Bush Housing Agency Appointee Convicted; Grand Jury Investigations Said To Continue.

Business Editors/Government & Real Estate Writers

HOUSTON--(BUSINESS WIRE)--Nov. 2, 2000

A federal jury in U.S. District Court here has convicted one of Gov. George W. Bush's appointees to the board of the Texas state housing agency on bribery, theft and other charges, according to a report on the web site of Affordable Housing Finance magazine.

Florita Bell Griffin, who was appointed by Bush in 1995 to the governing board of the Texas Department of Housing and Community Affairs (TDHCA), was convicted on all counts this morning, stated the story. The article appears at www.housingfinance.com, a web site offering news and reference material on developing and financing apartments, including conventional and government-assisted housing.

Griffin was convicted in connection with her role in approving an award of federal tax credits in 1997 for a housing project to be developed by a partnership called One Golden Oaks, Ltd., in Bryan, Texas. The indictment stated that she received land and money "in exchange for her support of the application for tax credit assistance." Two other defendants were also convicted in the case.

After the conviction, a Bush spokesperson called for Griffin to resign from the board. However, critics of TDHCA lambasted Bush for ignoring earlier complaints about irregularities in the way the agency allocates millions of dollars in federal assistance. A former TDHCA staff member said two federal grand juries are continuing to investigate the activities of other TDHCA board members and staff.

"For three and a half years, I have been imploring this governor to address possible criminal activity at TDHCA and he's ignored it," said State Rep. Harryette Ehrhardt, a member of the state legislature's Urban Affairs Committee. "The governor left Griffin in a decision-making capacity for as long as legally possible," added Ehrhardt, who has studied TDHCA's operations in response to complaints about unfairness from unsuccessful applicants for housing aid.

Bush was first notified by the TDHCA board chairman on July 28, 1998 that there were possible grounds for removing Griffin, said Ehrhardt. Griffin continued to chair one committee and sit on another three-person committee that decided which developers would receive millions of dollars in state and federal housing subsidies.

Ehrhardt's office estimates that during Griffin's tenure on the board, TDHCA provided over $1 billion in grants, tax credits and subsidized loans.

After Griffin was indicted in June, Bush still made no public effort to seek her resignation or ask her to refrain from voting, Ehrhardt said. It was not until the federal Department of Housing and Urban Development (HUD) threatened to cut off funding to TDHCA that Griffin agreed to refrain from voting on funding decisions.

Charges of corruption and favoritism in the agency's operations have circulated in Texas for years and were substantiated in a report this year by the State's Sunset Advisory Commission, which is considering abolishing the agency.

Housing advocates say that the TDHCA has failed to address the state's housing needs adequately and blame Bush for not better managing his appointees on the agency board. All nine members of the agency's governing board, as well as the executive director, were appointed by Bush.

"There has been a complete lack of leadership on the part of the governor in dealing with this," said John Henneberger, co-director of the Texas Low Income Housing Information Service in Austin. "We think it's serious, the legislature thinks it's serious, and HUD thinks it's serious. The only people who think everything is okay are the people in the governor's office."

In response to Bush's call for a higher ethical standard in the White House, Henneberger said: "We continue to call on the governor to practice that in Texas, as we have been calling on him for five and a half years to clean up the mess at TDHCA. The administration has its head in the sand over this agency. It defies logic."

Other TDHCA board members and staff may also face criminal charges. The Houston grand jury that indicted Griffin is still looking at how financial assistance decisions are made at the agency, according to a former TDHCA staff member who has been interviewed by the FBI about the case. A separate grand jury is also meeting in San Antonio, according to the former TDHCA employee. He said this grand jury is considering allegations that a former TDHCA executive director, also a Bush appointee, pressured housing agency underwriters to approve projects that they did not believe merited funding. The director, Larry Paul Manley, resigned in 1998. Federal prosecutors would neither confirm nor deny these reports.

Earlier this year, the Sunset Advisory Commission found that TDHCA does not target housing assistance to Texans with the greatest needs and appears to practice "favoritism" in the allocation of federal assistance. It also made numerous other criticisms. It recommended that the TDHCA board be restructured and said the agency should only be continued for a two-year "probationary period," after which it might be abolished. The report came from the staff of the commission, which reviews each state agency periodically to decide whether they should be abolished or reformed to better achieve their missions. The commission is set to take final action on the recommendations later this month.

The commission staff's report was prompted in part by a study of TDHCA's 1999 housing aid decisions by Ehrhardt. Her study found that "TDHCA board and staff appear to be allocating public funds in a subjective manner that supports the widespread perception of favoritism. Numerous members of development teams who appear to maintain close friendships or have had previous working relationships with TDHCA board members and staff received (assistance)," Ehrhardt found.