Sunday, November 24, 2019

Housing Authority - Part 9

What could have the McHenry County Housing Authority have done differently? What should it have done differently?

First of all, it should have taken the tenant's complaint seriously. The employees of the MCHA seem to have "circled the wagons" and made up their minds. Once "they" decided that pawn shop loans were "income", they were not going to back down.

Even when I quoted HUD Regulations to them and pointed out that the Tenant was not engaged in a business of "pawn shop loans" and certainly was not an employee of the pawn shop, they should have asked themselves the question, "Could the Tenant be right?"

When I suggested to the Executive Director to get an opinion from a CPA, that fell on deaf ears. What would a CPA have said? "Are you kidding me?" I guess they wanted to avoid that embarrassment.

But they should have re-read the HUD Regulations, especially the part about "net income", not gross income. Even if they didn't know what the difference was, it should have caused them to inquire about it. And they should have made an effort to understand what short-term collateralized loans really are.

The Housing Authority must have, or know, a CPA.

The problem was compounded by the unwillingness of the Chairman of the Board of Commissioners to recognize the error in gross income vs. net income. And, as a banker of 35 years' experience, he should have known in a heart beat that short-term collateralized loans are not income.

Further, the Executive Director was wrong when she said that many of the pawn shop loans had not been redeemed. As a matter of fact, all of them were redeemed. But, even if none had been redeemed, that would not have caused loan proceeds to become income.

The Housing Specialist and the Housing Supervisor should be required to attend trainings by HUD in how to understand and apply Regulations.

How many other Tenants of the MCHA have been harmed by staff mistakes?

Many Section 8 tenants do not have the resources to challenge errors successfully. Some of them might assume that the staff should know the rules and regulations and they would apply them correctly. Now we know that they don't know some of the Regulations and they don't apply them correctly.

And, worse, they dug in their heels when challenged.

If you know any clients of the MCHA who has been treated unfairly, let me know. As I have said many times, "I am not a lawyer, but ..." 

Write to gus@woodstockadvocate.com

Saturday, November 23, 2019

Housing Authority - Part 8

An appeal beyond the Executive Director should never have been necessary. But her statement that they "always use Gross Income" told me that she did not understand the difference between earned income (wages) and business income (which has gross income, expenses and net income).

On October 25 I mailed a letter to the Chicago Regional Office of HUD, explaining the complaint and enclosing copies of the Housing Specialist's determination of the reduction in assistance and the Hearing Officer's Decision, which completely - and incorrectly - upheld the position of the MCHA.

I estimated that my letter would be delivered on Monday, and so I waited until Tuesday to call.

I was fortunate to be connected with an official at the regional office. A few minutes after our conversation, his administrative assistant told me that my letter had been received, and I asked if she would take it right in to the official.

The help from that official was outstanding. He undertook investigation of the complaint personally and immediately. Two days later he called the MCHA Executive Director and explained that pawn shop loans were NOT income. That was Thursday, October 31.

Let's be clear. He did not over-ride HUD Regulations. He explained the HUD Regulations.

And still the MCHA malingered in correcting the problem. They only needed to do at least two things.

  1. Adjust the monthly assistance to the correct amount for November; and
  2. Issue a check for the amount that had been improperly withheld from the September and October rent assistance.

MCHA is a small agency. I'm sure the employee group is a close-knit group. I'm sure they all want to get along well.

And, when they screw up, they should fix the problem quickly. The Executive Director could have ordered the correction and the preparation of the adjustment check that Thursday. Instead, they claimed they had to wait for the letter from the Regional HUD Office. And wait they did.

But the tenant finally was able to pick up the adjustment check, and the MCHA paid the correct amount of rent assistance for the November 1st rent.

Tomorrow - look for my comments about how this should have been handled at the MCHA office in Woodstock or at least upon escalation to the Board of Commissioners.

Friday, November 22, 2019

Housing Authority - Part 7

When should a Board of Directors intervene in the operation of an agency it directs?

Its function is to direct the agency, not "manage" the agency. But when it is informed that the agency is not being properly managed, then the correct duty of the Board is to investigate and determine whether, in fact, the agency has been mismanaged and, if it has, then its duties is to direct corrective action.

Is that what happened when the Board of Commissioners of the McHenry County Housing Authority was informed of the errors and conduct of employees of the Authority and even of the error of a hearing officer? Did the MCHA retain an impartial, independent, unbiased, unaffiliated hearing officer? Or did it "stack the deck"?

When the Executive Director refused to consider an appeal of the hearing officer's Decision, which merely rubber-stamped the errors made by employees, I contacted the Chairman of the Board of Commissioners, Keith Leathers.

Leathers is Senior Vice President of Commercial Lending for Home State Bank. According to his bio on the Home State Bank website, he has been on the Board of Commissioners of the McHenry County Housing Authority for 18 years. With 35 years of commercial banking expertise and as a graduate of the Graduate School of Banking from the University of Wisconsin-Madison, you'd think he would immediately realize that a short-term collateralized loan was not "income". It might be reasonable to assume that he would have at least some familiarity with HUD Regulations or know where to look quickly in the Regs for a particular question.

In his October 24, 2019 response Leathers advised that MCHA staff is certified and experienced in the programs they administer. He stated that "While the use of "pawn shops" is not a usual source of income it is not excluded from HUD regulations."

What he did not say, and could not say, was the the use of pawn shops was included as income in HUD Regulations. Because it's not. Furthermore, it's not any source of income. A pawn shop loan is not income. How could a graduate of the UW-M Graduate School of Banking not know that?

The MCHA was treating the making of pawn shop loans as a business. And, even so, it was considering only the proceeds of the loan received. It disregarded the repayment of the loan. 

First of all, it wasn't a business, at all. And even if it had been, HUD Regulations call for the determination of Net Income. The MCHA Executive Director told me they use only Gross Income. I recognized that she was most likely referring to Wages, not Business Income. It also seemed that she did understand the difference between Gross Business Income and Net Business Income. Every pawn shop transaction would have resulted in a loss, not a profit.

Leathers also wrote that the MCHA is "better suited for hearing officers to have expertise in HUD income regulations, not an expert in accounting and income tax." He said later in his reply, "When using an outside hearing officer, it is important to ensure they know the rule and PHA policy related to decisions under dispute and are informed of the limits to decisions that can be made in a hearing."

Now, the last part of that sentence really bothered me. Exactly what were the "limits to decisions" that the hearing officer could make? Could she find for the Appellant? Against the MCHA?

He directed me to MCHA for the contact at HUD for an appeal. But I didn't need that. Contact information was readily available at www.HUD.gov 

On Friday, October 25, I mailed a letter to the Regional Office of HUD in Chicago. 

What was the response? Come back tomorrow. Fasten your seat belt!

Thursday, November 21, 2019

Citizen Beats Bull Valley

There is a citizen out there who took on Bull Valley and its revenue plan. He fought and he fought and he fought. Was this David vs. Goliath? Or David vs. a mole hill? But a mole hill that could spend taxpayer dollars. Dollars after dollars after dollars.

I don't know the Petitioner, the person who was harmed by the tactics of the Bull Valley PD and its former Chief. Most drivers know the reputation of the Bull Valley PD, or at least its reputation for many years.

From McHenry County Circuit Court record, this case appears to be No. 15LA000407, Charles A. Casamento v. Village of Bull Valley et al. Virtually impossible to find among the many cases involving Bull Valley, but easily found in search results for James Page.

I had heard a story about one of its part-time police officers who would stop local Mexican pizza delivery drivers for speeding. Being such a nice guy, he would "let" them pay their speeding fines on the spot, in cash, so that a hot pizza wouldn't cool off. Very considerate, right? That officer was allowed to resign. He should have been prosecuted and sent to jail.

Well, the local lawsuit was settled this week. Read this posting from Facebook.

I’ve been waiting for this day for almost 4 years. Four days short of 4 years actually.
Tonight, the jury concluded that I was falsely arrested and maliciously prosecuted by Jim Page and the village of Bull Valley holding them liable for my damages.
One month ago at a pre-trial conference with the judge, opposing counsel, and my lawyers, it was ruled that there would be many things that were not to be discussed or allowed into the trial as evidence. While I don’t agree with that decision, I respect the rule of law and it applied to both sides - but in my opinion there was so much more that wasn’t allowed on my side.
My attorneys went into the lions den this week with two hands tied behind their backs and simply delivered the best case they could have with what we were allowed to do. They fought and battled like no one I’ve ever seen to make sure the jury understood the most they could from what happened to me. I am extremely grateful by their efforts in the monumental task.
Thank you Jeannie Ridings and George Kililis for all of your hard work. And Randal Baudin Sr who initially assisted me and filed the lawsuit. 
And thank you to all the anonymous police officers who assisted me from day one. You know who you are and I am extremely grateful.
After understanding the rules of evidence before the trial, we had assumptions that my damages would be under $10,000. Tonight, 12 jurors awarded me $55,000. While it is not the amount we were hoping for, I am extremely satisfied simply over the principle and I understand it was way more than I thought it would be based on the rules going into trial.
I will say this one last time. I started this campaign over five years ago to help every citizen who either drives through or enters Bull Valley. The police department for so many years was running a major racketeering and illegal ticketing operation robbing citizens blind for so many years and left unchecked. My initial goal was to figure out what was going on and help one of my employees at the time. And then the rest is history from there.
I gave them an opportunity to make a course correction and rather than change course, they tried ruining my life. At the end of it, the illegal ticketing operation has ceased, several police officer positions have been eliminated - including the chief of police and I now understand people can drive through the village for the most part without the fear of having their lives turned upside down.
Thank you for all of your interest in my case, and I want you all to know today justice has been served.
Cheers.
I myself never had a problem driving through Bull Valley but, then, I'm the guy who was often at the front of the line of cars, poking along at exactly the posted speed limit and making full stops at Stop signs. I had heard about speeding tickets for 2MPH over the posted limit, although a former Chief told me that none of his officers ever wrote a ticket for less than 10MPH over.

Congratulations to Mr. Casamento for your perseverance and your victory.

Housing Authority - Part 6

Once I got involved with this and saw the dead-end into which the tenant had run, I contacted the Executive Director of the McHenry County Housing Authority, Kim Ulbrich.

In a telephone discussion, she upheld the decision of her employees and the hearing officer.

It was obvious to me that she, too, did not understand that there was no way that a short-term collateralized loan could be income. I mean, it just does not make sense.

The only reason that it was "income" in the eyes of the Housing Authority was that the Housing Specialist, the Housing Supervisor and the hearing officer had decided to call it income. Whether or not it was legally "income".

When I inquired about the appeals process, Kim said she, as Executive Director, was not an appeals end-point. This was hard for me to grasp.

The hearing officer had conducted an "informal hearing", as identified in the decision. The Executive Director should have the authority to over-ride it, if it is wrong. Just as a judge has the authority to over-ride a decision by a jury.

But the Executive Director informed me that an appeal could only be made to HUD or through a lawsuit.

Seriously?

After I thought about that, I made a list of possible levels of appeal:

The McHenry County Housing Authority Board of Commissioners (composed of Keith Leathers, Chair (Home State Bank, Crystal Lake); Mary Reid, Vice Chair; Victor Oswald, Huntley; Mary Donner, Crystal Lake; Lyn Orphal, Huntley; Kevin Myers, Oakwood Village; Marty Kampmeier, McHenry)
The McHenry County Board
The McHenry County Mental Health Board
Thresholds
Then HUD
And then the courts

And, of course, there are the newspapers and blogs: Northwest Herald, Daily Herald, McHenry County Blog, Chicago Tribune, Chicago Sun-Times, and the television stations.

I started with Keith Leathers. See you tomorrow.

Wednesday, November 20, 2019

Housing Authority - Part 5

Continuing with the saga of the Section 8 tenant of the McHenry County Housing Authority whose monthly assistance was reduced, because an Authority clerk decided that pawn shop loans were "income".

On September 27 a hearing was conducted on an appeal. The tenant challenged the Authority's consideration that a "short-term collateralized loan" was "income".

The Housing Authority selected the hearing officer.  HUD Guidelines call for the selection of a hearing officer who has knowledge of the particular item or issue being contested. Did the Authority do so?

The hearing officer selected, who can remain nameless here, includes this in her LinkedIn profile: "Management of HUD-based grants to McHenry County agencies, programs, and municipalities. .."

Right there could be enough to decide that this hearing officer might be biased in her partiality. Could she make a decision against the McHenry County Housing Authority? Not that she would, but could she? Could she be impartial, independent? If the tenant was right that a pawn shop loan was not income, could or would she support the tenant and rule against the McHenry County Housing Authority? How would that affect her future working relationship with the Authority?

What happened on September 27 was she swallowed - hook, line and sinker - the argument of the Housing Authority. According to her written decision, issued on October 4, 2019, she ruled that deposits of cash received from pawn shop loans were "cash income", 

Her whole premise that pawn shop loans was unsupported. She didn't determine that the tenant was engaged in any business; the fact was that he was not. He merely borrowed some money for a short period of time. He did this several times. If one time was not "income", then a number of times would not be income. She ended her Decision with "As such, I concur with the determination of income calculation performed by the McHenry County Housing Authority."

She was wrong; it was wrong.

But the tenant continued to suffer the reduction in monthly assistance. A clerk told him that if he could produce future checking statements without similar "deposits", then his case would be re-considered.

It was at this point I got involved. 

Tuesday, November 19, 2019

Housing Authority - Part 4

Are pawn shop loans income? Is the use of a pawn shop a "business"?

At one point a clerk at the Housing Authority provided the tenant with its form for calculating business income. The Housing Authority was trying to support its unjustifiable position that a pawn shop transaction was a business. It provided a worksheet titled "SELF-EMPLOYED INCOME WORKSHEET".

The first problem with completing it, of course, is that the Tenant was not self-employed. And then the Housing Authority had considered the total of several loans as income, without any adjustments for expenses.

The question of completing such a form and for a tenant to submit it could put the tenant in a position of having submitted false information to the Housing Authority. The Authority offered the form and expected him to complete it. But where would the legal responsibility fall, if he did complete it and submit it?

It's a pretty big deal, in my book, to submit a form containing false information to a HUD-affiliated agency.

But let's go down the path followed by the Housing Authority.

How much income would a pawn shop customer have, if he borrowed $100. A typical pawn shop transaction requires collateral worth substantially more than $100. Then the borrower (customer) must pay back the loan, plus interest, within a stated period of time; that time period is, for example, 30 days. That's why these are called "short-term collateralized loans".

Let's say the pawn shop charges a fee of 20% for a 30-day loan. When the customer redeems the pawn ticket, he would pay $120.00 and get his collateral back.

You figure it out. How much "income" did he have?

First of all, he didn't have any income, because it was not a business transaction.

But, if you filled out the Self-Employed Income Worksheet and put $100 on the top line as income, where would you put the $120 that he paid back? Would you list that as an expense?

How much is $100 less $120? There is, of course, no "income". In fact, there is a loss. A $20 loss.

The tenant and the Housing Authority could not reach a meeting of the minds, and the conclusion reached by the Housing Authority was appealed. An appeal hearing was scheduled for September 27.

Of course,, that was well past the due date of the September rent and just five days before the tenant's October rent was due.

Some back tomorrow to learn about the hearing on the appeal.