The Mobile Housing Board of Commissioners might be looking to make changes to Mobile Development Enterprises, the organization’s long-standing nonprofit arm, which was the subject of a scathing U.S. Department of Housing and Urban Development (HUD) Office of Inspector General report earlier this year.

Many of the commissioners, who are relatively new to the board, began to question why employees of Mobile Development Enterprises were listed alongside MHB employees in organizational charts at a work session held Wednesday, Nov. 16, to discuss the organization’s annual budget.

Commissioners also questioned why some employees, including MHB Executive Director Dwayne Vaughn, appeared to be listed as employees of both entities.

“If someone gets a salary for the housing board and MDE, do they get paid double?” Commissioner Reid Cummings asked. “The $1.8 million budget for MDE — does it pay people who are paid by the housing board?”

MHB CFO Lori Shackelford told Cummings no one is dually employed, but Cummings mentioned Matthew McClammey, the new vice president of asset management, as an employee for both entities. Shackelford said McClammey is an employee of MDE, but MHB attorney Raymond Bell added that he has responsibilities for both entities.

MHB President Kimberly Pettway further questioned the nonprofit’s organizational structure, as she said it appeared State Rep. Adline Clarke, president of MDE, reports to Vaughn rather than to the nonprofit’s board.

“… Adline Clarke should report to the board,” Pettway said. “It looks like she reports to Dwayne Vaughn.”

Bell said at some point MHB board members requested that the executive director operate as CEO of the nonprofit organization. As CEO of MDE, Vaughn has the authority to hire for budgeted vacancies within the nonprofit without having to ask the board for approval, Bell said. McClammey, the most recent MDE hire, was considered a budgeted vacancy.

“That’s odd …,” Cummings said. “That’s not the way to operate this enterprise. I’m uncomfortable with it.”

Pettway added that it was hard to see how the nonprofit arm was separate from the public board with Vaughn serving two roles.
“The marriage between the housing board and MDE is substantial,” she said.

The OIG report specifically questioned MHB’s relationship with MDE. OIG found in its report that although MHB claimed the nonprofit arm was a third-party affiliate, MDE could actually be considered part of the authority. The report found the close relationship between the two entities could have led to funding being mishandled.

“In HUD’s perfect world MDE would be completely autonomous,” Bell said. “Other boards are pushing back on that because they have skin in the game and don’t want to give it to a group that has a different vision.”

Pettway questioned Bell about the MDE board activity. MDE’s three-member board typically meets once a year, following the housing board’s annual meeting in December, Bell said. The nonprofit’s board includes Vaughn, who serves as secretary/treasurer, the MHB board president and one other MHB board member, he said.

In the meeting, Bell said, the nonprofit board typically adopts its budget and approves the various tenant services.

Cummings suggested changing the structure of the nonprofit’s board to include all members of the housing authority board. He said he felt “uncomfortable” approving the budget for an agency he had no control over.

“There’s a perception that the housing board has little or no oversight on MDE,” Cummings said. ”Three board members have no oversight on MDE.”

Bell said HUD would have some concerns over that structure, as the two entities would be too closely linked. Bell instead suggested the nonprofit’s board include all five MHB commissioners and a few other members not associated with MHB.

Cummings also suggested MDE’s “organizational alignment” at the top should be addressed. It also appears the board will re-examine the organization’s bylaws in the near future.

MHB created MDE in the late 1990s in order to apply for and receive money to open and operate the Clinton L. Johnson Center, Bell said. In order to receive the grant, the center had to have an economic development component and a job training component. This was achieved, in part, through a Dollar General store, which leased space in the center. In addition, Bell said, the center included day care, a computer lab and other amenities.

“That was the original intent,” Bell said. “That’s how it started.”

The nonprofit entity grew from there, Bell explained, as the “housing authority ran into situations where they would apply for grants … and they would run out.”

There were discussions about hiring employees and having them tied to the grants, rather than hired through the personnel board, or merit system, Bell told commissioners.

“There was an idea of trying to make MDE generate income for non-federal funds,” Bell said. “There were many ideas … I think in the infancy of it. Operating the center ending up being it.”

Bell said the housing authority began to use MDE to circumvent the low wages set by the Mobile County Personnel Board. He said MHB had several conversations with personnel board officials about increasing the salaries for publicly hired engineers after struggling to attract qualified candidates.

Later, he said, MDE grew into an entity that would provide certain social services to MHB residents. MDE now operates in part through a family self-sufficiency grant, Bell said.

“The social services component is vitally important,” Pettway said. “We need to get a clearer understanding of what MDE does.”

The myriad services MDE provides are designed to guide residents toward market-rate housing in three to five years, on average, Bell said. Currently MDE does this through a number of HUD-approved case manager positions.

MDE also earns money through a contract with MHB for resident services. The contract is paid out through at least two different MHB budgets: low-income public housing and a central-office cost center, Shackelford said.

While MHB pays the nonprofit’s salaries, Shackelford said, MDE in turn pays an administrative fee to the housing board because MHB keeps the books for MDE.

“It’s not all grant funded,” Shackelford said. “The majority is grant funding.”