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PBC Housing Authority loses $1M on failed apartment project

The Palm Beach County Housing Authority lost more than $1 million in taxpayer money on a failed plan to rebuild the troubled Grand Lake Apartment complex in Belle Glade, the chairman of the authority’s board wrote to the county.

Board Chairman Paul Dumars said the authority’s previous executive director, Van Johnson, mismanaged the effort, losing $750,000 in earnest money pledged by the authority. The expectation was that financing could be found to rebuild the complex, which has repeatedly been cited for health and safety violations. That financing was never obtained, and after other money was spent on feasibility studies, professional services and other items, plans for the deal were halted.

Dumars pushed for a forensic audit of the authority’s finances, and in his letter he described for County Mayor Melissa McKinlay some of what was found.

“As detailed in the attached forensic audit, to date, PBCHA has (lost) in excess of one million dollars on the GLA property,” he wrote to McKinlay, whose district includes Belle Glade. “Immediately upon the termination of Mr. Johnson’s employment contract, PBCHA Board of Commissioners suspended all future development activities with the exception of existing real estate development projects.”

Documents shared with The Palm Beach Post indicate the earnest money, the bulk of what was spent on the Grand Lake project, was committed in 2012. Three of the five current members, including Dumars, were not on the board at that time.

Board under criticism

McKinlay had supported the rebuilding of Grand Lake, viewing it as a way to provide more affordable housing to an area in desperate need of it.

She said the authority’s decision to halt plans to rebuild Grand Lake is “extremely disappointing.”

McKinlay faulted Johnson for problems with the project, but she criticized the board as well.

“The board did not keep a close enough eye on its executive director,” McKinlay said. “Now, the people of Belle Glade will pay the price for that. (Board members) had to have an idea of what he was doing and what he was spending money on.”

Efforts to reach Johnson were unsuccessful. Board members fired him in July, describing his tenure as one of “financial malfeasance, gross mismanagement and ethics violations.”

The Palm Beach Post subsequently reported that Johnson had hired his niece as a consultant and employed her for four years before telling the board of his relationship to her.

The housing authority has not named a successor to Johnson.

“Within the next two months, the search will be public and active,” Dumars told The Post. “We hope to hire an experienced housing executive with development and policy experience who has an impeccable record of integrity in order to continue to restore the public’s trust in the agency.”

Dumars defended the board’s actions in investigating and ultimately firing Johnson.

“The board acted properly in the time it took to investigate Van Johnson,” he said. “As we have stated before, we conducted a year-long investigation into Van Johnson and fired him before his actions took the agency down.”

The housing authority gets its money from the federal government, principally the U.S. Department of Housing and Urban Development, which provides money for vouchers used by poor residents and by landlords who rent to them at reduced rates.

Housing authority board members are appointed by the governor.

McKinlay and other commissioners support legislation in Tallahassee that would allow them to appoint two board members. In pushing for the legislation, commissioners noted that the agency bears the county’s name and the people it serves are county residents.

The legislation, however, has failed to gain traction and appears unlikely to pass this session.

Plagued by problems

McKinlay said that, despite her repeated pleas for updates and coordination, the housing authority has provided neither.

“There’s been no coordination with my office,” she said, adding that she was disappointed the board halted plans for Grand Lake without county input. “We weren’t even able to be a part of the conversation. It would have been nice to have a seat at the table.”

Dumars said the housing authority’s staff has had contact with county staff members on other projects and about future developments.

McKinlay and county staff had worked on the deal to sell and rebuild Grand Lake, which has long been a trouble spot for the housing authority.

In August 2015 — days before the beginning of a new school year — 200 Grand Lake residents faced displacement because of health and safety problems at the complex, including unsafe or non-existent staircases, rodent infestation, active wasp nests, mold, broken windows, garbage, open sewer pipes and discarded mattresses and tarps in abandoned swimming pools.

The owner of the 384-unit complex, Miami-based Ytech International, promised to make repairs. Two months later, county, local and housing officials all praised the prospect of the sale and redevelopment of the complex.

But that sale never came to pass.

“Today, the property is roughly 30 percent occupied and in poor condition,” Dumars wrote to McKinlay.

A market study that assessed housing needs in the Belle Glade area concluded that rebuilding Grand Lake Apartments would be massively expensive.

“The study also contemplated rehabilitation of the GLA property,” Dumars wrote to McKinlay. “However, in consideration of the fact that GLA is a brick veneer and given the condition of the property, it was decidedly recommended that the property be completely demolished and newly constructed. The costs of which was estimated at approximately $50 million or higher.”

Dumars said the housing authority is determined to turn the page from the Johnson era and wants to “continue to partner with the county to find solutions for the housing issues we have in Palm Beach County.”

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