Feds are watching
HUD steps in to review Housing Authority contracts
by Carlo Davis
Reporter staff writer
Jul 20, 2014 | 2539 views | 2 2 comments | 4 4 recommendations | email to a friend | print
ADVICE OF COUNSEL -- Hoboken Housing Authority Executive Director Carmelo Garcia (right) listens as general counsel Charles Daglian gives an opinion at the July 10 HHA board meeting
ADVICE OF COUNSEL -- Hoboken Housing Authority Executive Director Carmelo Garcia (right) listens as general counsel Charles Daglian gives an opinion at the July 10 HHA board meeting
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As the Hoboken Housing Authority board attempts to mount a legal investigation into $3.5 million in no-bid contracts that were awarded by the agency since 2010 – including a few that went to contractors donating to the Assembly campaign of agency director Carmelo Garcia – they may be getting some help.

Last week, the federal Department of Housing and Urban Development (HUD), which oversees the HHA and its low-income housing, said it would conduct a full review of the agency’s procurement of contracts since 2010. According to HUD Public Affairs Officer Adam Glantz, the review will begin on the week of July 28.

The HHA board, made up of seven unpaid appointees, is currently controlled by allies of Mayor Dawn Zimmer. These members and the Zimmer administration have been at odds for some time with the agency’s paid director, Carmelo Garcia, who is also an Assemblyman. The HHA is the independent Hoboken agency that manages the city’s low-income public housing under the oversight of HUD.

Glantz said the review would “ensure that HUD program funds have been expended appropriately.” He noted that HHA is a classified as High Risk and as a Sub-Standard Physical Troubled Housing Authority.

HHA Board Chairwoman Dana Wefer said Sonia Burgos, the director of the HUD’s New Jersey public housing office, mentioned to her that a full procurement review was something HUD’s lawyers could do. Wefer said she told Burgos conducting such an investigation “would be great.”
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“We always welcome a review from the field office.” – Carmelo Garcia
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Garcia said HUD routinely reviews the allocation of funds as a section of the Housing Authority’s physical action plan. But he acknowledged that the new investigation covers more years than would be typical.

Garcia said his administration “always welcomes a review from the [HUD] field office because they are a partner” in maintaining and improving the Authority.

But if past attempts by HUD to weigh in on the controversy embroiling the Housing Authority are any guide, the prospect of a federal investigation will not be enough to resolve the ongoing conflict at the agency.

No end in sight

In late May, the housing board passed a resolution hiring Joseph Manfredi and Associates, a Hoboken law firm, as a special counsel charged with conducting an investigation of the HHA’s procurement practices. In an ironic turn, the procurement of Manfredi’s contract was challenged by Garcia for violating the agency’s procurement rules because the agency didn’t seek competitive bids.

On May 29, Charles Daglian, the Housing Authority’s general counsel, prepared a legal opinion that restated this argument.

But Daglian himself is a point of strain between Garcia and the Zimmer allies on the HHA board. Daglian is not currently under contract, and Wefer said the housing board has voted multiple times against his continued service to the board.

Garcia asked HUD to opine on the Manfredi contract, and on July 2, Director Burgos wrote a letter to Wefer stating that the HHA had not provided the necessary documentation to justify retaining Manfredi’s services through a non-competitive process. As a result, she said the contract with Manfredi was "not justified."

New lawyer sought

Under his contract with the Hoboken Housing Authority, Garcia retains the sole power to appoint professional services like lawyers for the agency. Thus, if the board had sought competitive bids for a special counsel to investigate Garcia’s business practices, Garcia would be responsible for ranking them and recommending a selection to the board. In Wefer’s eyes, this creates a clear conflict of interest that justified the board’s appointment of a special counsel outside the normal process.

However, following the rebuke from HUD, the housing board voted on July 10 to seek out competitive bids for a special counsel to investigate the agency’s “procurement and compliance practices.” Wefer said the contract with Manfredi has been annulled, and that Manfredi never actually billed HHA for services. His firm’s contract had been set at an amount not to exceed $30,000.

Manfredi did not respond to a request for comment as of press time.

Despite the looming prospect of a federal audit of HHA’s procurement practices, Wefer says it is important to move forward with her plans to procure a new special counsel. She says there is a range of issues not under HUD’s purview that still need to be addressed.

“I realized that the HUD investigation is only going to cover federal laws and regulations and a lot of the violations (though not all) occurred under the state bidding statutes,” wrote Wefer in an email.

She said HUD will not examine the potential ethical issues surrounding campaign contributions to Garcia’s state Assembly election fund, nor will it look into the bureaucratic issues surrounding the housing board’s failure to update its bank signatories in a timely manner, which resulted in employees not getting their checks on time (covered in the Reporter last week). At a special meeting on July 2, Wefer presented a resolution to expand Manfredi’s contract to include the banking issue but tabled it after receiving the letter from Burgos.

Wefer also wants a special counsel to advise her on the appropriate steps to take if the HUD review finds HHA in violation of federal law. Typically, the housing board would call on Daglian, its general counsel, or Joseph Wenzel, its special counsel, for that type of legal opinion, but Wefer said she could not rely on the advice of uncontracted lawyers.

New hiring process

Given her concerns about Garcia’s appointing authority, why was Wefer so willing to seek open bids for a new special counsel two weeks ago? Because, at the same meeting it sought bids for a new special counsel, the HHA board created a new committee that will review and rank all bids for professional services with the agency, including lawyers.

That committee will consist of Garcia and two board commissioners selected by Wefer. It has yet to be formed, but appears guaranteed to foment additional debate within the Authority.

Wefer said she asked Garcia to prepare a request for proposals (RFP) for the new lawyer after the July 10 meeting, but has not yet received any specifications from his office.

Another lawsuit?

Garcia said he would consider any attempt by the committee to usurp his sole authority to rank bids for professional services a breach of his contract, and he may work with his personal lawyer to protect his rights. This could include a lawsuit against the board.

Last summer, Garcia filed a suit against Zimmer and her housing allies for allegedly harassing him in his job, as a campaign of “ethnic cleansing” in Hoboken. The suit was dismissed, but Garcia was allowed to resubmit it in January with different language.

Meanwhile, even the manner in which the resolution to create the RFP Review Committee was introduced is in dispute. The title of the resolution was not included on the agenda of the meeting published two days in advance, but instead was read into the record during the July 10 proceedings.

Wefer said she presented the RFP committee resolution at the meeting because she had only written it that day. Garcia said there was no way such a detailed legal document could have been written in one day.

According to Garcia and Daglian, the lack of prior notice for the resolution constitutes a violation of the Open Public Meetings Act. Any member of the public can file for an injunction that would invalidate the resolution if a violation is proved.

Comments
(2)
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recallbethmason
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July 21, 2014
I am amazed about the number of stories being written about Carmelo Garcia...clearly his actions speak volumes, the only question is why is he still employed by the HHA?
assilem
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July 28, 2014
An Hoboken administration orchestrated witch hunt.