Is Poor Oversight at City Hall Contagious?
Yet another council member has problems with the details of financial stuff.
One of Houston’s newest council members is facing tough questions about his management of the charity organization he helmed for more than a decade. But District B Council member Jarvis Johnson believes the questions are nothing more than a political vendetta.
Oh, here we go again, the “shadowy conspiricy card.”
Johnson believes he’s the target of a political vendetta because, he said, Phoenix Outreach was running just fine until he decided to run for the city council.
“This program was closed down because somebody felt like I made somebody mad downtown,” Johnson said.
“But you still don’t know who that is?” Arnold said.
“Still don’t know who it is,” Johnson said.
Johnson resigned as executive director of Phoenix Outreach when he was elected to city council. Nonetheless, the charity is struggling to stay afloat.
Unpaid payroll taxes, lack of permits, lack of proper documentation… is this any way to run a charity?
The charity ran into even more trouble when it had a grant with the city for after-school programs. An audit by the city controller shows Phoenix Outreach wasn’t serving the number of children it promised, it wasn’t providing the programs it agreed to provide and it didn’t have proper documentation to account for all of its expenses.
Taxpayer money, down the tubes. Perhaps it could be diverted to the Mayor pro tem’s office? Oh, and don’t forget nice deals for the family. Clearly someone understands finances:
A contract examined by Local 2 showed Johnson’s sister is renting the house to the charity for only $1 a month. But a closer look at the deal showed Phoenix Outreach will eventually wind up losing money on the deal.
Johnson’s sister agreed to buy the house for $118,000 and sell it back to the charity for the exact same price. However, Johnson’s sister is allowed to deduct the $3,200 a year in property taxes and the interest on her loan from the original selling price. But the charity still has to buy it back from her for the full amount.
So for every year she has the property, the original price for her goes down, but the charity still has to pay full price if/when it buys it back. Ok kiddies, today’s phrase is “compound interest.” By reducing the principal (i.e.: purchase price) at a rate of $3,200 per year even before making a single payment, she is drivng the overall cost (not the price, the cost) of the property down by reducing the amount of interest to be paid. One suspects that no bank would carry a note like that, which means there’s likely to be some private amendment to the sale agreement. (Yes, I’m aware that the contract says she’s deducting the “interest paid” but she’s deducting it from the principal, which reduces the amount of interest - eventually.)
Now, I lack the math to turn this problem on its head, but in short, the effect is that she has loaned the charity the money to pay its fines at an usurious rate, using the house as “pre-emptive” collateral. If KPRC’s description is accurate, she should profit by the amount of the reduced interest. But what happens if the charity shuts down, or more likely, is shut down? Well she’s the owner of a house the Houston Rockets paid to build. Must be nice.
Meantime, the charity isn’t getting it’s job done.
That’s because two years ago the fire marshal’s office shut down the program because the home didn’t have proper permits. Plus, the city even made the group take down the sign in front of the house because it didn’t have proper permits for that either.
Wait, two years? How is this “charity” still in existance? And could someone explain to me how all these problems started when Johnson ran for office, although they started 2 years ago? I’m having a problem with the math again. 2006-2 = 2004; elections were in 2005. Huh?
“Should it have been done properly? Yes. But I’m not here to point fingers who didn’t do what they were supposed to do,” Johnson said.
Considering that Councilmember Johnson is the one at whom the fingers would be pointed, this is understandable.
Phoenix Outreach made the decision to stop pursuing any grant money, supporting itself largely on fees collected from its day care centers. But the Troubleshooters found state violations at those facilities.
Johnson said the violations were minor and have been corrected.
I would like to know more about those violations, myself.
Johnson said the person responsible for the payroll mistake was fired.
Was it an ex-city employee? (I just had to ask, sorry!)
He also said the organization is going through a restructuring and hopes to have the house open again for children by the end of the year.
And he says that the house will be repurchased from his sister within 3 years. Ok, I’ll see you all in 2009 and we’ll check. In the meantime, much more of this and I’m not going to be able to keep up.