SAHA faces giving back fed funds
The San Antonio Housing Authority must repay $1.86 million to the U.S. government and could be charged an additional $2.02 million, according to a federal audit of the Mirasol Homes public housing project. Details in the report released Tuesday suggest there was a sweetheart deal between SAHA and builder KB Home that went back to 1997, two years before the Mirasol contract was signed. The audit says $1.86 million must be returned because it was spent in mismanaging the contaminated landfill at Mirasol. The report also said SAHA violated state environmental laws. The $2.02 million was money spent on salaries the housing authority hasn't documented.

San Antonio Express-News 
SAHA faces giving back fed funds
04/28/2004  

Ron Wilson
The San Antonio Housing Authority must repay $1.86 million to the U.S. government and could be charged an additional $2.02 million, according to a federal audit of the Mirasol Homes public housing project. 

Details in the report released Tuesday suggest there was a sweetheart deal between SAHA and builder KB Home that went back to 1997, two years before the Mirasol contract was signed. 

SAHA President Melvin Braziel denied that charge and said the long-awaited audit report was the first to raise that allegation. KB Home couldn't be reached for comment. 

The audit says $1.86 million must be returned because it was spent in mismanaging the contaminated landfill at Mirasol. The report also said SAHA violated state environmental laws. 

The $2.02 million was money spent on salaries the housing authority hasn't documented. 

Ed Hinojosa, SAHA's chief financial officer, said he's confident that paperwork will show the $2.02 million was spent appropriately. 

U.S. Rep. Charlie Gonzalez, D-San Antonio, requested the audit from the Office of the Inspector General of the U.S. Department of Housing and Urban Development last May in response to public complaints about the homes' quality of design, workmanship and materials.

Late Tuesday, Gonzalez said he hadn't had time to study the report but that a cursory look revealed some "disturbing problems."

"For SAHA to misappropriate, mismanage or otherwise not account for nearly $4 million in federal funds is inexcusable and merits further investigation," he said in a statement.

"The report implies that a deal was in the works long before the bidding process even began."

Gonzalez also criticized the report's cursory treatment of questions about materials and workmanship in the project's 247 homes. 

The inspector general's report mentioned in passing that it looked at a report by Dan Medley of the Forensic Consulting Group that was released in May. Medley's report, commissioned by SAHA in the wake of complaints about quality, said the standards set forth in the documents were below industry standards and didn't meet the requirements of a federal HOPE VI grant. 

Medley found that "materials used were some of the least expensive, and therefore most likely to fail"; some windows had been installed out of square and could not be shut; and an air conditioner was "poorly installed and was leaking condensate onto the particle board platform below."

The inspector general's new report did not go into specifics about materials, other than to say they met city building codes. 

The report's most serious charge is that SAHA adopted procedures that "limited competition" for the Mirasol contract.

In 1997, two years before the Mirasol contract was signed, "SAHA's vice president of investment initiatives contacted KB Home and initiated a standing commitment to construct homes" at the Menchaca subdivision. 

Though SAHA did not get a separate grant to build those homes, "the Menchaca homes were included in the Mirasol HOPE VI grant," according to the report. 

Braziel said he never heard anything about that "standing commitment" until the inspector general's report came out.

The report said that during the bidding process, in 1999, SAHA included a stiff financing clause. 

Braziel said this was to ensure SAHA got a builder healthy enough to complete the project. 

But other builders told investigators they would have bid on Mirasol had the clause not been included.

"Therefore, the financing clause contributed to the limited competition," the report stated.

Midway through the project, the stiff financing rules were done away with and regular payments were made. 

The report also said the developer, the Mirasol Joint Venture Team, was allowed to draft its own contract.

Braziel said contractors frequently bring in contracts but that all drafts are reviewed by staff and by attorneys. 

SAHA paid an average of $69,226 for the homes, slightly less than the contracted price. 

He said SAHA agreed to some of the report's findings, including the need to return the $1.86 million spent because of the landfill. 

The housing authority asserts that the landfill problem was caused in part when former President Apolonio Flores failed to follow up on a 1995 report saying an environmental study was needed. 

"That's news to me," Flores said Tuesday, saying he had no recollection of any such report. 

"Even if it were true," he said, "I left in 1997, and they continued doing what they were doing until 2000? Why did it take them so long to catch a mistake they say they already (had) caught?" 

Braziel said SAHA has learned and changed a lot since the Mirasol days. And personnel responsible for Mirasol decisions no longer are at SAHA, he said.