in Houston, Texas
texas department of housing and community affairs
Texas couple fit to be tied in red tape, stimulus weatherization cash more trouble than it was worth
Tuesday, Dec 11, 2012, 09:49AM CST
By Mark Lisheron
light bulb

Viewed in one very particular way, carefully following the bureaucratic contours of a $327 million stimulus energy efficiency program, the weatherization of Brandi and Byron Hockaday’s south Austin home is a success story.

Rules and guidelines were followed. Contractors and inspectors returned again and again to check the work. And when things weren’t right Austin Energy made them right at its own expense. And none of it, or almost none of it, cost the Hockadays a dime.

And yet, after more than two years and well over $14,000 spent, no one involved, least of all the Hockadays, believes they should have gotten involved with the federal weatherization assistance program in the first place.

On Oct. 31, after the latest of dozens of complaints, Austin Energy customer service representative Ann Salerno put an official end to its relationship with the Hockadays.

“For many months while assisting you, Austin Energy has exceeded its role as the involved electric utility,” Salerno said in a letter, one of a fistful Brandi holds in her hand on the sofa in their living room. “Austin Energy staff has gone above and beyond its obligations, and, at this point, there is nothing else Austin Energy can do to assist.”

But what about the gas line left exposed and running right alongside the air conditioning line in the bedroom wall? The positive test for mold? And the incessant cycling of an air conditioning system that is supposed to be the best in the industry?

All of the contractor errors, the unexpected visits to fix things that never got fixed. The arguing that one time nearly led to a fistfight. The derision and condescension from at least one of the Austin Energy officials.

“They damaged our house, they put our family in danger and they’ve repeatedly said we need to be done with this,” Byron says, unable to stay seated next to Brandi. “That’s what’s flooring us here. We’re tired of this shit.”

Spend five minutes with the Hockadays, and you are convinced tired isn’t at all the right word. They have painstakingly filed every document - paper and electronic - generated by their case. They recorded phone calls with workers, contracting supervisors and Austin Energy program leaders. They’re already tag-teaming their latest contractor.

The Hockadays aren’t tired by a long shot.

Pulling up to the Hockadays’ home in a neat, middle-class neighborhood, it is difficult to grasp how, indeed, they ever got involved in the program.

There is an older model, silver Jaguar in the Hockadays’ driveway of a nicely maintained 1,400-square-foot home.

Brandi and Byron HockadayBrandi and Byron Hockaday

The Hockadays built this house themselves in 1999. Both of them had good-paying jobs with a commercial printing company until day care costs for their two children made it more cost effective for one of them to stay home.

“We flipped a coin, and I became Mr. Mom,” Byron says. “It worked out because I wanted to get my own mobile IT business started.”

It worked out until June of 2010 when Brandi was laid off after 13 years with the company. In an economy that a congressional majority thought only a nearly $1 trillion stimulus could help, the Hockadays’ combined work experience came from an industry in decline.

Brandi started investigating and found that the family now qualified for food stamps. They enrolled the children in Medicaid for their health care. And when she went to the Austin Energy website she spotted a house ad for a “Free Energy Program.”

She filled out a two-page application sometime in late July.

The program the ad referred to was part of the Weatherization Assistance Program, the U.S. Department of Energy's $5 billion contribution to the $862 billion American Recovery and Reinvestment Act of 2009. The goal of the program was to help low-income Americans save money on their monthly bills by making their homes more energy efficient at no cost to them.

Joseph Guerrero, now the weatherization program coordinator for Austin Energy, says his company dispatched the inspector based, according to the program’s guidelines, on little more than the Hockadays’ current combined income.

An interview with the Hockadays, a visit to the home, past earnings, the value of the home, even the Jaguar in the driveway was not part of the calculation, he says.

“We had no authority to question any of it. It’s not arbitrary,” Guerrero says. “Had we denied it for any of those reasons, you can bet TDHCA would have been notified.”

On August 4 an inspector came to the Hockaday home and did a series of energy tests.

“On his way out the door, he told us it was one of the nicest homes he had been in since he started doing the inspections,” Brandi says. “He said, if anything, we’d probably be eligible for low-energy light bulbs.”

Unknown to the Hockadays at the time, Austin Energy was under threat of having its $5.9 million stimulus grant yanked by the state Department of Housing and Community Affairs. Texas Watchdog reported Austin Energy had managed to weatherize just 56 homes in the 18 months since the stimulus bill passed. Only four of the 44 agencies in the weatherization program had done fewer homes.

In the first year of the stimulus contractors statewide had spent $3.7 million, mostly on administrative costs, and had weatherized a total of 47 houses. Program directors from all over the state complained they were under tremendous pressure by Housing and Community Affairs to spend their stimulus grants.

"Is time running out for this program? Absolutely," state program director Michael Gerber said of Austin Energy at the time. "We will de-obligate funds before we let one penny of this funding go unspent."

Two months after the initial inspection, Robert Meredith, the owner of a second contractor, Go Green Squads, came to the Hockadays’ door with good news. The initial tests showed they qualified for a new air conditioning system.

The air conditioning system they had was working fine, Byron says. The inside unit had been replaced in 2008, and the outer unit had been repaired in the past couple of years, he said.

Meredith, Byron says, pressed them to decide. A new energy-efficient system would help them realize hundreds of dollars in savings.

“He said we were about to lose this if we didn’t decide and that we had to get this done,” Byron says. “My initial reaction,” Brandi says, finishing his thought, “was ‘Wow. Awesome.’ Byron’s reaction was, don’t muck around with it. I love my AC. Byron gave in.”

A ‘deceptively complex’ government program

The decision to install a new air conditioning system in the Hockaday home was based on calculations punched into thresholds set by the federal government, nothing more, Guerrero says.

At no time did Austin Energy officials issue a directive to speed up or increase spending on the units they were weatherizing, he says.

Susan Meredith, Meredith’s wife and the company’s co-owner, says Austin Energy gave the company 10 days from the time a work order was generated to start work. Never did Austin Energy call for spending over and above that recommended on the work orders, she says.

On Oct. 8, 2010, Go Green Squads installed an new air conditioning system and thermostats. The $2,433.27 in expenses was paid for by the federal program, which allowed for a maximum of $6,500 to be spent on each housing unit.

“And for nine months we thought it was the best program in the world,” Brandi says. “We felt like we won the lottery.”

Until the day Byron came home and felt warm. The Hockadays regularly set their thermostat at 75 degrees. The temperature read 77 degrees, and to get there the air conditioning unit was running for hours at a time without cycling off.

Thus began a series of calls and responses from contract workers. They did temperature readings. Had Byron seal and insulate his attic door. The ductwork was checked. The plenum, an air circulation chamber in the attic, was rebuilt. Several times.

During these months of trial and error, the Hockadays reported condensation on their vents and a musty smell in the house.

Around one of the openings in the attic, Byron found black soot he thought was mold. The contractors insisted it be referred to as a mold-like substance. In January of this year the Hockadays had tests done that determined the mold-like substance was mold.

At the same time, the Hockadays’ monthly utility bills were now exceeding the bills for the same months with their old air conditioning system.

In the absence of solutions, Byron offered troubleshooting suggestions like checking the coil that were routinely ignored, he says. It seemed as though the workmen were going through the same motions again and again. During one visit insults were exchanged and challenges made before Byron and a crew member could be calmed down.

“They were coming here all the time, all different times of day. They’d never call, they’d just show up. Then they never did anything. It was like watching monkeys hump a football,” Byron says.

From then on, Brandi systematically worked her way up alerting the chain of command at Austin Energy to their problems.

On Dec. 20, 2011, Austin Energy ordered another full inspection of the home and followed it with a systematic retracing of all the steps that had so far bedeviled the other contractors.

But not until March 20, 2012, did the company reach the conclusion that the air conditioning system installed by Go Green Squads needed to be replaced. The coil Byron had been pointing to was designed for a four-ton air conditioning system. It had been trying to cool the house in a three-ton system.

“There definitely was a problem with the system,” Susan Meredith says. “And we were very committed to fixing their system. But there are so many different factors involved. That is why I say this is a deceptively complex program.”

Austin Energy decided that it wouldn’t be Go Green Systems but McCullough Heating and Air Conditioning that would install not only a new air conditioning system but a new furnace.

The cost, $8,604.81, was more than three times the first system. The company did some additional calculating and cut two checks to the Hockadays totalling $453.58, an estimate of the cost of the additional energy consumed by the old system.

In all, Austin Energy turned over just $3,000 in bills for the Hockaday work to Housing and Community Affairs for federal reimbursement. Austin Energy assumed the rest.

Guerrero said he didn’t want the blot on a program he is proud of.

“I thought it was in the interest of everyone involved that we change out the equipment for a new system,” Guerrero says. “Our goal was to satisfy a customer who had some extreme concerns. I think that by looking at the facts of the case alone, this was not a normal course of business for us.”

By the overall standard of Austin Energy work, the Hockadays weren’t normal business. Of the 1,886 units weatherized with stimulus funds, Austin Energy went over the $6,500 budget 13 times, a check of the records by Texas Watchdog showed.

Nine of the thirteen were total bills under $7,000, one of them over the limit by 83 cents.

Despite its slow start and by the decidedly low standard set by a program beset throughout with administrative incompetence, poor workmanship and allegations of fraud Austin Energy was a solid performer.

(You can track the program’s performance and that of all the other local programs in the Weatherization Assistance Program in charts provided here.)

Once threatened with a loss of funding, Housing and Community Affairs eventually shifted more than $3 million more from laggard programs to Austin Energy. The program spent all but $1,100 of its $9.2 million, Guerrero says.

And while Texas Watchdog tracked a rather dismal record of workmanship problems statewide, Austin Energy performed better than most. (You can examine the results of eight spot inspections of contractor work done by the Department of Housing and Community Affairs did over two years here.)

“One house out of all those we worked on is a pretty good record, I think,” Guerrero says.

Utility: Responsibilities fulfilled

But what of the record at that one house?

In the weeks that followed, the Hockadays discovered a water buildup in a garage ceiling that showered water and sopping drywall on computer hardware Byron had stored there. Negotiation with the contractor for reimbursement came to an impasse when the Hockadays wouldn’t surrender the hard drives for replacement.

McCullough tracked the moisture problem and in July rebuilt the plenum, return and filter system.

The installation of the air conditioning system, Byron says, has juxtaposed an air line unsafely with a gas line running to the new furnace. The Hockadays have demanded an inspection. McCullough insists they already deemed the parallel lines safe.

The Hockaday home gets cool, with digital thermostats festooning the house to prove it. But Byron swears this new, top-of-the-line energy efficient air conditioner still cycles for hours.

It is December, and in the cool weather the Hockadays can’t be sure, but all of that cycling, Byron says, isn’t going to save them any money come summer.

And if something more should go wrong, Austin Energy has said it won’t be coming around any more.

In the hundreds of units done by Go Green Squads as one of the six contractors used by Austin Energy, Susan Meredith says she never experienced anything like the Hockadays.

Understanding the cold calculating of eligibility and rehabilitation, Meredith still wonders if this program ought to have been serving a family like the Hockadays. She thinks the couple knew what they were doing, that they “gamed the system.”

Austin Energy and its contractors, she says, were caught in the classic quandary: Was there too much government or not enough government?

“In hindsight we shouldn’t have bent over backwards,” she says. “We spent so many hundreds of dollars we didn’t bill for trying to make them happy. All we did was create a bigger problem.”

The weatherization assistance program, at least at the start, would not allow anyone to walk away from the Hockadays, Guerrero says. Austin Energy, he says, has more than fulfilled its responsibilities.

The Hockadays do not believe that. It takes them nearly three hours on the sofa to tell their story, and only because they are forced to leave out all sorts of details. The Hockadays are consumed by the details.

Brandi is working again, at home and as a virtual assistant at a fraction of her old salary, she says. Byron is still working to make a go of his business. Their combined income, Brandi says, would easily make them eligible for the Weatherization Assistance Program if it were available today.

Knowing what they know now, the Hockadays say they would have never applied. But having done it, having gone through it, they aren’t about to give up.

“From the time we applied, all we expected them to do is do their job right,” Byron says. “That’s all we asked all along. I don’t think that’s too much to expect. Do you?”

Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog.

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Photo of light bulb by flickr user ikewinski, used via a Creative Commons license. Photo and video of the Hockadays by Mark Lisheron.

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Texas state payroll shrinks, though not in higher ed or at the DMV
Thursday, Nov 01, 2012, 12:10PM CST
By Mark Lisheron

Social services, criminal justice and education were largely responsible for reducing the state payroll by ½ a percent in the past fiscal quarter in Texas.

The reduction of 1,620 full-time positions, bringing the total down from 297,502.9 positions, was nearly offset by the addition of 1,587.6 positions in the state’s institutions of higher education, according to a new report by the state Auditor comparing employment in the previous quarter to the same period in 2011. (See a chart tracking the change here.)

While total higher education staffing increased by 1.1 percent to 148,557.9 full-time equivalencies, the number of administrators jumped by 2.4 percent over the same period a year ago to 3,023.6 positions.

The Department of Aging and Disability Services reduced its staff over a year to 16,878.8 positions. The reduction of 721.2 positions was the biggest single loss for a state agency, according to the study.

The Texas Department of Criminal Justice and Juvenile Justice Department dropped a combined 1,101.7 jobs from the end of August 2011.

The Texas Education Agency, which began laying off employees during a tough legislative session on public education in 2011, reduced staff by 226.2 to 701.6 positions, a 24.4 percent drop, the highest percentage decrease among major departmental employers.

The Texas House under Speaker Joe Straus and the Senate, headed by Lt. David Dewhurst, both conservative Republicans who have called for smaller state government, made double-digit percentage reductions, shedding more than 100 employee positions each.

It is important to note that in June through August of 2011 the Legislature was just completing a session and in the same quarter this year the Legislature had been adjourned for more than a year.

The Department of Public Safety, in the midst of a $63 million spending spree to open driver’s license megacenters across the state, brought its staffing to 8,692.8 positions by adding 347 jobs, more than any state agency.

Texas state employees

The Department of Motor Vehicles grew its staff by 151.3 positions to 730.2 positions or 26.1 percent, the highest percentage increase of any major state agency.

Governor Rick Perry, another high-profile, small government conservative, added 3.9 positions in a year, bringing his staff to 264.1 positions.

Attorney General Greg Abbott, whose staff handled a Supreme Court challenge to Obamacare that was not upheld and a Supreme Court redistricting fight this year, increased his office’s staffing by .3 percent, 13.7 positions added to a staff of 4,057.2 positions.

The General Land Office, headed by conservative Land Commissioner Jerry Patterson, who is running for lieutenant governor in 2014, boosted his staff by 20.9 positions or 3.6 percent to 600.9 positions.

However, Patterson’s agency was called on in August of 2011 to take over nearly $3 billion in federal funding that had not yet been distributed in relief for the victims of Hurricane Ike in 2008.

The Department of Rural Affairs, one of the agencies criticized for its handling of the Hurricane Ike funding, was abolished by the Legislature, a reduction of all of its 70.6 positions, the Auditor’s report says.

The other agency with Ike responsibilities, the Department of Housing and Community Affairs, lost 52.2 or 14.4 percent of its staff during the same period. Michael Gerber, the executive director of the agency, resigned at the end of August of 2011.

Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog.

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Troubled Texas state housing agency faulted by auditors in management of $101 million program to redevelop foreclosed homes
Friday, Aug 24, 2012, 08:35AM CST
By Curt Olson

A federal audit of a Texas housing agency with a troubled past casts doubt on whether the state properly managed a $101 million Housing and Urban Development program aimed to stabilize neighborhoods hit by foreclosures.

According to a report by the HUD Inspector General, the Texas Department of Housing and Community Affairs improperly obligated $42,182, which HUD’s Fort Worth office has been directed to take back. The IG audit also requires the state agency to provide better documentation of $25 million in spending on the Neighborhood Stabilization Program. The state agency also could not support $8,767 in expenses for businesses and organizations it worked with to complete projects, the HUD audit states.

Read the full audit here.

The program money to the state was part of a $3.9 billion nationwide effort to boost neighborhoods hit hard by foreclosures amid the Great Recession. Only California and Ohio disbursed more money than Texas, the San Antonio Express-News reported. Some Texas cities and counties also oversaw program grants, which were aimed at redeveloping abandoned and foreclosed properties.

The HUD inspector general chastised poor record keeping and staffing at the Texas Department of Housing and Community Affairs. Gerald Kirkland, the regional inspector general for audit, also noted the state agency’s repeated tardiness on quarterly reports showing progress to commit and spend the money.

The inspector general found:

  • The state agency did not have valid contracts or other sufficient documentation for $631,402 in reported obligations.
  • Of 58 agreements with other agencies to carry out work under the program, 38 listed amounts which did not match amounts in other paperwork. The difference amounted to more than $24.7 million in unsupported costs.
  • Of the 58 agreements, 22 showed planned work that didn’t match earlier paperwork. “These differences gave the appearance that the department did not know what activities it was going to pursue,” the audit states.
  • TDHCA entered into agreements with other agencies that did not complete their responsibilities, resulting in $8,767 of unsupported costs.

States and municipalities received money in March 2009, and rules stipulated they obligate the money by September 2010 to rehabilitate abandoned and foreclosed homes. The program’s nature necessitated reporting to the feds. Housing and Community Affairs repeatedly came up short.

“The department did not establish systems and controls for the obligation of (program) funds, which significantly hindered its ability to support its reported obligations,” the audit states.

The state agency failed to have a support system in place to assist the agencies it worked with to carry out the program. Ultimately, Housing and Community Affairs pulled back funding for $21 million in activities it could not complete, the audit states.

No one should be surprised by the results of this audit because the agency has a troubled past. It failed to use Hurricane Ike rebuilding funds and oversaw a faulty stimulus program to fix up low-income homes. Last August, the agency’s leader resigned.

But the signs of trouble in the program targeted in the latest audit were there as early as April 2010.

About six months prior to a deadline to have funds committed, a progress report showed that the state had committed 6.2 percent of its program funds, ranking behind every state but Illinois, the Express-News reported.

Housing and Community Affairs Executive Director Timothy Irvine in his agency response disputes that any funds were improperly spent and that the findings boil down to paperwork problems. He cited limited federal guidance at the outset of the program and problems with a reporting system that HUD used for the program.

Irvine added in his letter to Kirkland:

“We concur that our processes for record-keeping in the initial phase of the program left room for improvement; while we do not agree that our funds were improperly obligated (other than those obligations with which we have been corresponding with HUD over the past nine months), we do agree that they were not well organized.”

“However, in spite of our challenges and lack of ideal systems, we believe that we have source documentation to substantiate TDHCA’s commitments, obligations and decisions. We also are deeply concerned and disappointed with the emotionally charged and pointed language in portions or your report which appear to suggest TDHCA intentionally mismanaged its administration of the Texas NSP. In fact, TDHCA has acted in good faith and has always attempted to administer this program in a manner that complies with all applicable federal requirements and guidance.”

While home sales have improved in some markets nationwide, the New York Times reports that Realtors don’t see signs a full housing recovery anytime soon. That raises the stakes of a program centered on an aspect of the crisis to be managed the right way in Texas.

Contact Curt Olson at or 512-557-3800. Follow him on Twitter @olson_curt.

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Board members often absent from meetings of Amarillo nonprofit under state investigation
Thursday, Apr 19, 2012, 01:56PM CST
By Steve Miller

Here’s one that's hard to understand: A nonprofit that appears on paper to be a hard-working, benevolent operation, handing out grants for weatherization and housing assistance to the needy is under state investigation. The Amarillo Globe-News reports that as financial problems surfaced, board meetings of Panhandle Community Services were meagerly attended - by its own board members.

An average of 72 percent of the 14-member board attended bi-monthly meetings dating back to April 2011. The board oversees a budget of $29 million.

Which would create a problem.

With nearly a quarter of the board missing each month, Panhandle can’t account for $400,000. An auditing firm brought in by the Texas Department of Housing and Community Affairs found that the missed meetings hinder Panhandle’s ability to get a grip on sound business decisions.

Panhandle keeps its salary expense low and its grant-to-revenue ratio high, which makes it look good to most reviewers. According to its tax form 990, its director, Phyllis Cook, makes $94,000 a year, peanuts compared to the heads of many nonprofits.

The red flag appears to have been the meager attendance at board meetings, where expenditures and allocations need to be carefully pored over and discussed. Board members include three judges and a couple of clergymen.

Besides, with weatherization programs, what could go wrong? Big surprise - Panhandle indeed swooped in for some of that federal stimulus money.

Tonight’s meeting looks to be a barn-burner, as they might say in those parts.

The auditing firm, according to the minutes of the last meeting, “found the board of directors has failed. The board has not received or requested necessary information to take care of 30-million-dollar businesses with policies, which are not adhered to.

"They looked at 17 personnel files with no annual reviews…there is an issue with six board members whose terms have expired…there appears to be a complete failure to train the board and staff of their responsibilities.”

Finally, the 72 percent board turnout may make good decisions difficult, but that’s nothing compared to the board turnout at an October meeting of the Panhandle Regional Planning Commission, when 12 of 24 board members bothered to show up.

Contact Steve Miller at 832-303-9420 or

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Latest blunder by state housing agency: Texas discriminated by putting too much affordable housing in poor, minority areas, court finds
Wednesday, Mar 21, 2012, 10:55AM CST
By Mark Lisheron

Over the past three years, the Texas Department of Housing and Community Affairs has placed new emphasis on embarrassment in the phrase embarrassment of riches.

On Tuesday, a federal judge ruled the department’s interpretation of a crazy quilt of federal and state guidelines has led to systematic, but somehow not deliberate, discrimination in its distribution of tens of millions of dollars in federal tax credits to build affordable housing in Texas.

Sounds complicated? Maybe that’s why the department needed $1.6 million of our tax money for legal representation to help them keep everything straight, according to a story today by the San Antonio Express News.

It seems that Housing and Community Affairs, which is expected to dispense $55 million of these tax credits in 2012, keeps giving them to builders to put up affordable housing in poor and minority neighborhoods.

The goal of the program, if we’re following this correctly, is to build a certain percentage of this housing in more affluent, or in the government vernacular, “high opportunity,” areas.

The department is doing woefully little high opportunity building and has 60 days to deliver a plan to change that, U.S. District Court Judge Sidney Fitzwater ordered.

The original lawsuit filed in 2008 by Inclusive Communities Project, a Dallas non-profit also supported by our federal tax dollars, claimed the department had been picking projects with race bias. Fitzwater’s ruling placed the burden on something at least as pernicious, hopelessly clotted bureaucracy.

One could very nearly empathize, but the Department of Housing and Community Affairs hasn’t had much luck doing one of its core jobs of handling our federal tax dollars.

The department parted company with its executive director, Michael Gerber, last August over its inability to disburse nearly $3 billion in federal relief funds to Texans who lost property to Hurricane Ike in 2008.

Gerber’s oversight of $327 million in federal stimulus funds to weatherize low-income homes and apartments, the subject of dozens of Texas Watchdog stories, didn’t help in his performance review.

The Weatherization Assistance Program was beset by allegations of fraud, bad workmanship, and, like the hurricane funding, an inability to push the windfall out its doors.

After getting its deadline extended by six months to the end of last August, the department’s weatherization program still had not spent almost $78 million of the $327 million Congress granted them in February of 2009, according to the department’s weekly reports.

While federal officials had at the time the stimulus bill passed threatened to take back funds not spent by the deadline, Housing and Community Affairs dribbles on with $13.7 million not yet stimulating anything.

(Please see the weekly report from Sept. 26, 2011, for the end of August totals and the latest report from March 5, 2012 by scrolling here.)

It is unclear from the most transparent and accountable program in our lifetimes whatever happened to all the talk at the outset of the stimulus of “use-it-or-lose-it.”  Navigate the federal government’s $27.7 million stimulus website and try figuring out what’s been used and what’s been lost.

Don’t feel bad. We’ve been trying for years.

Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog.

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Taxpayer funds for the disabled allegedly looted by nonprofit CFO to pay off credit cards; her death in the days after indictment now being investigated
Tuesday, Mar 20, 2012, 05:39PM CST
By Mark Lisheron

Investigators are awaiting a ruling on the cause of the death of a former chief financial officer indicted on charges that she misappropriated more than $100,000 in state funds from a non-profit agency helping people with disabilities pay their rent.

Mary Ann Hernandez, 58, of Pflugerville, CFO for Austin Resource Center for Independent Living between 2005 and 2009, died on March 6, according to the Travis County District Attorney’s office.

The cause of her death awaits toxicology reports by the Travis County Medical Examiner’s office.

On March 1, a Travis County grand jury indicted Hernandez on two felony counts, misapplication of fiduciary property of at least $100,000 and less than $200,000 and theft of at least $20,000 and less than $100,000.

The indictment lists the amounts of dozens of checks allegedly drawn on Resource Center accounts by Hernandez to pay Visa credit card bills between 2005 and 2009. The funds were provided through a state program administered by the state Department of Housing and Community Affairs.

The department called on the special investigations unit of the state Auditor, whose inquiry into the missing funds provided the basis for the grand jury indictment, according to a press release issued today by the Auditor.

Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog.

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Six-figure jobs in federal stimulus program to fix up low-income homes; millions of dollars in questionable spending in Texas’ weatherization assistance program
Thursday, Sep 08, 2011, 09:23AM CST
By Mark Lisheron

What was to have been a Frankenstein-like lightning strike to the economy and to unemployment, the Weatherization Assistance Program today in Texas has spent more than $226,000 on each of 1,041 jobs the program is said to have created or saved.

The director of the state Department of Housing and Community Affairs overseeing the nearly $327 million stimulus program to fix up low-income homes has stepped down. At least three of the original 44 local organizations administering the program have been shut down for chronic mismanagement and concerns about fraud.

The state has taken funding from 13 of the programs and redistributed it to more efficient organizations, while the federal government says it will take back tens of millions from the state if it fails to spend the money quickly.

And in a review by Texas Watchdog of state monitoring reports over the past nine months, state inspectors have found administrative overspending, careless workmanship and millions of dollars in prohibited and questionable spending by contractors working for more than two dozen of the local groups.

Housing and Community Affairs officials asked that they be able to respond to questions about the inspection reports in writing. As of Wednesday afternoon, agency spokesman Gordon Anderson said, “Staff is working on responding to these questions right now, but these same employees have – and continue to be – pulled off of all other tasks throughout the day to assist in responding to inquiries from other governmental entities regarding the state’s response to the numerous wildfires still burning across Texas. This takes a priority over everything else at the moment.”

As President Obama prepares to address the nation with a request that taxpayers come up with another $300 billion for a federal jobs program, it is worth taking a hard look at one of the original jobs programs in the $862 billion American Recovery and Reinvestment Act of 2009.

Baylor University economist Earl Grinols said there are three immediately obvious problems with the weatherization program: “First, it is not an appropriate government function to provide weatherization of private homes. Second, even viewed as a stimulus measure, it is not very effective as a stimulus based on cost-per-job, and third, it appears not to be well-managed.”

Hard to get a stimulus out of unspent $$$

The $5 billion Department of Energy weatherization program was to have not only put people to work quickly, but also provided millions of dollars in energy savings to qualified low-income homeowners and apartment dwellers.

Caught in the undertow of hundreds of millions of dollars and vast new federal and state regulations, it took the housing agency nearly a year for the first houses in Texas to be weatherized.

Almost 31 months since President Obama signed the bill, the housing agency has yet to exhaust its remaining $91.6 million, according to its weekly report through the end of August. The Department of Energy has threatened it will collect unspent money in six months.

A closer look at the report shows that 9 of the 10 biggest weatherization programs in the state are behind the state average in the amount so far spent. The city of Houston has so far spent $13.3 million or 57 percent of its original $23.5 million.

Auditors in other laggard states are warning that thousands of homes will go without new insulation, caulking and energy saving appliances if they are forced to return the stimulus funds. A staff member for Auditor John Keel said Wednesday no similar study had been done or had so far been requested for Texas.

Having so far spent $235.3 million, the number of jobs created in Texas has changed little since work began in earnest in early 2010. Weatherization crew foremen have said that if and when the stimulus money is spent the jobs are likely disappear.

“If this was being done purely to stimulate the economy to generate private activity and higher employment, it’s a failure as a program because the expenditures per job were beyond what they could have been,” Grinols said.

While the housing agency has taken pride in having weatherized 42,350 housing units by the end of August, the crews have had a chronic problem balancing the need to spend swiftly and carefully. The problem has, to judge from the inspection reports, worsened over time.

Inspectors in the past nine months have demanded that crews return to hundreds of homes across the state. The deficiencies in administration, work quality and record keeping are too numerous to cite here, but we have posted copies of each of the 108 inspection reports here.

High carbon-monoxide levels, sunscreens in the shade, and more

When inspectors came to Houston in March, they found nearly a third of the 65 units they saw required crews to come back. They asked that the state be reimbursed for 40 water heaters worth $47,892 that had been installed where they hadn’t existed before. They questioned another $47,892 for 40 water heaters that might not have needed replacing.

An inspection in June of 82 units done by the city of Houston found the work in 47 of them deficient. Inspectors questioned the necessity of $186,291 of work, including the mass installation of heat pumps and new sunscreens put on windows in the shade.

Bad documentation led inspectors to question $2.2 million in weatherizing work done by city of Dallas crews who were forced to return to 32 of the 49 unites inspected in December of 2010.

The state in February threatened to take the remainder of $15.5 million away from the Alamo Area Council of Governments in San Antonio for spending more than half of its funds on administrative costs. The federal program reimburses for administrative spending of no more than 5 percent of the total.

For this, homeowners in the San Antonio area got work in 16 of 17 homes such as gas space heaters left unventilated, high carbon monoxide levels and basic weatherizing like caulking and door sweep installation done improperly.

In October of 2010, inspectors produced a 36-page report complaining that in 28 of 29 inspections the city of El Paso work was substandard. A month later inspectors flagged 23 of 30 units done by another El Paso agency, Project Bravo. After nearly a year on the job, inspectors said weatherization staff for both groups needed to attend the state’s weatherization academy “immediately.”

Still, inspectors complained in report after report that the work and the spending wasn’t being done fast enough. As of the end of August, the Community Services Agency of South Texas in Carrizo Springs had spent about $900,000 or less than 25 percent of its $3.69 million weatherization grant, by far the worst performance in the state. The problems with the Community Services Agency weatherization program are longstanding.

In a 34-page report from January, inspectors said it appeared the program was at a standstill after completing just 149 units. The record keeping, too, had slowed so that inspectors could not account for $1.22 million in materials procured by contractors. And $28,379 of the costs the agency could account for inspectors said were not allowed. All 19 of their inspections found work that needed to be finished or done over again.

To judge from the Weatherization Assistance Program, among other questionable stimulus programs, Grinols said President Obama needs to take a much different approach.

“What the president should have done in the original stimulus, and in any stimulus, is return money to the hands of the private sector. The citizens themselves should decide how that money is going to be spent,” Grinols said.
Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog. Lee Ann O’Neal contributed to this report.

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State investigating alleged misspending of $186,000 in taxpayer money by Community Council of Reeves County
Friday, Jul 08, 2011, 04:15PM CST
By Kevin Lee

A West Texas community program aimed at helping low-income families pay utility bills and weatherize their homes has allegedly misspent $186,000 in taxpayer money, KOSA Channel 7 in Odessa reports.

The Texas Department of Housing & Community Affairs found widespread misspending and mismanagement at the Community Council of Reeves County, which also serves, Ward, Winkler and Loving counties. The department’s report looked at all the agency’s programs, and the money involved included federal stimulus and other federal funds.

“The Department discovered a significant risk of fraud, waste and/or abuse of program funds,” state inspectors wrote in a June 24 letter to the council.

Among the problems noted in the state’s report:
  • Fraudulent payments of $5,600 to a worker who was paid even though she did no work for three months.
  • The agency spent $47,000 on compact flourescent lights, water savers and ceiling fans at the end of 2010, but had not installed them in any clients’ homes as of May of this year.
  • Lack of any policy governing use of the agency’s gas and credit cards, and a chief financial officer who “does not appear to have the experience to manage the fiscal operations.”
  • Inadequate documentation of spending on the weatherization assistance program -- which provides energy-saving upgrades for low-income families -- and no system in place to prioritize applicants. The agency also spent $5,000 to fix up the home of an agency employee, who investigators found did not qualify based on income guidelines.
  • Misspending, including $5,000 spent on equipment without getting state approval, $166 in meals for staff and contractors, and $90 for the registration of a trailer owned by the executive director’s brother. The brother had offered the trailer for the agency’s use, the director told investigators.
  • Problems in procurement, including failing to seek new bids as required for an HVAC contract.
  • The agency spent more on salaries than on direct client assistance in some months.
  • Lack of adequate forms and case management plans for clients.
In some cases, the council will be required to pay back money to the state. The state has put the council on a tighter system of being reimbursed for spending.

The state is considering stepping in and installing a different agency to handle the programs, Gordon Anderson, spokesman for Housing and Community Affairs, said. But the department is waiting until after the council’s board meeting Thursday before making a decision, he said.

One of the programs tracked in the state report, the weatherization assistance program, has been plagued by problems since it was enlarged by the federal stimulus in 2009. As Texas Watchdog has found, organizations tasked with completing those projects have provided substandard work, failed to provide adequate documentation of taxpayer funds, and blocked public access to addresses of homes fixed up with the money.
Contact Kevin Lee at 713-228-3733 or

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Sounds like Texas: Illinois stimulus program to weatherize homes marked by shoddy work
Wednesday, Oct 20, 2010, 09:36AM CST
By Mark Lisheron
worker with tool belt


The inspector general for the U.S. Department of Energy found in Illinois what state inspectors have repeatedly found in Texas: shoddy and unsupervised work under the federal stimulus Weatherization Assistance Program.

An audit of the $242 million state program found that energy efficiency upgrades for low-income homes repeatedly failed final inspections. Inspectors checking 15 homes in the Chicago area found that 14 would not pass inspection and 12 were left with problems that could have posed a health risk to the residents or damage to the property. Inspectors found that contractors had overpaid for materials on the jobs and that, overall, the work had been poorly monitored.

Inspector General Gregory Friedman ordered the audit after reports of weatherization problems earlier in the year in Illinois. Friedman at the time issued a national alert warning state agencies taking part in the $5 billion Weatherization Assistance Program to be aware of the potential for problems.

"Substandard weatherization work can pose health and safety risks to occupants," the audit said. "Payment of excessive materials costs to contractors reduces the amount of funding available to weatherize homes ... and reduces the amount of funding for direct job creation."

The Illinois Department of Commerce and Economic Opportunity, the agency overseeing the program, took issue with the criticism, saying federal inspectors looked at work that was not completed. The agency said it had made improvements statewide in oversight. Contractors, the agency said, were not overpaid.

Texas has had its share of problems with its $326 million weatherization program. Management problems have forced the Texas Department of Housing and Community Affairs to suspend local programs and withhold funding. Texas continues to lag behind much of the country in spending its funding, although the pace of the work has picked up considerably over the past eight months.

Serious problems have been reported in several other states, including Michigan, North Carolina, Delaware and Indiana.


Contact Mark Lisheron at 512-299-2318 or Read more about how the federal stimulus is playing out in Texas. Search stimulus at


Photo of a worker by flickr user danagraves, used via a Creative Commons license.

High costs, low production, substandard workmanship dog state's stimulus weatherization program
Monday, Sep 20, 2010, 03:32PM CST
By Mark Lisheron

Agencies are struggling to account for spending, maintain work quality in $326 mil stimulus program to make low-income homes energy efficient. 'Sense of failure' in nonprofits handling weatherization program, Austin interfaith leader says.

State inspectors found tens of thousands of dollars in unaccounted for charges, substandard workmanship, high administrative costs and low production in more than half of 29 monitoring reviews of the $326 million Weatherization Assistance Program in Texas. 

A Texas Watchdog review of all reports done in June and July by state Department of Housing and Community Affairs inspectors showed 15 of the 44 local weatherizing agencies with serious problems meeting state and federal standards for the American Recovery and Reinvestment Act program. They represent $76.7 million or almost a quarter of the federal stimulus weatherization grants, including the city of Houston, whose $23.6 million is the largest single contract.

These programs include: the City of Arlington, Austin Energy, Bee Community Action of Beeville, Brazos Valley Community Action Agency Inc. of College Station, City of Brownsville, Cameron and Willacy Counties Community Projects Inc. of Brownsville, Community Services Agency of South Texas in Carrizo Springs, Concho Valley Community Action Agency in San Angelo, Project Bravo of El Paso, Hill Country Community Action Association of San Saba, City of Houston, City of Lubbock, City of Odessa, South Plains Community Action Association of Leveland and West Texas Opportunities Inc. of Lamesa.

As contractors across the state have stepped up work blowing insulation, replacing appliances, caulking and weather stripping to make low-income homes more energy efficient, the volume of violations has increased markedly. A review of state records obtained by Texas Watchdog for 
April and May found seven local agencies with serious problems. Cameron and Willacy had a worse performance report in May than it did in the first inspection done in March.

On top of the negative monitoring reports, the city of Abilene Monday night dissolved Community Action Program Inc., the agency directing the city's $5.6 million stimulus weatherization program, for longstanding mismanagement. The state housing department is seeking another government or nonprofit group to take over weatherization, or the remainder of the budget will be turned over to other agencies in the weatherization program.

The department also announced that it was stripping the weatherization program with the smallest budget in the state, $451,000, from the Institute for Rural Development in Kingsville. Its small budget was still too much for the tiny nonprofit to handle, department officials said.

Local organizations with an interest in how stimulus money would be spent in their communities are expressing disdain, but hardly surprise.

Bee Moorhead, executive director for the state interfaith group Texas Impact, based in Austin, blames the legislature for not taking responsibility for oversight of the stimulus weatherization, leaving unprepared agencies to fend for themselves.
Bee MoorheadMOORHEAD

Moorhead has also been frustrated at how difficult it has been to get information from the the Department of Housing and Community Affairs to critically assess how well the weatherization program is doing.

"What I think you have at the local level is a sense of failure, a wish that more could have been done," Moorhead said. "While it's not surprising, it has been disappointing."

The reports of difficulties with at least 17 of the state's weatherization overseers is not evidence of a statewide program in trouble but, rather, a program now completing energy efficiency jobs at the highest volume since the program was funded in March of 2009, according to Michael De Young community affairs director for the department. Bureaucratic funding, rules and training delays prevented work from beginning at all until December in Texas.

As it has from the beginning, the department has been heavily involved in training for administrators who suddenly found their weatherization budgets bulging with federal taxpayer funds and contractors whose crews had for the most part not been asked to hew to exacting federal and state workmanship standards before, De Young said.

"I don't think these monitoring reports address an agency in trouble. They are a focus on the quality of work being done by unit," De Young said. "I would say that there are only a handful of agencies in the state that need additional attention beyond additional training. And we've had extensive training in the last few months."

A review of the department's own monitoring reports suggests the training was sorely needed. In its inspection of 24 units weatherized by Brazos Valley contractor crews, state officials questioned the entire $91,920 cost to install new air-conditioning systems in each unit because the contractor couldn't produce documentation to prove the new systems were needed.

The report went on to say that workmen would be required to return to every one of the units to address poor workmanship, including a failure to insulate attic spaces, weatherstrip front doors, seal plumbing openings and patch furnace closets.

Texas Watchdog attempted to contact every agency director whose negative monitoring report is mentioned in this story. Brazos County was among those that did not return phone calls seeking comment.

Among those who did was Randy Kopplin, whose Bee Community Action program has spent months retracing the work done on units that caused state inspectors to question $73,056 in costs for work done on more than a dozen units. The report criticized crews for filing invoices for work that were substantially higher than estimates and going ahead with weatherization without being able to prove the measures offered sufficient energy savings.

Kopplin said his program was just this week lauded by the department for justifying $57,000 of the $73,056 in costs. Kopplin, who said he was reluctant to criticize the department, said local agencies like his have been battered trying to speed along their work under an August 2011 mandated deadline, adhere to strict new rules and make no mistakes. To have what amounts to paperwork errors publicized, Kopplin said, "isn't a slap in the face, it's a punch in the face."

Janet Everheart, executive director of West Texas Opportunities, characterized Kopplin's slap as a learning experience. After inspectors recommended that work crews return to every one of the units they inspected for poor on-site inspections, Everheart said West Texas Opportunities hired a quality control specialist who has improved overall performance.

A couple years ago West Texas Opportunities was weatherizing about 50 homes in 14 counties a year with a budget well below $1 million. The nonprofit has a stimulus budget of $5.8 million and a goal of weatherizing more than 1,300 homes with those funds.

"We certainly welcome the money, but there have been problems, the training, waiting for the money to get started," Everheart said. "I don't think it was anybody's fault. It just happened. We're all learning as we go, even though we've done this for years."

Some who once paid close attention to weatherization at the start have distanced themselves. At the end of July 2009, before a single low-income unit had been weatherized, Don Baylor, a senior analyst for the 
Center for Public Policy Priorities in Austin wrote a seven-page policy paper titled, "Texas Weatherization Assistance Program Provides Relief to Low-Income Families and Creates Jobs For the New Economy."

The organization, whose mission statement stresses its commitment to bettering economic and social conditions of low- and moderate-income Texans, has no real interest in following up with a study to see if Baylor's predictions have come true, he said. Baylor said from what little information he has been able to gather, weatherization has not made good on the stimulus promise of getting money into the economy quickly.

"By all accounts it has been slow," Baylor said. "But at the end of the day, I guess, tens of thousands of homes are going to get weatherized." 

Moorhead said she wonders how many thousands of homes may not get weatherized because of delays, mistakes and cost overruns. She finds fault for the rickety condition of the weatherization program from top to bottom with the legislature.

Groups like Texas Impact and the Sierra Club supported a bill carried in the last session by Rep. Sylvester Turner, D-Houston, that would have made the state's lawmakers responsible for the goals and objectives of the Weatherization Assistance Program.

The bill was ignored and, instead, $326 million of federal money was dumped on a department that had worked with a $13 million annual budget for weatherization statewide, Moorhead said. "The legislature botched this as badly as it could have been botched," she said.

"At this point I think all you can do is take these lessons back to the legislature in this next session and say if you ever got the opportunity to do weatherization on this scale, you'd be unprepared because this did not go so well." 

Contact Mark Lisheron at 512-299-2318 or

Photo of insulation by flickr user Jack Amick, used via a Creative Commons license.

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