Atlanta Housing Authority officials dodged a federal salary cap on top execs by supplementing salaries from a little-known nonprofit, an AJC investigation found.

Atlanta housing agency skirts salary cap for top execs

Atlanta Housing Authority’s publicly paid executives have evaded federal rules that were put in place to crack down on extravagant pay, an Atlanta Constitution-Journal investigation found.

Since 2012, the authority has supplemented six-figure salaries paid to its top executives by $4 million, using money from a little-known nonprofit that shares revenues with AHA and other Georgia housing authorities.

The money could have been spent on housing services for the poor — that’s what some other housing agencies have done — but Atlanta officials elected to devote it to salaries instead.

Revenue AHA receives from National Housing Compliance in Tucker has kept top Atlanta authority salaries at levels higher than almost every other public housing authority in the nation — and well above the $158,700 annual cap on federal housing money that can be spent on those salaries.

The nonprofit National Housing Compliance earns about $15 million a year from a contract with the U.S. Department of Housing and Urban Development to administer low-income housing, but only spends about $5 million providing those services.

National Housing Compliance divides the surplus among 10 Georgia-based housing authorities and a state agency that control it through a board of directors. That money goes to the housing authorities in the form of grants with no restrictions on how it is spent.

U.S. Sen. Chuck Grassley, R-Iowa, pushed for limits on the amount of HUD funding that could be used on public housing authority salaries amid a public backlash against excessive compensation. Those limits were enacted in 2012, months before an AJC investigation found Atlanta’s salaries were among the highest in the nation.

“This appears to be another effort by a public housing authority to circumvent the salary caps set by Congress,” Grassley told the AJC.

Grassley blamed HUD leadership for allowing ways around the cap. “This has been helped by the department’s lack of transparency with Congress and the public,” he said.

HUD declined to answer a list of questions submitted by the AJC about how AHA was using National Housing Compliance revenues to supplement salaries. But the agency issued a statement acknowledging that it may have been overpaying for the services provided by National Housing Compliance and other contractors around the country.

The statement said HUD will soon accept new bids for those contracts in hopes of saving money.

“We understand that some of our legacy contracts that were negotiated years ago may not reflect the costs of providing these services today,” the statement said.

One of the AJC’s questions that HUD did not answer is why it continued renewing the contracts every three years since 1999 if the agency knew it was paying too much.

Six-figure salaries get supplements

In Atlanta, the biggest beneficiaries of National Housing Compliance money have been 28 current and former members of the housing authority’s top brass.

This includes chief executive Joy Fitzgerald, and former chief executive Renee Glover, who resigned three years ago after the AJC reported that she made $644,000 in 2010, and was the highest paid public housing official in the country.

Fitzgerald, whose total compensation was about $300,000 in fiscal year 2016, has received $579,025 in supplemental income since the salary cap was initiated. The supplemental pay covered portions of her salary above the federal cap.

Glover received $437,600 in supplemental pay from 2012-14. That amount includes $167,850 of extra income as part of a lucrative severance deal that paid her one year of salary, consulting fees and money for her attorney who negotiated the separation.

Fitzgerald said she has made strides in reducing executive pay by eliminating bonuses and cutting salaries by an average of 8 percent since she took over the agency in 2013. She also said the number of employees earning more than $150,000 a year has been reduced by five during her tenure. Documents provided by the housing authority back up those claims.

Catherine Buell, the Atlanta authority’s current chief operating officer and incoming chief executive, said some staffers will continue being paid more than the federal limit under her leadership, but reducing salaries is one of her goals.

“AHA over the years has built a ‘corporate’ structure that frankly needs to be dismantled,” Buell said. “It will take time to do so, but my intent is to return the authority to its mission of providing affordable housing for residents while retaining the efficiency and competency that remains at the heart of the system.

“Joy Fitzgerald started the process of reducing excessive salaries … and I intend to build on her work and finish the job.”

As of last fiscal year, the Atlanta authority still had 16 employees making more than the federal cap. It used $722,500 from National Housing Compliance to supplement those salaries, enough to provide housing vouchers to about 72 families that year.

Big salaries troubling to critics

Big salaries at public housing authorities have long troubled critics such as Grassley and other housing advocates because they contrast so sharply with the agencies’ mission of providing affordable housing to low-income families.

In Atlanta, the contrast has become sharper because the housing authority has stopped building, maintaining and managing public housing complexes over the past two decades.

Today, the authority mainly administers HUD’s housing choice voucher program, and develops mixed-income properties with private developers. Atlanta officials say attracting top talent to negotiate complex deals with developers requires them to pay higher salaries in some cases.

National Housing Compliance money has provided an easy path around the federal salary limit. The nonprofit was created in 1999, specifically to bid on HUD contracts and direct money to housing authorities.

The nonprofit processes payments to about 800 privately-owned Section 8 properties in Georgia and Illinois, and provides other services for HUD. That work generates huge surpluses — 66 percent in fiscal year 2015 when each member housing authority received more than $900,000, according to National Housing Compliance’s IRS filing.

The Atlanta authority has used 83 percent of its National Housing Compliance revenue to supplement executive salaries since the salary cap was passed by Congress. Among them are three general counsels, six vice presidents; and six senior vice presidents.

Senior Vice President of Policy Mike Proctor, Atlanta’s representative to the National Housing Compliance board, has been paid $445,600 in supplemental income since 2012, the second-most at the agency.

Tim Franzen, of the local Housing Justice League, called the supplemented salaries “outrageous” in a city where advocates say there is an affordable housing crisis.

“The reality is that we are not in a crisis of resources, we are in a crisis of priority,” Franzen said.

NHC finances largely secret

Despite being paid with federal tax dollars and passing on that money to public housing authorities, Chief Executive Valerie Todaro and National Housing Compliance’s attorney David Pope said they do not have to make the organization’s budget available to the public.

In an interview, Todaro declined to specify how much annual revenue the nonprofit receives from its federal contracts, although she did say that almost all of it comes from HUD.

The AJC was able to establish broad ranges of revenues and spending from National Housing Compliance’s fiscal 2015 Internal Revenue Service filing, which includes a list of the nonprofit’s top earners: Todaro makes more than $204,000 annually, and four others average $122,000 each.

The IRS disclosure also says the nonprofit “makes its governing documents and financial statements available to the public upon request.”

Pope called the AJC’s request for budgets “misplaced.”

“In short, there is no legal requirement that a tax-exempt entity make its financial statements or budgets available to the public,” Pope wrote in an email.

HUD no longer requires annual financial audits of National Housing Compliance and its 40 counterparts around the country. But Todaro said her board still requires them.

“We’ve been audited each and every year, and those have been completely clean,” Todaro said. “I don’t see it as a transparency issue. We simply do not have to comply with open records.”

She declined to provide the AJC with any of the audits.

“We have a very high standard here and we’re pleased with the operation,” Todaro said. “So it’s been a success by anyone’s standard.”

But audits by HUD’s Office of Inspector General have repeatedly found fault with the federal agency’s fiscal oversight.

Three audits between 2007 and 2015 made a range of critical findings, including that HUD overpaid contractors more than $27 million — including $737,000 to National Housing Compliance.

Other audits reported that the contracts were not “cost effective” or adequately monitored to ensure that taxpayers were not overcharged.

HUD would not say what actions they took in response to the audits.

Atlanta’s spending unusual

While some of the other Georgia housing authorities use National Housing Compliance money to supplement salaries, none do so as much as Atlanta. Most use the money to fix up aging apartments, pay overhead or help residents find jobs.

Marietta’s housing authority supplements 18 salaries with National Housing Compliance funds, but that spending makes up only about a quarter of its income from the nonprofit, and only two of its employees earn more than the federal cap, according to 2016 figures.

“NHC is a good blessing for (authorities) trying to provide more services to their clientele,” said Pete Waldrep, executive director of the Marietta Housing Authority.

Athens’ housing authority pools funds from the nonprofit and other efforts to boost salaries for six of its executives. Augusta and Brunswick supplement only their executive director’s salary, while Columbus, Decatur, Hinesville and Americus do not use the funds for salaries at all, according to the authorities.

“Our NHC revenues go into our locally-owned program and not to any specific staff person,” John Anderson, chief executive of the Housing Authority of Americus, wrote in an email. “Our locally-owned program is used to expand affordable housing in our community and to renovate existing housing that we have in that program.”

James Kinkead, certified public accountant for the Hinesville Housing Authority, said that agency uses its National Housing Compliance money “to further programs that assist low and very-low income families and individuals where federal funds are not sufficient or are not available.”

“None of the NHC funds are paid directly to a specific individual or supplement anyone’s salary or benefits,” he wrote in an email.

AHA’s Buell said some of her staff’s salaries have to be competitive with the private sector because there are significant differences between Atlanta and smaller housing authorities. She said the agency plans to do a salary assessment to compare its pay to similar organizations.

“There is in terms of breadth, size and households served, a difference between us and a smaller public housing authority,” she said. “In certain areas, it is appropriate to have higher salaries, if we’re going to recruit the talent that we want to recruit.”

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