Opponents of a bill that would remake the state’s affordable housing system are passing out a series of outdated audits in an apparent attempt to argue that the system doesn’t need a complete overhaul.
Meanwhile Senate Bill 519, sponsored by Sen. Mary Kay Papen, D-Las Cruces, has not yet been scheduled for a hearing in the House Business and Industry Committee.
Speaker of the House Ben Lujan and that committee have made moves in recent days most believe are designed to kill the proposal, though Lujan says that’s not his intent. On Sunday the committee, after at least two of its Democratic members spoke privately with Lujan, tabled the House version of Papen’s bill. Then on Monday, Lujan moved Papen’s bill from the Judiciary Committee to the Business and Industry Committee.
Earlier that day, before Lujan moved the bill, Vincent “Smiley” Gallegos, a lobbyist and the former director of the Albuquerque-based Region III Housing Authority, was sitting outside a House Democratic caucus meeting with a grin on his face. Later Monday, he and Lujan began touting audits they said showed the problems with the housing authorities aren’t as bad as many claim.
Lujan told me on Tuesday that the state auditor’s office had completed reviews of three recent housing authority audits that he said revealed no problems. Gallegos and Rep. Jose Campos, D-Santa Rosa, have been handing those audits out to lawmakers Wednesday and today as part of what is an apparent campaign against Papen’s bill.
But their claims are, at least to some degree, disingenuous. Of the seven regional housing authorities, only two have completed 2006 audits, and those are the authorities, based in Roswell and Silver City, that all agree are doing well. The other audits
For example, the newest audit for the Albuquerque-based Region III authority is from 2004 and the newest audit for the Las Cruces-based Region VII authority is from 2005, so they say nothing about the operations of those authorities at the time the system collapsed last year when Region III defaulted on $5 million in bonds it owed the state.
More recent reviews of the Region III authority conducted last year by the governor’s office and State Investment Council, on the other hand, found a myriad of problems and resulted in a widespread investigation by the attorney general’s office. Read the investment council report by clicking here.
When asked for a comment on whether the old audits reveal anything about the current situation, Caroline Buerkle, spokeswoman for the state auditor’s office, had this to say: “The Region III Housing Authority’s most recent completed audit is for fiscal year 2004. Currently, the auditor is diligently working with the Region III Housing Authority to bring it into compliance and complete their fiscal year 2005 and fiscal year 2006 audits.”
State Auditor Hector Balderas is a former House member who has higher political ambitions, so he has to choose his words carefully. The reality is that timely audits are required by law, and the fact that five of the seven regional housing authorities aren’t in compliance is another sign of dysfunction.
Bill would fund additional audits
There’s been a lot of focus on the fact that Senate Bill 519, which Papen is carrying for the governor, would shut down the state’s scandal-plagued regional housing authorities and replace them with a system overseen by the New Mexico Mortgage Finance Authority.
But the proposal would also appropriate $200,000 to the Legislative Finance Committee for audits of each of the seven housing authority regions to determine the extent of the mismanagement that led to the system crumbling in scandal. Despite the reviews that have taken place, the state still doesn’t know, because there was so much dysfunction, how much taxpayer money was lost and where it went.
“That’s why we need some funding in the bill to be able to follow the money to see if $5 million (in bonds) is really all that was defaulted on, if there’s more money, where the money is and where the money has all gone,” Papen said.
Charles Wollmann, spokesman for the investment council, said the audits “will help make sense of issues that currently exist under the current regional housing authority structure. By understanding areas where the system needed strong oversight and accountability, the Legislature and the MFA will gain better insight in moving forward to provide much-needed affordable housing for qualified
And Attorney General Gary King said the audits the bill would fund might aid his office’s ongoing investigation.
“The housing authority investigation is one of my office’s top priorities, and we have dedicated significant resources to this effort,” King said. “We think (the additional audits) are a good idea and are quite interested to see if they have any relevance to our investigation.”
Do opponents fear additional scrutiny?
Some suspect that’s why there is opposition to the audits and the bill. Gallegos no longer works for the housing authority – he submitted his resignation on Aug. 1, as the system was falling apart around him – but it’s no secret that his actions are a focus of the attorney general investigation.
Of the $5 million in bond money that was to be spent on affordable housing, the investment council found that almost $900,000 went to Gallegos as salary, benefits and a questionable loan.
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
The report also found that homes were being sold to investors, in addition to two employees and a board member of the Region III authority. The attorney general is suing over the homes sold to those tied to the authority.
In addition, the housing authority scandal has been a hot potato in the Legislature because of the relationship between Lujan and Gallegos, who is a former legislator and, as a lobbyist, has spent a lot of time in the speaker’s office.
Lujan was tied to the scandal late last year when the Albuquerque Journal reported that one of his top aides, who may not qualify for low-income housing, was living rent-free in a home owned by the Region III authority. After the situation was revealed, the aide paid back rent. She continues to live in the home.
Lujan has said he didn’t know about the situation until a reporter told him about it, and he told me earlier this week he isn’t trying to kill Papen’s bill. But
I’ve been unable to reach Lujan,
Papen said her bill needs to be approved.
“We as legislators need to step up to the plate to help clean this mess up. Look at the audit that is already there from the investment council,” she said. “If we’re going to spend the public’s money, we need to be willing to follow that money and keep track of it.”