Fed By Uncle Sam

Mayor and TDA's feet held to fire in HUD/CDBG flap as city councilor Christiansen vows investigation

The Tulsa City Council includes Democrats and Republicans, rich and not-so-rich, men and women (oops, no women this year). Now, in response to a host of violations uncovered by the U.S. Department of Housing and Urban Development (HUD), a new distinction has emerged: witch-hunters versus rug-sweepers.

"As a city, we are very interested in accountability; we have too few resources to not hold people accountable," Susan Neal, director of community development and education initiatives for Mayor Kathy Taylor, said. "We've already made staff changes. Those folks (responsible for the violations) aren't here anymore."

Neal didn't name any people responsible, but instead stressed that the processes that led to the violations -- and a request that Tulsa repay $1.5 million in Community Development Block Grant (CDBG) money -- were in place for about 30 years before HUD notified the city that it was using its grant money inappropriately.

"Moving forward, what's done is done. ...The municipality, the city of Tulsa, is at fault, and we've taken major steps to address it," freshman Councilor Eric Gomez said. "We have to be very careful of a witch-hunt audit that looks to point a finger and doesn't move forward best practices or move us forward as a municipality."

For some councilors, however, simply moving forward would be unacceptable.

"That isn't going to happen," Council Chair John Eagleton said. "I keep dirt under my rugs too. [To fix the problem], we have to find out how the train got off the tracks."

An audit of Tulsa Development Authority (TDA) practices from October 2005 through September 2007, which was completed in August by HUD's regional inspector general, showed the city had gotten off the tracks in many ways. The most costly was using more than $1 million of CDBG money to pay for work that may have been unrelated to the CDBG program.

"As I understand it, the vast majority (of the repayment request) is because HUD said we used federal money to pay city employees for non-CDBG business," Councilor Bill Christiansen said. "For the city to knowingly pay salaries when they knew they shouldn't do that -- it's almost criminal to convert federal funds to do that."

Christiansen vowed to find out who's responsible, despite the "smoke and mirrors" that administration officials have been using to "dance around the issue." He noted that with a majority vote, the nine-member council could launch an investigation into the matter.

"The mayor is ultimately in charge, and I am going to hold her fully accountable for this," Christiansen said. "If she didn't know about this on her watch, she should have."

Taylor was elected in April 2006, but the HUD report does not show which violations occurred before Taylor took office. TDA handled $3.28 million of the city's $8 million in CDBG funding from October 2005 through September 2007.

Neal and the mayor's chief economic development officer, G.M. "Mike" Bunney, said the city's most serious violation was allowing the executive director of TDA to supervise the monitoring of TDA.

Neal and Bunney said TDA also improperly held onto some properties for many years because they were undevelopable or were small "remnant" lots, which had no practical use. The HUD report, however, showed a much more basic problem with TDA's operations: its failure to benefit low- and moderate-income residents, which the report said is the purpose of CDBGs and of TDA.

"According to the Authority, it would benefit the low- to moderate-income community 'whenever possible' when it sold or leased a property," the HUD report states. "Thus, its acquisition, clearance, relocation, and disposition activities did not comply with HUD requirements or benefit the low- to moderate-income community as required."

Council Vice Chair Jack Henderson said the HUD investigation began after he and former Councilor Roscoe Turner contacted the federal agency because they felt grants were not being used to revitalize areas of "slum and blight," as directed by HUD. Henderson is confident, though, that the city will not repeat its mistakes, and he said further investigation would be counterproductive.

"Somebody made some dumb decisions that cost us money," he said. "But as far as trying to put somebody in jail, I don't see going back far enough to make that happen."

Henderson and Turner also addressed TDA's practice of "land banking" when they contacted HUD, which turned up as a violation in the inspector general's report. As of June 30, 2007, TDA owned about 160 properties valued at a total of almost $9 million, and the Authority had no specific plans for those properties. Some of the properties had been acquired more than 40 years earlier, and about 84 percent had been acquired before 2000.

"[TDA] must develop end use plans for the disposition of each property consistent with CDBG national objectives and expend the resulting program income in accordance with HUD requirements," the inspector general wrote. "By complying with HUD requirements, the Authority could put approximately $9 million to the intended use of benefiting the low- to moderate-income community."

The bulk of the $1.5 million HUD has requested, however, is due to a lack of efficiency -- or falsification of employee records -- at TDA. During the two-year audit period, TDA completed five land acquisitions, 14 dispositions and five clearances. And during that time, more than $1 million in CDBG money was spent for salaries and benefits supporting those 24 actions.

For comparison, HUD noted that the city's urban renewal plan for the Kendall-Whittier neighborhood has resulted in 12 acquisitions, six dispositions and nine clearances at a salary-and-benefit cost of $21,587. The city responded that the Kendall-Whittier project costs don't include all money paid by the University of Tulsa, that the Kendall-Whittier acquisitions did not require disposition costs and that TDA's $1 million total included property-management expenditures.

Bunney added that the city has eliminated 20 of about 40 employee positions formerly devoted to TDA activities since receiving notice of the violations, which should lower TDA's administrative costs. The high cost of grant implementation, however, may not have been solely due to inefficiency, the HUD audit showed. It may have been caused by inaccurate reporting of employee activities.

"A review of seven City/Authority employees' timesheets showed that while the employees worked on both CDBG and non-CDBG activities, they did not charge time in accordance with federal regulations," the audit states. "The Authority needs to support that employees charged time resembling their actual work."

In addition, HUD is seeking $384,428 that TDA spent on supplies, employee training and temporary staffing, because TDA cannot show that those items benefited the CDBG program. In total, TDA spent just under $1.4 million of CDBG money on those items plus salaries and benefits during the audit period, with $718,667 spent in the 2005-2006 program-year, and $672,792 spent in 2006-2007, according to the city.

The final $108,490 requested by HUD would cover the cost of acquisition and clearance of five properties bought between March 2006 and October 2007 for which the city failed to perform required environmental reviews. The city also failed to report CDBG-related rental income to HUD, according to the inspector general's report, and it falsely told HUD that all CDBG expenditures had benefited low- to moderate-income residents.

"We're owed an explanation of how this happened, why this happened and what we're going to do about it now," freshman Councilor G.T. Bynum said. "We're not losing $1.5 million because nobody screwed up. It destroys the public's confidence in city government when nobody steps up and takes responsibility."