Little Rock directors oust two board members at struggling public housing authority

The Little Rock board of directors removed two members from the governing board of the city’s federally-funded public housing authority at a special-call meeting Tuesday.

Lee Lindsey and Leta Anthony were the chair and vice chair of the five-member board of commissioners at the Housing Authority of the City of Little Rock, known as the Metropolitan Housing Alliance. Their removal was effective immediately upon the city board’s 6-2 votes, city attorney Tom Carpenter said.

The ouster comes after the conduct of MHA’s board has been under scrutiny from both the city and the U.S. Department of Housing and Urban Development. In fact, HUD notified MHA on Monday that the local agency’s participation in a program to convert public housing to private operation is in jeopardy.

Little Rock public housing board preps for removal vote by acquiring legal counsel

MHA is Arkansas’ largest federally-funded public housing agency and provides rental assistance to about 8,000 low-income people. Multiple reports from HUD in the past few years, including two since August, have pointed out red flags in MHA’s financial and management practices.

Lindsey, Anthony, and a third board member, Kerry Wright, refused to resign from the board two weeks ago at the request of Little Rock Mayor Frank Scott Jr. Commissioner Branndii Peterson resigned upon request, and Commissioner Louis Jackson had already said he planned to resign.

The city board voted with no dissent to keep Wright on the MHA board. He has been a commissioner since March of this year.

According to Arkansas law, a local governing body may remove a housing authority board member “for inefficiency or neglect of duty or misconduct in office” with a majority vote.

The vote can only occur after the commissioner is presented with the charges against him or her at least 10 days before the hearing, and the commissioner must have the opportunity to present his or her case “in person or by counsel,” the law states.

MHA employees asked Scott twice, in 2020 and 2021, to remove the housing authority board; Scott did not move to do so either time.

Ward 5 Director Lance Hines made the motions to remove Lindsey and Anthony and to retain Wright.

Directors Virgil Miller, Kathy Webb, Capi Peck, Brenda Wyrick and Joan Adcock joined Hines in voting to remove Lindsey and Anthony.

Ward 2 Director Ken Richardson and Ward 6 Director Andrea Hogan Lewis voted against removing Lindsey and Anthony. Two other directors were absent.

Richardson voted present on retaining Wright, who told the city board he had no comment on any of the MHA board’s conduct before he was a member.

Little Rock housing authority will ask for meeting with HUD after report shows management troubles

Wright later told reporters that Anthony and Lindsey’s removal “was necessary.”

“Change was what we needed if we’re going to turn the ship,” he said.

Financial and management concerns

An Aug. 9 report from HUD labeled MHA “troubled” after surveying its physical condition, financial condition, management and use of its capital fund.

The federal housing agency assigns the “troubled” designation to housing authorities that score below 60 points out of a possible 100. MHA scored 40 points, with the financial and management categories receiving zero out of 25 points each. The agency previously received the “troubled” label after scoring 57 points for the fiscal year 2017 assessment.

Anthony Landecker, HUD’s Little Rock field office director, wrote in an Aug. 16 letter to the MHA board that its failure to submit required financial information to HUD in a timely manner led to the financial and management scores of zero in the report.

Landecker also said the MHA board “must determine if recovery is feasible or if alternative options for affordable housing should be considered.”

If HUD allows MHA to continue providing public housing, MHA must recover half of its current score on its next assessment from HUD and raise its assessment score to at least 60 out of 100 possible points on the next full fiscal year assessment.

HUD has consistently considered MHA’s management subpar in its reviews of the agency, awarding it no more than 15 out of 25 points every year from 2011 to 2018, the Arkansas Democrat-Gazette reported in 2021. Kenyon Lowe, the board chairman at the time, said the problems had been remedied.

Additionally, HUD requires annual third-party financial audits from public housing authorities. The Little Rock accounting firm FORVIS usually conducts MHA’s audits but has not finished the one from fiscal year 2019. Reasons for the delay included the COVID-19 pandemic in 2020 and accusations of MHA board misconduct from a former agency executive director in 2021.

FORVIS asked MHA in an Aug. 30 letter to provide a range of financial documents so the firm can finish the audit. The MHA board voted Sept. 6 to fulfill the firm’s request, with encouragement from both Landecker and Carpenter.

During Tuesday’s hearing, Carpenter asked Wright if the housing agency had submitted the documents to FORVIS yet. Wright said he did not know.

Carpenter then asked if Wright believed the MHA board had fulfilled its legally-required obligation to provide audited financial records to HUD.

“Absolutely not,” Wright said.

“Greater supervision was required”

In June 2021, then-MHA executive director Nadine Jarmon sent a 161-page complaint about the board to both Scott and Landecker. The memo alleged widespread wrongdoing, including unnecessary and unauthorized spending, by the five commissioners and requested their removal.

The board suspended Jarmon with pay shortly after she filed the complaint and fired her two months later. She was the housing authority’s third of five executive directors in less than three years.

Jarmon’s complaint led FORVIS to pause the fiscal 2019 audit of MHA’s finances, but it tried to resume the audit in January after Jarmon’s legal action against the board was dropped, the firm wrote to the board Aug. 30.

Carpenter said Tuesday that since MHA had been aware since January that it needed to provide documents to FORVIS and did not do so, the agency’s noncompliance with HUD’s auditing requirements was “inefficiency at best” but could be considered misconduct.

HUD’s Departmental Enforcement Center said in an April 2022 letter to the MHA board that it was “unable to substantiate the allegations” in Jarmon’s complaint. Sylvester Smith, the attorney representing Lindsey and Anthony, pointed this out to Carpenter and the city board on Tuesday.

Little Rock housing authority failed to follow spending and contracting rules, HUD finds

However, the DEC had already been reviewing samples of two and a half years of MHA’s contracts and financial documents, and the review found that MHA failed to comply with federal, state and its own purchasing rules for years, according to the ensuing HUD report, and Carpenter brought this up during the hearing.

Carpenter also referenced a Sept. 1 report from the Quality Assurance Division within HUD’s Office of Housing Voucher Programs. The report flagged several “potentially disallowed” spending decisions by MHA, which has until the end of the month to provide the Quality Assurance Division with a corrective action plan.

“Our review revealed … a further degradation of internal controls, financial management and reporting practices,” Carpenter read from the report. “Substantive errors in the financial recording and reporting discrepancies appear to be prevalent, pervasive, and systemic, based on the information provided by the [MHA] staff.”

Smith said the MHA board was not aware of the issues in the report until it was issued, and he said the report’s use of the word “potentially” meant it had not proven the board’s spending decisions were inappropriate. He said the board would respond to the Quality Assurance Division by its given deadline.

Landecker had also requested a corrective action plan from the board in light of the Aug. 9 report, and the board responded with a letter from Lindsey on the Sept. 14 deadline. The board will address “audits, finances, expenses, and employment restructures” at HUD’s suggestion, Lindsey wrote, but the one-page letter did not provide detailed plans.

Smith admitted to the need for “cultural improvements” at MHA but attributed them to staff, which the board does not hire or fire.

“Clearly greater supervision was required, and in partnership with the executive director, that’s happening, but you don’t change the culture of an organization overnight,” Smith said.

He also said one of the biggest challenges to public housing is aging facilities, and MHA has agreements in place to secure private funds for renovations. He was referring to the Rental Assistance Demonstration (RAD) program, a HUD initiative in which private companies take over the leases of low-income housing complexes, though the housing authorities still own the land.

On Monday, HUD’s Office of Recapitalization notified MHA that the concerns raised by the August and September HUD reports jeopardized 137 units being converted under the RAD program.

“HUD must have determined that the factors resulting in [MHA’s] Troubled status will not affect its capacity to carry out a successful conversion under this Demonstration,” said the letter, obtained via an Arkansas Freedom of Information Act request.

What’s next

Lindsey and Anthony will appeal the city board’s decision, Smith told reporters after the meeting.

He said he thought the city board “made several errors,” such as not allowing Lindsey and Anthony to call witnesses to support their case.

He also said the decision to expel Lindsey and Anthony while retaining Wright was “arbitrary and capricious” and “potentially for questionable reasons.” Similarly, Lindsey, Anthony and former board chairman Lowe have publicly alleged conspiracies behind scrutiny and criticism of the MHA board in the past.

Wright, the sole remaining MHA commissioner, said he dealt with issues similar to MHA’s when he served on the Harris County Housing Authority board in Houston, Texas. He said an immediate order of business for MHA is to provide FORVIS with the documents it needs to finish the 2019 audit.

“We’re going to get down to work, roll our sleeves up, fix what needs to be fixed and get our financials in order,” Wright said.