Blowin' in the Wind: Housing Chief Faces New Scrutiny

by Terrilyn Simpson
for the Maine Wire
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Dale McCormick resorted to quoting Bob Dylan.

Though it may not have provided the answer sought, it did provide a curious and somewhat entertaining moment in one of McCormick’s first official interactions with new state officials attempting to untangle the bureaucratic quagmire at the Maine State Housing Authority, of which McCormick is director.

And it may have set the tone for interactions between McCormick and MSHA board members newly appointed by newly elected Governor Paul LePage.

The setting was a July 7, 2011 MSHA stakeholders meeting, comprised in large part of builders and others associated with the construction of low-income housing. Somewhere in the course of the meeting, held at the Augusta Senator Inn, McCormick was asked by board member and State Treasurer Bruce Poliquin whether she had figured the cost payback on the solar hot water heaters she’d had installed in a number of low-income homes. A Dec. 2010 article by John Christie in the Bangor Daily News listed the installation cost of the heaters at $7,500 each –considerably more than the $250 cost of an electric hot water heater.

“For that,” McCormick is said to have told Poliquin, “I look to Bob Dylan.”

Several in attendance recalled that many of the approximately 200 present stared at her in stupefied silence, including Poliquin who demanded to know what she was talking about.

“The answer,” announced McCormick, “is blowing in the wind.”

The response is still bandied about by administration officials trying to unravel the bureaucratic mindset of McCormick and MSHA.

Established in 1969 by legislative statute, the purpose of MSHA, according to its published mission statement, “is to assist Maine people to obtain and maintain decent, safe, affordable housing and services suitable to their unique housing needs.”

Continues the statement, “In carrying out this mission, the Maine State Housing Authority will provide leadership, maximize resources, and promote partnerships to develop and implement sound housing policy.”

Critics contend MSHA has strayed far from the mission of its formation.

Under specific scrutiny at present is McCormick’s failure to comply with the MSHA mission mandate to “maximize resources” — a universal term in both the public and private sector understood as utilizing funds to get the biggest bang for the buck.

New MSHA commissioners questioned — with 6500 Maine residents on the MSHA waiting-for-housing list — whether a construction cost in excess of $300,000 for a single, low-income apartment was a reasonable maximization of resources.

A quasi-governmental agency, MSHA projects are funded by both state and federal tax dollars. The director is appointed by the governor, as are MSHA commissioners.

LePage appointed four members to the MSHA board of commissioners. In addition, by-laws require that the state treasurer be seated as a commissioner — thus, enter State Treasurer Bruce Poliquin.

Early on in the business of the new board, comprised of the five new members, including Poliquin, four longtime members and McCormick, who serves as a non-voting participant, the commissioners were handed what had in the past been considered a routine item of business — the QAP. The Qualified Allocation Plan contains the standards — or rules — building contractors must comply with to potentially receive funding through MSHA for the construction of low-income housing.

According to the document, the QAP “establishes criteria for allocating credit to qualified low-income housing projects and procedures for administering the credit and monitoring the qualified low-income housing project after allocation of the credit.”

The details of the federally required QAP are up to the individual state agency — in this case – the Maine State Housing Authority.

Getting approved for funding by MSHA is a competitive process, based on a point system. A contractor earns points by complying with standards set by MSHA. Contractors with the most points, win.

Surprisingly, cost does not figure in the equation.

The QAP, drafted by MSHA under the guidance of McCormick, is first approved by the commissioners and then sent to the governor’s office for a signature. Both steps in the process had been accomplished in years past with little or no scrutiny.

But Poliquin read the plan.

Poliquin was troubled by what was — and what was not — included in the QAP. Why, for instance, was it MSHA’s business whether or not a contractor provided employees with health insurance? Why was McCormick offering extra points to a contractor who complied with her health insurance requirement? Poliquin didn’t see it as any of the state’s business.

What even Poliquin didn’t know was that a Democrat majority legislature had already determined several years previous, not to require as state standards, contractor employee health benefits, not to require hospitalization plans, not to require contractor-based apprenticeship programs — in addition to several other items. Senator Deb Plowman (R), Hampden, recalled that the proposed bill never made it to the floor after it got an ought-not-to-pass in committee. Plowman expressed concern that McCormick was ignoring the will of the legislature and sliding in her own
social agenda piecemeal.

Poliquin was even more troubled that a key issue — money — did not count in McCormick’s bid process. “Why was there no consideration for controlling cost?” demanded Poliquin. There was no reward if a project came in below the bid and if the bid was exceeded, no penalty.

And there was no incentive for being low bidder. It simply didn’t matter.

Board chairman Peter Anastos, one of the newly appointed members, has pointed out that the money matter often gets lost in the rhetoric — that incredibly, cost containment carried no weight. None. While DSL access and smoke free apartments and “green design” are all rewarded, cost is not considered.

“There is nothing in the scoring that keeps costs down,” emphasizes Anastos.

Poliquin told McCormick and fellow board members he didn’t see the QAP passing muster with LePage. He was right. LePage refused to sign without changes — with an emphasis on cost containment.

McCormick complained it was too late in the year to alter the QAP and accused new board members of politicizing.

There was eventually a partial capitulation. Four modifications were offered by McCormick — that the plan would be for one year, rather than two; that mandates for contractors pertaining to employee wage provisions, employee classifications and apprenticeships, or on-the-job training requirements, be eliminated; that the requirement that contractors provide health insurance to employees be eliminated; and that the scoring advantage that contractors with non-profit sponsorship were getting be eliminated.

With those changes in hand, the LePage administration agreed to let the 50-plus page plan go through, with the understanding that a dialog on additional changes would continue.

It was at that point that Poliquin, Anastos and other board members focused their attention on the numbers. If there had been no advantage to keeping costs down in the awarding of contracts, what was the cost of the projects? Surprisingly, it was an item of business that seemed not to have come up in detailed open discussion previously.

They were shocked by what was eventually revealed by McCormick. The Elm Terrace project in Portland was projected to cost between $309,000 and $314,000 per 1100 square-foot unit. McCormick was quick to react to the criticism — she called a secret meeting — or at least secret from her board members.

Players involved in the Elm Terrace project were included but board members were not notified. Several found out about the October 20 meeting at the last minute and rushed to the meeting location on the University of Southern Maine campus. The conversation at that meeting, and the contents of a letter two weeks previous — to McCormick from Community Housing of Maine — contradict McCormick’s subsequent claims that she — McCormick — had already identified the cost of Elm Terrace as too high and that she had, all on her own, put the brakes on the project until costs could be brought down.

At the meeting, representatives of Community Housing of Maine, whose application had been approved by MSHA and who had received the go-ahead for the Elm Terrace project, appeared more than surprised, according to individuals in attendance, that McCormick was suddenly making an issue of cost. In the letter to McCormick from the president of the CHOM board of directors, the point was emphasized. McCormick’s abrupt stance was identified under a sub-heading “The Sudden Problem.” It was pointed out that MSHA had been kept apprised of all cost increases and that CHOM representatives had actually met with MSHA staffers every two weeks for detailed updates. The account emphasized that 17 months into an 18-month project, after investing hundreds of thousands of dollars in engineering studies, permits and architectural designs, that one day before bids were due, McCormick was — for the very first time — identifying a problem.

McCormick was accused by CHOM of “changing the rules at the end of the game — and — by delaying or denying the project at such a late stage –of putting CHOM “at considerable risk.”

McCormick’s public insistence that she’s had ongoing concerns about cost and her inference that she initiated formation of a cost containment committee on her own are not only in conflict with the CHOM letter on Elm Terrace — they’re in contradiction with her approval of past projects, such as Gilman Place in Waterville which passed uncontested muster with McCormick at $292,000 per unit.

And as for the cost containment committee, Anastos admitted he couldn’t remember who said the three words out loud first but he is clear that the move was a consensus reaction to the revelation of a longterm lack of attention to cost at MSHA — and the consternation over exorbitant price tags. The first cost containment meeting was held on August 8, according to Anastos.

As the list of problems uncovered at the housing agency has grown, critics have begun to question McCormick’s running of MSHA. According to state statute, McCormick does not at present answer to the MSHA board of commissioners and there seems to be ongoing murkiness regarding her accountability. She was appointed to a second four-year term by Baldacci in 2010. A 1987 statute states that the director of MSHA can be removed by the governor “for inefficiency, neglect of duty or misconduct in office………..”

Thus far LePage has been publicly mum regarding MSHA but is said to be following ongoing issues there.