Friday, October 27, 2017

The Golden ARCHES Project - Part 2

Revised: January 2019

By Sarah Owens and Michael Livingston

Last October 2016, when OHCS changed its rules to allow CAAs to use their EHA and SHAP funds for acquisition, eight expressed interest.  Four, however did not bother to apply.  According to OHCS's August 30 memo, a major factor preventing their applying was "the short timeline to implement"  -- they only had until June 30 to "complete the purchase and have ready for client use a shelter or transitional housing facility."   

As discussed in Part 1, the short timeline somehow wasn't a problem for MWVCAA, who also didn't bother applying.  Lucky for them, OHCS cleared their funds to be used for acquisition anyway.  Let's say that was a mistake.

But, as we will show in Part 2, the mistake was eventually discovered.  Unfortunately, rather than admit the mistake, OHCS and MWVCAA colluded to paper it over, so no one need know. 

"Need some items for my file"

The first suggestion of record that OHCS knew they'd screwed up is an August 1 email to CRP Director Jimmy Jones. 

I have to write something up on the acquisition accomplished with the EHA-NEW funds.  Please tell me 1) what date MWVCAA completed their move and opened to the public in the new location, 2) what other funding was used to make the building purchase, and 3) what is your capacity for the day shelter.

Now, obviously, OHCS should have known the answers to these questions before they released the half million dollars of EHA and SHAP funds, because they go to the basic requirements of the funding.

And, just as obviously, Jones knew OHCS's questions went to the basic requirements of the funding, and knew what the answers needed to be in order to avoid the whole phony Golden ARCHES deal blowing up in everyone's face.  Jones replied.

We completed the move on June 30th and opened immediately. We used [O]HCS dollars for our down payment, and completed a contract sale for the building with the owners. The payments are coming out of our normal operating budget (CSBG). The capacity for the day center will be 65 at any one time. Right now we've got enough money to substantially upgrade the day center area. The drawings are being finalized, and we're about to start a renovation that will allow us to run a real, one-stop shop, bring in medical and dental and other agencies to work with our population.

Trouble was, the answer to Question 1 needed to be that the day shelter was opened by June 30.  However, the day shelter would not open for more than a year. 

What could they do?  It was too late.  The money was spent.  They did what anybody would do.  They tried to cover it up.  They lied.

OHCS, Jones, and MWVCAA all pretended that the office building or "day center" being "open to the public" was the same as its being a place where people experiencing homelessness could take shelter -- it wasn't, and it wouldn't be for over a year.  It was a cruel, shameless, lie.

The answer to Question 2 needed to be consistent with the purchase's being completed by June 30.  But, a "contract sale", sometimes called an "installment contract" is a seller-financed agreement to purchase a property over time.  It is the antithesis of a completed purchase.  Furthermore, OHCS's question shows OHCS had no idea how much MWVCAA had agreed to pay for the building, or what proportion of the facility was devoted to use as a "day shelter."  As OHCS didn't know what other funding was used to purchase the building, it had no way to gauge the project's feasibility, when or if it was likely to be completed, or whether it was an appropriate of use of almost $.5M of EHA/SHAP funds.  Furthermore, Jones's answer omitted any mention of the two, quarter-million dollar balloon payments, which could not be possibly be paid out of MWVCAA's "normal operating budget", and which OHCS should have questioned.   

The answer to Question 3 needed to demonstrate that the Commercial Street facility had, since June 30, been continuously operating as a day shelter at a  capacity that was substantially increased from its capacity on Madison Street.  MWVCAA's hedging answer as to what the capacity "will be" begged the question what the current capacity was, namely zero.  It would be more than a year before the day shelter could open.
Jones's assertions about having "enough money" "right now" for renovations, about  "drawings...being finalized", and about renovations  being "about to start" were lies.

On June 23, Jones indicated that he would be relying on grants to pay for renovations.  September management reports indicate Jones was still waiting to hear whether they'd secured $125K in grants "for the day center", and that an architect had only just been secured to complete the needed drawings.  So, the drawings could not have been "being finalized" on August 1.  In consideration of Jones's "optimism", we gave his answer a "Mostly False", even though none of what he said was true in fact.
About a week after that first set of questions, OCHS was back.  "We worked through the building purchase so fast in June that I'm lacking some required documents for my file."

Someone at OHCS must have finally figured out that MWVCAA hadn't so much as submitted an application.  So, why not admit the mistake?

Instead, OHCS acted as though they just happened to have a few, very pointed questions that just happened to cover what should have been provided with the acquisition application -- the one that MWVCAA didn't submit.  Jones's response was prompt.  "I'm working this, will try to have it all to you no later than mid-week of next week."

The next day, August 11, we published "MWVCAA Purchase Appears to Side-step State Approval Process", prompting this email to the Homeless Services Section manager from the staffer who worked on all the acquisition projects:

"There's one thing we can argue about the blog article: this project fits under the Community Capacity Building definition, which reads in part: Eligible expenses include programs, activities and projects that expand homeless prevention and or intervention program capacity."

"There's one thing we can argue"?  Not, "Oh, s%$t.  We're busted.  They know MWVCAA never submitted an application.  What do we do now?"?   

Later that day, still August 11, the staffer sent Jones an acquisition application form with the directive, "Please provide as many documents as possible by Monday."  (Emphasis added.)

Monday, Jones's responses started trickling in to OHCS.  Some of the information was new, much of it had been conveyed in previous emails.  Then came the closing documents, the accounting policies, the list of MWVCAA's real estate holdings.  Tuesday, Jones made a special request.

Would it be possible to pull the installment note I sent yesterday out of the file?  The reason I am asking is that there are two $250,000 balloon payments in there, that we are going to have to cover at some point.  I'd rather that piece not be public knowledge if I can avoid it.    

"That we are going to have to cover at some point"?  Could it be any clearer that MWVCAA had no plan for making those balloon payments?  And, what's more, they didn't care, and, apparently, neither did OHCS, because they didn't ask about them.

On August 16, OHCS told Jones they needed a signed document promising to use the property as a day shelter/center for 20 years (of course, MWVCAA was already in breach of that covenant, but, never mind), and a five-year operational budget.  On August 23, Jones provided the requested document, and told OHCS, "Yes, we do have reserves and resources that could be used for operating and repairs as the need arises."  No further assurances were offered or asked for.  

At some point in late August, Jones provided OHCS an undated "business plan" for the project.  But, whereas a business plan generally projects 3-5 years ahead and outlines the path and organization intends to take to reach its goals, including revenue projections, the document Jones submitted reads like bad advertising copy that fails to distinguish between aspiration and reality.  It doesn't even call itself a plan.  Here's a brief summary:

The Executive Summary: the old building was run down and we needed to move.  The new building is in a better location and will allow us to expand.  Organizational Statements:  vision, mission, name, business form.  Services: we're one day going to provide a whole bunch of services.  Company History: CAAs were created as part of the War on Poverty.  Market Analysis: (5 pages) there are a lot of homeless in Salem.  Management Summary:  there are 7 really amazing managers working on this project.   Funding: ARCHES gets lots of $$ from OHCS, HUD/CoC, FEMA, HUD/HOME, CSBG, SSVF, OHA, and DHS, among others.  

Financial Analysis (at left in its entirety) we have plenty of money for renovations and staff, but we're asking for more, just in case.  Evaluation Tools: we have great assessment tools and are going to collect all kinds of cool data that will help us eliminate chronic homelessness in Salem.  Growth and Grant Opportunities: "Our goal is to open the Day Center with full services in November 2017, with the hope of attracting most of the co-location partners quickly [within 2 years] after that."

Operational Budget:  $14K/yr for supplies and equipment and $169K/yr for the building, not including the cost of hazard insurance or the $.5M in balloon payments due in 2018 and 2019.  Income from Rents:  (at right) $132K/yr.

Jones's projection that income from rents will eventually exceed the monthly mortgage payment by several hundred dollars was pure fantasy.  Unless the City/County and local health care providers decide to put a sobering station on the first floor and pay MWVCAA substantial rent, but, when that might happen, and how long it would last, was anyone's guess.

"I can confirm that MWVCAA did have OHCS approval prior to acquiring the site"

In Part 3, the cost to the community, and the OHCS cover up.

Monday, October 23, 2017

IGA Establishing Homeless Program Coordinator

Revised: January 2019

By Sarah Owens and Michael Livingston

On October 17th, the Mid-Willamette Council of Governments authorized Executive Director Sean O'Day to sign an intergovernmental agreement with Salem, Keizer, Monmouth, Independence and Marion County to establish a Homeless Program Coordinator position within COG. Salary and benefits are to be paid by the cities and County.  Salem and Marion County will put up $45K each, with the remainder cities each putting up $5K.  The Scope of Work includes "Conduct analysis of pros and cons of local Continuum of Care options, and if favorable, develop implementation plan."  See the 10/17/17 meeting packet here: at pages 47-48 for the Scope of Work.  The packet also includes the staff report, the IGA and a position description.   (Staff Report, IGA, Scope of Work pasted below.)

In January 2019, the IGA was amended to extend it to June 30, 2020, see here.

Friday, October 20, 2017

The Golden ARCHES Project - Part 1

Revised: January 2019

By Sarah Owens and Michael Livingston

The Oregon Housing Department (OHCS) says, when the Oregon Legislature gave it an additional $10M in Emergency Housing Assistance (EHA) and State Homeless Assistance Program (SHAP) funds back in 2016, it gave them "the opportunity to look creatively" at ways to respond to the housing crisis and the lack of shelter for homeless Oregonians.

Translated:  this was some serious money that could make a difference.  

So, staff and local Community Action Agencies (CAAs) ('cause that's who gets all the homeless assistance $$ coming out of OHCS) developed a proposal to allow these new funds to buy real estate -- something that previously had not been allowed at all --  specifically SHELTER facilities or transitional HOUSING units.  The proposal was discussed and approved by the Housing Stability Council on October 7, 2016 and details were  finalized and shared later that month.

Being able to use EHA and SHAP funds for acquisition was a very big deal, see, because of the amounts involved, and the potential for inexperienced social service providers to make costly mistakes.  The need for caution and oversight was well understood. 

Longstanding OHCS rules require CAAs to stick to their EHA and SHAP "work plans" and budgets, or seek approval to amend them.  The new acquisition process didn't change any of that.

What it did do, however, was require preliminary approval of the acquisition project -- separate and apart from work plan amendments and budget change requests.  Makes sense, doesn't it? To  get a project approved before requesting funding for it?   

So, to purchase a shelter facility or housing units using these new EHA and SHAP funds, CAAs had to submit an application, complete with "an extensive Business Plan"  that included, among other things, demonstrated ability to maintain and manage the property, a five-year operational budget with projected revenue, the availability of agency reserves for replacement and operations, and a projected timeline showing that the property would be purchased and clients/tenants in place by June 30, 2017.

Which is exactly what three CAAs much smaller than MWVCAA (Klamath Lake Community Action Services, Oregon Coast Community Action, and United Community Action Network) managed to do -- all by or before March 1, 2017.  But not, as it turns out, MWVCAA.

There's plenty of excuses and blame to go around, but they don't matter.  The agency screwed up.  Jon Reeves was asleep at the wheel.  The Board wasn't paying attention.  Everything was left up to one, newbie manager with zero management experience, Jimmy Jones, who would later admit the purchase was "executed clumsily and with a great deal of optimism, when a healthy dose of skepticism would have better served us."

So, the end of the biennium came and went, with no business plan from MWVCAA.  Their project should have lost out, shouldn't it?  But obviously, it didn't, or we wouldn't be talking about it.  So, for reasons we cannot fathom, in flagrant violation of OHCS's expectations, OHCS staff cleared about $.5M in EHA and SHAP funds for MWVCAA to use to acquire the old office building on Commercial Street, knowing nothing more about the project  than what had been been shared in a few casual emails.  The closing took place on June 28, 2017.

Amazed such a thing could happen?  Don't believe it?  Write to us, and we'll send you the documents we received in response to our public records request.  It's all there, in banal email after banal email.

"I know that you’re anxious to get that money spent, so are we.”

The MWVCAA project was staffed by the same OHCS Homeless Services Section staff who had worked on the other acquisition projects, including the section manager.  But the MWVCAA project was more complicated (and costly) than the others, raised more questions, required more scrutiny, and the review process was apparently unclear, even to OHCS staff.  Checklists, review standards and deadlines were never developed, forms were confusing and in need of revision, and too few management signatures were required.  In other words, the process was just an unbelievable mess.  In the end, all that mattered was getting "that money spent" by June 30.

Let's be clear, there was every opportunity, between March 2, when MWVCAA first asked about using EHA funds as a down payment for a day shelter, and June 28, when the funds were cleared, to remind MWVCAA they hadn't submitted a business plan.  On March 24, OHCS reminded the CRP Director, "[Y]ou can't request funding for something that hasn't been approved.  For instance, if you want to fund a day shelter, you won't be eligible to be paid for your costs until that activity is authorized."  (Emphasis added.)  On May 24, the manager of the OHCS Homeless Services Section raised what should have been a red flag when she wrote to the CRP Director: 
Vicki and I have discussed your acquisition project proposal and my understanding is that you are now looking for another property to purchase by June 30th...I am concerned that there is not time to locate, secure additional funds, complete the purchase and have ready for client use a shelter or transitional housing facility within the next 5 weeks.

1255 Broadway
The "acquisition project proposal" that the manager was referring to was, initially, to use EHA funds to buy the building at 1255 Broadway (formerly the Center for Community Innovation).  But just when MWVCAA thought they had a "done deal" on the building, a tenant/shareholder with veto rights decided they didn't wish to share a building with a homeless shelter.  So, MWVCAA came up with a new proposal.  This new proposal was to buy the building as planned, but rather than move the ARCHES Project, they'd move their administrative offices from Center Street to the Broadway location, and put The ARCHES Project at Center Street.  

This new proposal, which OHCS rejected politely as "really difficult to defend as a legitimate use of the funds", reveals a couple of things.  One, it shows MWVCAA's determination to secure any kind of a deal by June 30.  Two, it shows the extent to which the ARCHES Project's day shelter was simply the means to an end.  It was immaterial to MWVCAA whether or not they could have their shelter ready for client use by June 30 (they knew they couldn't).  All they wanted was the building. 

By mid May, MWVCAA was stuck.  EHA funds couldn't be used to acquire office buildings, only homeless shelters.  No homeless shelter, no EHA, and no EHA, no office building.  They'd boxed themselves into a corner by allowing the Madison Street lease to end June 30 and having no Plan B.  So, even though they'd just told OHCS the day before that they couldn't buy "the old Coldwell Banker building" because they hadn't found a "partner to come along and provide us with another [$]300K to make that work for us", they were now telling OHCS, "We have signed a purchase agreement on the Coldwell Banker building...We anticipate moving our day center operations there on June 15."

Both statements were, of course, untrue (as late as June 22, the MWVCAA Board of Directors was told that they were still "working toward a contract"), but the lies kept the deal alive, as intended.

That was the last time before the real estate deal would close that OHCS inquired about MWVCAA's intent or ability to have their shelter ready for client use by June 30, even though it was a requirement of the EHA funding.  It apparently didn't occur to OHCS that one can't just open a day shelter in an office building, that there might be regulatory or permitting issues to overcome (there were), or that renovation construction costs and delays might pose a problem (they have).

At midday on Monday, June 26,  OCHS staff announced, "Done, done, done.  The funds will go out Wednesday and post overnight.  They'll be in MWVCAA's account Thursday."  OHCS had never seen the MWVCAA business plan (there wasn't one), and didn't even know the building's purchase price ($2.1M), or whether the purchase was financed (yes, by the seller).
"Need some items for my file"  

In Part 2, we'll discuss what happened after OHCS discovered they'd allowed MWVCAA to side-step the acquisition-approval process.

Sunday, October 8, 2017

News from the Continuum

Revised: January 2019

By Sarah Owens and Michael Livingston

House Bill 2402 became effective last week. The bill sets up a $50,000 fund in the Oregon Health Authority that the Center for Health Statistics can tap when social service organizations request a birth certificate on behalf of an Oregon-born homeless person.

An Oregon ID still costs.

The Center for Health Statistics says:  Brian Nieubuurt, Legislative Coordinator for Health Care Programs, is the current lead to implement the bill. He can be reached by email at or phone at 503-269-5970. He is gathering a list of interested parties [providers] at this time.

Week before last, Westcare celebrated the long-awaited opening of its home for veterans on Center Street.  Dignitaries in attendance included ODVA Director Cameron Smith, Rep. Paul Evans, Sen. Pete Courtney, Marion County DA Walt Beglau and Planning Commissioner Sheronne Blasi (go Navy).

Program eligibility requirements:  being homeless, an honorable or general discharge, 30 days clean/sober, criminal background check, income or working toward with a % going to rent/savings and self-care capable.  Also, take all prescribed meds, attend house meetings, maybe counseling and live cooperatively.  Basically, a person needs to be functioning at a fairly high level to get into/stay in the program, which is probably why there's only a handful of folks participating. 

Westcare Veterans Home on Center St (behind the CCS Bldg)
* * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * * * * The Westcare Veterans Home is a transitional housing facility, not a shelter.  St. Francis Shelter (also a transitional housing facility, not a shelter) has comparable expectations of its families.  The Salem Interfaith Hospitality Network (since 2018 called Family Promise), which offers eligible families overnight accommodation inside church/temple facilities, hosted by church/temple members, and The Salvation Army Lighthouse Shelter, which until recently offered a transitional housing program, but now offers only emergency overnight shelter, require their adult guests to pass a criminal background check and be clean/sober.  There is also Grace House, transitional housing for single women (mostly  recovering and reentering from prison), the Center for Hope and Safety's shelter for victims of domestic violence (medium to low needs) and the Union Gospel Mission (Men's Mission and Simonka Place).

UGM Men's Mission on Commercial St, circa 1950s
All this is a long way of saying that Salem continues to rely on UGM to offer adults immediate shelter and care to those not eligible for other programs.  But, even UGM has limits.  Used to be, if they couldn't help you, your choice was the streets or the woods.  Then, we got HRAPHRAP isn't a shelter, but it does take those with high needs.

The facilities at the Men's Mission are really old, and, for several years now, UGM's been looking to build a new facility a few blocks north, where its store and admin offices are located.  But, some are saying the City can't support two capital campaigns and that UGM must give way again, this time to the Salem YMCA Family Center, because Sen. Pete Courtney's $12M "gift" came with time limits.  The deteriorating condition of the Men's Mission gives UGM no choice but to proceed as planned.

In Salem, when there's a choice between serving families and serving high-needs homeless individuals, the choice has always been families.  Not surprising.  The Kroc Center's a much easier sell than the Lighthouse Shelter.  So much so, that, within a few years, there won't even be a Lighthouse Shelter.   When that happens, Salem will be even more beholden to UGM.

North Salem SIT, coordinated by Salem Health's Skye Hibbard
Center 50+ moved the North Salem SIT to a larger space for its second meeting, and every seat was occupied.  Tiffany Ottis of Congregations Helping People, Jason Ramos, Social Services Director for The Salvation Army, and Jennifer Stark from Northwest Human Services Information Hotline gave a brief overview of emergency resources other than housing (e.g., rent/utility payments, IDs, prescriptions, transportation, food boxes) they make available and explained a bit about how they cooperate to minimize the number of doors folks in need have to knock on.  Among the notable personages attending the meeting was Denyc Boles of Salem Health, who's on the WVCH (Marion and Polk County's CCO) board.  Elected to state House in 2018