After the City Council on August 15, 2006, had continued the public hearing on urban renewal, I spoke to a member of the Louisville Revitalization Commission. I repeated my concern, which I had just expressed to the Council, that the LRC was not accountable to the citizens, yet had extraordinary powers. He said, one, the LRC is "accountable to the Council," and, two, the City of Louisville "already has" an unelected body that has the kind of authority the LRC has: the Louisville Housing Authority.
Based on that discussion, I thought it would be interesting to see how the Louisville Housing Authority has done with its powers. This led me to the Boulder County Housing Authority, since it administers and operates the Boulder County Housing Authority, or BCHA. The story of the BCHA and its appointed board, before it was taken over in January 2003 by elected officials, the Boulder County Commissioners, is a compelling one.
"Accountability to the Council." On the question whether the LRC is "accountable" to citizens because it is "accountable" to elected officials, that's just an unfortunate misunderstanding of what accountability means in our democracy. But the statement is wrong on a more practical level: As the LRC has acknowledged and as Colorado law provides, it's not accountable even to elected officials, let alone citizens. An urban renewal authority like the LRC is a legally separate entity from the municipality and that municipality's governing body.
The law governing housing authorities. It is true that Colorado law provides broad powers to counties and cities to create housing authorities. A housing authority, once created, is very much like an urban renewal authority, or URA. (Prepare for my citations to statutes. If you want to look up the statutes, type in the statute number at the Colorado statutes Web site operated by LexisNexis.) For example, like an urban renewal authority, the principal purpose of a housing authority is to combat slum and blight, although it does so not for "urban renewal" so much as to ensure that persons of low income have safe and sanitary places to live. Colo. Rev. Stats. § 29-4-102. A housing authority is created much the same way as a URA
(§ 29-4-204), its members are appointed (§ 29-4-205), and it has extraordinary powers for an unelected body (§ 29-4-209). For example, it is a separate legal entity; it can grant or lend money or give finance to any person, firm, corporation or government; it can create entities that operate under its control; it can sell, exchange, transfer, assign, or pledge any property to any person, firm, corporation or government; it can borrow money and issue bonds; it can invest money; sue and be sued; enter into contracts; and generally "do all things necessary or convenient to carry out the powers given" to it. § 29-4-209. The similarity in powers between a URA and housing authority are striking.
On November 21, 1972, the Louisville City Council created the Louisville Housing Authority. (It was later combined with and then separated from the Louisville Urban Renewal Authority.) The Council then appointed five persons to serve as authority members. Three years later, Boulder County did the same thing: it created a the Boulder County Housing Authority and appointed a separate, unelected governing body to serve as the Boulder County Housing Commission.
Later, Boulder County and the City of Louisville entered into numerous agreements under which the BCHA provides administration and management services to the Louisville Housing Authority.
The BCHA under an appointed board. The BCHA, which in 2004 had operating revenues in the millions of dollars and assets of more than $30 million, had some good days, winning awards for many of its activities. And it had some really bad days, culminating in the resignation of its long-time director.
In the period 1999-2002, the BCHA lost $914,000. In the period 1999-January 2003, it lost $1.5 million. To break it down: In 1999, it held $907,211 in cash and investments; in 2002, it had -$6,850--that's negative $6,850. Its cash and investments fund lost 93% percent of its value in the span of one year, plummeting from a balance of $665,665 to $46,301. The balance plummeted another $600,000+ by January 2003, when it recorded a deficit of $619,000.
In October 2003, the BCHA finance director and an outside consultant did an internal analysis and wrote a memo about why the BCHA was in a negative cash position, unable to meet payroll and other necessary operating expenses. The memo, obtained under a Colorado Open Records Act request, contained this stark picture of fiscal unsoundness:
The alpine slide in the BCHA's cash position led to an audit by the U.S. Housing and Urban Development's Office of Inspector General. The audit, issued on March 9, 2005 and provided to each of the Louisville City Council members and to city staff, roundly criticizes the accounting and control systems at the BCHA during the 1999-2003 time frame.
Some key events of the BCHA 1999-2003 financial crisis were detailed in a March 12, 2005, Daily Camera story:
- In January 2003, the BCHA had a deficit of "more than
$619,000."
- So that the BCHA could meet payroll and begin repairing its
financial state, the Boulder County Commissioners had to loan the BCHA $980,000
in 2003.
- In the aftermath, eight employees were laid off and another eight resigned by the end of 2003.
The epilogue. Since the HUD audit and since the takeover of the BCHA by elected officials, the Boulder County Commissioners, the BCHA financial ship has righted itself. HUD did not require the BCHA to pay back any federal monies and as of September 2006 virtually all issues raised in the HUD audit were resolved.
A lesson from the BCHA experience. The combination of vast, unchecked powers and no accountability to citizens can be a fiscally risky proposition. Unelected board members, who don't have to face citizens in elections, simply don't have the same investment, if you will, in acting as stewards of taxpayer money. From the citizen perspective, when taxpayer dollars are being hemorrhaged, we must have a recourse at the ballot box. Those who are willing to "trust" unelected officials with $77 million need not travel far to see why they're alone.