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Government watchdog group to investigate MaineHousing expenses

By Terrilyn Simpson

www.TheMaineWire.com

OPEGA has initiated a rapid response review of Maine State Housing Authority vendor expenditures following the release of a list of questionable expenses revealed in a MaineWire story. The vendor list was obtained through a Freedom of Access request submitted by the Maine Heritage Policy Center to MaineHousing.

The list of vendors includes: Caesars Palace. The luxury boutique hotel George. Posh hotel accommodations throughout the country. BYOB dance clubs. Funtown/Splashtown USA. Portland Pirates hockey team. The Great Falls Balloon Festival. Sunday River Ski Resort. A magician. A masseuse. High-priced motivational speakers and corporate training companies. Pricey bed and breakfasts. Donations to political groups. Donations to theaters and social justice groups and arts and theater organizations. It goes on and on.

The Office of Program Evaluation & Government Accountability (OPEGA) was slated to review Maine State Housing in the spring. But an increasing number of questions about how MSHA funds are being spent and controversy over a lack of accountability by the MSHA director have propelled legislators to act. The Government Oversight Committee directed OPEGA to immediately scrutinize some of MSHA expenses. A larger scale investigation by OPEGA is still slated for later in the year.

OPEGA Executive Director Beth Ashcroft categorized this initial examination as “very focused on MSHA expenditures,” such as payments, sponsorships, donations, travel money, meals. OPEGA will be looking at vendor names and dollar amounts and noting “anything that sticks out, or that’s not clearly related to the mission of MSHA.”

The first phase, likely to take three to four weeks, will be getting the data. What happens next “kind of depends on what we want to look at for supporting documentation,” said Ashcroft.

Established in 2003 and beginning operation in 2005, the legislative OPEGA is authorized to audit non-state entities receiving state funds or entities established to perform government functions.

Though the vendor list retrieved by Maine Heritage Policy Center has raised the lid of Pandora’s box, MHPC has thus far received only a portion of the mandated response to the Freedom of Access Act request filed approximately seven months ago. The vendor list released to date contains names of vendors, but MSHA has not yet revealed dates and amounts of payments to vendors.

Even with the omissions, the vendor list was impressive enough to provoke irate demands for explanations from both members of the public and from newly appointed MSHA commissioners—and from legislators. MSHA Director Dale McCormick has been short on concrete explanations.

Following the release of the vendor list came the discovery that MaineHousing, in the middle of a state wage and benefit freeze, handed out between $144,000 and $147,000 in non-performance-based bonuses—$1,000 to each employee—solely contingent on the recipient having been employed at the housing agency on the last day of 2009.

These revelations followed the discovery by newly appointed commissioners that MSHA had not been considering unit costs when awarding contracts for the construction of low-income housing units and the revelation that units as miniscule as 1,100 square feet were tagged with building costs as high as $314,000 per unit. Points were being awarded to contractors for disallowing smoking but not for keeping construction costs down.

Then there was the debacle of shoddy and unsafe conditions at Section 8 low-income housing units in Norway, Maine, over which MSHA had ultimate authority. MSHA targeted a single “rogue” inspector with the blame and pulled all Section 8 housing contracts statewide without review or discussion. The Norway situation has precipitated a request from U.S. Senator Susan Collins for a HUD investigation of MaineHousing.

In addition to the HUD investigation and the OPEGA review, a group of 34 Republican state legislators have asked the Maine Attorney General to scrutinize MaineHousing activities, based on the revelations of questionable vendor expenditures and donations to political groups.

The letter to the Attorney General was delivered on the same day as former Turnpike Authority Director Paul Violette pled guilty to felony theft charges for mismanaging funds at the Maine Turnpike Authority.

The OPEGA analysis of MSHA begins in the same week that a legislative bill proposing MSHA director accountability directly to MSHA commissioners is debated in committee by legislators and members of the public.

In addition to blaming the “rogue” inspector, MSHA Director Dale McCormick has gone on the attack, accusing critics of being politically motivated. She’s volunteered for radio talk shows and claimed that “MSHA is already audited up the wazoo.”

But Representative Rich Cebra (R-Naples), who was instrumental in calling for the disassembly of the financial morass at the Maine Turnpike Authority, points out that McCormick’s frequent references to audits are misleading: no one is suggesting that the checks have not been written and cashed by the designated recipients. The type of audit McCormick is talking about is simply a determination that the checkbooks balance, showing that the money has been spent.

What is called for, Cebra suggests, is a type of forensic audit, a hard-hitting financial analysis to determine, for starters, the appropriateness of expenditures. It would determine, for instance, whether stays at pricey hotels and trips to water fun parks and payments to masseuses and donations to political activists and theater and art groups were in keeping with the intended designation of the accounts from which the payments were made.

Senator Margaret Craven (D-Lewiston), a member of the Government Oversight Committee, is critical of MSHA scrutiny, referring to it as a “witch hunt.” She’s gone on the record in support of the high construction costs of low-income housing allowed by MSHA, calling it necessary. Regarding the release of the vendor list obtained by the Maine Heritage Policy Center, Craven said “the slant is deceiving.” She referred to the coverage of the vendor list as “trials in the press.”

Said Craven: “I do not support something that is so political, and the Maine Heritage Policy Center pretty much runs the governor’s office with its ideas, and between the governor and the treasurer, I don’t trust when it’s only one side of the story that’s being told, especially by an organization such as the Maine Heritage Policy Center that often really don’t investigate the true facts. And that’s sad.”

Craven said she was “glad OPEGA was taking up the ball so we can hear both sides.”

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2 Responses to “Government watchdog group to investigate MaineHousing expenses”

  • Karen Miller:

    Witch-hunt?? At this particular time in our history, any agency receiving government funds should be prepared for public scrutiny! I am a teacher who has been able to witness firsthand the front line effects of this current economic climate. Kids are hungry and are losing their homes to foreclosure! If this agency had a surplus large enough to award $1000 bonuses in 2009, the money should have been allocated to support the people for whom this agency was established! Even if their wages have been frozen at the same level for 4-5 years, (which it appears that they have been) those wages are in fact support by government dollars and the government does not have a lot of extra money to throw around. Sorry, this is not a political issue. Any elected official should be supporting efforts in holding agencies that receive government dollars accountable.

  • Nancy Vose:

    Thank goodness light is finally being placed on these long term, fraudulent activities. Kudos to rich Cebra and others who are helping to re-structure how Maine spends it money.

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