Free Money Is Bad
Dollars from HUD are the root of much evil at City Hall.
Most of the comments that people offer on blog items on our web page are interesting. Some can be crazy or spam or truly offensive. But whenever I skim over the comments and fail to pay close attention, I find I have done so at my peril, as happened two weeks ago when I got a call from a knowledgeable source asking me why I had ignored a comment from someone using the pseudonym "bigbexardaddy."
Email the author at email@example.com.
I went back and looked. Indeed! Missed a good one. It was one of the first comments on an item I had written about the city's Bexar Street Project, a boondoggle exposed a few days earlier in a brilliant series of stories by Steve Thompson at The Dallas Morning News.
The comment, written in the feverish shorthand of a person banging it out on his personal iPad in the cafeteria with one eye over his shoulder, claimed that agents of the U.S. Department of Housing and Urban Development Office of the Inspector General were at City Hall combing through files and that Dallas already had been forced to pay back "hundreds of thousands."
There were enough good clues in the comment to lead my source to believe that bigbexardaddy had to be a City Hall insider with knowledge. A person who did pay close attention right away was City Council member Philip Kingston, who immediately contacted city management staff to ask if what bigbexardaddy had said was true.
It took a few days, but they eventually did get back to Kingston. The staff said the city had paid back HUD $811,181 over the last year, of which $625,814 came from one program. Chan Williams, an assistant director of the office of financial services/grant administration, told Kingston in an email: "When funds are repaid to HUD, they are deposited back to the city's line of credit to be used for other eligible activities."
So, nothing about why, only a line sort of painting it as an accounting operation, with nobody actually short any money.
Perhaps to salve my conscience for not having gotten onto it quicker myself, I spent the next week papering people with demands for the why. Why did Dallas pay back HUD more than eight hundred grand?
HUD itself, as usual, was even more opaque and less responsive than the city, basically telling me they would look into it but in the meantime I'd do better asking the city anyway. Yeah. Knew that. Thought I'd ask anyway so they wouldn't feel left out.
The city took a few days, but Shawn Williams, the city's top spokesperson, did get back to me with a fairly thorough answer at the end of a business day last week. At almost the same moment I was getting my answer, City Manager A.C. Gonzalez was delivering the same information to the City Council, guaranteeing that Gonzalez's official version would appear in The Dallas Morning News overnight. Hey, that's all absolutely standard operating procedure, the regular ritual dance. It's why we call The Morning News Dallas' own Pravda.
The Gonzalez memo revealed that the lion's share of the money repaid to HUD was from a small program funded with HUD HOPWA (housing opportunities for persons with AIDS) grants, this one aimed specifically at recently released felons. During the period of a few days when the city was formulating its answer to me, a city caseworker on that staff was sentenced to 15 years in prison in a plea deal in exchange for his promise to cooperate with the FBI.
The employee had misappropriated funds, used his office and federal money to extort sex and then lied about it to federal investigators. He was facing a much tougher sentence than 15 years had he not agreed to cooperate.
According to some news accounts, this same person actually started out as a whistle-blower, ratting out his boss, the head of the program, who subsequently was indicted on a complaint of abuse of official capacity by the city. But that's a tangled web. No government official, local or federal, has laid out who really started ratting on whom and who was ratting back to save his or her hide. All we know is that a bunch of rats were ratting on each other at City Hall.
It's there, however, that we begin to see the connective tissue. What connects almost all of the scandals I have written about at City Hall in the last several years — Patriot's Crossing, 1600 Pacific, the car wash on Martin Luther King Jr. Boulevard — is HUD. The millions of dollars sluiced into City Hall every year in the form of HUD money is the mother's milk of local patronage and corruption, a peculiar kind of luxury for local politicians because they don't have to vote for any local taxes to get it. In political terms, it's free money. And not to be a crabby old wad about it, but there has always been something fundamentally corrupting about free money.
Look, I speak here as an old hippie liberal and one hell of a slow student, a person who dearly wanted to believe in free money. But I was brutally dragged by the collar to dingy free federal money opium parlors all my life by cruel newspaper editors forcing me to see the miserable moral wreckage there. Those editors knew they were slowly extinguishing all my cherished youthful idealism about federal do-good money, and still they made me go. But I don't blame them. The only pain in my heart now is that I didn't start out as a Bush Republican asshole in the first place, save a lot of time and maybe have a couple nickels to show for it.
There was an accountant fired from the city's auditing staff many years ago for being excessively honest. I talked to him after he left. He told me something that has always stuck. He said in public accounting if you put money in a drawer and then announce to everybody that you are never going to count what's in the drawer, you must enter those funds in the ledger under "Already Stolen."
Back to the beginning. The only reason any of this is happening now is that the city pissed off the wrong guy seven years ago. The city required Curtis Lockey and his partners to invest $64 million of their own money in order to win HUD money for a project to rehabilitate a 1960s tower at 1600 Pacific Avenue downtown. He and his partners did their part, putting in a substantial chunk but not all of their required commitment, but the city later pulled the rug from under them.
There's some who-shot-John about why. Lockey says they did it because he refused to conspire with them to violate federal law on low-income housing and planned instead to include the legally required ratio of subsidized, low-rent apartments. The city says Lockey's deal was no good and based on flaky financing.
Lockey went to a Washington law firm, Relman Dane & Colfax, that has locked horns with HUD and won in the past. They put together a complaint that HUD could not ignore. In fact HUD launched a four-year federal investigation, during which the city brought massive political pressure to shut down the probe. But with Relman out front with its track record and its legal rocket launchers, there was no way HUD could sweep the Lockey complaint under the rug.
To be fair, people familiar with HUD, some of whom have worked there, tell me HUD has always had within it a fair housing enforcement staff that basically wants to do the right thing. Their problem has been that most of their enforcement actions get smothered in the cradle by the funding side of the agency, the people who hand out the free money and then promise not to count it. After all, those people have their word and their honor to think of.
The point is that because of the Lockey complaint, the HUD inspector general had to come to town and had to look at the money in the Lockey deal. Apparently, according to what bigbexardaddy has revealed, the I.G. must have started pulling on strings that wouldn't stop unraveling.
The Lockey complaint is at its final stage. HUD has ruled that Lockey was the one telling the truth, and, amazingly, the city recently has come around to more or less admitting HUD is right. HUD and the city are hammering out a negotiated settlement.
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Last week I filed repeated public record demands with both HUD and the city for the HUD "voluntary compliance agreement" on which those negotiations are based. HUD told me they would "put it in the hopper" (muffled laughter). The city just refuses to acknowledge my requests. At some point this week or next, there will be a story about it inside The Dallas Morning News revealing terms of the HUD document and announcing a settlement but only in broad terms.
HUD and the city will issue a joint statement saying they still love each other. If Lockey gets paid, he will sign a vow of silence clause and I will never hear from him again except for the occasional unsigned wish-you-were-here-(not-really) postcard from Monaco.
But the real truth is in what bigbexardaddy told us. Resolving the Lockey complaint will do nothing to cure the larger cancer — the HUD money. It leads everywhere. It never leads to anything good.
WEB: HUD's Free Money Poisons Dallas