The mayor’s office and city housing officials attempted to answer questions about a city-run affordable housing process at the center of ethics allegations against Mayor Sylvester Turner on Tuesday — two weeks after a special committee meeting that largely avoided questions about the mayor’s role.
During a Houston City Council housing committee meeting, council members asked city officials about a process referred to as a notice of funding availability, or NOFA, which has been used to select certain housing projects for funding under a federal Harvey recovery program.
Former city housing director Tom McCasland accused Turner of trying to use the NOFA process to award $15 million in federal funds to a particular affordable housing developer.
Turner has denied the allegations.
At Tuesday’s meeting, Andy Icken — the mayor’s chief development officer — told council members that the Texas General Land Office was performing an analysis of the city’s NOFA process for this latest round of proposals, as well as millions in funding for two previous rounds. That report was originally scheduled to be available on Oct. 15, but has since been delayed, Icken said.
“I can't presume what it's going to say at this point,” Icken said of the pending report, “but once we see that, we certainly would want to, after comment on that, share that with council.”
A spokeswoman for the GLO, which distributes the federal Harvey relief funds allocated by the U.S. Department of Housing and Urban Development, said the report was delayed because the state agency was still awaiting documents it requested from the city, and that it hoped to issue the report by mid-November.
Tuesday’s meeting came roughly two weeks after a three-hour special hearing in which the committee members heard testimony from senior housing officials about expenses incurred by the city Housing and Community Development department under McCasland’s watch.
Among other things, that meeting revealed the department spent more than $11 million last fiscal year on administrative costs to distribute HUD Community Development Block Grant funds, even though it was allocated just about $4 million for the program.
But that meeting did not address any allegations that the mayor tried to funnel millions to a favored developer in a deal that would have cost more money per affordable unit than other recommendations from housing officials in the last months of McCasland’s tenure.
Those housing officials had recommended four projects to create 362 affordable units at $16.2 million, McCasland told council members. Instead, Turner chose the Huntington at Bay Area project, which if approved would have created just 88 affordable housing units for $15 million — four times the cost per affordable unit.
Critics both outside city government and inside the council itself criticized the meeting earlier this month for its lack of focus on the controversy.
“You have good staff over there, and they work hard, and they do this on a regular basis,” District G Councilmember Greg Travis told Houston Matters host Craig Cohen last week. “So when the staff is recommending certain projects, and then you try to override them, why? What was going on there?”
Turner has since withdrawn his support for the Huntington at Bay Area, calling it “too much of distraction,” so the project won't receive funding. While McCasland called the process a "charade," he also emphasized in his remarks to council that he was not accusing the administration of doing anything illegal.
But the Huntington at Bay Area project was ranked eighth by housing officials among the projects looking to receive money in the third round of federal disaster recovery funding related to Hurricane Harvey, and its price tag was labeled an “extremely high ask” in its initial scoring.
The Turner administration has argued that it was prioritized because it was set to be placed in a district that has not received much affordable housing.
It was later reported by the Houston Chronicle that a company named Harbor Venture Group — associated with Turner’s former law partner, Barry Barnes — was attached to the project. Documents show Barnes as a co-general partner and developer of Harbor Venture Group. A partner at Barnes’ firm, Jermaine Thomas, is listed as a principal of that company.
The Harris County District Attorney’s Office is investigating the deal, according to the Chronicle. City Council will also vote Wednesday on whether to approve a $275,000 contract with law firm Butler Snow to investigate the ethics allegations.
Turner has consistently defended the NOFA selection by pointing out it wasn’t subject to rules of what is called a “procurement.” McCasland also said this in his remarks to council in September. Icken and city housing official Ray Miller told council members the same on Tuesday.
Instead, Miller said, the NOFA is a grant-making process where the city is investing in a project and developers aren't working for the city, so they're not considered contractors or vendors. That means the mayor has full discretion on which projects are chosen, they argue.
"When we do these grant-making activities, we're not constrained by the local procurement codes that the feds and the state requirements have us under," Miller said.
Tuesday's committee meeting was intended, in part, to complete the agenda from two weeks ago, giving council an opportunity to question Icken and Miller.
While Miller went into detail explaining to council members the steps in the NOFA selection process, he stopped short of sharing the department's scoring methodology that would shed light on how the department awards points when ranking projects it recommends for funding.
Housing committee chair Tiffany Thomas continued to call for more transparency from the housing department moving forward — and more accountability from her colleagues on council.
Thomas added that the housing department's chief financial officer will begin giving a monthly report to the committee.
"We have to ask better questions, as well, and we have to really hone in and dig deep on the content and take full advantage of briefing with staff, asking questions, because this has been more than a teachable moment for myself," Thomas said. "Now that we have this information, we can do better."