Broken Promises: Failures of the Little Rock Housing Authority and the Impact on Residents

The subcommittee will come to order. Without objection, the chair is authorized to declare recess of this committee at any time. This hearing is titled Broken Promises, Failures of the Little Rock Housing Authority and the Impact on its Residents. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. I want to start just by saying thank you. Everybody went through a lot of trouble to put this together. Appreciate the involvement and the seriousness that just in our earlier conversations I received on this very important issue that you all care about very much. I want to pay particular thanks to Chairman French Hill. Chairman Hill, of course, is our is the head of our is the chairman of our full committee, Financial Services Committee. He does a fantastic job. He loves our country and he, well, he loves Little Rock. So that's very much why we're here, so we want to thank him for holding this field hearing and for, Chairman, your leadership in conducting this serious oversight on issues that directly affect your constituents who rely on the all-important public housing. We are here today because the Metropolitan Housing Authority of Little Rock, MHA, experienced many years of quite frankly disastrous financial and governance failures that put federal housing funds and local residents at serious risk. In 2018, HUD identified that MHA failed to submit required financial statements for funds up to $30 million that were transferred between the housing authority and its nonprofit affiliate, the Central Arkansas Housing Corporation, in ways that were intentionally poorly documented and lacked justification. In 2023, HUD also found improper payments, unauthorized use of credit cards, and failures in basic financial controls that should have been caught long before they reached that point. The problems became severe enough that the FBI executed a search related to the housing authority and CAHC. As early as 2018, problems were identified. By 2021, Ms. Jarmon blew the whistle on the corruption. Those claims led to the investigations. HUD became involved, the Arkansas Attorney General became involved, Chairman Hill became involved. Nearly the entire MHA commission was fired and ultimately the FBI executed a search related to the housing authority and its nonprofit affiliate. So when a situation reaches that level, it should be treated as a top priority, but under the previous HUD secretary, it was decided it was not. Thankfully for you all here, Chairman Hill became chairman of the Financial Services Committee and Secretary Scott Turner took office at HUD. Now this matter is receiving the serious oversight and attention it requires. Our goal here today is to fully understand how these failures were allowed to continue for so long and to make sure the necessary fixes are put in place so the residents of Little Rock and all the residents in public housing and all those that strive so hard to serve the public housing and the residents can have confidence moving forward. That's why our first hearing on this topic was held in on February 10th and included letters to 32 public housing agencies that were troubled, demanding solutions and coordination with HUD. MHA was not included among those 32 agencies, reflecting that steps have been taken over the past year to stabilize the authority. New leadership has, of course, been put in place. The city has taken action and HUD has been actively engaged since early 2025 to restore proper oversight. I do want to note that HUD Secretary Scott Turner committed to this committee that the Trump administration is working with us to stop waste, fraud, and abuse in federally funded housing programs to make sure housing authorities follow the rules and follow the law. That commitment is important. We will continue to work closely with the department, but today's hearing is about accountability and looking forward. Probably more so looking forward, I would think. I understand that many people would like to move on as we all do after years of problems, but Chairman Hill and I do believe that and this committee that before that happens, the facts need to be clear, failures need to be understood so they don't happen again. We continue to look at what where responsibility should be found and held accountable and provide as much transparency and discipline the law and our constituents and residents deserve. I yield back. I now recognize the chairman of the full committee, Chairman Hill, for one minute for an opening statement.

Thank you, Chairman Meuser. I want to appreciate the opportunity to host you in my hometown of Little Rock and to highlight how the mismanagement and alleged fraud here at our local public housing agency have impacted some of our most vulnerable citizens of our great city. Since it was first designated as troubled in 2023, I've been seeking answers on how the Little Rock Housing Authority was allowed to degrade so severely with nearly $30 million in questionable or potentially disallowed expenses putting our constituents here in central Arkansas at risk of losing their homes. When these programs are abused, scarce resources are diverted away from families in need, undermining both public trust and the mission of public housing itself. This problem is only exacerbated when wrongdoers are allowed to escape accountability. What's occurred here in Little Rock was a failure at multiple levels, a failure of the individuals running the public housing agency to work in the best interest of our residents and a failure of the Department of Housing and Urban Development to fulfill their important oversight role. This is quite simply unacceptable. Today I'm hopeful that we're moving in the right direction, now with new leadership in place at both HUD and on the board here in Little Rock. Looking toward that future, it's crucial that Metropolitan Housing Authority's new leadership work to rebuild trust and become financially sustainable. The committee's dedicated to getting answers and demanding accountability from troubled or failing public housing agencies. I want to thank the Trump administration under the leadership of HUD Secretary Scott Turner for taking steps to strengthen their oversight of public housing, including here in Little Rock. It's welcome, it's long overdue. This is just the start of the committee's investigation into the quality and safety of America's public housing. I'm committed to working together to demand accountability on the issues that we've seen here in Little Rock and ensuring that public housing across the country are subject to sufficient oversight. I thank the chairman and I yield back.

Thank you, Chairman. We will now move to witness testimony. Today we welcome the testimony first, who I understand doesn't need any introduction in this building, but City Director Joan Adcock. She serves as the position 10 at-large city director for the city of Little Rock and has been a dedicated public servant of the people of Little Rock for over 30 years, being elected to the city board for the first time in November 1992. From January 95 until December 96, Director Adcock also served as vice mayor. Director Adcock was also the founder and director of the Hope Center, a nonprofit welfare-to-work organization that I understand was very effective and has been actively involved in establishing neighborhood associations throughout the city. Additionally, Director Adcock was instrumental in establishing the Little Rock Land Bank Authority, Little Rock Animal Village, and the first rental inspection program. Director Adcock is well known in the community for her dedication to helping individuals navigate their challenges, earning her the reputation of a voice for the people. Welcome, thank you. Commissioner Kerry Wright, I'd like to introduce. Mr. Wright serves as commissioner on the Little Rock Housing Authority's, which also operates as the Metropolitan Housing Alliance, the MHA, Board of Commissioners. Mr. Wright was first appointed to the Board of Commissioners in 2023 and served for a time as chairman. In addition to his board position, Mr. Wright is the owner of Garage Door USA and Windsor Door. Prior to moving to Little Rock, Mr. Wright served as the chairman of the board for the Harris County Housing Authority in Texas. Mr. Wright helped mold the Harris County Housing Commission into a responsible functioning agency following a large-scale theft and mismanagement by its prior leadership. Mr. Wright graduated from Texas A&M University with a bachelor's degree in economics and serves on several public sector, private sector, and nonprofit boards in Arkansas and Texas. So thank you for being with us, Mr. Wright. Next, Dr. Nadine Jarmon. Appreciate you very much being here, Doctor. Dr. Jarmon is the executive director of the Little Rock Housing Authority, again, also known as the Metropolitan Housing Alliance or MHA. Dr. Jarmon has worked for over 30 years at some of the largest, most troubled housing agencies in the nation. Prior to her work at MHA, Dr. Jarmon worked as an independent consultant for the Louisville, Westchester, and Gary housing agencies. Dr. Jarmon also held executive director positions in New Orleans before and after Hurricane Katrina, as well as the Baton Rouge and Deerfield Beach housing authorities. Dr. Jarmon has a master's degree in public administration and a doctorate degree in urban and public affairs from the University of Texas Arlington, a master's degree in business administration from the University of Houston, and a bachelor's degree in business administration from the University of Central Arkansas. Dr. Jarmon also completed a two-year fellowship at Yale University as a HUD Community Renaissance Fellow. So thank you very much, Doctor. And now Ms. Amanda Wentz. Ms. Wentz is a senior assistant attorney general with the Consumer Protection Division of the Office of the Arkansas Attorney General, where her litigation focus includes nationwide consumer matters such as antitrust and robocall enforcement. She holds a juris doctor from the University of Arkansas at Little Rock William H. Bowen School of Law, a master of public administration from the University of Arkansas at Little Rock, and a bachelor of arts in English literature from Harding University. Amanda is licensed to practice law in Arkansas, the District of Columbia, and the Second Circuit and D.C. Courts of Appeals. So thank you very much. So we thank each of you for taking the time to be here. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Ms. Adcock, you, ma'am, are now recognized for five minutes for your remarks.

Thank you for your remarks.

Put your there we go. HUD's there to help.

During my 35 years of service to the city of Little Rock, affordable housing is and will continue to be my passion. I feel very strongly about MHA. My commitment to MHA stems beyond my position as a member to the city board of directors. In growing up, my family had limited means. I did not have the opportunity to live in affordable housing like Madison Heights. Not only does Madison Heights address a growing affordable housing crisis in this community, but it also gives children and family hope. When I was growing up, I didn't know any doctors, lawyers, teachers, or people like you up there today. It is difficult for a child to grow up with a dream of becoming something that they don't know. Madison Heights allows children to live next door to professionals. What happened, the federal government did a study and they found that children growing up in poverty has no dreams. They do not understand what they can what they can do. When they built Madison Heights, it was with the understanding that 10 percent of the people living there would be from other places. They would be doctors, lawyers, it would be full market rent. And so a child would know someone. They would know people not in poverty. That was why Madison was built. And now today, by Madison, you will find UAMS, our medical school. They have people there that needed daycare for their children and after-school care and nighttime care. So they built a beautiful daycare and school. And I was serving on that committee, and I asked that 10 percent of the people from there become from Madison, and that is happening today. So children are growing up knowing what it is like to know people that are doctors and lawyers and everything. Also Mrs. Clinton, when she was looking at building her library for children in the city of Little Rock, she built it just a couple blocks from Madison, so children have the advantage of a daycare and a library close to their homes. During my involvement with MHA, I have seen the accomplishment of outstanding projects, such as the affordable housing units at properties like Parris Towers and Sunset Terrace. We've had problems, but we've helped solve those problems. But today, our biggest problem is that we have between 30 and 40 percent of our housing empty because of no funds to repair them to get tenants into them. We have a large population of homeless people in our city. And there again, we have a waiting list one to three years for people getting into housing. In 2025, Madison Heights was on the brink of foreclosure. MHA and the city of Little Rock board meetings was packed with senior citizens crying, begging us, saying, where will we go if you close our apartment complexes, where will we live? When the city voted against funding the Madison Heights refinancing, MHA worked to secure funding to prevent the properties from being foreclosed on. The loan is currently in progress of being closed. And I hope today that this meeting does not cause the banks to feel like that we are hopeless, because we're not. We have great people working at MHA to make a difference in the lives. Sunset Terrace was recently remodeled, and it's beautiful now. And it's by Barton Coliseum, which is another landmark in our city. To decrease the numbers of vacancies, MHA is going to have funds available to make the repairs needed. We restricted in one 55 percent, 55 years old. We did this because we had moved some people in there that had young people that wasn't obeying the rules, and it scared the seniors. We have to be able to get our units up to rent and put people in. When people call about problems, they get answers from the people at MHA. As I said, we have great people working. The board has made great improvements. I don't see how HUD can just walk away instead of walking in and saying, we're here to help. It seems like they walk to the door with a stick and make threats of wanting reports that there's not background information to make those reports. Dr. Jarmon and her staff has done incredible work with what they have to work with, but they need help. They can't do it alone. I thought and prayed a great deal about coming here before you today. I know that your heart, because you're here. I know that you understand and you want to help. As you sit here today, please remember the children that needs these homes. A waiting list one to three years for a mother who cannot provide for her children, that should not be acceptable in our world today. Our MHA's property residents have pride in themselves and their community, but they should not be made to live without hope. We'll clean these things up a lot. We've got people in place, but the one thing is missing, and that's you. Please today, take a stand and help us, help the city of Little Rock, help the people. Remember the children. Thank you.

Thank you. The chair is going to remind that we do have five minute limits. I wouldn't dare gavel out Ms. Adcock, but we're going to be more flexible in this field hearing, so please try to keep it close. Dr. Jarmon, your remarks, your five minute remarks, please.

Thank you. Good morning. Good morning, Chairman Hill. Good morning to this committee. As you said, I'm Dr. Nadine Jarmon, I'm the executive director of the Housing Authority here in Little Rock. A little bit of backdrop that I think you need to know is that the Little Rock Housing Authority is the largest housing authority in the state of Arkansas. We've got 32 employees. We administer over 4,000 forms of subsidy to the people in Little Rock. You'd have to multiply that number by at least three times to get a good idea of how many people we really, how many lives we really impact. Closer to the microphone. Thank you. Sorry about that. Tip it down. Is that better? Yes. Oh, okay. Do I get my minute back? I'm sorry. I appreciate the opportunity to speak to you today to discuss the challenges of the agency has faced in the past and the work currently underway to stabilize its operation and restore the trust. I've actually served two terms with the Housing Authority in Little Rock. My first term was from May of 2021 to August of 2022. During that time, when I first came, I discovered a lot of disturbing patterns and things that were going on. I did approach the board at that time and tried to bring them to recognize that there were some issues that needed to be addressed. The concern that I expressed was largely ignored. As a result of that, I could have did one of two things. I could have took the coward's way out in my opinion and just left, or I could have done what I did, which was I filed 161 page complaint to the local field office as well as the city of Little Rock, to which I filed that complaint in June of 2020, I lost my date, but at any rate, shortly after that by in August of the same year that I filed the complaint, I was terminated. Due to the efforts of people spearheading the effort like Director Adcock and Chairman Wright, I was able to come back after they dismantled the board that I had the concerns about, all but dismantled it, I believe the only remaining member was Chairman Wright at the time. So in June of 2024, I was brought back to the agency, partial in consideration of my wrongful termination lawsuit, but primarily because of my experience with recovering troubled housing authorities. My vision of my return was a big triumph return with confetti and people welcoming me with open arms and, but indeed that is not what I walked into when I came back. Instead, I was met with a lobby full of disgruntled landlords, some of which had not been paid in over six months. And if you know anything about the HUD program and the Section 8 program, it is very important for us to keep our landlords and to pay them on time. The Housing Authority had failed to submit audits for four years. More than $600,000 in arrears with its software provider and legal counsel. HUD had identified more than 22 million in non-compliance findings. 54 action items was what I walked into. Strained relationship with the nonprofit, lack of staff capacity, a valuable asset or property was facing foreclosure, a high number of vacancies. These are the conditions, these conditions actually reflected years of instability and systemic breakdown both internally and externally. In November 24, we entered into a recovery agreement with HUD to guide the agency stabilization and reform. With HUD's assistance and monthly updates, we have remained in compliance and have worked methodically to implement the required corrective actions. In a little over 18 months, we have done what was once thought to be unattainable and insurmountable. We have implemented stronger management and operational controls. We are near the closing on the Madison property that you heard Director Adcock speak so fondly of. We're almost near closing that due to the, what I call a local hero, which is one of our local CDFIs, Community Development Finance Institution, Southern Bancorp and Enterprise Foundation have stepped up to the plate and are going to help us to remove that foreclosure. We also retained a national accounting firm, Novogradac, to who at this time close to one month away from closing out all of the audits, bringing us current. We stabilized the relationship with landlords and fully implemented electronic payments. We brought vendors payment current. We are addressing the HUD non-compliance issues. We built staff capacity. We're developing a functional relationship with the nonprofit board. Equally as important, we have worked and continue to work to build trust with our residents, landlords, employees, and community partners. This work of rebuilding this agency is not complete. However, meaningful and measurable progress has been made and the Housing Authority is moving in the right direction. Thank you.

The gentlelady yields. Thank you very much. Ms. Wentz, we now offer for you your opening five minute remarks.

Thank you. Mr. Chairman and members of the committee, thank you for inviting me to participate in today's hearing, and thank you for your attention to a topic that is of critical importance to Arkansans. My name is Amanda Wentz, and I'm a senior assistant attorney general in the Consumer Protection Division of the Office of the Arkansas Attorney General, where I have worked as an attorney since 2021. I served as counsel for the Office of the Attorney General in its lawsuit against the owners of the Big Country Chateau complex, and my testimony today will focus on the Office of the Attorney General's involvement in the consumer issues plaguing that complex. The work of local housing authorities is of vital importance in assisting vulnerable populations in securing housing. Many of the tenants of Big Country Chateau used MHA housing choice vouchers. The owners of Big Country Chateau took advantage of the Little Rock residents least able to protect themselves from exploitation, and they accepted taxpayer dollars to do so. In July of 22, the Office of the Attorney General was made aware of a joint inspection of the Big Country Chateau apartment complex conducted by the Little Rock code enforcement, fire department and others. The inspection found over 1,000 code violations. At the same time, the office learned of an imminent utility shutoff at the apartments due to non-payment by Big Country Chateau management. In this complex, all units were on central electric and water meters, so utility costs were built into the tenants' monthly rent. The owners of Big Country Chateau, however, were not paying these utility bills, nor were they using rent funds to maintain the premises. Instead, the money was being funneled out of the state and lining the owners' pockets. At that time, the apartment owners owed approximately $71,000 in electric utility bills and $223,000 in water utility bills. Big Country Chateau was operated by Apex Big Chateau Arkansas LLC, a shell company to disguise the involvement of Apex Equity Group, a New York corporation. Big Country Chateau accepted MHA housing vouchers, federal funds intended to help vulnerable residents secure housing. On August 17, 2022, the Office of the Attorney General filed a lawsuit against all three companies for violations of the Arkansas Deceptive Trade Practices Act. Defendants filed a joint answer to the state's complaint. In addition, Apex Equity Group moved to dismiss, alleging that the company had no relationship to the apartments, a claim that was demonstrably false. After continued refusals by these companies to comply with the court's orders during litigation, the court sanctioned all three defendants by striking the joint answer and granting default judgment in favor of the Attorney General. As a result, all three companies are prohibited from operating apartment complexes or otherwise leasing residential properties in the state of Arkansas. As litigation continued, the condition of the apartment complex deteriorated as management abandoned the already neglected property. Tenants were placed in a difficult situation as the Big Country Chateau apartments were uninhabitable, but closure of the property would result in homelessness for the remaining tenants who struggled to find housing elsewhere. Little Rock Code Enforcement conducted another inspection of the complex on February 7, 2023, and found that only a few repairs had been made since the July 2022 inspection. Due to concerns about the safety of the remaining residents, the Office of the Attorney General coordinated with the Federal Home Loan Mortgage Corporation, which had active litigation against Big Country Chateau for defaulting on the property's mortgage, to identify and retain a receiver to ensure resident safety and wind down the apartment complex, and the court appointed a receiver to the property. In an effort to facilitate open communication between stakeholders, the Office of the Attorney General met with the receiver and representatives of Freddie Mac and the city of Little Rock to discuss relocation efforts for residents. There were many barriers to relocation, including lack of funds to move, as well as tenants who may not be able to pass background checks necessary to apply for another apartment complex. To assist Big Country Chateau's remaining residents in relocating to safer housing, the city of Little Rock, partnering with local nonprofit organizations, hosted a two-day event that worked to give tenants relocation information and needs assessment for financial resources. This event resulted in mixed success, with many tenants being relocated, while others were unable to secure housing due in part to the limited availability of MHA vouchers and other assistance funds, which had been depleted due to the recent tornado that had destroyed many homes in Little Rock. Big Country Chateau as an entity no longer exists. The apartment complex was sold under foreclosure to new owners and is no longer owned or operated by Apex Equity Group. The owner of Apex Equity Group is currently in federal prison for mortgage fraud relating to the purchase of Big Country Chateau complex and other residential properties. Our case is not an isolated incident. The events at Big Country Chateau are part of a recurring pattern of behavior. Apex or another entity creates local dummy corporations to take liability, opens low-income housing, then allows the apartments to flounder while rent money is funneled back to the owner. Apex cuts its losses by sending the properties into foreclosure. This has happened repeatedly, not only here in Arkansas, but across the country. It is a business model that allows shady corporate entities to exploit vulnerable populations for their own financial interests. Arkansans deserve safe housing, and the Office of the Arkansas Attorney General is dedicated to holding accountable fraudsters who attempt to take advantage of Arkansas residents.

Thank you. Gentlelady yields back. Commissioner Wright, you are now recognized for five minutes.

Chairman Hill, members of the committee, my name is Kerry Wright. I'm an owner of Windsor. My twin brother and I own Windsor Door, a third-generation family-owned business that designs, manufactures, and distributes residential and commercial overhead doors. I moved my family to Little Rock from Houston in 2019 to run my company's business. I joined the board of Little Rock Housing Authority in March of 2023. I served as chairman from October 2023 to October of 2025. I previously served as a commissioner of the Harris County, Texas Housing Authority from 2012 through 2018. I was chairman there from 2013 through 2018. When I came on board the Little Rock Housing Authority, I was stunned by the organization's financial and operational troubles. I want to state my point here clearly. Little Rock Housing Authority's troubles are the result of past mismanagement of its business. When I got here, the Housing Authority had not kept good books since 2018. The only financial records we had were bank statements. We had so many open bank accounts no one could tell me how many or where they were. We had almost no property management records. We did not know who occupied units, how much rent we were supposed to collect, or how much HUD subsidies we should be receiving. We were issuing notices to vacate to tenants for not paying rent, but those tenants had proof of payment. We were paying for two financial accounting systems, but we were not properly using either of them. We were not paying vendors on time, if we paid them at all. The previous Housing Authority commissioners had set up shop at Central Arkansas Housing Corporation's offices. The commissioners were in control of the Housing Authority and CAHC, the nonprofit, and they were ordering the executive director and staff under the threat of termination to engage in illegal acts such as conveying Housing Authority properties to CAHC and transferring Housing Authority funds to CAHC's bank accounts. Quitclaim deeds is what they were trying to get the ED to sign. This mismanagement resulted in the Housing Authority and CAHC being sued several times. HUD's Office of Inspector General came to Little Rock in 2022 and reviewed the Housing Authority's business practices. Their report said they found millions of dollars paid for questionable and unallowable expenses, inadequate documentation of spending, and failure to follow procurement rules. I'm the owner of a large business that operates in 32 locations in 10 states, and we're growing rapidly. If I have a location like this that is failing to perform or serve its customers, I face a hard decision of either closing the location or completely gutting it and cleaning it up. I say this because I found in 2023 that the Housing Authority was failing to perform and failing to serve its tenants. It was too far gone to recover on its own. I told our local HUD office officials the only way the Housing Authority could recover financially and operationally was for HUD to intervene or to take it over. And my local HUD officials supported that idea immensely. Deputy Secretary Richard Monocchio came to Little Rock to meet with me. I told him we cannot fix this. We have no money. We cannot borrow money because we have no business books. We are disorganized. We need HUD intervention. I told Mr. Monocchio about our problems and mismanagement, and I told him what resources I thought would be required to make the agency solvent again. I thought I had a deal with Mr. Monocchio and HUD. I read in January of 2024 that Secretary Fudge appeared before this committee and made a personal commitment to take responsibility for the Housing Authority's situation and to commit resources to resolve the agency's long-standing issues. Those were empty promises. My understanding is that Mr. Monocchio and Secretary Fudge scuttled my deal. Secretary Fudge resigned from HUD in March of 2024. Ironically, she came to Little Rock to receive key to the city by our mayor. We are still defending lawsuits over bad deals the previous board made. Madison Heights is still in foreclosure, working on it with the loan. We still do not have updated audit financials, and I believe we're in troubled status again. HUD released our latest PHAS scores on February 27th of this year, and we scored a 53. Any housing authority that scores below 60, HUD classifies as troubled. So we will be in default of our rescue loan agreement on the date we close, which is currently set for this next Monday, March 16. I will close with my point I stated in the beginning. If there's a solution to be found for the Housing Authority's problems, it will come from putting in place and maintaining good business and financial management practices, not playing politics with the agency. The previous HUD administration failed us. The current HUD administration should take over the Little Rock Housing Authority and clean it up once and for all. Our tenants and customers deserve this. Thank you.

Thank you, Commissioner. The gentleman yields back. We'll now turn to member questions. I do now recognize myself for five minutes for questioning. I think it's pretty clear why we are here, why Chairman Hill wanted to hold a Oversight and Investigation Subcommittee hearing for Financial Services here in Little Rock. And you know what, I'll just start with, you know, we're here to help. You know, there's the old joke when government says they're here to help, that's the scariest phrase you can hear. We're going to hear from you because your sincerity is all clear and your background, your experience, your knowledge of the situation, what happened, how we're going to avoid it in the future, and what you would like to see from your Congress and HUD, what we can do in the short term as quickly as possible to inject the resources, whatever's necessary to help straighten things out. Because there's a fair amount that needs to be straightened out. So Dr. Jarmon, I'm going to start with you, please. Can you describe how serious the breakdown in record keeping was under the prior leadership and whether the city had any visibility into MHA's finances during that time?

The situation was dire. It is what Chairman Wright described. We didn't have any firm records in terms of who was in the units, how much rent they were paying. The software had went through three different platforms, so it was almost impossible to track the actual numbers for financial purposes. Whether or not the city had access to or knew the records and the financial situation, I can't speak to that. I don't believe that they have been involved to that level. But no, the situation was pretty dire in terms of the bookkeeping for the agency.

Okay. And I'm going to come back to you, maybe in the second round, what can we do to improve that situation from all of your vast experience. Commissioner Wright, can you explain how when MHA and its nonprofit affiliate CAHC, they had tremendous amount of poorly documented information, various bank accounts, their relationship was quite nebulous. Can you explain how they were able to move money between these entities without proper oversight?

Well, basically, when the city directors and the mayor terminated the board except for me, we went in and we were trying to find out all the bank accounts we could find. The people that were terminated stayed at the nonprofit until I could get a board. It was just I was the only board member, so I had to wait until I could get a quorum. So I got a quorum and in the meantime, we were trying to get passwords, bank accounts, amount of money we had, all the information we needed, but they blocked us. They blocked us from the nonprofit. Basically, the nonprofit was running the Housing Authority because they officed there and they were running the housing.

So CAHC blocked you.

Yeah.

They blocked us from getting... Now, the finance director at the time, that I don't have a name of, had signatory of all the MHA's bank accounts. Are you familiar with who that was?

Regina. Her name was Regina something. Regina...

Okay. Was she under investigation? Was anything coming about that?

I don't know what the FBI did or but she...

Ms. Wentz, do you know? Sir? I'm sorry, Mr. Wright, excuse me.

I'm afraid I don't. I'm sorry.

Okay. Well, we'll see about trying to find that out. Anything else to add, Mr. Wright?

Well, Regina Regina was the one they they blocked our access to QuickBooks, their computers. They blocked access to banks. We had eventually what we had to do is start calling every bank in Little Rock and see if if the housing authority or CAHC had an account to find out. The records were in horrible. It was just ridiculous.

Dr. Jarmon, you want to add to that? Or regarding bank accounts or the disruptions that continue to take place? And you know what, as well, I want to ask you when you're when you were terminated, what were the reasons that were given and what did you why do you think you were terminated?

There was no reason ever given. I did pursue a lawsuit. There was no reason given for my termination, not ever in writing, verbally. And the second part of your question was, I'm sorry.

What do you think they what was their excuse for terminating you?

I wasn't given any reason. So I can't I can't you know, assume what it was. I I generally think that it was my 161-page complaint because shortly after that, I filed that in June and in August I was out of there. So I'm pretty sure it has something to do with that.

Understood. That's I guess pretty obvious. Ms. Wentz, do you have anything to say about Dr. Jarmon's termination?

I am not privy to any of that. I'm familiar with the Big Country Chateau case, but I wasn't privy to the inner workings of the housing authority.

Yeah, I do want to get to that. I'm kind of out of the time, but we're going to we're going to come back around. Ms. Adcock, I'm just going to take a little bit of liberty with the time. You were talking quite a bit about the the occupancy that exists today and how shameful it is that you got all this what should be occupancy capacity and yet you have 3,000 people on the waiting list. You want to expand upon that? Ms. Adcock? Microphone. Microphone.

It seems like some of the apartment complexes are 30 and 40 percent vacant. They don't have refrigerators, they don't have stoves and other things in them. In my opinion, from what I was told, the people before Dr. Jarmon and everything, they took that money and used it for other things and the needs in the apartment complexes was not finished. There was too many apartments that was needing repairs and everything, some roofs and things, but they had used the money, the three people who was there before running everything had used the money for their own purposes and diverted it from the apartment buildings and did not do the repairs.

Thank you very much, Ms. Adcock. I'm going to yield back. I now recognize the chairman of the full committee, Chairman Hill, for his five minutes of questioning.

Thank you, Mr. Chairman. Well, I'll I'll pick up where you left off, Chairman Meuser. Director Adcock, can you explain what motivated the city board to remove all the directors when you finally took that action?

I think it started out that the calls from the community, from the companies that wasn't being paid, the calls from people, the wrong their long waiting list and everything. And I think that they they could not answer the board's questions when we asked questions about what was going on, why things wasn't being done.

Were you aware that at the time they were removed, was it was the city board was the city board aware of the fact that those employees that had been terminated actually remained compensated over at the nonprofit and that they blocked access from the housing commissioner, sole director, and the remaining staff from access to that information?

No, I think that the board never got the notification or did not know of the a second group of people. We felt like that if we removed the first group of people. I had a telephone call from a gentleman with the FBI. He had been at City Hall looking for records and everything. I did not know that they was investigating the city MHA. I checked with the city and I was told by Mr. Carpenter that I could talk to the FBI. They told me that they was at City Hall and at MHA looking for records. At that time, I was attending some of the meetings at MHA and they said that there was records that they could not find. And they was told by the city staff that I kept filing cabinets at my home of my records and things that I personally had got through the city. And they wanted to know if I could would give them some of the records I had. I asked what was they looking for and they gave me a list and twice a gentleman with FBI named Jacob came to my home and picked up about that big of a stack of records that they was looking for that they had not been able to find at MHA and they had not been able to find at the city. I gave them to them and I have not heard from them. And they was mainly about the people who was running MHA. It was right shortly after that that the mayor took the action to bring it before the board to remove those three people.

Thank you for that. Let me as a follow-up with you, Mr. Wright. You were the only member of the commission to remain in place. To the best of your knowledge, why were all the other commissioners removed but you were not?

Well, they were the old guard. I was the new guard. I was the newbie, the newcomer. And I was not part of the clique and a lot of a lot of things were kept away from me.

So how how long did it take for you to get access to the records that you were being blocked from by employees that had been terminated yet were still being compensated and kept in place on the nonprofit? How many days or weeks?

Oh, it took three months, four months. Things started trickling in that I start you know, I see something, I have to snoop, I have to look around, see what it's all about. And just like the loan that we had, Madison Heights loan that started in 2019 and it was a balloon note. And they had only paid interest and penalties, nothing on the principal. But that'd been going on. And they were using money, they were trying to take well, they were taking money from the housing authority because every year they had to make that payment and they didn't have any money. And at one point in time, they went to the executive director, I forgot her name, Erica Benedicto, and sent her an email and told her that she needed to how much money did we have in the voucher program, which was about 3 million. And it's illegal to pull anything from there. And they instructed her to pull some money from there and they would replace it later. And she called me and asked me what do I do? I said, you don't do a thing. That's illegal. You can go to jail for that. But things like that is what we started to find out. And but you asked me how long, Chairman, we were we were still looking for things. We were still looking for things in early 24.

Thank you. I'll yield back, Mr. Chairman, and look forward to the second round.

The gentleman yields back. We now recognize Tim Moore, Representative Tim Moore of North Carolina, for five minutes of questioning.

Thank you, Mr. Chairman. I just want to follow through on the questions that that have been asked and I'll and I'll go back to you, Mr. Wright. So how many years would you say the mismanagement had probably been happening? I know you came on the board, it was clear already happening from what you've seen.

I could I would say it started in 219 or 2019. There were some bad deals with ITEC, there were some bad deals with Gorman that they they had done. It's all over developer fees. But I'd say around 2019 is when it started. And they it went on it was it went on until I got on the board because I think they were a little nervous about what I what I knew. This wasn't my first time to be on a board, a housing authority board. But 2019.

Was there any evidence of those actual board members engaging in self-dealing themselves?

Sure. Yes, sir. Yes, sir. They would throw the chair the president of the CAHC would throw herself throw herself a birthday party at the expense of the housing authority. They were driving around in housing authority vehicles. Some things like pest control and and pest control and appliances that were missing ended up in their homes, friends' homes. It was a they treated it like it was their business is what they were doing.

Did or were those positions compensated at all, those board board positions?

No, sir. They're we're all we're appointed and this is we do it for the love.

Right. What any thoughts on your end of what kind of changes in federal law could come in place that would make it easier to kind of catch this? Because it sounds like but for you guys kind of being whistleblowers, I guess is the best way to put it, this could have just continued, you know, could be happening even today and and unfortunately probably situations like this are happening around the country right now. Any suggestions from where from where you are sitting of recommendations that you would make to those of us in Congress of changes that we should look to to statutory law on this?

I think you should term limit board members, number one. Number two, I think that HUD intervention is desperately needed and in oversight. What I found out, which I found remarkable, was the the nonprofit really HUD sometimes feels like they have oversight over it and sometimes doesn't feel like they have oversight over of the nonprofit, which is where the money is, the RAD. And they seem to be a little reluctant on the nonprofit side to to really get in and look at it. And I think that needs to change.

Ms. Wentz, a question for you. There was reference to I guess the previous owner of this one place that he's in prison right now. Have there been any other criminal convictions of any other individuals caught up in any of this mess?

Thank you for the question. Not to my knowledge. The president seemed to be the ringleader of the situation and he was using kind of strawman buyers to help him. I think others got plea deals.

So do we know if there's anybody looking at that now, if you can even speak to that? Maybe something you can't speak to, I don't know.

Not to my knowledge. We didn't coordinate with Department of Justice on that.

Okay. And just curious, Dr. Jarmon, it's any anything that you have concerns about now or do you feel like the ship has been righted at least with respect to the local authority or are there things safeguards that you're looking for so this can't happen again?

Yes, there are several recommendations that I would make. One is that and we have implemented this that you never have the exact same people on both the nonprofit and the housing authority board. In the past, that's exactly what happened. They had a rubber stamp board that was composed of the exact same members. I think there should be a safeguard against that ever happening again. We have since gone away from that practice and so we always make sure that the people on the nonprofit are not the same as the people on the housing authority board. The other thing that I would recommend is that having been around the nation and looking at boards in general, I would highly recommend that board get training and commissioner certificates. And I know certain states like New Jersey or different states require that any board member get a professional certificate within one year of appointment. I believe that's very important to to have in place. That's pretty much my recommendation in terms of the governance.

And if I could have a little leeway, Mr. Chairman, I know my time's gone, but so any idea why the previous HUD admin, because I know this current HUD administration is on this, they're dealing with it, they've been very engaged. Any idea why the previous HUD administration didn't seem to want to deal with this?

I cannot speak to that. I am... I cannot speak to that. I am just absolutely really blown away why they didn't address it. I just can't even answer that. I believe that when I filed my lawsuit, there was a massive confusion about which organization, whether it was the city or HUD, that could actually do something to this board. They were going back and forth. HUD was saying, well, we can't dismantle that board, only the city can dismantle that board. And then the city was saying, well, no, once we appoint them, that's not our role, that HUD should, especially with the mismanagement, HUD should be dealing with that. I cannot explain to you why there was such a gap in the oversight and management at that time.

I'm out of time, but I will be interested from the others if you have thoughts on that at the appropriate time, Mr. Chairman, as to what happened there, because that's one of the questions that I have, Mr. Chairman, as to why the previous administration didn't step in to protect not only these taxpayer dollars, but frankly these residents. With that, I yield back.

Gentleman yields back. We now recognize Chairman Flood, who is the subcommittee chair on Housing and Insurance, for his five minutes of questioning.

Thank you, Mr. Chairman. Good morning. Thank you all for being here and for caring about your access to public housing. Let's look forward now. In 2024, MHA became delinquent on its loans for its Madison Heights property. By late 25, you were $5 million behind on these loans. First, you tried to get a $6 million lifeline from the city, which I understand they denied, said it wouldn't be prudent. As a result, MHA has to find private financing to prevent foreclosure on the Madison Heights complex. Dr. Jarmon, can you describe the steps that MHA is taking to find that private financing and how's that going?

It was a struggle. You're correct. We were literally put in a position because of the massive hole that had been dug for that particular property. And yes, we did approach the city and we were denied that money. We since went out and Southern Bancorp, as I mentioned before, and Enterprise have stepped up. We are, we think, within weeks of closing on that. The amount, they negotiated the amount down from $5 million to $4.6 million. So we're very optimistic that that loan will be closed in the next week. Ideally, when you know, and here's one of the issues is that when I came back, we had $3.7 million in our bank account in HUD, what they call HUD-held reserves. And HUD came in and after telling us that they would not sweep our reserves, actually took our reserves. And that's a practice that HUD does sometimes where they come in and take your reserves and give it to other housing authorities.

Okay. My second question is, of the $4.6 million you're getting in that loan, other than repaying debts that the agency has, what else are you going to do with that money? Are you going to be able to fix anything up?

Yeah. $500,000 of that is dedicated strictly to what we call make-ready or unit repairs. So yeah, $500,000 is earmarked. The condition of that is that the housing authority has to match. If Southern Bancorp and Enterprise are going to put in 500, the housing authority has to commit $500,000, of which we have with our capital fund allocation. Two years of our capital fund allocation will go to fixing those units as well.

Ms. Wentz, what happened to the residents of Big Country Chateau when that property was foreclosed on?

Our receiver worked very hard with the city of Little Rock and with local nonprofits to rehouse as many as possible. I know that many of them were rehoused either through vouchers or through other other donations. There were some that by the end of it, I know I lost track of because they were unable to find other housing, and I am not certain what happened to those residents.

Okay. So thank you. Dr. Jarmon, back to you. So I applaud you for finding the private loan. Based on the information that we've received on this committee and understanding your financial status, I still have concerns about whether you'll be able to satisfy the terms of the loan. Right now at the time of closing, MHA expects to have under $300,000 in annualized net operating income and a debt service coverage ratio of 0.89. Within one year, MHA purportedly projects that its operating income will double and then increase 9 percent annually. How does that work?

Yeah. I think there's a term like magic numbers or different. It actually works. If we can lease up those properties from getting those units back online. What we are faced with now is that to project the revenue is very difficult because we have to deal with again the the albatross that's around our necks. We can't just go in and raise people's rents to what it's supposed to be because they had years of not paying rent at all or paying below the market rate. We can't just go in and say now instead of paying 700, you have to pay 1,100. We can only raise their rent by 10 percent. But the projections work. Once we get the property fully occupied, there's different numbers, but as far as what that means, it's 240 units in Madison. But once we get that fully occupied and can command the right size rent for those units, I believe that we would cash flow where we won't have any issue making the payment. More importantly is that Southern Bancorp recognized that and gave us two years of interest-only payment to help us not put ourselves in a bad situation again. And I think that's tremendous.

Thank you, Doctor. With that, I yield back.

Gentleman yields. We now recognize Representative Downing from Montana for his five minutes of questions.

Thank you, Chairman Meuser, and thank you all for being here. You know, this is incredibly important to this committee to me, making sure that there is stewardship, accountability, oversight in programs, especially something as important as housing. And so I really appreciate all the effort and the folks being here. And I represent Montana's second district, and we've not been immune from these problems either surrounding public housing authorities. And much like the Metropolitan Housing Alliance, Richland County in my district has a history of poor financial management, including misuse of credit cards, insufficient financial documentation. In fact, a recent assessment from HUD out of a maximum score of 25, Richland County scored a one in financial management. Horrible. I'm going to go back to Commissioner Wright. Prior to your time on the Little Rock Housing Commission, you helped the Harris County Housing Authority overcome millions in theft. So given your experience, what similarities and what differences do MHA and the Harris County Housing Authority have, and what impact does that have on MHA recovery?

The difference was the folks that were causing this issue, which is the executive director and the chairman, they were, you could see what they did. It was wide open. I mean, they spent money, went on trips, bought themselves cars, paid themselves or the ED paid himself about a horrendous salary and things of that sort, bought art, paid for their kids' dental bills. But the long story short, it was when we did a forensic audit, you could see it. It was there. It was blatant. They didn't hide it, didn't try to hide it. As opposed to here, I mean, it was tough. It's tough finding anything following the paper trail. It's very, very tough. And I always assumed they had some assistance. Somebody, they weren't the sharpest knives in the drawer. So I always assumed they had some assistance. That was my opinion.

Right. Thank you. Another important factor driving the historic problems at MHA is its low occupancy rates, particularly at MHA's Madison Heights property. And these low occupancy rates create cash flow issues for MHA and limit the number of people MHA can remove from its waitlist. I'm going to go to Director Adcock. You'd mentioned the list. How long is this waitlist for housing at MHA, and more importantly, what impact does this have on the community of Little Rock?

Microphone, please. It has a big impact on our community. It has an impact on the number of people we have homeless. Right now we have a tremendous amount of homelessness in the city of Little Rock. It has an impact on the children mainly. Children are living in cars because their mothers have been removed from apartments. So I'm working with one family. She just recently had a little four-pound baby, and she's got five other children. And she's behind on her rent, and she has no place to go to get help. She's applied to MHA, but there's a waiting list. It's just a tremendous stoppage of these people cannot get jobs because they don't have housing. The children are not in schools. Our schools have started having an employee that's trying to help them find housing. But when you have 40 percent or 30 percent of the housing that they should be able to move into that is not available, it's causing them to live with other people. It's causing mothers to have to move in with people that she should not be moving her children in with. And so every time we get housing, that's a family that we've saved.

Right. Well, thank you very much, Ms. Adcock.

I do want to make one comment. A few minutes ago, the question was about the nonprofit. The woman that was running the housing authority, she also was a member of the CAHC. You had three people and they had all kinds of positions. They would be employees and they would be serving on one of the either the nonprofit or MHA's commission. And that was one of the biggest problems I saw with it was when you had three people and you were supposed to have nine different people, you had the same three people just changing titles with it.

Right. Thank you very much, Ms. Adcock. Mr. Chair, can I get one more question in or?

Gentleman's recognized.

Thank you. I'm going to just go to Dr. Jarmon really quickly. I understand that Madison Heights is a desirable property. What's driving these low occupancy rates?

One point of correction, we have 6,558 people on the waitlist. Wow, quite a bit more than the 3,000. I'm sorry, I know Director Adcock, this is not what she do, this is what I do every day. So we have over 6,500 people on the waitlist. So the occupancy at Madison, again, was initially Madison was slated to do what they call a RAD, a RAD project. I think people that kind of know housing know that that's a development project where you do major mod to the units. So but as a result of that, there was a company that Commissioner Wright mentioned called ITEC. ITEC had been selected, they were ready, they were at the closing table when the previous board yanked the rug out from under them. But as part of the practice, when you get ready to know that you're going to do major mod work on units, you don't occupy them because you know you're getting ready to do the mod work and it's much easier to work on an empty unit than it is to work on an occupied unit. So that strategy had already been put in place to relocate people or not fill the units when someone left voluntarily or through, you know, just regular attrition. So that accounts for the large number of vacancies that we inherited at Madison was that practice had been put in place to not purposely occupy those units. And that's just, you know, what we inherited as well.

Right. Thank you, Doctor, and Mr. Chair, I yield. Right. Thank you, Doctor. And Mr. Chair, I yield.

Gentleman yields. We now will move into round two of our questions, and this round is titled Solutions, Accountability, and Prosecution. So I'm going to recognize myself for the first five minutes here. And I'm going to start with Dr. Jarmon. And do you believe there's been sufficient evidence of misconduct that would be reviewed for criminal prosecution? Should be reviewed?

From a personal standpoint, I believe that there is sufficient enough information. A lot of it predated me. I didn't, I could not say for sure that I saw a smoking gun or anything that would actually substantiate criminal, you know, activity or and so I can't speak to that. But do I suspect? Sure. I mean, you don't get yourself in this type of hole and actually have the accountability and the gaps in in where the money went if there wasn't something awry. But as far as my personal opinion, I can't attest to that. That is the role that we thought that the FBI and OIG would be would be conducting.

Sure, I understand. Ms. Wentz, were there Big Country Chateau, for instance, were there referrals to to the federal government? Federal law enforcement agencies?

We did work closely with the Federal Home Loan Mortgage Corporation once the property was in default. We worked with them to get a receiver and I believe they referred it to DOJ for the mortgage fraud issue.

Okay. And Ms. Wentz, continuing, after everything that has come to light, missing funds, missing records, failed oversight, do you believe the people responsible have been held accountable?

With regard to the owners of Big Country Chateau specifically, I believe so. But I do think there are other apartment complex owners and companies doing the same thing. With regard to the housing authority, I'm not familiar enough with the details to speak on that.

Okay. Mr. Wright, Commissioner Wright, same question.

Can you repeat the question?

I'd be happy to. After everything that we now know, missing funds, missing records, failed oversight, do you believe the the people responsible have been held accountable?

No. I believe they have enough information. I was there when when the FBI went in and raided the CHC office, that nonprofit office. They came over to MHA. They were able to locate the ex-president of the CHC wrote herself a check for $40,000. There was another one for Lee or for the for the chairman of the housing authority, there was one for 10, 15, 20,000. They had those stubs. They had copies of that. And there was just a lot of other things that I that I think was enough to to go after them.

Okay, thank you. Ms. Wentz, back to you for a moment. You mentioned before the ringleader. Who was that?

Yes, that was a Mr. Aaron Puretz. He is a New Jersey business owner. And he was the one that was having these straw men acquaintances make dummy corporations under their own names to purchase mortgages so that HUD or Freddie Mac or others wouldn't know that the companies and properties were actually managed by Mr. Puretz.

Was he the one that was prosecuted and jailed?

Yes.

Okay. Dr. Jarmon, I and I'm probably going to ask this question of all, what support from HUD would be most helpful right now to stabilize MHA, do our get back on sound footing of course? How can HUD help? What would you like to see ideally?

Ideally, I kind of started on this a little earlier about the fact that they came in and swept our reserves, 3.7 million. I can only imagine where we would be if they had not taken money from an already troubled agency. That is something that I think at the time we were told they wouldn't and then they did. I thought that was pretty egregious and a punch down on a agency that's already troubled. They are there are other measures that I think we now had a great meeting yesterday with Assistant Secretary Hobbs. They are saying that they are fully committed to our recovery. We do meet monthly with representative from from HUD to talk about our recovery agreement. The issue now also is that there's some disconnect within HUD. I mean, we don't know if we're talking to people in Oklahoma, Fort Worth, or, you know, and we were told yesterday that they're going to work very hard to make it seamless. That regardless of where they are, because the actual Little Rock office was all but, you know, dismantled. So that makes it a little bit difficult when you have a problem like what we're dealing with, we need boots on the ground, we need people that really understand the issues because it's not it's not what it looks like. I mean, they also mentioned that we had what they call a PHAS score that went from being standard performer to back to trouble to back to standard. It's like, I get it. You have to do what you have to do, you have to be accountable, you have to have measurable. But when an agency is already troubled, I want to I would like to see a little bit more leniency, possibly waivers in the very strict compliance world. We don't want no oversight, but we don't want heavy-handedness in a situation where an agency is already crippled.

Thank you very much. My time has expired. I'm going to come back and ask all of you the same question. I think we're going to have a third round as well. So I yield back. I now recognize Chairman Hill for his five minutes of question.

Thank you, Chairman. Let me just pick up on that strain of thought for a minute. So heard Mr. Wright say that he felt like there was more than enough evidence to, you know, demonstrate malfeasance on the part of previous administration that could rise to the, you know, case of prosecution. So I'll leave an open-ended question for you, Dr. Jarmon, first. Would you be more than willing to fully comply with any request from the State Attorney General's Office or any other law enforcement agency in in response to that previous management investigation?

I really think Chairman that really of course, that goes without without saying. We're we're right now full transparency, full disclosure. We're fighting, we're scratching to get back to being a standard performing in my case I would prefer a high performing agency. We're not there yet. But of course, anything that I can do or my staff can do or the board can do to to bring light to the issues that we've faced and challenges in the past, we'd be more than happy to to be cooperative.

Ms. Wentz, you've had quite a fine success in Big Country Chateau. What I'm sick to my stomach about though is former Director Doris Wright, a good friend, a loyal citizen and servant of this city for many, many years, begged people to do something about Big Country Chateau, I would say for over a decade and maybe extensively longer. And it's just a horrific place that was the top place to, you know, look at your police report to see where they were stopping by on a daily basis. So to me it's outrageous. But it is concerning because of the nature of the financing at Big Country Chateau that you've described, it also fell between direct in fact, no direct oversight of the Metropolitan Housing Agency, but certainly oversight by HUD. So tell me, did your investigation find notice any effort by the local field office of HUD that they were doing anything about enforcing their contract with the owners at Big Country Chateau?

Thank you, Mr. Chairman. We did kind of coordinate with HUD and they were very cooperative in giving us information about the other properties owned by this same set of shell corporations. I personally am not aware of any action that HUD was taking, but my knowledge is limited.

But this is my point. I mean, we just let these situations fester until they become catastrophic. And this is just outrageous. Who is the who is hurt by this? The tenants. The families. And you just talked about in your testimony, it's excellent, on what you had to do to try to help tenant relocation in this situation. So I hope we can find and we'll talk to our friends at HUD about what the oversight gap is for multifamily HUD subsidies combined with a Freddie Mac mortgage to some multifamily developer who then also takes Section 8 vouchers. It's really a gap that I think this is a prime example of. And after decades of ripping people off and creating a crime haven in our city, $11 million criminal judgment you won. So it was a big victory. Did you get $11 million from somebody?

Unfortunately, they were able to hide most of their assets. We have recovered some and we are actively working on recovering more, but they have shuffled most of their assets out of our reach at this time.

I hope you'll I hope you'll keep the public apprised as you year after year call back that money while they sit around in I hope federal prison. Would you be would you be willing at the Attorney General's Office to take a look at the transactions between the nonprofit and the multi and the Metropolitan Housing Authority to see if there's any state law violations there?

The Attorney General's Office is always willing to work with other state and local agencies, always willing to provide any assistance that we can.

Thank you. Ms. Jarmon, you've got such great experience multiple jurisdictions. How do you think about this out-of-state private developer either in a RAD context or in this multifamily subsidized context that comes in and takes advantage of a lack of due diligence, lack of knowledge, lack of financial expertise in a local housing authority? I'm sure it's at the heart of the work you've done. How would you address that? How should it be addressed? And how should HUD hold PHAs accountable for that?

And it is something as simple as the oversight and and management and and being true to to what you say, you being HUD. If your true calling is to provide decent, safe, and affordable housing and to make sure that the players are playing fairly, then there has to be some bite in in it and there has to be some accountability. When you talk about developers, what I've found from a more broader standpoint is that once these deals hit that 15-year compliance period where they get the tax credits, they pretty much kind of not interested in anymore making sure that the conditions of the housing is what it was supposed to be.

But they still have a they still have a they're still have taken public money and they still have and HUD still has some legal oversight responsibility even after the tax credit period.

Absolutely, absolutely.

And is HUD equally lackadaisical in terms of looking at them once they've passed that point? Is that your?

I believe I believe so. I believe so. And that is of course we're hoping that this committee as well as drawn attention to these types of matters will make things a little bit better in the future. But certainly you can look at this example, you can look at many examples as as Ms. Wentz said across the nation. This is not something that's uncommon. You really have to put a little bit more bite into the oversight without being overly compliant and trying to make everybody fit the same mold because it's not.

Thank you. I yield back. Thank you. I yield back.

The gentleman yields back. We now recognize Representative Moore for his five minutes of questioning.

This question probably is for Director Adcock. What was the role in terms of the city supervising the board? In other words, were you all being apprised of what was happening before it came to light? Did y'all have any way of even knowing what was going on with that? And you might want to turn your mic on there, sorry.

As a board, we do not have any supervisory. Mine comes from the telephone calls from the community usually. When they have a problem, they start calling. When we appoint, we get a list from the mayor. We have executive session. The mayor tells us who he and his staff has selected for the boards and commissions and then he asks if there's any questions or any problems. If not, then it's a positive vote for what they have selected for us to appoint. I think that is where I found a problem because when we found with the non-profit, it was the same people that we was appointing instead of more people for supervision. They had gotten it down where their supervision was just those three people doing everything. But on boards and commissions, there's really not any supervision that we as a city director do.

All right. Thank you. And so last time I ended with the question about any communication any of you had with the prior administration, the prior HUD folks as to why they didn't take anything proactively and this was brought to light. I think Dr. Jarmon spoke to it. I don't know that the other three did. Do any of the other three of you have any thoughts on that at all?

What?

Are you talking about why HUD didn't take any action in '23 and '24?

Correct.

Especially when I requested what I requested.

Yes, sir. My thought was it was a election, election year. And that was my thought. It was an election year and didn't want to embarrass the candidates, so the president. That was my thought.

Did you hear anything to that or is that just kind of like your best guess because nothing was done?

It's best guess.

Okay. And anyone else on that subject?

I couldn't speculate to that, I'm afraid.

Okay. So but in terms of this new administration, would you describe their response as being very proactive and responsive to try to deal with this? I see nods, I guess those are yeses.

Yes. We went into the recovery agreement under this new administration. I do see an improvement. I believe that they are sincere about trying to address the issue. Again, there is a disconnect between the local field office and then the regional and then headquarters. You know, that is just kind of goes with the territory in terms of bureaucracy. But I do see an improvement. I think that with some assistance, the biggest thing that I have is that once you become troubled or you have issues that you just no longer should be treated as business as usual. But I do see an improvement.

You mentioned there was a waitlist, I think of 6,500 people right now. If you were to go to full capacity of everything you had, how many more folks would have homes? How many folks would come off that 6,500 waitlist?

I would say probably at least a thousand. Yeah, probably at least a thousand.

Very good. Mr. Chairman, I can, I would, the gentleman was on a roll. I'm glad to yield the balance of my time to the chairman if the gentleman would like.

Chairman offers to yield his time to Chairman Hill.

I thank my friend from North Carolina. Since we're, the vacancies has been such a good theme here. So the $500,000 advanced in the line and $500,000 from reserve, that's a million dollars. So how much is that per unit that you're going to bring back online approximately? And you think it's sufficient to bring all those vacant units in Madison Heights back up to occupiable standard?

I believe that it is a move in the right direction. Whether it's sufficient to the, because there's other issues. I mean, the housing authority went out on its own and got a million dollar grant from Federal Home Loan Bank to only do the roofs. We did that independent of HUD and independent of, you know, we still there's other needs. Will the million dollars fix everything and at least bring the units up? I believe that it would. I believe we did a back of envelope calculation and we came up with about 700,000 plus that would bring the units ready. But you know, Madison, if you have toured or know anything about it, it's a beautiful site. But there's still other things that we need to address and the million dollars is not going to cover everything.

Thank you. Yield back, Mr.

Gentleman yields. I now recognize the chair of the subcommittee on housing and insurance, Mr. Flood of Nebraska for five minutes.

Thank you, Mr. Chair. You know, the goal of public and subsidized housing is to provide support for Americans so that they can get back on their feet. Dr. Jarmon, how long have the longest tenured residents been living in in the MHA's facilities?

That's a great question. One, it depends. First of all, we have elderly at our elderly sites that tend to be longer residents. They once they get in their site, they're pretty stable. As far as the family site, I believe we have people that have been there 12 years, 15 years, you know, and that that is something that in my opinion, as you said, to stabilize and move on that, you know, is not a very strong or popular position to have limits on how long a person can stay.

Well, in fact, nationally since 2010, the average length of stay across major HUD rental programs has gone from five to six years to nearly eight to nine years on average. And nearly 90 percent of able-bodied Section 8 voucher recipients. So we're not talking about folks that are 72 years old, they've earned the right to retire and and not have to go to work every day. But as I always say, if you're 28 years old and you can get a job and you can work and you're able-bodied, you shouldn't be on Medicaid, you shouldn't be in public housing until you can get back on your feet. With 6,500 people and families on the waiting list for housing assistance, are you thinking you can use these new HUD work requirements, institute time limits for MHA programs? HUD has made this a priority. I agree with it. Can we use those to to get these able-bodied folks back out into the workforce?

In theory, I've seen this work requirement before and it didn't work. I would hope that maybe it's strengthened this round. But yes, of course, I'd like to see that exact cycle that you're referencing, which is people get in, stabilize, maybe stay as long as until they can, you know, become stable and move out and allow other people. When you have a robust waiting list like we have here, I would ideally want to see that that type of process where you come in, have some type of limit, some type of accountability, some milestones, and then you move on and allow someone else to occupy that very valuable resource.

You and I totally agree. And I applaud HUD for the proposed rule, which I do think does expand access for deserving families on the waiting list while still preserving protections for elderly and disabled folks that clearly if you can't work, totally understand you need that housing, you need that space. And I have to think in that 6,500 pool of people, there's disabled and elderly folks in there that are not getting a spot because you've got somebody who can work and chooses not to. So at the same time, the situation of the MHA and those in other jurisdictions make it clear that to be efficient, PHAs must be subject to more rigorous oversight. Unfortunately, as you have pointed out, MHA was not subject to this oversight. For example, HUD first identified issues with MHA's financial records and internal controls in 2015. Ms. Adcock, are you aware of HUD taking any action to ensure MHA made the necessary changes after those findings?

No, I'm not.

Okay. I guess did HUD take any action to inform the city of this issue in or around 2015? Was this on the radar?

Not that I know of.

Okay. Then in 2019, the MHA first failed to submit its HUD required audits. Dr. Jarmon, to the best of your knowledge, did HUD conduct outreach to MHA at this time to understand why the audit didn't show up?

To the best of my knowledge, I'm not aware of any efforts.

What about in 2020?

To the best of my knowledge, I'm not aware of any efforts.

2021?

No, sir.

Okay. Dr. Jarmon, you briefly worked at MHA in 2021, but you were fired and we know why. To the best of your knowledge, did HUD take any action regarding the complaint you submitted that ended up getting you fired?

No.

These are the types of things that we're trying to fix. That's why the bill we're working on, the 21st Century Act includes additional reporting requirements for PHAs and troubled PHAs and requires PHAs to make all their contracts available online. So I think you are moving this in the right direction. You're going to get some air support from Congress when we get that passed. You've got the leadership of HUD sitting right behind you. I see better days ahead, but it's it's equally troubling to me that the people at HUD when you were filing when they weren't getting the reports weren't pulling the fire alarm. And you know who gets hurt? The elderly and the disabled. That's who gets hurt. So with that, I yield back.

Gentleman yields. Now recognize the representative representative Downing of Montana for five minutes.

Thank you, Mr. Chair. Earlier in this hearing, Chairman Hill identified some concerns that sophisticated private sector actors may take advantage of housing authorities when they engage in partnerships with outside developers such as the Rental Assistance Demonstration program or in project-based Section 8. Ms. Wentz, you've encountered issues with private sector partners in housing programs here in Little Rock. Based on your investigation at Big Country Chateau, what characteristics or red flags should PHAs look into when identifying private sector partners?

Yes, thank you, Representative. There are several red flags that you can look for. The first is just a surface level understanding of who the owner actually is. Yes, there are all of these strawman buyers and dummy corporations, but it didn't take very long in our investigation for us to figure out that these were all really owned by the same person. And I think just a few layers of looking at the business registration filings, looking at the property ownership, whose name is on the documents could go a really long way in making sure that people who are repeatedly doing these behaviors are not being given more contracts. And I think another one is just communication. Communication with local code enforcement to ensure that if there are inspections happening, that the people giving vouchers are aware of that. Communication with HUD to make sure that if they have problematic owners that they have red listed, that everyone is aware of that.

Right, thank you. You know, we've heard repeatedly today that the former board of commissioners at MHA had far too much authority and autonomy and used its autonomy to dictate the day-to-day actions of MHA. While housing commissioners serve an essential role in the overall strategic planning and oversight of the housing authority, it should not overly involve itself in the day-to-day operations of a PHA. So I'm going to go to Commissioner Wright. Can you please explain the relationship between MHA's commission and its executive leadership under the prior regime?

The over- Yeah. Microphone. Like I said earlier, they ran it like it was their business. They had offices, which is unheard of. You know, they had their own car, at least the president of the CHC did, and a driver. But they were in the date, they were running it. They were superseding the ED. It was just, you know.

So what decisions and issues are the Board of Commissioners now typically involved in?

Well, the Board of Commissioners, we go into meetings and we look at budgets. We look at all the reports for the month, how each community is doing as far as, you know, how each community's doing as far as the people, are we at 100 percent, are we at 75, are we at 80, occupancy rate. And just review, review the budget and numbers and how each community's doing.

Do you believe that the current commissioners are provided with sufficient information and documentation to effectively oversee MHA and advise in its strategic thinking?

Yes.

Thank you. I'm going to move to Director Adcock. If the City Board of Directors had received consistent documents and reports from MHA under its prior leadership, do you believe it would have been able to act sooner?

I think there would have been questions and it would have put the city on report that something's going on, something needs to be done. We have a liaison, which I serve MHA as a liaison now. But the liaison prior to me has been absent from city board meetings and everything for the last 20 months. And so no report was coming back that there was any problem. Thank you. The person who was the chair of the commission at that time, and she also was the employee running the MHA at that time, she also was the chair of another commission for the city of Little Rock at the same time, which was the Land Bank. And in that, there was property that was going back and forth between the city of Little Rock and the Land Bank and this individual and her friends and some of her other committees that she was working on.

Thank you very much. Real briefly, Dr. Jarmon, understanding that based on your history and the history of MHA, you may have concerns that the commission is seeking to exercise too much authority over MHA. So do you agree that commissioners and directors requesting documents and reports does not rise to the level of seeking to control MHA, and will you provide commissioners with these types of documents?

I believe that is absolutely necessary. We provide our Board of Commissioners with monthly reports that detail activities in every key department: Section 8, finance. And we would be more than happy to provide it not just to our board, but to HUD and to the city as well. So I do believe that that's important that you, in the light of being transparent, that that is important that you get those types of documents.

Well, thank you very much, Dr. Mr. Chair, I yield.

Chairman yields. We will now, keeping respectful to our witnesses' time, we're going to open it up to members who'd like to have a few minutes of a third round of questions. I hope that's okay. I'm going to start with myself. And so recognize myself. So I've got something here that reads, although no one has yet been arrested, when the FBI raided CAHC's offices, committee staff understands the FBI is still undergoing an investigation. Multiple current Little Rock City Board members, housing commissioners, and current executive director have alleged the former housing board commissioners, Leta Anthony and Kenyon Lowe, engaged in potentially unlawful conduct, including stealing, nepotistic hiring, misappropriating land, selling it to friends, steering contracts to friends and family, allowing ineligible friends and family to live in MHA facilities. Mr. Wright, what do you think about that?

Mic, mic. I think you're 100 percent correct on what you just stated, which would include taking appliances from Madison Heights and other units and giving them to friends or taking them to their house. Just taking advantage of the vendors that we have at MHA and CAHC and using them to their benefit, you know, as far as for their homes or family, that sort.

How do you feel about the current team that's in place, you and your colleagues and fellow commissioners?

Very good. Feel very good about it, yeah. It's a good team. Good team.

Okay, excellent. I'd now like to ask you a question I asked before of Dr. Jarmon and what would you like to see HUD doing ideally?

Well, as I said in my statement, I've been here a little bit longer than the others and went through it when I was just the sole member, the sole member of the board. And what we went through to acquire and get information. But I believe HUD needs to come in and clean it up. Clean up all the finances, clean up organizations. It's not her fault. It's their fault, the old guard. They created this mess. And that's my opinion. And I think if they came in and cleaned it up, we'll get back on our feet quicker.

That's great, thank you. Ms. Adcock, we spoke earlier and you said you were hopeful that through prayer that this could be a, this could help be a turning point, today's hearing. And I certainly believe in working hard and praying hard. On that note, what would you like to see ideally HUD's participation in helping move things in the right direction?

I have seen a lot of pressure put on Ms. Jarmon and the commission, Mr. Wright and everything, for them to do things that they do not have the background, not the physical background, but they do not have the papers available for some of this stuff that HUD wanted them to have. And it seemed like HUD just walked away instead of being there for them. I would like to see HUD being there for them, to be a partner with them, to help them. I also would like to see something done about the prior administration that caused all this. I think that everyone just thinks, okay, all that is forgotten. I'd like to see HUD and maybe the Attorney General's office and everything look into that, investigate it. I would like to see, of course, the apartments done. And I think if that includes HUD or the federal government coming up with some money, I don't think we should have to look up for every penny, how could we do it. There needs to be a fund set up, money set up, that says, okay, go out there and do what you need to do to get this thing back on its feet. If they have to penny everything along, it's going to be forever getting it done. The loan is wonderful, and they have begged and begged. And I just praise them because they really have got this loan going. But this loan is going to do one little bit. And you can't just bite off one little bit of a whole bag of something. You've got to approach it, how do we solve the whole problem. And the whole problem is money to get this thing started again, to get these families in these apartments. Putting nickels and dimes into it is going to take forever. Madison, the streets in Madison, the signage in Madison, it looks defeated. These properties should look like they represent our city government, our federal government, our state government. They should be some of the best-looking things in our community. And right now, with the exception of like Sunset and some of the others, they're not. And we need them to look like places that we take ownership of. The government is in here and government is going to make a difference. If it's HUD coming in and helping for a while, if it's y'all providing money, whatever it takes, I would like to walk out of this room with the attitude today they're going to do whatever it takes to get this corrected.

Thank you, Director Adcock, very, very much. I yield back. Does a member wish to be recognized? Chairman Hill is recognized for as much time as he sees fit.

Thank you, Mr. Chairman. I want to go through just a series of kind of follow-up questions to just clarify in my mind. I'm going to start with you, Ms. Wentz. You talked, you told us the story, and I think Director Adcock did too, about the pivot from Intech or whatever the name of the company was, but maybe it was you, Dr. Jarmon. They went from Intech and then they stopped and threw in the towel even though they were seconds away from closing and went to Gorman. And then Gorman has been sort of the source of the problem on Madison Heights. Is that right? And so why, what was the reason for dropping, either whoever wants to answer, why did you all change horses in midstream? Why did the previous management do that?

They went from Itex. Itex was also managing Madison Heights at that time. Okay. And they were doing a RAD program and it was all about developers' fees. And- All about what was that? Developers' fees. Yeah. Itex wanted 60 percent and was offering them 40 and they wanted 50-50. That was one of the reasons that they moved from Itex to Gorman. Gorman came in and did 50-50. And so that was one of the reasons.

So that's a legitimate business reason, you'd say, right? Even though if it was at the last minute, that's still a legitimate business reason.

Yes. If I'm not mistaken, I believe, I believe was there a contract signed on that? Yeah, there was a contract with Itex at that time.

And was there a penalty for breaking it?

It's litigation, yes sir.

And so that, and that litigation still continues?

We're still in litigation over it. It's a $1.something million litigation. But that was the reason that they, strictly money.

Yeah, go ahead.

One thing I'd like to see, actually two things I'd like to see HUD do is when we're doing these RAD programs or developing, is for HUD to have oversight over the contracts or and review them and review the proposals and the, because we did a RAD on Sunset and soft costs were 60 percent, hard costs were 40. Unheard of. Yet it went through. And I mean that was the biggest waste of taxpayer dollars on that side. And I think my co-commissioner, Monty, how much, I think it was $350 a unit or $350,000 a unit? Is that correct? It's what it ended up doing the remodel, the RAD.

Oh my god. 350k. So in just to catch the legal situation, a public housing authority and its nonprofit affiliate if needed, they have full discretion over signing a RAD contract. It's not reviewed by a HUD field office or above. Is that a fair description?

No, there is some oversight. HUD does have to sign off on the agreement. They, HUD and the Arkansas Finance Development Authority. There is-

So ADFA does too? And so you would think something that has that kind of soft cost in it and upfront fees would be very unappealing and would get a lot of scrutiny. So is it just a rubber stamp or are people really doing due diligence?

In some cases I believe they are doing due diligence. I know of examples where ADFA, for example, has come and said something as simple as the type of material that the developer is proposing. So there is some involvement and some oversight, yes, between ADFA and HUD. HUD is primarily on the financial side.

Okay. Well we'll follow up on that. Also on the continuing hangover from the previous management, what contracts are still in existence for the Metropolitan Housing Authority signed under the previous management that you can't get out of? Or that you and then give me your opinion of like data processing, marketing, legal, accounting. Are there contracts that were signed that were multi-year that were done with the prior management, Dr. Jarmon?

Not necessarily with the prior board that I'm aware of. We have some now that in the course of trying to recover the agency that the board did sign some rather long-term contracts. And we are bound to those contracts, especially the one for the data management through I believe 2028. I have actively spoke to the board and the board chairman about possibly revisiting some of those contracts because here's the thing about recovering an agency, it's quite costly. You have to pay a premium. Nobody wants to dig you out of that hole without you paying them a premium. And we've had a couple of examples of that where we've had to pay, in my opinion, exorbitant costs to dig us out of that hole, including the data system, including some legal fees, including the high cost that we have to pay the Novogradac, the audit company. We don't get any extra money for that. We have to try to figure out how we're going to pay them.

It'd be a lot easier if you weren't missing $18 million, wouldn't it?

Exactly.

I think you'd not have a lot of these problems if you weren't missing millions of dollars. Last question on the waiting list issue, which is so important to my good friend Director Adcock. We talked about vacancies, we talked about capital expenditures to fix vacancies, particularly in the Madison Heights question. How many people in a unit are not qualified to be in a public housing unit in your opinion? They are over income or under age. Director Adcock kind of referenced the experimentation over at Parris Towers to try to have some flexibility there. I'm not talking about that issue. I'm talking about someone who is in a public housing unit but is no longer qualified to be in that unit by income, for example. Do you track that?

We most certainly do track it. The lapse in previous administration in terms of the recertification process, the recertification is supposed to occur annually. Every year you're supposed to check that household to make sure that they continue to qualify for the subsidy and the benefits. Without that, without the inspections, without the annual recertification, then you are going to get families that possibly should not continue to be in that unit or be in that unit at all. Now that we have tried to address the fundamental issues, that is a very fundamental issue, the eligibility of families that live in our units. We now have very strict annual recertification requirements. I think that under this current administration and board that there's little to no other than trying to catch up from the past. But as far as walking in the door now, no, if you don't meet the eligibility requirements, you're not going to be in one of our units.

Thank you. I yield back.

Chairman Hill yields back. We're concluding our hearing. We certainly want to thank all of our witnesses. I hope you found it worthwhile, we certainly did. And everyone here for your attendance and concerns on this important issue. Without objection, all members will have five legislative days to submit additional written questions for the witnesses to the chair. The questions will be forwarded to the witness for their response. Witnesses, please respond no later than April 17, 2026. This hearing is adjourned.