The Taylor Housing Authority Crimes - Chapter Two - It's all about money.
The Taylor Housing Authority crimes!
Chapter 2: It’s all about money!
By Tom Mowdy
“The Taylor City Attorney, two Mayors, and the District Attorney, all lawyers involved in politics, have refused to demand a criminal investigation of major crimes, involving $ millions, committed against a public corporation created by Taylor citizens. They know they will find corruption.”
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(Link to Chapter 1 – Foxes guarding the henhouse?)
Taylor, Texas March 19, 2019 -- The Taylor Housing Authority (THA) was created by the Taylor City Council to protect the community. City council approval is the only way a municipal housing authority can be created in Texas.
THA was created to protect the community as explained in Texas Local Government Code (TLGC) Section 392.003 legislative findings:
Extract of Texas Local Government Code 392:
Sec. 392.003. LEGISLATIVE FINDINGS. The legislature finds that:
(1) there is a shortage of safe or sanitary housing at rents that persons of low income can afford that forces persons of low income to live in unsanitary or unsafe housing and in overcrowded and congested housing;
(2) these housing conditions are responsible for an increase in and spread of disease and crime, are a menace to the health, safety, morals, and welfare of the residents of the state, impair economic values, and necessitate excessive and disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection, and other public services and facilities;
Once created, by a city council, a housing authority is a unit of city government that works with the U.S. Department of Housing and Urban Development (HUD) to coordinate housing support programs. Those programs include HUD money to subsidize rent and public housing.
So, who gets help from the Taylor Housing Authority?
More than half are elderly and disabled citizens. They simply don’t have the ability, or potential, to generate sufficient living income. Many have health problems, poor education, chronic low wages, and other unfortunate circumstance backgrounds. Circumstances that reduced or destroyed their ability to now afford safe and sanitary homes. They all meet low income standards. They are normally on social security and/or other social support programs. They are always afraid of losing their place to live.
They are vulnerable and cannot afford to speak up about housing problems. If they do, they may invite retribution from those who administer the housing program. That retribution can come in the form of administrative problems, financial complications, substandard maintenance, and possibly eviction.
But, that is not all they face. In Taylor, that growing population will not receive the affordable housing support that was intended. There is clear evidence that public money has been brazenly and illegally diverted from the housing program. That missing money leaves the mostly elderly and disabled community and families and children with a greater potential for the unsafe and unsanitary conditions the Texas law and HUD housing programs were created to prevent.
How much money and how has it been diverted? The amount is in the multi-millions of $, and continues to grow. There are public tax filings, IRS Form 990s, that give enough detail to determine the amounts are large. But, the exact calculation of how much is missing would take subpoenas and a thorough audit.
How was that money diverted?
The OIG audit determined it was done through the illegal title transfer of Mallard Run’s 40 unit apartment complex and the brazen takeover of the Taylor Sunset Apartments Development operation. These things were done under the nose of the THA board of Commissioners and Mayor, perhaps with their knowledge and cooperation.
The contracted Executive Director illegally transferred Mallard Run’s 40 unit property to a non-profit he created. Then he just took over the Taylor Sunset Apartments with another non-profit. Those two non-profits began collecting the rents as the THA Commissioners and Taylor Mayors stood by, for years. It took a tipster to expose the crimes.
Williamson County records show the 40 rental unit Mallard Run Housing Development, parcel R015921, totaling 2.53 acres, was transferred from the Taylor Housing Authority on April 2, 2001, to Mallard Run Housing Development, a non-profit entity. The transfer was made by the THA Executive Director, at that time, and there is no THA Commissioners Board record approving that property transfer. The property’s 2018 appraised value is $1,755,071. The property is exempt from taxes.
Williamson County records show the 64 rental unit Taylor Sunset Apartments, parcel R313317, 6.68 acres, was purchased by the Taylor Housing Authority on August 11, 1988. The current owner of record is shown as the same Taylor Housing Authority. The property’s 2018 appraised value is $2,008,916. The property is exempt from taxes. Although County records show the property belongs to the Taylor Housing Authority, the rent payments are collected by the Taylor Sunset Housing Development non-profit as shown by Form 990s filed with the IRS and presented in this chapter.
The financial effect has been a large amount of money illegally extracted from the cash flow of the publicly owned housing properties. The evidence, of that financial assault, is in the HUD OIG report and Internal Revenue Service (IRS) Form 990s filed by the two non-profits now controlling the 104 apartments. The complete Form 990 information for 2011 through 2016 can be accessed through the "Exhibit 1" hyper links. Some 2010 information is available on the 2011 Form 990.
The Cash Flow analyses:
The “Exhibit 1” cash flow analyses shows $1,405,566.00 is missing for a six year accounting period.
The methodology for the calculation was to determine how much money was on hand at the beginning, how much was collected, how much spent, and how much was there at the end. When all those accounting's are made, as shown in “Exhibit 1,” a total of $1,405,566.00 is missing.
The data is available for anyone to examine. Clicking on the yearly income and expense $ numbers in “Exhibit 1,” will take the reader to the actual Form 990 filed with the IRS.
But it is not just the missing cash flow. The salary, pension plans, and legal expenses suddenly became very expensive, in the $ millions, as shown in “Exhibit 2.”
Exhibit 2, is a salaries and personnel expense analyses. The analyses compared the Mallard Run and Taylor Sunset Apartment expenses with the nationwide average expenses for a subsidized apartment complex operation for FY 2011 through 2016. Note the massive increases in salaries and benefits. Those high costs are far above normal for operating 104 apartments.
Another interesting observation is the massive increases in compensation, officers, other salaries and wages while the payroll taxes remain relatively constant.
The nationwide data used for comparison was the 2013 National Apartment Association (NAA) database, “Exhibit 3” 2013 NAA Operating Income & Expense Data. 2013 is the mid-range of the source Form 990s time period. That data was collected from hundreds of subsidized apartment complexes throughout the nation and provide a “normal” for analysis.
The Form 990s analyses show:
1. The 2011 Form 990s, Oct 1, 2011 – Sep 30 2012; (Note: Clicking on the yearly income and expense $ numbers in “Exhibit 1,” will take the reader to the actual Form 990 filed with the IRS.) These 990s, for FY 2011, were filed before the Taylor City Attorney was notified about the missing money, (see chapter 1). The personnel salary and benefit cost to manage 104 apartments totaled $74,880.00. $28,800 to manage the 40 unit Mallard Run and $46,080 to manage the larger, 64 unit, Taylor Sunset Apts. The management costs are consistent with the NAA baseline, around 10% of revenue. There were no pension plan or benefits expenses. (See Exhibit 2: Salaries and Personnell Costs)
2. The 2012 Form 990s, Oct 1, 2012 – Sep 30 2013; These 990s were filed after the City Attorney was notified money was missing, March 12, 2013. Compared to the prior year and the NAA data, salaries and pension benefits exploded. The cost to manage the 104 units rocketed from $74,880.00 to $452,362.00. That was a $377,482.00 cost increase! More than a 500% increase in management cost over the prior year, massively exceeding the NAA average. In this report, FY-2012, it suddenly cost more to manage the 40 unit complex than an older 64 unit complex. The expenses included $75,398.00 for pension plans and benefits, but, there is no such key employee(s) listed in Part VII of the Form 990. The “Other salaries and wages” expense category exploded. Part VII of the Form 990 requires, but does not contain the identities of the recipients. (See Exhibit 2: Salaries and Personnell Costs)
3. The 2013 Form 990s, Oct 1, 2013 – Sep 30 2014; The salaries and personnel expense went from less than 10% of revenue to more than 70% of revenue in two years. Pension plan benefits increased to $127,195.00. Officer compensation blasted to $202,793.00 while other salaries exploded to $415,224.00. There is no listing of the five highest paid persons and the amount they received, as required by IRS Form 990. (See Exhibit 2: Salaries and Personnell Costs)
4. The 2014 Form 990s, Oct 1, 2014 – Sep 30, 2015; Compensation for Officers continues at an unreasonable high level and the officer, key employees, and vendor identities are not reported as required by the IRS Form 990. Pension plan contributions jumped to $90,032 for unidentified employee(s). The management cost is far above the NAA standard. (See Exhibit 2: Salaries and Personnell Costs)
5. The 2015 Form 990s, Oct 1, 2015 – Sep 30, 2016; Management cost are sustained at an unreasonable level, indicating corruption. Pension plan benefits total $96,245.00. Salary and benefit recipients are not all listed as required by the Form 990. (See Exhibit 2: Salaries and Personnell Costs)
6. The 2016 Form 990s, Oct 1, 2016 – Sep 30, 2017; Management costs continue at the corruption level. Pension plan benefits total $95,062. Salary and benefit recipients are not listed as required by the Form 990. (See Exhibit 2: Salaries and Personnell Costs)
The 990s analyses showed an obvious rush to extract money from the Mallard Run and Taylor Sunset non-profits after the City Attorney was notified of the crimes. The blatant money extraction suggests there was no fear of being held criminally accountable. That now appears to be correct. How could it be so brazen and the criminal be so sure of no more than a civil suit?
The Executive Director of the Mallard Run and Taylor Sunset properties was sent a certified letter dated January 25, 2019, which asked for an explanation of the Form 990 expenses and the missing $1,404,566. The Executive Director has not responded to date.
The legal expenses:
Next is the legal expenses extracted from the Form 990s in the chart below.
|
Mallard Run and Taylor Sunset Legal Expenses FY 2011-2016 |
|||
|
YEAR |
Mallard |
Sunset |
Total |
|
2011 |
$ - |
$ 360.00 |
$ 360.00 |
|
2012 |
$ 25.00 |
$ - |
$ 25.00 |
|
2013 |
$ 19,446.00 |
$ 235.00 |
$ 19,681.00 |
|
2014 |
$ 17,682.00 |
$ 21,618.00 |
$ 39,300.00 |
|
2015 |
$ 50,970.00 |
$ 121,671.00 |
$ 172,641.00 |
|
2016 |
$ 9,522.00 |
$ 16,860.00 |
$ 26,382.00 |
|
Total |
$ 97,645.00 |
$ 160,744.00 |
$ 258,389.00 |
In addition to the $258,389.00, in the chart above, THA paid the City Attorney and another attorney a total of $202,867.62.
All together it appears to be a grand total of $461,256.62 paid to lawyers from taxpayer money to resolve felonies, against a public corporation, that were not reported by any official to any law enforcement entity. As of this writing, there has been no conclusive results, or reported results, for those expenses. It is a lawyer’s civil suit dream, a dream that continues.
The legal expenses would have not have occurred if the felony crimes were reported as crimes and our law enforcement system worked the same for everyone in Williamson County. The Taylor City Attorney, two Mayors, and a District Attorney, all lawyers involved in politics, have refused to demand a criminal investigation of major crimes, involving $ millions, committed against a public corporation created by Taylor citizens. They know they will find felony corruption.
The “civil suit” lawyers have been paid well, The judge has been “cooperative.” They all know taxpayers are paying those legal bills? When the HUD OIG investigation began having impact, the legal bills at Mallard Run and Taylor Sunset housing developments went up as fast as the salary and pension increases. The non-profits are paying the former THA Executive Director’s legal expenses in the civil suit. That money comes from the stolen properties.
The District Attorney must know where the money is coming from and where it is going. He must know the money is not going where it was intended. Why let the losses and harm continue? Each time rent is collected illegally, that is a new theft.
Now we get to a real puzzling part. The defendant’s civil suit legal bills are obviously being paid by the revenue generated from the illegal property transfers discovered by the HUD OIG. But, the Taylor Sunset Housing property is still in the name of THA. The county records show the Taylor Housing Authority is the current owner. But, THA is not collecting the rent.
So, lawyers who should have reported a crime, now have a public entity suing itself and the government paying all their lawyer fees. The District Attorney and 425th District Court merrily pretend it is nothing but a civil case, apparently so everybody can make a lot of money at the taxpayer’s and vulnerable citizen’s expense. That is a racket.
All those fees, paid by the Mallard Run and Taylor Sunset property income and THA, were intended to provide safe and clean homes for the most vulnerable in our community.
Why hasn’t the City released any information to the public on these losses to a unit of Taylor municipal government? Why hasn’t the City Council demanded a legal opinion from the City Attorney? Is the City Council afraid to bring the question of THA’s organizational status to a legal opinion by the City Attorney? Is the City Attorney afraid?
Why hasn’t the City Attorney presented the Texas Attorney General opinions and the Texas courts’ opinions to the City Council? He should have done the research, shown in Chapter 1, when he was notified of the crimes. Or, maybe he did, and keeps quiet? His contract is for “accurate and timely legal advice.” By quietly implying THA is not part of Taylor, it makes the corruption unimportant and diminishes those who now and will need clean and decent homes.
Why are assets illegally taken from THA paying those civil lawsuit legal fees. Those are non-profit corporations, funded at more than 90% by HUD money, which should not be liable for the criminal or civil behavior of the former THA Executive Director.
The members of the Mallard Run and Taylor Sunset non-profit boards obviously voted to put the former THA Executive Director’s questionable behavior above the law and needs of vulnerable Taylor Citizens. Yet, that person is no longer listed as the Executive Director of the Mallard Run and Taylor Sunset non-profits. The non-profit boards approved paying his legal bills with public assets. What are they protecting?
The Mallard Run and Taylor Sunset non-profit boards could have demanded a full investigation to determine if their Executive Director had been involved in the improper transfer of property. What non-profit board would want such a Director without knowing the truth? The same individuals are on each of those boards. Their actions appear to support illegal behavior and money diverted from a vital community program. Their behavior creates more suspicion.
What the Mallard Run and Taylor Sunset IRS Form 990s analyses show is the financial rape, the results of felony crimes, of a public entity under the supervision of the Taylor City Mayor, with the knowledge and support of the Taylor City attorney and the Williamson County District Attorney.
The THA crimes were documented and briefed in 2014. The crime information has been available to our sworn public officials for years and they have done all of nothing, while the losses continue. There should be accountability, but there is only denial and avoidance.
The next chapter will examine the apathy about corruption. Does it matter when elected officials, including the District Attorney, ignore crimes committed by public officials? What should those leaders and citizens who are not corrupt do? I look to readers for answers and invite their posts on my FB Page.
LINK TO CHAPTER 1 – Foxes guarding the hen house?
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"Corruption in our courts and government will not be stopped by those at the top, they benefit too much. It can only be stopped from the bottom, by each voter becoming informed and holding city and county elected officials responsible.
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Coming soon.....Chapter 3: Apathy?
By Tom Mowdy