▶ 0:08:15Little Rock, Arkansas. 10 987654 3321 10 987654321 Is the audio hot back in the control center?
▶ 0:08:3410 987654 321 will
▶ 0:17:48come to order. Without objection, the chair is authorized to declare recess of this committee at any time. This hearing is titled Broken Promises, Failures of Failures of the Little Rock Housing Authority, and the Impact on Its Residents. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement.
▶ 0:18:22Okay. Uh I want to start just by saying thank you. Everybody went through a lot of trouble to put this together. uh appreciate the uh involvement and the the seriousness that uh just in our earlier conversations I received on this uh very important issue that you all care about very much. I want to pay particular uh thanks to uh Chairman French Hill. Chairman Hill of course is our is the head of ours the chairman of our full committee financial services committee.
▶ 0:18:53He does a fantastic job. He loves our country and he uh well he loves Little Rock. So that's very much why we're here. So we want to thank him for holding this field hearing and for uh chairman your leadership and conducting the serious oversight on issues that directly affect your constituents who rely on the allimportant public housing.
▶ 0:19:14We are here today because the Metropolitan Housing Authority of Little Rock, MHA, experienced many years of quite frankly disastrous financial and government's failures that put federal housing funds and local residents at serious risk. In 2018, HUD identified that MHA failed to submit required financial statements for funds up to $30 million that were transferred between the housing authority and its nonprofit affiliate, the Central Arkansas Housing Corporation, in ways that were intentionally poorly documented
▶ 0:19:44and lacked justification. In 2023, HUD also found improper payments, unauthorized use of credit cards, and failures in basic financial controls that should have been caught long before they reached that point. Uh, the problems became severe enough that the FBI executed a search related to the housing authority and CHHC. As early as 2018, problems were identified. By 2021, uh, Miss German blew the whistle on the corruption.
▶ 0:20:14Those claims led to the investigations. HUD became involved. The Arkansas Attorney General became involved. Chairman Hill became involved. Nearly the entire MHA commission was fired. And ultimately, the FBI executed a search related to the housing authority and its nonprofit affiliate. So, when a situation reaches that level, it should be treated as a top priority. But under the previous uh HUD secretary, it was um decided it was not.
▶ 0:20:44Thank thankfully for you all here. Chairman Hill became chairman of the Financial Service Committee and Secretary Scott Turner took office at HUD. Now this matter is receiving the serious oversight and attention it requires. Our goal here today is to fully understand how these failures were allowed to continue for so long to make sure the necessary fixes are put in place so the residents of Little Rock and all the residents in public housing and all those that strive so hard to serve the public housing and the residents can have confidence
▶ 0:21:14moving forward. That's why our first hearing on this topic uh was held in on February 10th and included letters to 32 public housing agencies that were troubled demanding solutions and coordination with HUD. MHA was not included among those 32 agencies reflecting that steps have been taken over the past year to stabilize the authority. New leadership has of course been put in place.
▶ 0:21:38The city has taken action and HUD has been actively engaged since early 2025 to restore proper oversight. I do want to note that HUD Secretary Scott Turner committed to this committee that the Trump administration is working with us to stop waste, fraud, and abuse in federally funded housing programs to make sure housing authorities follow the rules and follow the law. That commitment is important. We will continue to work closely with the department.
▶ 0:22:05But today's hearing is about accountability and looking forward, probably more so looking forward. I I I would think um I understand that many people would like to move on uh as we all do after years of problems, but Chairman Hill and I do believe that in this committee that before that happens, the facts need to be clear, failures need to be understood so they don't happen again.
▶ 0:22:30Uh we um continue to look at what where responsibility should be found and held accountable and provide as much transparency and discipline the law and our constituents and residents uh deserve. I yield back. I now recognize the chairman of the full committee, Chairman Hill, for one minute for an opening statement.
▶ 0:22:53Uh thank you, Chairman Muer. I want appreciate the opportunity to host you in my hometown of Little Rock and to highlight how the mismanagement and alleged fraud here at our local public housing agency have impacted some of our most vulnerable citizens of our great city.
▶ 0:23:08Since it was first designated as troubled in 2023, I've been seeking answers on how the Little Rock Housing Authority was allowed to degrade so severely with nearly $30 million in questionable or potentially disallowed expenses, putting our constituents here in central Arkansas at risk of losing their homes. When these programs are abused, scarce resources are diverted away from families in need, undermining both public trust and the mission of public housing itself.
▶ 0:23:37This problem is only exacerbated when wrongdoers are allowed to escape accountability. What's occurred here in Little Rock was a failure at multiple levels. A failure of the individuals running public housing agency uh to work in the best interest of our residents and a failure of the Department of Housing and Urban Development to fulfill their important oversight role. This is quite simply unacceptable.
▶ 0:24:00Today, I'm hopeful that we're moving in the right direction now with new leadership in place at both HUD and on the board here in Little Rock. Looking toward that future, it's crucial that Metropolitan Housing Authorities new leadership work to rebuild trust and become financially sustainable. The committee is dedicated to getting answers and demanding accountability from troubled or failing public housing agencies.
▶ 0:24:24I want to thank the Trump administration under the leadership of HUD Secretary Scott Turner for taking steps to strengthen their oversight of public housing, including here in Little Rock. It's welcome. It's long overdue. This is just the start of the committee's investigation into the quality and safety of America's public housing. I'm committed to working together to demand accountability on the issues that we've seen here in Little Rock and ensuring that public housing across the country are subject to sufficient oversight. and I thank the chairman and I yield back.
▶ 0:24:54Thank you, chairman. We will now move to witness testimony. Uh today we welcome the testimony uh first uh who I understand doesn't need any introduction in this uh building, but city director Joan Adcock. She serves as the position 10 at large city director for the city of Little Rock and has been a dedicated uh public servant of the people of Little Rock for over 30 years being elected to the city board for the first time in November 1992 uh from January 95 until December 96.
▶ 0:25:25Director Adcock also served as vice mayor. Director Adcock was also the founder and director of the Hope Center, a nonprofit welfare to work organization uh that I understand was very effective and has been actively involved in establishing ma neighborhood associations throughout the city. Additionally, Director Adcock was instrumental in establishing the Little Rock Land Authority, Little Rock Animal Village, and the first rental inspection program.
▶ 0:25:49Director Adcock is well known in the community for her dedication to helping individuals navigate their challenges, earning her the reputation of a voice for the people. Welcome. Thank you. Commissioner Carrie White. Like to introduce um Mr. Wright serves as commissioner on the Little Rock Housing Authorities, which also operates as the Metropolitan Housing Alliance, the MHA, Board of Commissioners. Mr. Wright was first appointed to the board of commissioners in 2023 and served for a time as chairman. In addition to his board position, Mr.
▶ 0:26:19Wright is the owner of Garage Door USA in Windsor Door. Prior to moving to Little Rock, Mr. Wright served as the chairman of the board for the Harris County Housing Authority in Texas. Mr. Wright helped mold the Harris County Housing Commission into a responsible functioning agency following a large-scale theft and mismanagement by its prior leadership. Mr. Wright graduated from Texas A&M University with a bachelor's degree in economics and serves on several public sector, private sector, and nonprofit boards in Arkansas and Texas.
▶ 0:26:48So, thank you for being with us, Mr. Wright. Uh, next, Dr. Naen Gar. Appreciate you very much being here, doctor. Dr. Gar is the executive director of the Little Rock Housing Authority, again, also known as the uh Metropolitan Housing Alliance or MHA. Dr. German has worked for over 30 years at some of the largest, most troubled housing agencies in the [clears throat] nation. Prior to her work at MHA, Dr. Gar worked as an independent consultant for the Louisville, Westchester, and Gary housing agencies. Dr.
▶ 0:27:17Gar also held executive director positions in New Orleans before and after Hurricane Katrina, as well as the Baton Rouge, and Dear Beach housing authorities. Dr. German has a master's degree in public administration and a doctorate degree in urban and public affairs from the University of Texas Arlington, a master's degree in business administration from the University of Houston and a bachelor's degree in business administration from the University of Central Arkansas. Dr.
▶ 0:27:42Garman also completed a two-year fellowship at Yale University as a HUD community renaissance fellow. So, thank you very much, doctor. Uh, and now Miss Amanda Wentz. Um, Miss Wentz is a senior assistant attorney general with the Consumer Protection Division of the Office of the Arkansas Attorney General, where her litigation focus includes nationwide consumer matters such as antirust and robocall enforcement. She holds a jurist doctor from the University of Arkansas at Little Rock, uh, William H.
▶ 0:28:11Bowen School of Law, a master of public administration from the University of Arkansas, Little Rock, and a Bachelor of Arts in English literature from Harding University. Amanda is licensed to practice law in Arkansas, the District of Columbia, and the Second Circuit and DC Courts of Appeals. So, thank you very much. Um, so we thank each of you for taking the time to be here. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record.
▶ 0:28:41Uh, Miss Adcock, you, ma'am, are now recognized for five minutes for your remarks. Thank What your There we go. HUD's there to help.
▶ 0:28:56There. That would be good. During my 35 years of service to the city of Little Rock, affordable housing is and will continue to be my passion. I feel very strongly about MF MHA. My mip my mip commitment to MHA stems beyond my position as a member to the city board of directors. In growing up, my family had limited means. I did not have the opportunity to live in affordable housing like Madison Heights.
▶ 0:29:26[music] Not only does Madison Heist address a growing affordable housing crisis in this community, but it also gives children and family hope. When I was growing up, I didn't know any doctors, lawyers, teachers, or people like you up there today. It is difficult for a child to grow up with a dream of becoming something that they don't know.
▶ 0:29:52Madison Heights allows children to live next door to What happened? The federal government did a study and they found that children growing up in poverty has no dreams. They do not understand what they can what they can do.
▶ 0:30:13When they built Madison Heights, it was with the understanding that 10% of the people living there would be come from other places. They would be doctors, lawyers. It would be f full market rent and so a child would know someone. They would know people not in poverty. That was why Madison was built.
▶ 0:30:44And now by Madison you will find our medical school. They have people there that needed to daycare for their children and afterchool care and nighttime care.
▶ 0:31:03So they built a beautiful daycare and school and I was serving on that committee and I asked that 10% of the people from there become from Madison and that is happening today. So, children are growing up knowing what it's like to know people that are doctors and lawyers and everything. Also, Mrs.
▶ 0:31:27Clinton, when she was looking at building her library for children in the city of Little Rock, she built it just a couple blocks from Madison, so children have the advantage of a daycare and a library close to their homes.
▶ 0:31:46During my involvement with MHA, I have seen the accomplishment of outstanding projects such as the affordable housing units at properties like Paris Towers and Sunset Terrace. We've had problems, but we've helped solve those problems.
▶ 0:32:05But today, our biggest problem is that we have between 30 and 40% of our housing empty because of no funds to repair them, to get tenants into them. We have a large population of homeless people in our city. And there again, we have a waiting list one to three years for people getting into housing.
▶ 0:32:36In 2025, Madison Heights was on the brink of MHA and the city of Little Rock board meetings was packed with senior crying, begging us, saying, "Where will we go if you close our apartment complexes?
▶ 0:33:00Where will we When the city voted against funding the Madison Heights refinancing, MHA worked to secure funding to prevent the properties from being foreclosed on. The loan is currently in progress of being closed. And I hope today that this meeting does not cause the banks to feel like that we are hopeless because we're not.
▶ 0:33:28We have great people working at MHA to make a difference in the lives. Sunset Terrace was recently remodeled and it's beautiful now and is by Bolton Coliseum which is another landmark in our city. To decrease the numbers of vacancies, MHA is going to have funds available to make the repairs needed.
▶ 0:33:55We restricted in one 55 55 years old. We did this because we had moved some people in there that had young people that wasn't obeying the rules and it scared the seniors. We have to be able to get our units up to rent and put people in. When people call about problems, they get answers from the people at MHA.
▶ 0:34:26As I said, we have great people working. The more board has made great improvements. I don't see how HUD can just walk away instead of walking in and saying, "We're here to help." It seems like they walk to the door with a stick and make threats of wanting reports that there's not background information to make those reports. Dr.
▶ 0:34:54Jman and her staff has done incredible work with what they have to work with, but they need help. They can't do it alone. I thought and prayed a great deal about coming here before you today. I know that you're hot because you're I know that you understand and you want to help.
▶ 0:35:19As you sit here today, please remember the children that needs these homes. A waiting list one to three years for a mother who cannot provide for her children. That should not be acceptable in our world today.
▶ 0:35:38Our MHA's property residents have pride in themselves and their community, but they should not be made to live without We've cleaned things things up a lot. We've got people in place, but the one thing is missing, and that's you. Please today take a stand and help us.
▶ 0:36:08Help the city of Little Rock. Help the people. Remember the children. Thank you.
▶ 0:36:17Thank you. Uh chair is going to remind that we do have five minute limits. I wouldn't dare gave out uh Miss Adcock u but uh but we're going to be more flexible in this field hearing. So uh please try to keep it close. Uh, Dr. Charman, your remarks, your fiveminute remarks, please.
▶ 0:36:37Thank you. Good morning.
▶ 0:36:38Good morning, Chairman. Oh, I'm so sorry. Uh, good morning, Chairman Hill. Good morning to this committee. Um, as you said, I'm Dr. Naen Garm. I'm the executive director of the housing authority here in Little Rock. A little bit of backdrop that I think you need to know is that the Little Rock Housing Authority is the largest housing authority in the state of Arkansas. We've got 32 employees. We uh we administer over 4,000 forms of subsidy to the people in Little Rock.
▶ 0:37:06You'd have to multiply that number by at least three times to get a good idea of how many people we really who how many lives we really impact.
▶ 0:37:16Closer to you. Thank you.
▶ 0:37:18Okay. Sorry about that.
▶ 0:37:20Tip it down.
▶ 0:37:21Is that better?
▶ 0:37:23Oh, okay. Do I get my minute back? I'm sorry. Um, I appreciate the opportunity to speak to you today to discuss the challenges of the agency has faced in the past and the work currently underway to stabilize its operation and restore restore the trust. I've actually served two terms with the city of uh with the housing authority in Little Rock. My first term uh was from May of 2021 to August of 2022.
▶ 0:37:52Uh during that time when I first came I discovered a lot of disturbing patterns and things that were going on. I did approach the board at that time and tried to bring them to recognize that there were some issues that needed to be addressed. The concern that I expressed was largely ignored. Uh as a result of that I could have did one or two things. I could have took the coward's way out in my opinion and just left.
▶ 0:38:17Or I could have done what I did, which was I filed a 161page complaint to the local field office as well as the city of Little Rock to which I filed that complaint in June uh of 2020. I lost my date. But at any rate, um shortly after that, by in August of the same year that I filed the complaint, um I was terminated.
▶ 0:38:42Uh due to the efforts of people spearheading the effort like uh director at and Chairman Wright, um I was able to come back after they dismantled the board that I had the concerns about. All but dismantled it. believe the only remaining member was uh chairman Wright at the time.
▶ 0:39:05So in June of 2024, I was brought back to the agency um partial in consideration of my wrongful termination lawsuit, but primarily because of my experience with recovering troubled housing authorities. My vision of my return um was a big triumph return with confetti and people welcoming you with open arms and um but indeed that is not what I walked into when I ca came back.
▶ 0:39:34Instead I was met with a lobby full of disgruntled landlords some of which had not been paid in over six months. And if you know anything about the HUD program and the section 8 program, it is very important for us to keep our landlords and to pay them on time. The housing authority had failed to submit audits for four years. More than $600,000 in the rears with its software uh provider and legal counsel.
▶ 0:40:04HUD had identified more than 22 million in non-compliance findings. 54 action items were is what I walked into. Strained relationship with the nonprofit, lack of staff capacity, a valuable asset or property was facing foreclosure, a a high number of vacancies. Um, these are the conditions.
▶ 0:40:27These conditions actually reflected years of instability and systemic breakdown both internally and externally. In November 24, we entered into a recovery agreement with HUD to guide the agency stabilization and reform. With HUD's assistance in monthly updates, we have remained in compliance and have worked methodically to implement the required corrective actions.
▶ 0:40:53In a little over 18 months, we have done what was once thought to be unattainable and insurmountable. We have implemented stronger management and operational controls. We are near the closing on the Madison property that you heard Director Edox speak so fondly of.
▶ 0:41:13We're almost near closing that due to the uh what I call a local hero which is uh one of our local CDFIS community development finance finance institution. Southern Bank Corps and Enterprise Foundation have uh stepped up to the plate and are going to help us to remove that foreclosure.
▶ 0:41:35We also retained a national accounting firm Nova Gradic to uh who at this time uh close to uh one month away from closing out all of the audits bringing us Karen. We've stabilized the relationship with uh landlords and fully implemented electronic payments. We brought vendors payment cars. Uh we addressing the HUD non-compliance issues. We built staff capacity.
▶ 0:42:02We're developing a functional relationship with the non with the nonprofit board. Equally as important, we have worked and continue to work to build trust with our residents, landlord, employees, and community partners. This work of rebuilding this agency is not complete. However, meaningful and measurable progress has been made and the housing authority is moving in the right direction. Thank you.
▶ 0:42:30The general [clears throat] lady yields. Uh thank you very much, Miss Wentz. Uh we now offer you your fi opening fiveminute remarks.
▶ 0:42:38Thank you. Uh Mr. Chairman and members of the committee, thank you for inviting me to participate in today's hearing and thank you for your attention to a topic that is of critical importance to our canons. My name is Amanda Wentz and I'm a senior assistant attorney general in the consumer protection division of the office of the Arkansas Attorney General where I have worked as an attorney since 2021. I serve as counsel for the office of the attorney general and its lawsuit against the owners of the Big Country Chateau complex. And my testimony today will focus on the Office of the Attorney General's involvement in the consumer issues plaguing that complex.
▶ 0:43:07The work of local housing authorities is of vital importance in assisting vulnerable populations in securing housing. Many of the tenants of Big Country Chateau used MF MHA housing choice vouchers. The owners of Big Country Chateau took advantage of the Little Rock residents least able to protect themselves from exploitation and they accepted taxpayer dollars to do so. In July of 22, the office of the attorney general was made aware of a joint inspection of the Big Country Chateau apartment complex conducted by the Little Rock Code Enforcement, Fire Department, and others. The inspection found over 1,000 code violations.
▶ 0:43:38At the same time, the office learned of an imminent utility shut off at the apartments due to non-payment by Big Country Chateau management. In this complex, all units were on central electric and water meters. So, utility costs were built into the tenants monthly rent. The owners of Big Country Chateau, however, were not paying these utility bills, nor were they using rent funds to maintain the premises. Instead, the money was being funneled out of the state and lining the owner's pockets.
▶ 0:44:02At that time, the apartment owners owed approximately $71,000 in electric utility bills and $223,000 in water utility bills. Big Country Chateau was operated by Apex Big Chatau Arkansas LLC, a shell company to disguise the involvement of Apex Equity Group, a New York corporation. Big Country Chateau accepted MHA Housing Vouchers, federal funds intended to help vulnerable residents secure housing.
▶ 0:44:28On August 17th, 2022, the Office of the Attorney General filed a lawsuit against all three companies for violations of the Arkansas Deceptive Trade Practices Act. Defendants filed a joint answer to the state's complaint. In addition, Apex Equity Group moved to dismiss, alleging that the company had no relationship to the apartments, a claim that was demonstrably false. After continued refusals by these companies to comply with the court's orders during litigation, the court sanctioned all three defendants by striking the joint answer and granting default judgment in favor of the attorney general.
▶ 0:44:57As a result, all three companies are prohibited from operating apartment complexes or otherwise leasing residential properties in the state of Arkansas. As litigation continued, the condition of the apartment complex deteriorated as management abandoned the already neglected property. Tenants were placed in a difficult situation as the Big Country Chateau apartments were uninhabitable, but closure of the property would result in homelessness for the remaining tenants who struggled to find housing elsewhere.
▶ 0:45:22Little Rock Code Enforcement conducted another inspection of the complex on February 7th, 2023 and found that only a few repairs had been made since the July 2022 inspection. Due to concerns about the safety of the remaining residents, the office of the attorney general coordinated with the Federal Home Loan Mortgage Corporation, which had active litigation against Big Country Chateau for defaulting on the property's mortgage. to identify and retain a receiver to ensure resident safety and wind down the apartment complex. And the court appointed a receiver to the property.
▶ 0:45:51In an effort to facilitate open communication between stakeholders, the office of the attorney general met with the receiver and representatives of Freddy Mack and the city of Little Rock to discuss relocation efforts for residents. There were many barriers to relocation, including lack of funds to move, as well as tenants who may not be able to pass the background checks necessary to apply for another apartment complex.
▶ 0:46:12To assist Big Country Shadow's remaining residents in relocating to safer housing, the city of Little Rock, partnering with local nonprofit organizations, hosted a two-day event that worked to give tenants relocation information and needs assessment for financial resources. This event resulted in mixed success with many tenants being relocated, while others were unable to secure housing due in part to the limited availability of MHA vouchers and other assistance funds, which had been depleted due to the recent tornado that had destroyed many homes in Little Rock. Big Country Chateau as an entity no longer exists.
▶ 0:46:42The apartment complex was sold under foreclosure to new owners and is no longer owned or operated by Apex Equity Group. The owner of Apex Equity Group is currently in federal prison for mortgage fraud relating to the purchase of Big Country Chateau complex and other residential properties. Our case is not an isolated incident. The events at Big Country Chateau are part of a recurring pattern of behavior. Apex or another entity creates local dummy corporations to take liability, opens low-income housing, then allows the apartments to flounder while rent money is funneled back to the owner.
▶ 0:47:12Apex cuts its losses by sending the properties into foreclosure. This has happened repeatedly, not only here in Arkansas, but across the country. It is a business model that allows shady corporate entities to exploit vulnerable populations for their own financial interests. Our canons deserve safe housing and the office of the Arkansas Attorney General is dedicated to holding accountable fraudsters who attempt to take advantage of Arkansas residents. Uh thank you. Gentle lady yields back. Uh Commissioner Wright, you are now recognized for five minutes.
▶ 0:47:44Chairman Hill, members of the committee. My name is Carrie Wright. I'm an owner of uh Windsor. My twin brother and I own Windsor Door, a third generation family-owned business that do designs, manufactures, and distributes residential and commercial overhead doors. I moved my family to Little Rock from Houston in 2019 to run my company's I move uh I joined the board of Little Rock Housing Authority in March of 23.
▶ 0:48:10I served as chairman from October 23 to October of 25. I previously served as a commissioner of the Harris County, Texas Housing Authority from 2012 through I was chairman there from 2008 uh 13 to through 2018. When I came on board the Little Rock Housing Authority, I was very I was stunned by the organization's financial and operational troubles. I want to state my point here clearly.
▶ 0:48:39Little Rock Housing Authority's troubles are the result of past mismanagement of its business. When I got here, the housing authority had kept had not kept good books since 2018. The only financial records we had were bank statements. We had so many open bank accounts, no one could tell me how many or where they were. We had almost no property management records.
▶ 0:49:03We did not know who occupied units, how much rent we were supposed to collect, or how much HUD subsidies we should be We uh were issuing notices to vacate to tenants for not paying rent, but those tenants had proof of payment. We were paying for two financial accounting systems, but we were not properly using either of them. We were not paying vendors on time, if we paid them at all.
▶ 0:49:31The previous housing authority commissioners had set up shop at Central Arkansas Housing Corporation's offices. The commissioners were in control of the housing authority and CHC, the nonprofit, and they were ordering the executive director and staff under the threat of termination to engage in illegal acts such as conveying housing authority properties to CHC and transferring housing authority funds to CHC's bank accounts.
▶ 0:50:01Quit claim deeds is what they were trying what they were trying to get the ED to sign. This mismanagement resulted in the housing authority and CHC being sued several times. HUD's Office of Inspector General came to Little Rock in 2022 and reviewed the housing authorities's business practices.
▶ 0:50:22Their report said they found over where they found millions of dollars paid for questionable and unallowable expenses in adequate documentation of spending and fa failure to follow procurement rules. You I'm the owner of a large business that operates in 32 locations in 10 states and we're growing rapidly.
▶ 0:50:44If I have a location like this that is failing to perform or service it customers, I I face a hard decision of either closing the location or completely gutting it and cleaning it I say this because I found in 2023 that the housing authority was failing to perform and failing to service its It was too far gone to recover on its own.
▶ 0:51:08I told our local HUD office off officials the only way the housing authority could recover financially and operationally was for HUD in to intervene or to take it over and my local HUD officials supported that idea immensely. Deputy Secretary Richard Mino came to Little Rock to meet with me. I told him, "We cannot fix this. We have no money.
▶ 0:51:36We cannot borrow money because we have no business books. We are disorganized. We need HUD intervention." I told Mr. Mino about our problems and mismanagement. And I told him what resources I thought would be required to make the agency solvent again. I thought I had a deal with Mr. Manakio and HUD.
▶ 0:51:56I read in January of 2024 that Secretary Fudge appeared before this committee and made a personal commitment to take responsibility for the housing authority situation and to commit resources to resolve the AY's long-standing issues. Those were empty promises. My understanding is that Mr. Manino and Secretary Fudge scuttled my deal. Secretary Fudge resigned from HUD in March of 2024.
▶ 0:52:22Ironically, he came to Little Rock to receive She came to Little Rock to receive Key of the City by our mayor. We are still defending lawsuits over bad deals the previous board made. Madison Heights is in still in foreclosure, working on it with the loan. We still do not have updated audit financials and I believe we're in trouble status again.
▶ 0:52:47HUD released our latest FOS scores in FE on February 27th of this year and we scored a 53. Any housing authority that scores below 60, HUD classifies as So we will be we will be default or our res rescue we will be default of our rescue loan agreement on the date we close which is currently set from this next Monday March 16th. I will close with my point.
▶ 0:53:16I stated in the beginning, if there's a solution to be found for the housing authorities's problems, it will come from putting in place and maintaining good business and financial management practices, not playing politics with the agency. The previous HUD administration failed us. The current HUD administration should take over Little Rock Housing Authority and clean it up once and for all. Our tenants and customers deserve this. Thank you.
▶ 0:53:46Thank you, Commissioner. Uh the gentleman yields back. I will now turn to member questions. I do now recognize myself for five minutes for questioning. I think it's [clears throat] uh pretty clear uh uh why we are here uh why Chairman Hill wanted to hold a uh oversight and investigation subcommittee hearing for financial services uh here in Little Rock. And you know what? I'll just start with um you know, we're here to help. You know, there's the old joke when government says they're here to help.
▶ 0:54:14That's that's a the scariest phrase you can hear. Um, we're going to uh hear from you um because you your sincerity is all clear and your your your background, your experience, your knowledge of the situation.
▶ 0:54:28uh what what happened um how we're going to avoid it in the future and what you would like to see from your Congress uh and HUD what we can do in the short term as quickly as possible to inject uh the resources whatever is necessary to help straighten things out because there's a fair amount that needs to be straightened out. So um uh Dr. German I'm going to I'm going to German I'm going to start with you please.
▶ 0:54:54Um, can you describe how serious the breakdown in recordkeeping was under the prior leadership and whether the city had any visibility into MHA's finances during that time?
▶ 0:55:07The situation was dire. It is what uh ch uh chairman Wright described. We didn't have any firm records in terms of who uh was in the units, how much rent they were paying. The um software had went through three different platforms. So it was almost impossible to track the actual numbers for for financial purposes. Um whether or not the city had uh access to or knew the records and the financial situation, I can't speak to that.
▶ 0:55:37I don't believe that they have been involved to that level. Uh but no, the situation was pretty dire in terms of the bookkeeping for the agency.
▶ 0:55:48Okay. And I'm going to come back to you maybe in the second round. What can we do to improve that situation from from all of your your vast experience? Commissioner Wright, can you explain how um when MHA and its nonprofit affiliate uh they had tremendous amount of poorly uh uh documented information, various bank accounts, their relationship was is quite nebulous. Can you [snorts] explain how they were able to move money between these entities without proper oversight?
▶ 0:56:18Well, basically when uh when the city directors and the mayor terminated the board except for me, um we went in and we were trying to find out all the bank accounts we could The people that were terminated stayed at the nonprofit and and were allowed to stay at the nonprofit till I I could get a board. It was I was the only board member. So I had to wait till I could get a quorum.
▶ 0:56:48So I got a quorum and in the meantime we were trying to get passwords, bank accounts, amount of money we had, all the information we needed, but they blocked us. They blocked us on from the nonprofit. Basically the nonprofit was running the housing authority because they officed there and they were running the housing.
▶ 0:57:10So CHC blocked you. Yeah, it blocked us from getting
▶ 0:57:14Now, the the finance director at the time that I don't I don't have a name of had uh signatory of all the MHA's bank Are you familiar with who that was?
▶ 0:57:27U Regina. Her name was Regina something. Regina.
▶ 0:57:33Was she under investigation? Was anything come about that? I don't know what the FBI did or or or but
▶ 0:57:40M do you know?
▶ 0:57:42I'm sorry, Mr. Right. Excuse me.
▶ 0:57:43I'm afraid I don't. I'm sorry.
▶ 0:57:44Okay. All right. We'll uh we'll we'll see about trying to find that out. Anything else to add, Mr. Ryan?
▶ 0:57:49Well, Regina Regina was the one uh they they blocked our access to Quickbooks, their computers. They blocked access to banks. We had to eventually what we had to do is start calling every bank in Little Rock and see if if the housing authority or CHC had an account to find out the records were in horrible which is ridiculous.
▶ 0:58:13Dr. German, you want to add to that or regarding bank accounts or the disruptions that continue to take place? And you know what as well I want to ask you when you're when you were what were the reasons that were given and what did you why do you think you were terminated?
▶ 0:58:32There was no reason ever given. Uh I did uh pursue a lawsuit. Um there was no reason given for my termination. uh not ever in writing verbally. Um and the second part of your question was I'm what do you think they what was their excuse for terminating you?
▶ 0:58:54Um I I wasn't given any reason. So I I can't I can't uh you know assume what it was. I I I I generally think that it was my 161 page complaint because shortly after that I I filed that in June and in August I was out of there. So, I'm pretty sure it has something to do with
▶ 0:59:11Understood. That That's I guess pretty obvious. Uh, Miss Wentz, do you have anything to say about Dr. German's uh termination?
▶ 0:59:21I'm not privy to any of that. Um, I'm familiar with the Big Country Chatau case, but I wasn't privy to the inner workings of the housing authority.
▶ 0:59:28Yeah, I do want to get to that. I'm I'm kind of at at the time, but we're we're going to come back around. Miss Attek, I'm just going to take a little bit of liberty with the time. You were talking quite a bit about the um the occupancy that exists today and how shameful it is that you got all this uh what should be occupancy capacity and yet you have 3,000 people on the waiting list.
▶ 0:59:50You want to expand upon that It seems like some of the apartment complexes are 30 and 40% vacant. They don't have refrigerators. They don't have stoves and other things in it. In my opinion, from what I was told, the people before Dr.
▶ 1:00:17Jawman and everything, they took that money and used it for other things. And the needs in the apartment complexes was not finished. There was too many um apartments that was needing repairs and everything, some roofs and things, but they had used the money.
▶ 1:00:38The three people who was there before running everything had used the money for their own purposes and diverted it from the apartment buildings and did not do the
▶ 1:00:50Uh thank you very much, uh Miss Hadcock. I'm going to yield back. Uh, I now recognize the chairman of the full committee, Chairman Hill, uh, for his five minutes of questioning.
▶ 1:01:00Thank you, Mr. Chairman. Well, I I'll pick up where you left off, Chairman Muer. U, Director Adcock, uh, can you explain what motivated the city board to remove all the directors when you finally took that action?
▶ 1:01:18I think it started out that um the calls from the community, from the companies that wasn't being paid, the calls from people, the wrong the long waiting list and everything. And I think that they they could not answer the board's questions when we asked questions about what was going on, why things wasn't being done. Um,
▶ 1:01:46were you aware that at the time they were removed? Was it was the city was the city board aware of the fact that those employees that have been terminated actually remained compensated over at the nonprofit and that they blocked access from the housing commissioner sole director and the remaining staff from access to that information?
▶ 1:02:10No, I think that the board never got the notification or did not know of the the a second group of people. We felt like that we've removed the first group of people. I had a telephone call from uh a gentleman with the FBI. He had been at city hall looking for records and everything.
▶ 1:02:34I did not know that they was investigating the city of I checked with the city and I was told by Mr. Carpenter that I could talk to the FBI. They told me that they was at city hall and at MHA looking for records.
▶ 1:02:54At that time I was attending some of the meetings at MHA and they said that there was records that they could not find and they was told by the city staff that I kept filing cabinets at my home of my records and things that I personally had got through the city and they wanted to know if I would give them some of the records I had. I asked what was they looking for?
▶ 1:03:24They gave me a list and twice a gentleman with FBI named Jacob came to my home and picked up about that big of a sack of records that they was looking for that they had not been able to find at MHA and they had not been able to find at the city. um I gave them to them and I have not heard from them and they was uh mainly about the people who was running MHA.
▶ 1:03:54Thank you.
▶ 1:03:55It was right shortly after that that [clears throat] the mayor uh took the action to bring it before the board to remove those three people.
▶ 1:04:07Thank you for that. Um as a followup with you, Mr. Right. You were the only member of the commission to remain in place. To the best of your knowledge, why were all the other commissioners removed, but you were not?
▶ 1:04:21Well, they the old guard,
▶ 1:04:26they were the old guard. I was the new guard. I was the new the newcomer. And um u that was not part of the click. and and uh a lot of a lot of things were kept away from me uh because
▶ 1:04:40So, how how long did it take for uh you to get access to the records that you were being blocked from by employees that had been terminated yet were still being compensated and kept in place on the nonprofit? How many days or weeks?
▶ 1:04:54Oh, it took three months, four months.
▶ 1:04:58Things started trickling in that I start, you know, I see something I I have to snoop. I I have to look around and see what it's all about. And and uh just like the loan that we had, Madison Heights loan that started in 2019 and it was a balloon note and they had only paid uh interest and penalties, nothing on the principal, but that had been going on and they were using money.
▶ 1:05:22They were trying to take they were taking money from the housing authority because every year they had to make that payment and they didn't have any money. And at one point in time, they went to the uh the executive director um I forgot her name, Erica Benedictto, and sent her an email and told her that she needed to how much money did we have in the voucher program, which was about 3 million. And it's illegal to pull anything from there.
▶ 1:05:51And they instructed her to pull some money from there, and they would replace it later. And she called me and asked me, "What do I do?" I said, "You don't do a thing. That's illegal. You can go to jail for that." But things like that is what we started to find out. And um but you asked me uh how long Oh, chairman, we were we were still looking for things. We were still looking for things in early 24.
▶ 1:06:19Thank you. I will yield back, Mr. Chairman, and look forward to the second
▶ 1:06:24Uh the gentleman yields back. We now recognize uh Tim Moore, Representative Tim Moore of North Carolina for five minutes of questioning.
▶ 1:06:32Thank you, Mr. Chairman. I just want to follow through on the questions that that have been asked. I and I'll go back to you, Mr. Wright, there. So, how many years would you say the mismanagement had probably been happening? I know you [clears throat] came on the board. It it was clearly already happening from what you've seen.
▶ 1:06:50I I could I would say it started in 219 Um there were some bad deals with ITC. There were some bad deals with Gorman that they they had done. It was all over developer fees. Uh I'd say around two 2019 is when it started. And um they um and it it went on it was it went on until I got on the board because I think they were a little nervous about what I what I knew.
▶ 1:07:19This wasn't my first time to be on a board, a housing authority board. But um it's two 2019.
▶ 1:07:27Was there any evidence of those actual board members engaging in selfdeing
▶ 1:07:32Sure. Yes, sir. Yes, sir. They would throw uh le uh the chair chair the president of the CHC would throw ourselves a throw herself a birthday party at the expense of the housing authority. They were driving around in housing authority vehicles.
▶ 1:07:52some things like pest control and and uh pest control and appliances that were missing ended up in their homes, friends homes that it was a they treated it like it was their business is what they were doing.
▶ 1:08:10Did u were those positions compensated at all? Those board board positions?
▶ 1:08:15Uh, no sir. We're we're we're all we're appointed and this is we we do it for the love,
▶ 1:08:22right? What any thoughts on your end of what kind of changes in federal law could come in place that would make it easier to kind of catch this because it sounds like but for you guys kind of being whistleblowers I guess is the best way to put it. Uh this could have just continued you know could could be happening even today and and unfortunately probably situations like this are happening around the country right now.
▶ 1:08:44that any suggestions from where from where you are sitting of recommendations that you would make to those of us in Congress of changes that we should look to stat to statutory law on this?
▶ 1:08:55I think you should term limit board members. Number one.
▶ 1:08:59Number two, I think that HUD intervention is desperately needed and um and oversight. What I found out which I found remarkable was the the the nonprofit really HUD sometimes feels like they have oversight over it and sometimes doesn't feel like they have oversight over of of the nonprofit which is where the money is the rad and uh they seem to be a little on the nonprofit
▶ 1:09:29side to to really get in and look at it and I think that needs to change.
▶ 1:09:34Miss WZ a question for you. Uh there was reference to I guess the previous owner of this one place that he's in prison right now. Have there been any other criminal convictions of any other individuals caught up in any of this
▶ 1:09:49Thank you for the question. Um not to my knowledge. Uh the president seemed to be the ring leader of the situation. Um and he was using kind of strawman buyers to help him. Um I think others got plea
▶ 1:10:02So do we know if there's anybody looking at that now? if you can even speak to that. Maybe something you can't speak to. I don't know.
▶ 1:10:08Uh not to my knowledge. Um we didn't coordinate with Department of Justice on
▶ 1:10:12Okay. And u just curious uh Dr. Garman, it's um any any things that do you have concerns about now or do you feel like the ship has been rided at least with respect to the local authority? Uh or are there thing safeguards that you're looking for so this can't happen again?
▶ 1:10:31Yes, there are several recommendations that I would make. One is that and we have implemented this that you never have the exact same people on both the nonprofit and the housing authority board. In the past that's exactly what happened. They had a rubber stamp board that was composed of the exact same members. I think there should be a safeguard against that ever happening again.
▶ 1:10:57uh we have uh since uh gone away from that practice and so we always make sure that the people on the nonprofit are not the same as the people on the housing authority board. The other thing that I would recommend is that having been uh around the nation looking at boards in general, I would highly recommend that board get training and commissioner certificates.
▶ 1:11:19And I know certain states like New Jersey or different states require that any board member get a professional certificate within one year of appointment. I believe that's very important uh to to have in place. Um that's pretty much my recommendation in terms of of the
▶ 1:11:38If I could have a little wee way, Mr. Chairman, I know my time's gone, but so's recognized. Please continue. Any any idea why the previous HUD admin because I know this current HUD administration is on this? They're dealing with it. They've been very engaged. Any idea why the previous HUDa HUD administration didn't seem to want to deal with this?
▶ 1:11:58I cannot speak to that. I am just absolutely con, you know, really blown away why they didn't um address it. I I just can't even answer that. I I believe that when I filed my lawsuit, there was a massive confusion about which organization, whether it was the city or HUD, that could actually do something to this board. There they were going back and forth. HUD was saying, well, we can't dismantle that board. Only the city can dismantle that board.
▶ 1:12:28And then the the city was saying, well, no, once we appoint them, that's, you know, not not our role. That HUD should should, especially with the mismanagement, HUD should be dealing with that. I cannot explain to you, you know, uh, why there was such a gap in the oversight and management at that time.
▶ 1:12:45I'm out of time, but I will be interested from the others if you have thoughts on that at the appropriate time, Mr. Chairman, as to what happened there because that that's one of the questions that I have, Mr. Chairman, as to why this why the previous administration didn't step in to protect not only these taxpayer dollars, but frankly these residents. With that, I yield back.
▶ 1:13:05Gentlemen, yields back. Uh we now recognize uh chairman flood who is the subcommittee chair on housing and insurance uh for his five minutes of
▶ 1:13:17Thank you Mr. Chairman and good morning. Thank you all for being here and for caring about your um access to public housing. Let's look forward now. In 2024, MHA became delinquent on its loans for its Madison Heights property. By late 25, uh, you were 5 million behind on these loans. Uh, first you tried to get a $6 million lifeline from the city, which I understand they denied. Said it wouldn't be prudent.
▶ 1:13:45As a result, MHA has to find private financing to prevent foreclosure on the Madison Heights complex. Miss German, can you describe the steps that MHA is taking uh to to find that private financing and how's that going?
▶ 1:14:01It was a struggle. You're correct. We were uh literally put in a position because of the massive hole that had been dug for that particular property. And uh yes, we did approach the city and we were denied uh that money. We uh since went out and um Southern Bank Core as I mentioned before and Enterprise have stepped up.
▶ 1:14:25We are we think within weeks of closing on that the amount they negotiated the amount down from five million to 4.6. So we're very optimistic that that loan will be um closed in the next week. I mean ideally when you know and here's one of the issues is that when when I came back we had $3.7 million in our bank account in HUD what they call HUD held reserves.
▶ 1:14:54And um HUD came in and had after telling us that they would not sweep our reserves actually took our reserves. And that's a practice that HUD does sometime where they come in and take your reserves and give it to other housing authorities.
▶ 1:15:07Okay. My second question is of the 4.6 million you're getting that loan. Other than repaying debts that the agency has, what else you going to do with that money? You going to be able to fix anything up?
▶ 1:15:18Yeah. 500,000 of that uh is dedicated strictly to what we call make ready or unit unit repairs. So yeah, 500,000 is earmarked. The the condition of that is that the housing authority has to match. If Southern Bank and Enterprise are going to put in 500, the housing authority has to commit $500,000 of which we have with our capital fund uh allocation. Two years of our capital fund allocation will go to uh fixing those units as well.
▶ 1:15:47Miss Wentz, um, what happened to the residents of Big Country Chateau when that property was foreclosed on?
▶ 1:15:56Uh, our receiver worked, uh, very hard with the city of Little Rock and with local nonprofits to rehouse as many as possible. Um, I know that many of them were rehomed, um, either through vouchers or through other um, other donations. Um there were some that um by the end of it I know I lost track of um because they were unable to find other
▶ 1:16:20And I'm not certain what happened to those residents.
▶ 1:16:23Okay. So thank you, Miss German or Dr. German, I'm sorry. Uh back to you. So I applaud you for finding uh the private loan. Based on the information that we've received on this committee and understanding your financial status, I still have concerns about whether you'll be able to satisfy the terms of the loan. Uh right now at the time of closing, MHA expects to have under in annualized net operating income and a debt service coverage ratio of 089.
▶ 1:16:51Within one year, MHA purportedly projects that its operating income will then will double and then increase 9% annually. How does that work?
▶ 1:17:02Yeah. Um I think there's a term like magic numbers or different it it actually works. If we can lease up those properties from getting those units back online, what we are faced with now is that to project the revenue is very difficult because we have to deal with again the the the arbitrage that's around our necks. We can't just go in and and h and raise people's rents to what it's supposed to be.
▶ 1:17:32we because they had years of not paying rent at all or paying uh below the market rate. We can't just go in and say now instead of paying 700 you have to pay 1,100. We can only raise their rent by 10%. But the projections work once we get the property fully occupied. Uh uh there's different numbers, but as far as what that means, it's 240 units in Madison.
▶ 1:17:58Uh but once we get that fully occupied and can and can command the the right size rent for those units, I believe that we will cash flow where we won't have any issue making the payment. More importantly is that Southern Bank core recognized that and gave us two years of interestonly payment to help us, [clears throat] you know, not put oursel in a bad situation again. And I think that's tremendous.
▶ 1:18:24Thank you, doctor. With that, I yield
▶ 1:18:26Gentleman yields. We now recognize Representative Downing from Montana for his five minutes for questions.
▶ 1:18:33Thank you, Chairman Muer, and uh thank you all for being here. Uh you know, this is this is incredibly important to this committee to me. Uh making sure that there is stewardship, accountability, oversight, and programs, especially something as important as as housing. And so, I really appreciate all the effort and the the folks being here. And I represent Montana's second district and we've not been immune from these problems either uh surrounding public housing authorities and much like the Metropolitan uh Housing Alliance.
▶ 1:19:03You know, Richland County in my district has a history of poor financial management, including misuse of credit cards, insufficient financial documentation. Uh in fact, a recent assessment uh from HUD out of a maximum score of 25, uh Richland County scored a one in financial management. Horrible. Um, I'm gonna go back to uh, Commissioner Wright.
▶ 1:19:27You know, prior to your time on the Little Rock Housing Commission, you helped the Harris County Housing Authority overcome millions in theft. So, given your experience, you know, what similarities and what differences do MHA and the Harris County Housing Authority have, and what impact does that have on MHA recovery? The difference was the um the folks that were causing this issue, which is the executive de director and the chairman.
▶ 1:19:54Um they were you could see what they did. It was wide open. I mean they they spent money, went on trips, bought themselves cars, uh uh paid themselves or the ED paid himself about a horrendous salary and things of that sort. Bought art bought art, paid for their kids dental bills. But but the long story short, it was it was when we did a forensic audit, you could see it. It was there. It was blatant. They didn't hide it. Didn't try to hide it.
▶ 1:20:23As opposed to here, I mean, it's it was tough. It's tough finding following the paper trail. It's very, very tough. And uh I always I always assumed they had some assistance. Somebody they weren't the sharpest knives in the drawer, so I always assumed they had some assistance. That was my opinion. All
▶ 1:20:44right. Thank you. Uh, another important factor driving the historic problems at MHA is its low occupancy rates. You know, particularly at MHA's Madison Heights property. And these low occupancy rates create cash flow issues for MHA and limit the number of people MHA can remove from its weight list. I'm going to go to Director Adcock. Uh, you'd mentioned uh the um uh the list. How how long is this wait list for housing at MHA?
▶ 1:21:13And more importantly, what impact does this have on the community of Little Rock?
▶ 1:21:20Microphone, please.
▶ 1:21:23It has a big impact on our community. It has an impact on the number of people we have homeless. Right now, we have a tremendous amount of homelessness in the city of Little Rock. Um it has a impact on the children mainly. Children are living in cars because the mothers have been removed from apartments. So um I'm working with one family.
▶ 1:21:50She just recently had a little 4PB baby and she's got five other children and uh she's behind on her rent and you know she has no place to go to get help. She's applied to MHA, but there's a waiting list.
▶ 1:22:07Uh it's just a tremendous sage. You know, these people cannot get jobs because they don't have housing. They're not the children are not in schools. Our schools have started having a [music] employee that's trying to help them find housing.
▶ 1:22:24But when you have 40% or 30% of the housing that they should be able to move into that is not available is causing them to live with other people is causing mothers to have to move in with people that she should not be moving her children in with. And so every time we get housing, that's [music] a family that we've saved.
▶ 1:22:48Right. Well, uh, thank thank you very much, Miss
▶ 1:22:51I do want to make one comment. [music] A few minutes ago, the question was about the nonprofit, the woman that was running the housing authority. She also was a member of the that CHCAC. You had three people and they had all kinds of positions.
▶ 1:23:13They would be employees and they would be serving on one of the either the nonprofit or MHA's uh commission. And that was one of the biggest problems I saw with it was it when you had three people and you were supposed to have nine different people, you had the same three people just changing titles
▶ 1:23:35right with it.
▶ 1:23:36Thank you very much, Miss Adcock. Mr. Sure. Can I get one more question in or
▶ 1:23:41Thank you.
▶ 1:23:41Gentleman's recognized.
▶ 1:23:42Um I'm going to just go to Dr. Gar really quickly. I understand that uh Madison Heights is a desirable property. What's driving these low occupancy
▶ 1:23:54Uh one point of correction. We have people on the wait list. Wow. Uh quite a bit more than the 3,000. Um I'm sorry. I know. I know Director Adcock this is not what she do. This is what I do every day. So, we have over 6,500 people on the wait list. So, uh the occupancy at Madison again was initially Madison was slated to do what they call a rad a RAD project.
▶ 1:24:22I think people that kind of know housing know that that's a development project where you do major mod to the units. So, but as a result of that, it was a company that uh Commissioner Wright mentioned called Itch. Itch had been selected. They were ready. They were at the closing table when the previous board yanked the rug out from under them.
▶ 1:24:42But as part of the practice, when you get ready to know that you're going to do major mod work on units, you don't occupy them because you know you're getting ready to do the mod work and it's much easier to work on an empty unit than it is to work on an occupied unit. So that strategy had already been put in place to uh relocate people or not fill the units when someone left voluntarily or or through uh you know just regular attrition.
▶ 1:25:08So that accounts for the large number of vacancies that we inherited at Madison was that practice had been put in place
▶ 1:25:15to not purposely occupy those units and that's just [music] you know what we inherited as well.
▶ 1:25:22Right. Thank you Dr. and Mr. Cherry yield. Jeremy yields. Uh we now will move into round two of our questions and this round is titled solutions, accountability, and prosecution. So I'm going to recognize my myself for the first five minutes here. And I'm going to start um with Dr. Gar. And do you believe there's been sufficient evidence of misconduct that would be reviewed for criminal prosecution?
▶ 1:25:53should be reviewed.
▶ 1:25:55From a personal standpoint, I believe that there is sufficient uh enough information that a lot of it predated me. I didn't I could not say for sure that I saw a smoking gun or anything that would actually substantiate criminal uh uh you know, activity or and so I can't speak to that that uh but I do I suspect Sure.
▶ 1:26:18I mean, you don't get yourself in this type of hole and actually have the accountability and the gaps in in where the money went if there wasn't something arai. But I as far as my personal opinion, I can't attest to that. Um, that is the role that we thought that the FBI and I would be would be conducting.
▶ 1:26:39Sure, I understand. Um, Miss Miss Wentz, were there um a country chateau, for instance? Were there referrals to uh to the federal government, federal uh law enforcement agencies?
▶ 1:26:55We did work closely with the Federal Home Loan Mortgage Corporation. Um once the property was in default, we worked with them to get a receiver and I believe um they referred it to DOJ for the mortgage fraud issue.
▶ 1:27:07Okay. Okay. And Miss Wentz, continuing um after everything that has come to light, missing funds, missing records, failed oversight, do you believe the people responsible have been held
▶ 1:27:20With regard to the owners of Big Country Chateau specifically, I believe so. Um but I do think there are other apartment complex owners and companies doing the same thing. Um with regard to the housing authority, I'm not familiar enough with the details to speak on Mr. Wright, Commissioner Wright, same
▶ 1:27:41Repeat the question.
▶ 1:27:42I'd be happy to. After everything that we now know, missing funds, missing records, failed oversight, do you believe the the people responsible have been held accountable?
▶ 1:27:50No, I believe they have enough information. I was there when when the when the FBI went in and raided the the CHC office, the nonprofit office. They came over to MHA. They were able to locate uh uh the ex-president of the CAHC uh wrote herself a check for $40,000. There was another one for Lee or for the for for the chairman of the housing authority. There was one for 10, 15, 20,000. They had those stubs. They had copies of that.
▶ 1:28:20And there was just a lot of other things that I that that I think was enough to to u to go after
▶ 1:28:28Okay. Thank you. Uh, Miss Wes, back to you for a moment. You mentioned before the ring leader.
▶ 1:28:34Who was that?
▶ 1:28:35Uh, yes, that was Mr. Aaron Puritz. Um, he is a New Jersey business owner. Um, and he was the one that was having these um, strawman acquaintances make dummy corporations under their own names to purchase mortgages so that um, HUD or Freddy Mack or others wouldn't know that the companies and u, properties were actually managed by Mr. Pittz. Was he the one that was prosecuted and jailed?
▶ 1:29:01Okay. Um, Dr. Gar, and I'm probably going to ask this question of all. What support from HUD would be most help helpful right now to stabilize MHA? Do our get back on sound footing, of How can HUD help? What would you like to see? Ideally,
▶ 1:29:21yeah. Yeah. Ideally, I kind of started on this a little earlier about the fact that they came in and swept our reserves 3.7 million. I can only imagine where we would be if they had not taken money from an already troubled agency. That is something that I think um at the time we were told they wouldn't and then they did. I thought that was pretty egregious and uh punched down on an agency that's already troubled.
▶ 1:29:45Um they are uh there are other measures that I think uh we now uh had a great meeting yesterday with us secretary assistant secretary hobbs. They are saying that they are fully committed to our recovery. We do meet monthly with representative from h from HUD to talk about our recovery agreement.
▶ 1:30:05the the issue now also is that there's some disconnect and with within HUD I mean we don't know if we're talking to people in Oklahoma or Fort Worth or you know and we were told yesterday that they're going to work very hard to make it seamless that regardless of where they are because the actual Little Rock office was all but you know dismantled. So that makes it a little bit difficult when you have a problem like what we're dealing with we need boots on the ground.
▶ 1:30:30We need people that really understand the issues because it's not um it's not what it looks like. I mean, we they also mentioned that we had what they call the FA score that went from being standard performer to back to trouble to back to standard. It's like I get it. You have to do what you have to do. You have to be accountable. You have to have measurable. But when an agency is already troubled, I want to I would like to see a little bit more leniency, possibly waiverss in the very strict compliance world.
▶ 1:31:00We don't want no oversight, but we don't want heavyhandedness in a situation where an agency is already crippled. Thank you very much. Um, my time has expired. I'm going to come back and ask all of you the same question. Uh, I think we're going to have a third round as well, so I yield back. I now recognize uh Chairman Hill uh for his five minutes of
▶ 1:31:22Thank you, Chairman. Uh let me just pick up on that strain of thought for a minute. So uh I heard Mr. Wright say that he felt like there was more than enough evidence to you know demonstrate malfeasants on the part of previous admin administration that could rise to the you know case of prosecution. So I'll I'll leave an open-ended question for you uh Dr. German.
▶ 1:31:47First, uh, would you be more than willing to fully comply with any requests from the state attorney general's office or any other law enforcement agency in in in response to that previous management
▶ 1:32:02I really think uh, chairman that really, of course, that goes without without saying. We're we're we're right now full transparency, full disclosure. We're we're fighting. We're scratching to get back to being a a a standard performing. In my case, I would prefer a high performing agency. We're not there yet.
▶ 1:32:23But of course, anything that I can do or my staff can do or the board can do to to bring light to the issues that we faced and challenges in the past, we'll be more than happy to to be cooperative.
▶ 1:32:35Uh Miss Wch, you've had quite a a fine success in Big Country Chateau. What I'm sick to my stomach about though is former director Doris Wright, a good friend, a loyal citizen and servant of this city for many, many years, begged people to do something about Big Country Chateau, I would say for over a decade and maybe extensively longer. And it's just a horrific place.
▶ 1:33:00It was the top place to, you know, look at your police report to see where they were stopping by on a daily basis. So to me, it's outrageous. But it is concerning because of the nature of the financing at Big Country Chateau that you've described. It also fell between direct in fact no direct oversight of the Metropolitan Housing Agency but certainly o oversight by HUD.
▶ 1:33:25So tell me, did your investigation find any notice any effort by the local field office of HUD that they were doing anything about enforcing their contract with the owners at Big Country Chateau?
▶ 1:33:40Thank you, Mr. Chairman. Um, we did kind of coordinate with HUD and they were very cooperative in giving us information about the other properties owned by this same set of shell corporations. Um, I personally am not aware of any action that HUD was taking, but my knowledge is limited.
▶ 1:33:58Yeah, but this is my point. I mean, we just let these situations fester until they become catastrophic. And this is just outrageous. Who is the who is hurt by this? The tenants, the families, and you just talked about in your testimony, it's excellent on what you had to do to try to help tenant relocation in this situation.
▶ 1:34:17Uh so uh I hope we can find and we'll talk to our friends at HUD about what the oversight gap is for multifamily uh HUD subsidies combined with a Freddy Mack mortgage to some multifamily developer who then also takes section 8 It's really a gap that I think uh this is a prime example of and after decades of ripping people off and creating a crime haven in
▶ 1:34:47our city uh 11 million criminal judgment you you so it was a big victory. Did you get $11 million from somebody?
▶ 1:34:55Uh unfortunately they were able to hide most of their assets. Um we have recovered some and we are actively working on recovering more. Um, but they have shuffled most of their assets uh out of our reach at this point.
▶ 1:35:07I hope you'll I hope you'll keep the public apprised as you year after year claw back that money while they sit around in I hope
▶ 1:35:14federal prison.
▶ 1:35:16Uh would you be uh would you be willing at the attorney general's office to take a look at the transactions between the nonprofit and the multi and the metropolitan housing authority to see if there's any state law violations there. Uh the attorney general's office is always willing to um work with other state and local agencies, always willing to provide any assistance that we can.
▶ 1:35:41Uh thank you, Miss German. You've got such great experience, multiple jurisdictions. How do you think about this outofstate private developer uh either in a RAD context or in this multifamily subsidized context that comes in and takes advantage of a lack of due diligence, lack of knowledge, lack of financial expertise in a local housing authority? I'm sure it's at the heart of the work you've done. How would you address that? How should it be addressed?
▶ 1:36:09How should HUD hold uh PHAS accountable for that? and and it is something as simple as the oversight and and and management and and being uh truth to to what you say you being HUD.
▶ 1:36:27If your true calling is to provide decent, safe and affordable housing and to make sure that the players are playing fairly then there has to be some bite in in it and there has to be some uh accountability. When you talk about developers, what I found from a a more broader standpoint is that once these deals hit that 15-year compliance period that where they get the tax credits, they pretty much kind of not interested in anymore making sure that the conditions of the housing is what it was supposed.
▶ 1:36:56But they still have a they still have a they're still have taken public money and they still have and HUD still has some legal oversight responsibility even after the tax credit periods.
▶ 1:37:08Absolutely. Absolutely. And um
▶ 1:37:10is HUD equally lacadasical in terms of looking at them once they've passed that point? Is that your view?
▶ 1:37:16I I believe I believe so. I believe so. And that that is of course we're hoping that this committee as well as drawing attention to these types of matters will make things a little bit better in the future. But certainly you can look at this example. You can look at many examples as as Miss Winch has said across the nation. This is not something that's uncommon.
▶ 1:37:37you you really have to put a little bit more bite into the uh oversight without being overly compliant and trying to make every everybody fit the same mold because it's not.
▶ 1:37:49Thank you. Yield back.
▶ 1:37:51The gentleman yields back. Uh we now recognize Representative Moore for five minutes of questioning.
▶ 1:37:58This question probably is for Director Adcock. What What was the role in terms of the city supervising the board? or no, were you all being apprised of what was happening before it came to light? Did y'all have any way of even knowing um what was going on there? And you might want to turn your mic on there.
▶ 1:38:16I'm sorry. As a board, we do not have any supervisory. Uh mine comes from the telephone calls from the community. Usually when they uh have a [music] problem, they start calling. Uh when we appoint, we get a list from the mayor. We have an executive session. The mayor tells us who he and his staff has selected for the boards and commissions and then he asks if there's any questions or any problems.
▶ 1:38:45If not, then it's a positive vote for what they have selected for us to appoint. I think that is where I found a problem because when we found with the nonprofit, it was the same people that we was appointing instead of more people for supervision. they had gotten it down with their supervision was just those three people doing everything.
▶ 1:39:09But on boards and commissions, there's really not any supervision that we [clears throat] as a city director do.
▶ 1:39:17All right. Thank you. [music] And so last time I ended with the question about uh in any communication any of you had with the prior administration, the prior the prior HUD folks as to why they didn't take anything proactively. This is brought to line. I think Dr. German spoke to it. I don't know that the other three did. Either any of the other three of you have any thoughts on that at all.
▶ 1:39:44Are are you talking about why HUD didn't take any action in 23 and 24?
▶ 1:39:49Yes, sir.
▶ 1:39:50Especially when I requested what I
▶ 1:39:52Yes, sir.
▶ 1:39:53My thought was it was a election election year and that was my thought. It was an election year and didn't want to embarrass the candidates. So, the president that was my thought.
▶ 1:40:11Did Did you hear anything to that or is that just kind of like your best guess because nothing was done?
▶ 1:40:16His best guess. Yeah. Anyone else on that subject?
▶ 1:40:22I couldn't speculate to that, I'm
▶ 1:40:24Okay. So, but in terms of this new ad the new administration, would you describe their response as being very proactive and responsive [music] to try to deal with this?
▶ 1:40:38I see nods. I guess those are yeses.
▶ 1:40:41Uh yes. Um we went into the recovery agreement in uh under this new administration. I do see an improvement. I believe that they are sincere about trying to address the issue. Again, there is a disconnect between the local field office and then the regional and then headquarters. You know, that is just kind of goes with the territory in terms of bureaucracy. But I do see an improvement. Uh I think that uh with some assistance.
▶ 1:41:10The biggest thing that I have is that once you become troubled or you have issues that you just no longer should be treated as business as usual. But I I do see an improvement. You you mentioned there was a wait list I think of 6,500 people right now. If you were to go to full capacity of everything you had, how many more folks would have homes? How many folks would come off that 6,500 weight list?
▶ 1:41:36I would say probably at least a
▶ 1:41:39Yeah, probably at least a thousand.
▶ 1:41:42Very good. Mr. Chairman, I can I would The gentleman was on a roll. I'm glad to yield the balance of my time to the chairman if the gentleman would like. gentleman offers to yield his time to Chairman Hill.
▶ 1:41:55I thank my friend from North Carolina. since we're the vacancies has been such a good theme here. Uh so the $500,000 advanced in the line and $500,000 from reserve, that's a million dollar. So how much is that per unit that you're going to bring back online approximately? And you think it's sufficient to bring all those vacant units in Madison Heights back up to occupiable standard?
▶ 1:42:25I believe that it would is a move in the right direction whether it's sufficient to the because there's other issues. I mean the housing authority went out on its own and got a million dollar grant from federal home loan bank to only do the roofs. Um, we did that independent of HUD and independent of, you know, we still there's other needs. Will with will a million dollars, uh, fix everything and at least bring the units up? I believe that it would.
▶ 1:42:55I believe we did a back of envelope calculation and we came up with about 700,000 plus that would bring the units ready, but uh, you know, medicine, if you have toured or know anything about it, it's a beautiful site. Um, but there's still other things that we need to address and the million dollars is not going to cover everything.
▶ 1:43:14Thank you. Yield back, Mr.
▶ 1:43:16Gentleman. Yields. I now recognize the chair of the subcommittee on housing and insurance, Mr. Flood of Nebraska, for 5
▶ 1:43:22Thank you, Mr. Chair. [music] You know, the goal of uh public and subsidized housing is to provide support for Americans so that they can get back on their feet. Uh, Miss Dr. German, how long have the longest tenur residents been living in uh in the MHA's uh
▶ 1:43:42That's a great question. Um, one, it depends. First of all, we have elderly at our elderly sites that tend to be longer residents. They once they get in their site, they're they're pretty stable.
▶ 1:43:56As far as the family site, I believe we have people that have been there 12 years, 15 years, you know, and and that that is something that in my opinion, as you said, to stabilize and move on that, you know, uh is not a a very uh strong or popular position to have limits on how long a person can
▶ 1:44:16Well, in fact, nationally since 2010, the average length of stay across major HUD rental programs has gone from 5 to six years to nearly 8 to nine years on average. and nearly 90% of able-bodied section 8 voucher recipients. So, we're not talking about folks that are 72 years old, they've earned the right to to retire and and not have to go to work every day. But, as I always say, if you're 28 years old and you can get a job and you can work and you're able-bodied, you shouldn't be on Medicaid.
▶ 1:44:45You shouldn't be in public housing uh until you could get get back on your feet. With 6,500 people and families on the waiting list for housing assistance, are you thinking you can use these new HUD uh work requirements uh institute time limits for MHA programs? HUD has made this a priority. I agree with it. Can we use those to to get these able-bodied folks back out into the workforce?
▶ 1:45:12In theory, I've seen this work requirement before and it didn't work. Uh, I would hope that maybe [music] it's strengthened this round. Um, but yes, of course, I'd like to see that exact cycle that you're referencing, which is people get in, stabilize, maybe stay as long as until they can, you know, become uh stable and move out and allow other people when you have a robust waiting list like we have here.
▶ 1:45:38I would ideally want to see that that type of process where you come in have some type of limit, some kind type of accountability, some milestones and then you move on and allow someone else to occupy that very valuable resource.
▶ 1:45:52You and I totally agree and I applaud HUD for the proposed rule which I do think does expand access for deserving families on the waiting list uh while still preserving protections for elderly and disabled folks that clearly if you can't work totally understand you need that housing you need that space and I have to think in that 6,500 pool of people there's disabled and elderly folks in there that are not getting a spot because you've got somebody who can work and chooses not to.
▶ 1:46:21So at the same time the situation of the MHA and those in other jurisdictions make it clear that to be efficient PHAS must be subject to more rigorous oversight. Unfortunately as you have pointed out MHA was not subject to this oversight. Uh for example HUD first identified issues with MHA's financial records and internal controls in 2015. Miss Adak, are you aware of HUD taking any action to ensure MHA made the necessary changes after those findings?
▶ 1:46:53No, I'm not.
▶ 1:46:54Okay. Uh I guess did HUD take any action to inform the city of this issue in or around 2015? Was this on the radar?
▶ 1:47:03Not that I know of.
▶ 1:47:04Okay. Then in 2019, uh the MHA first failed to submit its HUD required audits. Dr. German, to the best of your knowledge, did HUD conduct outreach to MHA at this time to understand why the audit didn't show up? To the best of my knowledge, I'm not aware of any efforts.
▶ 1:47:24What about in 2020?
▶ 1:47:25To the best of my knowledge, I'm not aware of any efforts.
▶ 1:47:30No, sir.
▶ 1:47:31Okay. Dr. German, you briefly worked at MHA in 2021, but you were fired, and we know why. To the best of your knowledge, did HUD take any action regarding the complaint you submitted that ended up getting you fired? These are the types of things that we're trying to fix.
▶ 1:47:52That's why the bill we're working on, the 21st Century uh act, includes additional reporting requirements for PHAS and troubled PHAS and requires PHAS to make all their contracts available online. So, I think you are moving this in the right direction. Uh you're going to get some air support from Congress when we get that passed. You've got the leadership of HUD sitting right behind you.
▶ 1:48:15I see better days ahead, but it's it's equally troubling to me that the people at HUD when you were filing when when they weren't getting the reports weren't pulling the fire alarm. And you know who gets hurt? The elderly and the disabled. That's who gets hurt. So with that, I yield back.
▶ 1:48:30Gentleman yields. Now recognize uh the representative, Representative Downing of Montana for 5 minutes.
▶ 1:48:37Thank you, Mr. Chair. Uh earlier in this hearing, uh Chairman Hill identified some concerns that sophisticated private sector actors may take advantage of housing authorities when they engage in partnerships with outside developers such as the rental assistance demonstration program or in projectbased section 8. Uh Miss Wentz, you've encountered issues with private sector partners in housing programs here in Little Rock.
▶ 1:49:00Based on your investigation at Big Country Chateau, what characteristics or red flags should PHAS look into [music] when identifying private sector partners?
▶ 1:49:11Yes, thank you, Representative. There are several red flags that you can look for. Uh the first is just a surface level understanding of who the owner actually is. Um, yes, there are all of these strawman buyers and dummy corporations, but it didn't take very long in our investigation for us to figure out that these were all really owned by the same person.
▶ 1:49:30Um, and I think just a few [music] layers of looking at the business registration filings, looking at the property ownership, whose name is on the documents could go a really long way in making sure that um, people who are repeatedly doing these behaviors are not being given more contracts, right? Um, and I think another one is just communication. Uh, communication with local code enforcement to ensure that if there are inspections happening, um, that the people giving vouchers are aware of that.
▶ 1:49:59Um, communication with HUD to make sure that if they have problematic owners that they have redlisted, um, that everyone is aware of
▶ 1:50:07Thank you. You know, we've heard repeatedly today that the former board of commissioners at MHA had far too much authority and autonomy and used its autonomy to dictate the day-to-day actions of MHA. And while housing commissioners serve an essential role in the overall strategic planning and oversight of the housing authority, it should not overly involve itself in the day-to-day operations of a PHA. So, I'm going to go to Commissioner Wright.
▶ 1:50:31Can you please explain the relationship between MHA's commission and its executive leadership under the prior like I said earlier, they ran it like it was their business. They had offices, which is unheard of. Um you know, they had their had their own car, at least the the president of the CHC did, and and a driver.
▶ 1:51:00But um [clears throat] they they were in the day they were running it. They were they were super you know superseding the ED. It was just you know.
▶ 1:51:09So what decisions and issues are the board of commissioners now typically involved in?
▶ 1:51:15Well the board of commissioners u we go into meetings and and we look at budgets. We look at all the reports for the month. how how um how each community is doing as far as you know as far as how each community is doing as far as that the people are we at 100% are we at 75 are we at 80 occupancy rate
▶ 1:51:41uh and and just review uh review the budget and numbers and and how each community is doing
▶ 1:51:47you believe uh that the current commissioners are provided with sufficient information and documentation to effectively oversee MHA and advise in its strategic thinking.
▶ 1:51:58Thank you. Uh I'm going to move uh to Director Adcock. If the city board of directors had received consistent documents and reports from MHA under its prior leadership, do you believe it would have been able to act sooner? I think there would have been questions and I would [music] have put it the city on report that something's going on, something needs to be done.
▶ 1:52:25Uh we have a lison which I serve mha as a llayison now but the lison prior to me uh has been absent from city board meetings and everything [music] for the last 20 months and so no report was coming back that there was any problem.
▶ 1:52:43Thank you.
▶ 1:52:44Uh the person who is the chair of the commission at that time and she also was the employee running the MHA at that time. She also was the chair of another commission for the city of Little Rock at the same time which was the land bank, right?
▶ 1:53:04And in that there was property that was going back and forth between the city of Little Rock and the land bank and this individual and her friends and [music] some of her other committees that she was working on.
▶ 1:53:19Right. Thank thank you very much. Uh real briefly, Dr. German understanding that understanding that based on your history and the history of MHA you may have concerns that the commission is seeking to exercise too much authority over MHA. So do you agree that commissioners and directors requesting documents and reports uh does not rise to the level of seeking to control MHA and will you provide commissioners with these types of documents?
▶ 1:53:45Uh I believe that is absolutely necessary. We provide our board of commissioners with monthly reports um that that detail activities in every key department section a finance and we would be more than happy to provide it not just to our board but to HUD and to the city as well. So I do believe that that's important that you in in the in the light of being transparent that that is important that you get those types of
▶ 1:54:13Well, thank you very much Dr. Mr. Chair. I yield. Gentleman yields. Uh we will now um keeping respectful to our witnesses time uh we're going to open it up to members who'd like to have a few minutes of a third round of questions. I hope that's okay. Um I'm going to start with myself and so recognize myself.
▶ 1:54:36Um, so I've got something here that reads, "Although no one has yet been arrested when the FBI raided CH CHC's offices, um, committee staff understands the FBI still uh is undergoing an investigation.
▶ 1:54:52Multiple current Little Rock city board members, housing commissioners, and current executive director uh have alleged the former housing board commissioners Lita Anthony and Kenyon Low engaged in potentially unlawful conduct, including stealing, nepotistic [music] uh hiring, misappropriating land, selling it to friends, steering contracts to friends and family, allowing ineligible friends and family to live in MHA uh facilities. Mr. Right.
▶ 1:55:23You got any What do you think about that? I think Mike,
▶ 1:55:27I think you're 100% correct on on on what you just stated, which would include taking appliances from uh from from uh Madison Heights and other units and giving them to friends or taking them to their house, just taking advantage of of of vendors that that we have at MHA and and CHC and using them and to their benefit, you know, as far as for their homes or family that that
▶ 1:55:56How do you feel about the current team that's in place, you and your uh colleagues and fellow commissioners?
▶ 1:56:02Very good. Feel very good about it. Yeah, it's a good good a good team. Good
▶ 1:56:06Okay. Excellent. Um I now like to ask you a question I asked before uh of of Dr. John and what would you like to see HUD doing ideally? Well, as I said in my statement, um I've been here a little bit longer than the others and went went through it when I [music] was just the sole member, the sole member of the board and what we went through to acquire and get information. But I believe HUD needs to come in and clean it up.
▶ 1:56:36Clean up all the finances, clean up organizations. It's not it's not her fault. It's their fault. the old guard, they created this mess and that's my opinion and um I think if they came in and cleaned it up uh we'll get back on our feet quicker.
▶ 1:56:57That's great. Thank you. Um uh Miss Addak, we spoke earlier and you uh you said you were hopeful that through prayer that this could be a this could help be a turning point today's hearing and I certainly believe in working hard and praying hard. Um, on that note, what would you like to see ideally HUD's uh in helping move things in the right
▶ 1:57:23I have seen a lots of pressure put on Miss Jan and the commission, Mr. Wright and [music] everything for them to do things that they do not have the background, not the physical background, but they do not have the papers available for some of the stuff that HUD wanted them to have. and it seemed like HUD just walked away instead of being there for them.
▶ 1:57:48I would like to see HUD being there for them to be a partner with them to help them. I also would like to see something done about the prior administration that caused all I think that uh everyone just thinks, okay, all that is forgotten. I'd like to see uh HUD and maybe the attorney general's office and everything [music] look into that, investigate it.
▶ 1:58:15Um I would like to see, of course, their apartments done. And I think if that includes HUD or the federal government coming up with some money, I don't think we should have to look up for every penny, how do we do it? that there needs to be a fund set up, money set up that says, "Okay, go out there and do what you need to do to [music] get this thing back on its feet. If they have to penny everything along, it's going to be forever getting it done.
▶ 1:58:47The loan is wonderful and they have begged and begged and they can I just praise them because they really have got this loan going. But this loan is going to do one little bit and you can't just bite off one little bit of a whole bag of something. You've got to approach it. How do we solve the whole problem? And the hope of them is money to get this thing started again, to get these families in these apartments.
▶ 1:59:18Putting nickels and dimes into it is going to take forever. Madison, the streets in Madison, the signage in Madison, it looks defeated. These properties should look like they represent our city government, our federal government, our state government. They should be some of the best looking things in our community. And right now, with the exception of like Sunset and some of the others, they're not.
▶ 1:59:46And we need them to look like places that we take ownership of. The government is in here and government is going to make a difference. If it's HUD coming in and helping for a while, if it's y'all providing money, whatever it takes, I would like to walk out of this room with the ad to today. They're going to do whatever it takes to get this corrected.
▶ 2:00:16Thank you, Director Adcock, very, very much. Uh, I yield back. Uh, the member member wish to be recognized. Chairman Hill is recognized for as much time as he sees fit. Thank you, Mr. Chairman. Um, I want to go through just a series of kind of follow-up questions to just clarify in my mind. I'm going to start with you, Miss Wentz.
▶ 2:00:40And you talk you you told us the story, uh, and I think director ADOC did too about the pivot from Intech or whatever the name of the company was, but oh, maybe it was you, Dr. Garman. uh you went they went from intech and then they stopped and threw in the towel even though they were seconds away from closing and went to Gorman and then Gorman is been sort of the source of the problem on Madison Heights. Is that is that right?
▶ 2:01:07And so why what was the reason for dropping either whoever wants to answer who why did you all change horses in midstream? Why did the previous management do that? Uh they went from ITEX ITEX was also managing Madison Heights at that time.
▶ 2:01:27And uh they were doing a they were doing a RAD program and it was all about developers fees
▶ 2:01:33and all about all what was it
▶ 2:01:35developers fees.
▶ 2:01:37Uh ITEX you wanted 60% and was offering them 40 and they wanted 50/50. That was that was one of the of the reasons that they moved from ITEX to Gorman. Gour came in and did 50/50.
▶ 2:01:51And so that was one of the reasons.
▶ 2:01:53So that's a legitimate business reason you'd say, right? Even though if it was at the last minute, that's still a legitimate business. But if I'm not mistaken, I believe I believe there was was there a contract signed on that
▶ 2:02:06Yeah, there was a contract with Itex at that time.
▶ 2:02:09And was there a penalty for breaking it? it's litigation. Yes, sir.
▶ 2:02:15And so that's and that litigation still We're still in litigation over it. It's a $1 point something million dollar
▶ 2:02:24but that was the reason that they uh strictly money.
▶ 2:02:29Yeah, go ahead. One one thing I'd like to see uh actually two things I'd like to see uh HUD do is when when we're doing these RAD programs over developing is for um HUD to have oversight over the contracts or and review them and review the proposals and the and the because we we did a RAD on Sunset and soft cost were 60% hard cost were 40 unheard of yet it
▶ 2:02:59went through and I mean that was the biggest waste of taxpayer dollars on that side and uh I think my co-commissioner Monty how much I think it was $350 a unit or 350,000 a unit is that correct
▶ 2:03:14is what it ended up doing the remodel the rat
▶ 2:03:17oh my god
▶ 2:03:17350k so in just to catch the legal situation a public housing authority and its nonprofit affiliate if needed they have full discretion over signing a RAD contract. It's not reviewed by a HUDfield office or above. Is that
▶ 2:03:34from what I understand?
▶ 2:03:35Is that a fair description?
▶ 2:03:37Uh no, there is some oversight. HUD does have to sign off on the uh agreement. They uh HUD and the Arkansas uh Finance Development Authority. There is
▶ 2:03:48so ATPA does too. And so you would think something that has that kind of soft cost in it and upfront fees would be very unappealing and would would get a lot of scrutiny. So what is it just a rubber stamp or people really doing due
▶ 2:04:04In some cases I believe they are doing due diligence. I know of examples where AFA for example have come and said the the as something as simple as the type of material uh that the the uh developer is proposing. Uh so there is some involvement and some oversight. Yes. But ATPA and HUD is HUD is primarily on the financial side.
▶ 2:04:26Okay. Well, we'll follow we'll follow up on that. Also on the continuing hangover from the previous management, what contracts are still in existence for the Metropolitan Housing Authority signed under the previous management that you can't get out of or that you and then give me your opinion like so data processing, marketing, legal, accounting, are there contracts that were signed that were multi-year uh that were done with the prior management?
▶ 2:04:56Miss Dr. German
▶ 2:05:00not necessarily with the prior uh board that I'm aware of. We have some now that in the course of trying to recover the agency y
▶ 2:05:10that the board did sign some rather long-term contracts and uh we are bound to those contracts especially the one for the the the data management through I believe 2028. Um, I have uh actively spoke to the board and and the board chairman about possibly revisiting some of those contracts because uh here's the thing about recovering an agency. It's it's quite costly. You have to pay a premium.
▶ 2:05:37Nobody wants to dig you out of that hole without you paying them a premium. And we've had a couple of examples of that where we've had to pay, in my opinion, exorbitant costs to uh to dig us out of that hole, including um the data system, including some legal fees, including um the uh the high cost that we have to pay the Novagratic, the audit company. You know, we don't get any extra money for that.
▶ 2:06:05We have to try to figure out how we're going to pay them. And if you don't,
▶ 2:06:09it'd be a lot easier if somebody hadn't missed if you did if you weren't missing $18 million, wouldn't it?
▶ 2:06:14That exactly. Yeah, exactly. I think it'd be I think you'd not have a lot of these problems if you weren't missing millions of dollars.
▶ 2:06:21Yes, sir.
▶ 2:06:21Last question on the waiting list issue, which is so important to my good friend, Director Adcock.
▶ 2:06:26We talked about vacancies. We talked about capital expenditures to fix vacancies, particularly in the Madison House, Madison Heights question. How many people on in a unit are not qualified to be in a public housing unit in your opinion? Uh they are over income or over or underage. Director Adcock kind of referenced the experimentation over at Paris Towers to try to, you know, have some flexibility there. I'm not talking about that issue.
▶ 2:06:56I'm talking about someone who is in a public housing unit but is no longer qualified to be in that unit by income. for example, do you track that?
▶ 2:07:07We most certainly do track it. There the the lapse in previous uh administration in terms of the reertification process. The reertification has is supposed to occur annually. Every year you're supposed to check that household to make sure that they continue to qualify for the subsidy and the benefits. Without that, without the inspections, without the annual reertification, then you are going to get families that possibly should not be continue to be in that unit or be in that unit at all.
▶ 2:07:36Now, um now that we have tried to address the fundamental issues that is a very fundamental issue, the eligibility of families that uh live in our units, we now have very strict um annual reertification requirement. I would I would be I would I think that under this Karen um administration and board that there's little to no okay
▶ 2:08:01um other than trying to catch up from the past but but as far as walking in the door now know you if you don't meet the eligibility requirements you you're not going to be in one of our units.
▶ 2:08:11Thank you. I yield back for sure.
▶ 2:08:13Chairman Hill yields back. Um we're concluding our hearing. Uh we certainly want to thank all of our witnesses. I hope you found it worthwhile. We certainly did and everyone here uh uh for your attendance and concerns on this important issue. Without objection, all members will have five legislative days to submit additional written questions for the witnesses to the chair. The questions will be forwarded to the witness for their response. Witnesses, please respond no later than April 17, 2026. This hearing is adjourned.