Low income housing credits have started to make annual headlines in the El Paso area because of the controversies that follow them. As a government device, they tend to be complicated for the community to understand. Like all government programs, there is a mystic about them and a lack of understanding as to what they are. In their simplest terms, low income housing credits are dollar-for-dollar credits issued for building low income housing by private companies. An investor invests in public housing and because of the investment, the investor gets to take a credit for the investment in its tax returns. To ensure a fair and competitive playing field, tax credit developments must compete for the investor dollars using their local governmental bodies and abide by strict rules. It is highly competitive.
Competition between developers also insures that the tax credits are used in the most efficient manner possible. As you know, competition is supposed to be fair and transparent. Each developer is supposed to submit their best offers and the best one is chosen. When two, or more developers conspire together, the notion of fairness becomes nonexistent and it results in corruption.
To collude: to come to a secret understanding for a harmful purpose, or to conspire.
To conspire: to make secret plans jointly to commit an unlawful or harmful act.
Tax credits, as a federal program have strict rules governing them.
The United States Department of Justice published a document titled; “Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For”. Almost all of you are familiar with price fixing schemes and bid rigging. They are prevalent in the El Paso area, hence the corruption. The document states; “the competitive process only works, however, when competitors set prices honestly and independently.” I’d like you to focus on the word “independently”.
Some of you are aware that last week the news media reported on the lawsuit filed by Ike Monty and his company, Investment Builders, Inc. against the El Paso Housing Authority (HACEP). Monty alleges that HACEP conspired to drive Ike Monty out of the tax credit business in El Paso. You can download the original petition here.
As with all legal documents, the lawsuit document is full of legalese that makes it difficult to read and understand. Buried in the wordage is a detailed list of collusion and conspiracy activities between Ike Monty and HACEP.
Let me point out the collusion that Ike Monty admits to participating in.
In essence, Monty is arguing that HACEP conspired to drive Investment Builders and Ike Monty out of business by creating a monopoly. Monty, in his lawsuit, agrees that the tax credit programs is very “competitive”. Monty even argues that the competitive nature of the program is designed to benefit the community by providing better public housing for the community.
As evidence, Ike Monty provides examples of where he, and HACEP agreed to conspire for Monty’s business to not complete in some tax credits in return for HACEP purchasing some of Monty’s properties. Yes, you read that right, as evidence, Monty details a conspiracy where he agrees to keep his company out of bidding for tax credits in return for HACEP buying 25 of Monty’s properties.
Remember that HACEP is a quasi-governmental body using federal dollars to build public housing. In the most basic reading of the proper use of tax dollars is the understanding that any tax dollar used is based on open competition to achieve the best value for the dollar.
In this case, if HACEP was looking to buy apartment complexes to further its goals of providing public housing it would issue a public request for proposals to all apartment building owners. In return, the owners would respond with proposals. From there, HACEP would pick the best value for the federal dollars.
Now look at the lawsuit. Ike Monty provides evidence that he, and HACEP conspired to use federal dollars for 25 properties that Ike Monty owns. Yes, he explains how the conspiracy centered on Ike Monty staying out of some of the tax credits cycles in return for HACEP giving him federal tax dollars for his properties.
It is a clear case of conspiracy and corruption.
Is it illegal? A court would have to ultimately decide that but it is unlikely to happen even though it is laid out for all to see.
There is another player in this scheme, Woody Hunt. Many of Ike Monty’s projects involve Hunt Companies. Hunt has been actively involved in Monty’s projects for many years, although Monty is the public face of the housing properties.
Now ask yourself a simple question. Remove Hunt from the equation and ask yourself how long would it take the FBI to raid HACEP and the offices of Investment Builders and Ike Monty because of a court document filing that details collusion between two or more people/companies conspiring to use tax dollars to benefit one local developer?
It can’t get any clearer than that as to why corruption is so rampant in El Paso. Because even if you publicly acknowledge corruption in court documents, the case is unlikely to get the attention of the federal prosecutors and much less of Jaime Esparza, the local prosecutor.
For corruption to fester it must be encouraged by creating a class of individuals that are protected from prosecution.
The whole public housing industry depends on HUD. It has the potential and probably is rife with corruption at many levels, HACEP being just one example. Take HACEP and multiply it hundreds of times across the country and that is the scope of it all.
And people wonder why libertarians and paleo-republicans (me) distrust government and seek to defund it wherever possible, because you can’t control this kind of cronyism. Not possible. The only control anyone has over government is to starve it to force it to focus strictly on basics – streets, sanitation, parks, public safety, libraries. etc.
The taxpayer has no obligation to house people. Where is that in the Constitution? Then too, where are transgender bathrooms in the Constitution?
Starve it!
Well said Martin.