MANAGEMENT ISSUES FACING AAGLA'S MEMBERS |
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Arnie Corlin Read Arnie's Letter to Inspector General of HUD and their reply Learn How to Run a Safer, More Profitable Apartment Building |
By Arnie Corlin, AAGLA Board Member
L.A. City Section 8 Still a Risk
ou can read about the Housing Authority, City of Los Angeles (HACLA) and that it is again meeting with AAGLA regarding Section 8 issues. This is true. Nevertheless, I believe we are not yet ready to accept Section 8 vouchers as safe investments Owners tell me they are still experiencing financial hardships and other difficulties when working with the program.
We agree that there are many less fortunate tenants in this city desperately in need of this assistance, and it is our responsibility to attempt to help make the program work. However, it is the responsibility of HACLA and our legislative leaders to make this a viable program to work with.
Recently, an article in the Los Angeles Times lauds Rudolf Montiel, the Executive Director of the program, for making great strides. But many critical unresolved issues and much divisiveness needlessly remain and are, in large part, caused by Montiel. You may recall the highly publicized fiasco involving rigged bidding schemes, which, in one case, resulted in HACLA flushing a ton of money down the drain when they bought a bunch of toilets at $2,500 each.
Councilmembers Janice Hahn and Wendy Greuel made a motion for an audit, and City Controller Laura Chick said she would do one. Just prior to writing this article, I checked with Chick's office. The response? "At one point, the Controller's office was exploring the possibility of auditing HACLA. However, at this time, we will not be conducting an audit of HACLA."
The response also included that the U.S. HUD Office of the Inspector General (OlG) is duplicative of the scope of the Controller's proposed audit. Thus, it's not necessary.
Under normal circumstances it would not be in the public's best interest for multiple governmental agencies to do the same work. However, this issue greatly affects the fiscal well being of the city and its communities as well as the welfare of those residents most in need of housing assistance.
An audit should be done jointly by both agencies, as each would be privy to and knowledgeable about different important pieces of the puzzle. The U.S. HUD OlG has acknowledged and alerted HACLA that they are preparing to do an audit.
The recommendations I am taking back to HACLA are many of the same ones that have been raised since 2004. Fixes have been promised since then. They have not occurred. Some of these fixes are simple, and can be accomplished almost immediately. They would allow HACLA to perform more fairly and efficiently, and, more importantly, to show good faith.
Others take more time. But HACLA must demonstrate open verifiable progress. Following are five important, generally easy-to-do issues for HACLA to focus on.
FIVE BASIC FIXES: COMPLAINT LIST TOPPERS
1. Put a good contact phone number on the HACLA website. The main number given is always busy. Upon calling the Executive Director's office, they acknowledge the problem and refer you to another number. To show good faith and efficiency, make this change immediately.
2. HACLA to call back owners and tenants within 48 hours. In the real world, one day later is often too late.
3. Inspections should be conducted in 3-hour windows. The Building & Safety and Housing Depts. have shorter time frames. All day waits are inefficient and unacceptable.
4. Replies to rent increase requests should be sent out within five days, maximum.
5. Give fair and competitive rent increases to keep owners in the program.
I will be meeting with Mayor Villariagosa's Housing Policy Coordinator in the next week (after you get this). I plan to discuss some of these issues with him. I will also suggest the need for the Mayor's office to be directly involved in HACLA due to its past history and performance, and the need for his office to hold HACLA accountable.
As always, I rely on all of you to keep me updated on any progress you see through your emails and faxes.
For you owners and managers outside of the City of Los Angeles, I have not received one complaint about any of the other Housing Authorities in almost two years. AAGLA continues to work with Executive Director Carlos Jackson from the Housing Authority, County of Los Angeles, to help get them fully leased up.
Please contact me with your issues, comments and suggestions at acorlin@aol.com or fax to 310-216-1199.
Mayor Reappoints Conflicted Commissioner,
Mayor Antonio Villaraigosa recently reappointed Maria Del Angel to the Housing Authority Commission of which she is the Vice Chair. She has been on the commission since 1998. Del Angel also is a tenant at the Estrada Courts Housing Development. As a result, she has the ability to approve or disapprove resources which can directly benefit her. On June 26, 2007, all 12 council members present voted unanimously to re‑appoint her.
I called the Los Angeles City Ethics Commission prior to the vote to question if this conflict of interest is ethical. A representative called me back stating they checked with the City Attorney. They told them "it was legal." I then told him, "I understand it may be legal. However, that does not make it ethical." That's the problem with this city. It continually confuses legal with ethical.
Ethics Commission staff also told me the city does not have full control over HACLA (the Housing Authority, City of Los Angeles) and their participation in the oversight is "voluntary."
In another vein, this past June HACLA requested $996,800 to enter into a contract with Quadel Consulting Corp. This contract was for processing 5,600 backlogged annual re-examinations, of units in the Section 8 program.
In my May 2007 article, I wrote about how HACLA was designated by HUD as a "Troubled Performer" with a rating of 58.6% in their Section 8 Management Assessment Program.
Not only did they have to spend this additional money on the consulting firm because they failed to do their job, they also were potentially liable to HUD for a $300;000 per month penalty retroactive back to January 2007! Recently, they sent me a correspondence claiming to no longer be subject to this penalty, but there should be some major concerns with how this agency keeps getting into these messes in the first place.
An article also ran in the Los Angeles Times about one of Executive Director Rudolf Montiel's staffers steering nearly $800,000 in contracts to the staffer's brothers and other politically-connected firms. Some of the money went for toilets for those with disabilities. That's fine, but at $2,500 each one has to wonder about the price. Were they imported from the moon? Among those who got these pork-lined contracts was the Estrada Courts Resident Management Corp., where Commissioner Del Angel resides.
In a follow-up Times article, City Councilmember Janice Hahn called for an audit of HACLA. Additionally, City Controller Laura Chick indicated she planned to conduct an audit. Since May 2004, I have suggested to the city that an audit is necessary.
The article included a quote from Montiel. He tries to deflect any responsibility as he usually does. He says, "It happens here and it happens...all the time in other city agencies."
In other news from HACLA, there was an item noted in the minutes of a recent Finance & Operations Committee of the Board of Commissioners. Montiel has been looking into obtaining a regulatory waiver based on the tight Los Angeles rental market to allow homeless families to use vouchers to lease units in public housing in a variation of an emergency housing program. HACLA's inability to find rental housing in Los Angeles has nothing to do with a tight rental market. It has to do with the poor and unfair manner with which the program is run. Wake up.
You may contact me by fax at 310‑216‑1199 or email at acorlin@aol.com.
MORE ISSUES WITH THE HOUSING AUTHORITY, We often hear about the homeless problem in the city or the gang violence around city housing developments in Los Angeles. If you pay attention to most of the news articles and broadcasts, the upfront solution offered by our politicians usually appears to be to give it to the Los Angeles Police Department, thereby making them the first stop gap when they should be the last. At other times, the Mayor proposes that City Council should create a budget item and "find" the money in our tightly stretched city budget for band aids to fix problems.
Rarely in any of these articles do we hear about the first stop gap agency that may be able help, the Housing Authority, City of Los Angeles (HACLA). As a matter of fact, this agency is responsible for many of these problems. Although funded by HUD, it is facilitated by the city. Its Executive Director is chosen by a commission appointed by the Mayor.
Being self‑employed, I know that when my business has a problem, if the source is not identified, it will probably not get fixed. If enough problems occur without solutions, my business will eventually cease to exist.
In government, what often happens when problems occur and are not fixed is that taxes are increased and bonds are created. Occasionally, inefficient politicians are voted out of office, which still does not necessarily fix problems.
HACLA, with its poorly managed and outdated website, is difficult, if not impossible, to get facts from. After reviewing some of its online Agency Plan (and questioning its application in the real world), and adding some information gleaned from conversations with those in the know, I believe this article clearly outlines most of the agency's problems.
For the last three years, I have been the Chair of AAGLA's Section 8 Working Group. Throughout most of that time, I have also been AAGLA's liaison with the Save Section 8 Coalition (SS8 Coalition), a group consisting primarily of tenant advocates. For the past nine months, I also have regularly attended the Watts Gang Task Force meetings. This group is devoted to reducing violence and increasing resources, primarily in and around the city's housing developments in Southeast Los Angeles.
I have never seen HACLA's Executive Director, Rudolf Montiel, at a single one of these meetings. With the level of serious housing problems we have, homeless throughout the city and homicides in and around the developments he is responsible for, his presence should be mandatory.
Montiel was hired after numerous HACLA problems surfaced, including giving out too many vouchers and over-leasing in early 2004. There was a push for a HUD takeover by the feds at that time, however, a memorandum of understanding between HUD and the city allowed continued management by the city with HUD oversight.
My Apartment Age article of Dec. 2004, page 16, offered a positive attitude on Montiel's hiring, "in an encouraging development, HACLA finally has hired a new Executive Director..." In some of my initial meetings with Montiel, I suggested that AAGLA could help with additional resources for some tenants.
For example, in the hundreds of calls I have fielded from Section 8 tenants, most do not have a clue about their credit histories and how to improve them. This is one of the first tools that should be provided that would help those who are able move forward and eventually leave the program. Montiel advised me there is a program available to help with this. Neither I nor any of the owners I communicate with have been able to find tenants, or any one else, familiar with such a program.
At that time, I had also just finished building some large four and five‑bedroom townhouse-style units specifically for the program (private funds, not subsidized) and had plans to build more. As a member of one of the largest boards of realtors in the state, I offered to seek their help when I suggested to Montiel that he use these units for the homeownership program and that they could be a model for more to come. Nothing happened.
Since then, things have gone from bad to worse. The manner in which the program has been run is causing many owners to opt out. This is due to the inefficiency with which the agency is run, and also because of the inability to collect market rate rents. These issues have combined causing owners to collectively receive rents that are 20-30% below market.
I have received calls from some mom-and-pop owners in tears who were at risk of defaulting on their loans because they were unable to make their mortgage payments. Other calls from seniors on fixed incomes have detailed how they have to go into their life savings to make the payments due to the mismanagement of HACLA.
Many hours are spent on the phone and in meetings with other owners discussing how to avoid leaving the program so as not to cause hardships for tenants.
As this occurred, rather than taking responsibility for and fixing the program, our Mayor and City Council concocted an absurd amendment to rent control, stating that an owner voluntarily opting out of the Section 8 program was thereafter subject to collecting only the tenant's portion of the rent. That's ludicrous. I had one four-bedroom Section 8 unit rented at $1,500 per month with the tenants portion of the rent only $41 per month. If I had opted out of Section 8, and the tenant chose to remain in my unit, I would only be able to collect $41 in rent for the unit.
All this law did was subject the City of Los Angeles to lose a lawsuit filed by AAGLA. Again, rather than fixing the program, the city chose to appeal the lawsuit. It went all the way to California Supreme Court where the verdict was upheld. It also needlessly raised some of the tenant vs. owner rhetoric we often hear in this city. Although, in meetings with the SS8 Coalition, and to their credit, I believe many of them agree with us on this issue.
Incredibly, to this day, in spite of the verdict by the California Supreme Court upholding an owner's right to opt out of Section 8 and get market rents, HACLA remains in denial telling staff, in a written memo, that owners are not able to opt out of the program and collect full rents from the tenants.
Also, based on the number of owners in the program, deficiency in allowable rents paid, and the extra work caused to owners by the program, owners may have lost in excess of $200 million over the last three years. Should this money be reimbursed to owners?
Unfortunately, our city leaders have tried to make this an owner vs. tenant issue when it's really a poor management issue.
When I have tried to discuss the issues with HACLA staff, many of them do not even want to talk about them. Even at the Watts Gang Task Force meetings, HACLA development managers, while unwilling to discuss the issues, appear not to be given enough tools to help solve the problems. Recently, a high-level HACLA manager, who was well liked at the city's housing developments, resigned for reasons unknown. Was he frustrated with the program?
Following is some information, which to the best of my knowledge, due to the fact that getting information out of HACLA is nearly impossible, identifies HALCA problems:
• This agency has close to a $1 billion per year budget. This should be a resource for property owners, tenants and our city's economy. Unfortunately, with approximately 44,000 Section 8 vouchers (average $800 per month rent times 12 months), only $422 million is being used. • The mythical tenant homeownership program is at zero. I have been unable to find any data for, or participants in, the program. • Montiel says he has available vouchers. Is that because tenants with vouchers are unable to find owners to take them? When vouchers expire and are reissued to others, are they issued as new vouchers? I don't think so. • HACLA's waiting list has been reduced, however, that may be because they are mailing only to the last known addresses of people who are now homeless or have made other arrangements. According to Section 8, no response means you must not need the program. • Montiel has indicated that I receive more complaints regarding HACLA than other agencies since it is a bigger agency. He also indicates many of the problems are due to HUD regulations. The next paragraph indicates otherwise. Here are the numbers from over the last three years. • There are approximately 44,000 HACLA vouchers and I have logged over 1,200 owner complaints about them. All other area housing authorities combined contain approximately 25,000 vouchers. I have logged less than 10 complaints from them in the same amount of time. Now that's a problem.
You have to identify the problem before you can fix it!
Solutions? For starters, City Controller Laura Chick should audit the agency. Controller Chick, as she likes to be called, has stated her hesitancy to audit due to conflicting with HUD's audit. However, it appears both HUD and the city have failed in their oversight.
You may contact me by fax at 310-216-1199 or email at acorlin@aol.com.
LEARN HOW TO RUN A SAFER MORE
The Apartment Association of Greater Los Angeles (AAGLA), the City Attorney's Neighborhood Prosecutor Program, and the LAPD present free apartment owner and manager training forums to help you learn how to run a safer more profitable apartment building.
AAGLA is continuing to participate with the City of L.A. in these meetings designed to help you run safer more profitable apartment buildings. If you have any ideas for speakers or other resources for these meetings, contact me by fax at 310-216-1199 or email at acorlin@aol.com. Check the Calendar for scheduled meetings. Meeting topics include the following.
Citywide Nuisance Abatement Program (SNAP)
What you need to know about gangs, drugs, and abatements of problem properties.
AAGLA
Managing properties, solving problems with tenants or owners, and a 0 & A period with an attorney.
Los Angeles Police Department
Meet your assigned Senior Lead Officer and learn about forming a Neighborhood Watch program.
City Services
Meet your council Office representatives and learn about what services and programs are available to you. Take advantage of these free forums. You'll be glad you did.
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