Does Nashville Have Its Own TVA-Like Shadow Government in MDHA?

MDHA is much more than a traditional Public Housing Authority …. It’s an economic development authority as well, and as such it is an important political actor and buyer and seller of real estate …. MDHA is an empire.

Yesterday I had an enlightening meeting with SEIU Director Doug Collier. Among other information, I obtained a 2000 Financial Analysis of the Metropolitan Development and Housing Agency.* That analysis (from which the empire quote above comes) found that MDHA maintains high reserve levels ($15 million in 2000; yesterday I was told that their reserve is up to $20 million in the middle of a recession) and earns over $1 million annually on the investment of reserve cash alone.

Even in years when the federal government could not fully fund other housing authorities, MDHA increased its base rate of subsidy according to increases in the cost of living.

MDHA is able to operate with a surplus because of

• High occupancy rates, which generate larger reimbursements from the federal government
• High return on Interest on reserve fund, which does not adversely affect operating subsidies MDHA gets from the federal government
• Underspending on maintenance

After giving credit to MDHA, the report ponders more critical questions:

Are they cheating anyone? MDHA seems to collect more from Uncle Sam and the tenants than it spends. That at least raises the possibility that the program may be hoarding money by shortchanging the tenants somehow, neglecting to do extraordinary maintenance tasks, for example. Or it may be ripping off HUD by getting more reimbursement than it needs. A third possibility is that MDHA may be cheating its workers by underpaying them for services rendered. Fortunately, there is no evidence against the agency on the first two counts.

I am told that soon after this report was released in late 2000 and became common knowledge at MDHA employee pay went up from $11 per hour to $17 per hour and tenants received $6 million in MDHA rent refunds. The SEIU union representatives I met with criticize MDHA for focusing strictly on growth-oriented development to the neglect of maintaining housing and without regard for job-creating projects. They are concerned about how MDHA is going to spend the Obama Administration’s infrastructure stimulus funds in the pipeline.

There are a couple of things that interest me about this report’s findings beyond SEIU's concerns. One is the recent scaling back of the Salemtown streetscape project due to higher unanticipated costs. Put aside good questions about how construction costs could be higher in a market downturn. If MDHA is awash in excess funds through their own investments why can't they kick in some funds for planting some trees to enhance the quality of life in the North End? If they were at fault in not following up with Public Works and the private landscape architect on delays in the project then they should be willing to make amends by putting down some canceled parking striping. Is MDHA devoting all of the $589,000 block grant to the Salemtown project or is any of it shunted into their reserve fund? During the three year period that MDHA was holding on to block grant funds, did any collect interest that might be used now to meet unexpected costs? I sent in a request to the MDHA representative to the Salemtown project for a copy of the minutes of the relevant board meeting and an itemized budget for the project.

The other interest I have in this concerns MDHA’s leading role in acquiring real estate for the Mayor’s proposed convention center. Will the housing authority use the occasion to load more assets into its fat reserve fund and expanding its growing empire? Is anyone watching how MDHA itself conducts business during the land acquistion process?

MDHA seems to be accountable to no one locally or at the state level while it meets its obligations to the federal government well enough to keep the subsidies flowing into its coffers. But some interpret its response to the 2000 SEIU report as covering past actions by raising pay and returning rents. Are we living with a monster in our midst that poses many of the same accountability problems we see at the Tennessee Valley Authority? Will it take a catastrophe on par with the Kingston coal ash spill to reign in MDHA power? Or can a group of organized people delving into MDHA finances and once again asking critical questions force it up a higher road?


*The analysis was conducted by the SEIU International Research Department in Washington, DC and it relied on original MDHA financial data obtained upon request.