Wrangling over Housing Authority banking blunder
Both sides say employee paycheck issue symptomatic of larger problem
by Carlo Davis
Reporter staff writer
Jul 13, 2014 | 2318 views | 4 4 comments | 1 1 recommendations | email to a friend | print
SIGNATURE SPEAKER – Hoboken Housing Authority Executive Director Carmelo Garcia defends his handling of the banking crisis at a July 2 board meeting.
SIGNATURE SPEAKER – Hoboken Housing Authority Executive Director Carmelo Garcia defends his handling of the banking crisis at a July 2 board meeting.
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It was supposed to be a simplest of administrative changes—every time a new chair is elected to lead the Hoboken Housing Authority’s Board of Commissioners, he or she must be officially authorized to sign the agency’s checks. Somehow, that never happened after Dana Wefer took over as chairwoman of the board that oversees Hoboken’s public housing in May 2014, preventing the Authority from paying vendors, credit unions, or its own employees come June.

When the employees couldn’t get paid last month, various people involved with the politically heated agency pointed fingers. The local Teamsters even issued a press release.

The question of who is at fault has become the newest debate in the ongoing, increasingly bitter feud between the agency’s paid executive director, Carmelo Garcia, and new board chair Wefer, who’s allied with Mayor Dawn Zimmer’s administration.
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“You have been on this crusade to deliberately… make me look bad.” – Carmelo Garcia
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Unsurprisingly, Wefer and Garcia blame each other. One thing that’s clear is that a poor working relationship, mutual suspicion, and inadequate communication by the warring sides may have made things worse.

Board, director at odds

Garcia has been in conflict with the Zimmer administration for years. In 2013, he filed a lawsuit accusing Zimmer and her husband of pursuing “ethnic cleansing” of the HHA by trying to force Garcia out.

The HHA manages the approximately 3,100 units of low-income federally subsidized housing on the city's west side. In a city that is overwhelmingly white, the HHA’s tenants are mostly African-American or Hispanic, making racial issues a constant backdrop to debates over the Authority’s management and future.

Wefer and Vice Chair David Mello took control of the board in May and were expected to scrutinize the financial practices of Garcia. That month, the Zimmer-allied board majority hired a lawyer to investigate $3.5 million in no-bid contracts awarded by Garcia since 2010. Garcia, who won his state Assembly race last November, received campaign donations from some of the agency’s contractors, which raised eyebrows.

At a special meeting two weeks ago, Wefer proposed a motion to add Garcia’s handling of the banking crisis to the investigation. However, after receiving a legal opinion from the federal Housing and Urban Development Department, the matter was tabled.

Standard procedure

Typically, each check the HHA writes out to an employee, vendor, or other entity must be signed by the executive director and board chairperson. Because the HHA board elected Dana Wefer as the new chair in May 2014, she became one of two main signatories. Vice Chair David Mello is also permitted to sign checks under HHA by-laws.

However, PNC Bank, which manages the agency’s financial transactions, requires a corporate resolution as proof that any new signatories are legitimate and sanctioned.

Resolution tabled amid confusion

Garcia’s perspective on the check signatory saga is clear—by failing to pass a necessary resolution in June, he says, Wefer and the board were directly responsible for HHA’s inability to pay its claims. At the June 12 HHA regular board meeting, the first following the board’s reorganization, a resolution to update the bank signatories was placed on the docket by Garcia. It was tabled at Wefer’s request.

Garcia was not present during the discussion of the signatory resolution, but Emil Kotherithara, the Housing Authority’s CFO, warned Wefer that “none of our bills are going to be paid until the next month” after she proposed tabling the measure.

Wefer said in an interview this past week that at the time, she interpreted Kotherithara’s statement to mean that no checks were imminently due, giving the board leeway to table the resolution before it to a later meeting.

According to emails provided to the Hoboken Reporter, Garcia made clear to Wefer the following morning that HHA’s checks could not be signed by her without a resolution making her an official signatory. The night before, Wefer had been given a number of checks to sign by Kotherithara.

According to Wefer, some of the checks were already two weeks late when they were given to her. In her opinion, the signatory resolution should have been presented at the reorganization meeting in May, not in June.

Garcia told the Reporter he believes that the decision to table the signatory resolution was a deliberate attempt to “create a nuisance” for him.

“You have been on this crusade to deliberately and maliciously make me look bad,” Garcia said to the board at a July 2 special meeting.

He added, “you guys are trying your best and you can continue to do what you’re doing to try and crucify me. I have my rights and I know what I am going to continue to fight for.”

In an interview last week, Garcia said the Board of Commissioners should either buy out his contract or allow him to do his job.

Facsimile signatures drew concern

Wefer maintains that the signatory resolution presented by Garcia’s administration in June was improper and could not be passed. Of particular concern to her were the document’s multiple references to facsimile signatures, which are applied electronically or via stamp. In the past, the Hoboken Housing Authority has almost exclusively hand-signed its checks.

The June resolution stated that “the Authority, for its own convenience, desires to have its checks…signed with facsimile signatures.” It required that PNC Bank respect any check bearing a facsimile signature from one of the three signatories.

“I am concerned about allowing my facsimile signature being affixed…to checks without my actual having to sign a check,” Wefer said at the meeting. “I don’t want any signatures floating around,” she added later.

Kotherithara told Wefer that the resolution had come directly from PNC Bank. However, a copy of PNC’s 2014 draft resolution provided to the Reporter contains only a single clause permitting, but not requiring, the use of facsimile signatures.

In fact, the language in the 2014 resolution had been lifted almost verbatim from the HHA signatory resolution passed after board reorganization in 2013. This historical precedent was never mentioned during the discussion on June 12, and so did not affect the Board’s decision that day.

Vice Chair Mello suggested amending the resolution to remove all references to facsimiles, but Special Counsel Joseph Wenzel advised the Board that doing so would effectively strike the entire resolution.

The board subsequently voted unanimously to table the resolution and seek consultation with Director Garcia.

Garcia said Wefer’s concern over facsimiles illustrates the suspicion with which she and her allies regard him. As he wrote in a June 20 email to Wefer, “The delays are caused because you don’t trust what I, my CFO or counsel tell you.”

Addressing the problem

By Friday, June 20, the extent of the banking crisis had become clear. Vendors began contacting Garcia to complain about lack of payment, and a press release from the vice president of Teamsters Local 97 alleged that HHA employee accounts at the Hoboken Police Federal Credit Union had been frozen.

Wefer still had the checks, and asked Garcia via email to have someone come pick them up. After being informed that the checks could not be signed by her on June 13, Wefer asked Garcia to connect her with HHA’s account executive at PNC Bank so she could discuss the issue.

On the 20th, Garcia provided Wefer with a PNC contact number, but upon calling, she was told that she was not authorized to discuss the HHA account. That afternoon, Wefer asked Garcia to post a notice for an emergency meeting the following week.

On Thursday, June 26, the board met and passed a resolution authorizing Wefer and Mello as signatories. All of the language concerning facsimile signatures was removed, except with respect to certain payroll items. According to Wefer, a PNC bank representative told her that HHA’s checks should have become valid by this past Monday at the latest.

Comments
(4)
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assilem
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July 30, 2014
More Zimmer aligned incompetence. Piece of work this Wefer! Does not know or understand basic mgt principles, can't interpret English, reckless in her actions... Need I say more?
recallbethmason
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July 15, 2014
time to move on from mr. garcia...the HHA needs leadership that can get things moving forward again, clearly the vision 20/20 plan does not work
PAX07030
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July 14, 2014
No one needs go on a crusade to make Executive Director Garcia look bad. He seems to be doing that all by himself.

A new laundry list of Carmelo Garcia's questionable fiscal irregularities as ED has just been released by the HUD Board and have been posted on Hoboken Mile Square View blog site.

PAX07030
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July 14, 2014
Understandably Mr Garcia failed to mention one other option that HHA Board has and that is his dismissal.

It is my understanding that Executive Director Garcia serves at the discretion of the HHA Board and can be terminated with 120 day notice.

Then there would be no need to have taxpayers buy out his contract.