Lt. Gov Diane Denish announced today that she will back comprehensive reform of the state’s regional housing authorities in the upcoming legislative session.
Denish said she will support a bill sponsored by Sen. Mary Kay Papen, D-Las Cruces, that would build on the reforms approved in 2007 following a scandal that toppled most of the state’s housing authority system.
“I will do everything in my power to protect New Mexicans and to be sure we meet affordable housing demands where they are greatest, especially in rural areas where resources are thin,” Denish said in a news release.
Word of the reform proposal adds to the current flurry of activity in the housing authority scandal. On Thursday, The Associated Press reported that the attorney general plans to take the drawn-out criminal investigation of the scandal before a grand jury early next month. And the state auditor plans to release next week the results of an in-depth audit he’s been conducting in the aftermath of the collapse of the system.
The Albuquerque-based Region III Housing Authority defaulted on $5 million in bonds it owed the state in mid-2006. Soon thereafter, the State Investment Council released a report that found widespread misuse of the bond money, which was supposed to be spent on houses. Instead, almost $600,000 went to former Region III Director Vincent “Smiley” Gallegos as salary and benefits. Almost $700,000 was loaned to the Las Cruces-based Region VII authority, which did little to provide affordable housing and has since shut down.
Perhaps the most intriguing misuse of money revealed in the investment council report was a $300,000 loan the housing authority made to a private company owned by Gallegos under the guise of purchasing more than 30 lots in Las Cruces — lots that had already been purchased by the authority.
Such situations are likely among those the auditor’s office has been looking into in a probe that was funded by a bill Papen sponsored in 2007 that began the process of reforming the state’s housing authority system. That bill also increased oversight and temporarily stripped the authorities of bonding power.
The new legislation, according to the Denish news release, would replace the seven-region structure with “a more streamlined system that would target high-need areas, including previously underserved rural communities. It would also expand oversight to protect taxpayer dollars.”
The specifics
Some of the reforms Papen and Denish are proposing include:
• Requiring that potential board members and executive directors be reviewed and recommended for approval by New Mexico Mortgage Finance Authority.
• Designating an oversight agency to oversee all regional operations.
• Strengthening the conflict-of-interest language in the proposed amendments.
• Permanently eliminating the ability to issue bonds.
• Establishing financial oversight and requirements for the submission and review of budgets and audits.
• Requiring that any transaction over $100,000 be reviewed and approved by the mortgage finance authority.
• Requiring regional centers to provide an annual operations and financial report for review by the Department of Finance and Administration, Legislative Finance Committee and the MFA Legislative Oversight Committee.
Papen said the legislation will help ensure that “regional housing centers can enhance and expand the rehabilitation and development of new housing stock and provide additional housing related programs and services to communities all over New Mexico. “
“There continues to exist a serious need for housing related programs throughout rural New Mexico,” Papen said.