Blowup Between Mayor and Housing Director Triggers Fraud Investigation over Harvey Funds

Yesterday, City of Houston Mayor Sylvester Turner and Houston Housing and Community Development Director Tom McCasland got into a verbal brawl over alleged improprieties in the distribution of Harvey relief funds.

The trigger was the award of $15 million to build a Clear Lake multi-family housing complex in which the Mayor’s former law partner, Barry Barnes, is a co-developer.

The Mayor overrode the recommendations of McCasland and his staff who pointed out that $16.2 million could have created four times the number of affordable units in poorer neighborhoods. Those projects all scored higher in the competition for this funding.

General Land Office Response

Brittany Eck, a spokesperson for the Texas General Land Office (GLO), issued a statement within hours. She said, “The GLO is looking into the serious allegations of fraud or corruption regarding projects by the City of Houston’s Harvey Multifamily Program. The GLO is responsible for ensuring all money allocated through the Community Development Block Grants for Disaster Recovery (CDBG-DR) are spent appropriately. These projects and funds are intended to be utilized to aid the greatest number of low-income Texans as possible.”

Eck continued: “As such, we will re-review all requests for funding draws allocated to the City of Houston by the U.S. Department of Housing and Urban Development (HUD). The GLO will coordinate with HUD and other investigative entities to determine what actions should follow regarding these allegations. Fraud has no place in helping Texans recover from disaster.”

She concluded, “Anyone with information relating to potential fraud, waste, and/or abuse is encouraged to report it by calling 1-844-893-8937 or emailing cdr@recovery.texas.gov.”

Mayor’s Response

According to multiple news reports and a press release from the Mayor’s Office, Turner denied specific knowledge of the deal with his former law partner. He claimed there was no impropriety, that McCasland had raised no objections to the deal, and that he (Turner) had the right as Mayor to override McCasland’s objections.

The Mayor also asserted he was trying “to place affordable housing projects throughout the City…”

McCasland’s Point of View

McCasland insisted this was not the first time the Mayor’s office interfered. The Houston Chronicle, which broke the story yesterday, said “McCasland acknowledged the Mayor has the authority to overturn staff recommendations, but McCasland argued in this case it represented a subversion of a competitive process to benefit one applicant.

McCasland said he was not alleging fraud, but said the pattern of behavior was emblematic of a broader problem in Turner’s administration, a “do-it-because-I-said-so” management style. McCasland did say that drives out public servants dedicated to integrity and breeds a “culture for corruption.”

Further, the Chronicle article quoted McCasland as saying he briefed the Mayor August 17 and again on August 24.

McCasland said the Clear Lake complex (Huntington at Bay Area) ranked 8th out of 12 proposals, and had the lowest percentage (60%) of its units reserved for low income tenants.

Here’s a 77-page document that catalogs correspondence between McCasland and MST (Mayor Sylvester Turner) regarding the controversial project.

Note McCasland’s comments on page 4. He claims “The outcome of that process was predetermined before the funding opportunity was even issued.”

If you don’t read anything else, skip to the last page. It’s an email from McCasland to the Mayor dated September 17. In it, he summarizes all his objections to the Clear Lake deal. That would seem to contradict the Mayor’s claim that McCasland did not register his objections.

Mayor Fires McCasland by End of Day Tuesday

McCasland said to City Council, “I am being forced to participate in a charade that this was a competitive process, when I know it was not a competitive process. That’s the problem here and I’m being forced to ask my teammates to participate in that charade and that is not something that we can do and that is not something that we will do.”

According to those who watched the gripping testimony in City Council, it was like watching someone commit career suicide. By the end of the day, the Mayor issued a terse press release saying he had lost confidence in McCasland and it was time to move on.

Why All of a Sudden?

The big question is this: Why now? McCasland has been under fire for years:

• Repeatedly missing GLO/HUD deadlines and goals
• Failing to distribute funds
• Filing incomplete applications with the GLO and formatting applications inconsistently
• Barring GLO helpers from his offices
• Complicating the rollout of programs with a multi-stage application process against the advice of HUD and the GLO
• Notifying applicants at 4 PM on New Year’s Eve that they had to submit their applications by the close of business, and more.

Coming forward when he did – as he did – almost felt like a Law & Order episode in which the DA flipped the witness. Some observers felt McCasland was being unusually frank for someone who bore at least part of the blame.

If there was a pattern of ethics violations, why wait years into the process before objecting to them?

Mayor Likely Overstepped Authority

Both McCasland and the Mayor said the Mayor had the right to overturn staff decisions. But Eck pointed out the Mayor did not have the power to “rewrite” the Notice of Funding Availability (NOFA) to favor one applicant.

She said that had the City written the NOFA to favor affluent neighborhoods, and had HUD and the GLO approved it that way, there would be no problem at this point. However, the City did not do that. The City also went against the scoring system laid out in the NOFA. It led applicants to believe low-income neighborhoods would be favored. But then the City awarded the project to a former partner of the Mayor in a high-income area…ignoring the approved scoring system.

In that regard, the Mayor evidently overstepped his authority.

This was not the first time the presence of the Mayor’s former law partner in a deal has raised questions. The Houston Chronicle reported in 2018 that several city council members raised questions about his role as a subcontractor for a firm hired to find Harvey victims.

What Next?

The GLO has been in touch with HUD, the Texas Department of Housing and Community Affairs, Gov. Greg Abbott’s office and the Department of Public Safety, according to a Eck.

According to KTRK’s Ted Oberg, DPS would only be involved to investigate criminal matters.

Oberg also reported today that Chris Brown, the city’s controller, said, “This week’s revelations underscore an ongoing pattern concerning procurement processes and a continued lack of transparency at City Hall.”

Brown, who has audited City projects in the past, continued, “In the past several months alone, our office has been denied procurement documents required to conduct an audit of the Strategic Procurement Department and were told to stop all work on a financial transparency project that would bring much-needed insight into the city’s spending practices. Taxpayers deserve a city government that is transparent and above reproach. Unfortunately, recent events suggest that the city is falling short of that goal.”

Posted by Bob Rehak on 9/22/2021

1485 Days since Hurricane Harvey

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.

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