Whatever.  I'm happy where I am and I assume you are too, and isn't that all that matters.
Bothering locals and trolling boards since 2005

simms3

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from what i can tell simms, the controversy isnt over the waste, but rather the process,

Got it...the link provided as an example of wasteful spending harped more on the what spending was on and less about the process.  I can understand how the process (aka Bureaucracy) can be frustrating, inefficient, and wasteful.  That's why everyone debates what is the best balance between public and private realms?  You need both, private is clearly efficient but too self-interested to result in a harmonious society, and public is incredibly inefficient and often wasteful, but enacts the rules/regulations/systems that keep everything in check and in harmony.

To Non-redneck's point, doing public contracts is really sticking your neck out there from a pricing perspective.  It's that balance - public accountability, but then that screws $$ because perhaps the better and/or less expensive contractors won't even bid?  Who knows?
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whislert

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Unless I'm mistaken, this was a City of Jacksonville audit of programs partly financed with State funds. It was completed in April 2014 but not released until a year and a half later in September 2015 by the Lenny Curry mayoralty. This was about the same time HUD released its Monitoring Report finding the City "lacked the fundamental capacity to administer federal anti-poverty funds consistent with federal regulations." My reading of the City audit indicated that conflict of interest was found concerning two non-profit CDC's who both sponsored housing projects and also performed the work. Poor record keeping was endemic to virtually all elements of the City's Community and Housing Division programs. This means the City has now proved it lacks the fundamental capacity to manage local, state and federal housing program funds. The total of funds audited, as I recall, amounted to some $10 to $15 million. Was all the money audited? or just a sampling of projects that used some of these funds? I don't know. It covered program activity from 2009-12. This means Wight Greggor and/or her replacement Elaine Spencer are implicated as the "city employee" being considered for disciplinary action. Clearly this is a black eye to the entire non-profit housing sector of Jacksonville. The next 5-year CDBG Action Plan is up for reformulation beginning in February. Maybe its time for innovative programs and new faces to show up at the trough for these federal anti-poverty Entitlement Funds. And hopefully this spells the end of any possibility that Alvin Brown will feature in a democratic presidential cabinet as Secretary of HUD. Pray.