Troubled EOB gets $170,000 in HUD funds from Las Vegas

By Timothy Pratt (contact)

Wednesday, May 5, 2004 | 11:27 a.m.

Although the results of a federal Housing and Urban Development Department investigation into the Economic Opportunity Board are just days away, the Las Vegas City Council this morning gave $170,000 in HUD funds to the beleaguered nonprofit agency.

The money will reimburse the EOB for assistance it gives to low-income residents of the Las Vegas Valley in making down payments on homes. The item concerning the $170,000 was part of today's consent agenda -- a group of items considered routine. The consent agenda was passed by a single unanimous vote, and no council member asked for the item to be considered separately.

Orlando Sanchez, head of the city's Neighborhood Services Division -- the agency that oversees the money -- recommended approval of the allocation and said HUD officials told him informally that their investigation has not turned up any concerns with the down payment program.

"The (HUD officials) are not overly concerned with this ... program," Sanchez said.

"They tell us whether to go ahead or not."

But Kenneth J. LoBene, state coordinator for HUD, said his agency has not advised any of the local municipalities about passing along federal dollars to the embattled nonprofit agency, the largest in the Las Vegas Valley, and has put a hold on all EOB-directed funds until the investigation's results are released some time in the next week.

"We have not advised communities if they should go ahead or not, but said there are concerns and ... until we issue (the results) and make sure what the issues are, we have stopped the EOB from drawing down any future money," he said.

LoBene said that any negative findings about the program for low-income homebuyers would allow his agency to stop the issuing of the $170,000, regardless of the city council's decision.

The federal official said he didn't have information on hand about how much money HUD gives to EOB, but noted that the investigation will reveal how his agency's grants have been administered and how much of that money went to its intended source.

Today was the second time funding for the down payments program was slated for a council agenda. On April 7 an item allowed for "discussion and possible action on an allocation of $200,000" to the EOB for the program.

But the item was postponed, Sanchez said, "because we had some concerns with all the problems EOB was going through and decided to meet with them first."

The EOB faced an investigation by a team of consultants hired with federal funds and overseen by the state in early April, after the agency's largest program, which offers child care assistance, could not account for $2.1 million in federal and state funds. That investigation's results were released last week and the EOB must respond to its recommendations -- which include dismantling the 15-member board of directors and bringing in an outside management team -- by Thursday.

A second investigation, conducted by the Head Start bureau, also took place in early April. That agency was concerned with unresolved issues from a 2003 review, including whether or not children in the early childhood education program were being taught what they should be taught. That investigation's results have yet to be released.

Sanchez said he has met with EOB officials since the April 7 council meeting and is satisfied that the program's documentation was in order. The funding request was less this time around because some people dropped out of the program, he said.

But a look at the back-up materials for the April meeting and materials provided by Sanchez shows that payments to several of the homeowners included on a list that added up to nearly $200,000 at the time have since been approved by the city.

Those people were paid for with federal money from a previous fiscal year, Sanchez said, so no approval was needed from the city council.

"I know it sounds confusing, but this is the way the program works," he said.

In addition, the documents show that the EOB helped some people buy their homes before this fiscal year -- some as early as 2002. This would mean the nonprofit agency is seeking to be reimbursed with federal money this year for services it provided in previous years.

Sanchez said this could be a sign of problems in EOB's own bookkeeping, but it doesn't violate the terms attached to the federal funds.

Faye Johnson, manager of neighborhood development in the department of neighborhood services, said, "dates don't mean anything to us as long as we have the complete package ... and all the paperwork is correct."

EOB board member Chester Richardson said that administrators in the agency have in the past failed to seek reimbursement from grants -- the main source of funds for the agency -- as quickly as they should have.

"One of the elements (that) contributed to our fiscal distress is not asking funding sources for reimbursement in a timely manner," he said.