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‘Nearly Bankrupt’

'Nearly bankrupt': What role did the relationship between the ACHA and Laborers' Local 773 play in housing crisis?

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CAIRO — In a 2005 memo to employees, then-Alexander County Housing Authority Director James Wilson wrote in bold and all capital letters, “THERE IS NO HOUSING AUTHORITY IN THE STATE THAT CAN MATCH OUR BENEFIT PACKAGE! PERIOD.”

The memo was announcing a temporary freeze in cost-related benefits necessitated by budget concerns that year. But softening the blow for workers, Wilson accurately bragged that, even with the freeze, the ACHA employees represented by the Laborers’ International Union of North America Local 773 were well endowed in the benefits category compared to their peers.

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2005 memo to ACHA employees

In a 2005 memo to employees of the Alexander County Housing Authority, the-Executive Director James Wilson touts the agency's generous benefits package. 

The newspaper’s analysis of the situation concerning the ACHA — which has led to a housing crisis in Cairo that threatens to displace close to 400 people who rely on public housing — indicates Wilson and the Local 773 had a mutually beneficial relationship. 

The newspaper's months-long analysis of what went wrong with the ACHA has included an extensive review of records and interviews, both on-the-record and on background, with multiple people familiar with the operations of the ACHA and the players involved, as well as with experts in unemployment insurance, labor law, collective bargaining and Housing and Urban Development policies and best practices.

While management and labor helped each other for years — as indicated by public records — the housing developments they were charged with maintaining for some of the country’s poorest residents fell into complete disrepair.

All ACHA employees received generous benefits. And some benefited more than others. 

They "lived it up too good" — as Wilson described his view on what went wrong, in that same late 2015 interview mentioned above. 

But while they 'lived it up too good,' residents have lived with roaches and rats, mold, exposed asbestos, lead-contaminated water that went untested, electrical and plumbing problems and heating system issues that forced most residents to warm their homes in the winter with their ovens. 

In an August 2015 interview with The Southern Illinoisan, Wilson himself described the conditions of the housing developments he oversaw as executive director for 24 years as "third world." 

This past week, before a U.S. Senate hearing on President Donald Trump's proposed federal housing budget, Sen. Dick Durbin, D-Ill., told HUD Secretary Ben Carson that neither would "even consider staying a night" in those conditions "and yet, our American citizens, people we represent, are living there." Carson responded in agreement of Durbin's assessment.  

The ACHA and Local 773 

Today, the Local 773 is headquartered in Marion, across from the Veterans Airport of Southern Illinois. But the Local 773 traces its roots to Cairo.

Over its cumulative history, the Local 773 has played an important role in fighting for living wages and safe working conditions for people in Cairo, and in more recent history, throughout Southern Illinois and even nationally. 

But unfortunately where it concerns the ACHA, the union may have played a role in bleeding the ACHA financially dry. And the ACHA's financial troubles are only one piece of the disaster facing the community as it relates to this housing crisis. 

The pending relocation of about 185 families threatens to hollow out this struggling community and puts the school system in jeopardy, as close to 40 percent of Cairo Unit District 1's children live at Elmwood and McBride, the developments from which HUD officials are moving people utilizing Tenant Protection Vouchers, citing unsafe and unlivable conditions.

Further, a recent financial analysis indicated that other developments in the ACHA's portfolio are at risk, because the local agency is insolvent and was predicted to run out of cash this past month. So far, the HUD Recovery Team managing the ACHA in administrative receivership, despite the federal agency declining to allocate money for new housing in Cairo, has managed to stave off the worst of options, which include dissolution of the housing authority and/or bankruptcy.  

Wilson: A proud union member 

Wilson, during his lengthy career in public service, was fiercely loyal to the Local 773, as evidenced by his comments, actions and public records.

In an August 2015 interview with The Southern Illinoisan, while discussing the fiscal state of the housing authority and employee benefits, Wilson said, “I tell everyone we’re just like the state of Illinois. We lived it up too good and we didn’t see this coming and we thought it would last forever and when the cuts came we weren’t in a position to be able to handle them. That’s exactly right.”

Wilson also said during that interview that there was plenty of blame to go around for the unsustainable benefits that have come home to roost — and also pointed fingers at union negotiators, employees and the ACHA board members who voted in favor of the contracts.

Around the time of that interview with Wilson, Local 773 Business Manager Kevin Starr, responding to Wilson’s comments that the union also was to blame said, “This seems like somebody who knows the milk has spoiled and the cash cow is gone.”

Wilson, when asked by a reporter if he wanted to respond to that comment, said he would not speak further with the newspaper concerning the ACHA except to say on this matter that he was a proud, decades-long member of the union and intended to keep paying his dues.

Starr also said at the time that it was well-known that HUD's Office of Inspector General was investigating the ACHA and “we welcome a federal HUD investigation.” He further acknowledged at the time that the employee contract was problematic — he called it “sloppy” — and said there would be internal reviews of the complaints and concerns that were raised by HUD about potential conflicts of interest between the ACHA and Local 773 in reports issued to the ACHA in 2013 and 2014. 

Those issues concerned complaints of:

• discriminatory wages where black workers claimed they made less than white workers despite having worked there longer and having more difficult assignments;

• an unwritten “gentleman’s agreement” whereby the Local 773’s negotiator assigned to the ACHA, John Price, was individually negotiating salaries for office workers outside of collective bargaining with Wilson;

• the retirement settlements that included large cash buyouts for some Local 773 represented employees;

• and that Price, as a member of the ACHA’s board of directors, did not recuse himself from votes involving employee matters despite the conflict of interest presented by his dual role as a governing board member and the Local 773's lead negotiator for ACHA employees represented by the union. 

The latest contract on file for ACHA workers was signed in 2010 and expired in September 2015, though it remains in effect until a new one is agreed upon by the represented workers and management. This past week, Starr said those negotiations are in process despite the uncertainty facing the housing authority. Starr was not serving as general manager when the 2010 contract was signed.

“We’re continuing negotiations with HUD at this time and trying to get a fair and reasonable contract for employees at the Alexander County Housing Authority knowing that a lot of things are going to have to change,” he said.

“As I said in our previous interview, the contract is not written correctly and there are a lot of things that’ve been added to it that need to come out. And a lot of the perks that are in there need to be adjusted to make it fair not only to the employees but to the taxpayers as well.”

Starr further noted, re-emphasizing a statement he made in 2015 to the newspaper, that Price was removed from his duties as lead negotiator for ACHA employees that year. And when his term was up on the ACHA board in January 2015, he was not reappointed by the Alexander County Board chairman, who holds sole appointing powers. Based on ACHA records the newspaper obtained via a public records request, Price was a member of the board from 2007 to 2015. A document labeled as accounts payable for board members shows Price received payments of $12,163 during that time frame. Most of that amount matches with travel vouchers he received to attend training sessions. 

Though Price was removed as the lead negotiator for ACHA employees, Starr said he continues to negotiate on behalf of other public workers in Alexander County, including city and courthouse workers represented by the Local 773. He also continues to hold a high-level elected position within the union, that of secretary/treasurer, according to the Local 773's website.

Starr declined comment on the pending federal investigation, saying it would be inappropriate to discuss before it is concluded.

2013 report questions conflict of interest 

In an October 2013 report to the ACHA, HUD cited many of these problems, though they persisted without major consequence for close to another two and a half years. In that 2013 document, HUD cited as problematic the following as it related to the ACHA workforce:

• job descriptions for maintenance staff were not adequate to describe assigned work activities and specialized training required;

• the ACHA awarded retirement packages and offered part-time employment to specific employees with no documented or defined formula or eligibility requirements;

• due to that lack of a defined process for awarding these packages, retirement packages may not have been offered to employees with like tenures;

• maintenance employees were not receiving correct prevailing wage;

• nepotism and an inadequate nepotism policy;

• Martha Franklin, then serving as executive director (she served briefly in that role after Wilson's retirement), was also a member of the Local 773, and she was serving in executive, management and non-management functions;

• Price was serving in a dual role as an officer of Local 773 and an ACHA board member;

• Employee evaluations were not tied to housing authority performance.

HUD allowed known issues to persist 

HUD offered a more extensive evaluation of many of these issues following its 2014 site visit, but the federal government’s wheels turned slowly, and by time they took over the ACHA on Feb. 22, 2016, the housing authority’s finances were in a state of ruin.

On April 10, HUD officials announced to residents that they would begin relocating about 185 families from their unsafe units. In making that announcement, they said many families may have to relocate to places outside of Cairo because there is a shortage of affordable housing in the city. Therein lies the rub, as a number of residents have expressed a desire to stay, and city and school leaders worry about the exit of that many people.

HUD Secretary Ben Carson recently wrote a letter to the Cairo school superintendent that acknowledged those concerns, while writing that little could be done at this point to turn the situation around. “Sadly there are very limited financial options for a nearly bankrupt housing authority,” Carson wrote. Borrowing his words, the newspaper launched its “Nearly Bankrupt” series in May offering an exhaustive review of the issues that led to the housing crisis facing Cairo.

This story examining the relationship between the ACHA and Wilson is the third in that series. The first story in the series examined large buyouts and unusual employment and retirement arrangements. The second looked at unusual payments and arrangements made related to the position of executive director.

The ACHA's 'unsustainable cost structure' 

A financial assessment report published by HUD in April stated that labor costs are ACHA’s second highest expense item, behind utility costs.

“Generous employment and benefit agreements have contributed to the Authority’s unsustainable cost structure,” the report states.

The Bureau of Labor Statistics reports the average benefit rate (total benefits/total salary) for a state or local government agency is 35 percent. ACHA’s benefit rate ranged from a low of 45 percent, in 2012, to a high of 76 percent, for 2016. The 2015 and 2016 rates were both more than double the sector’s average rates, according to the report.

“One-sided labor agreements are one of the primary causes for this elevated rate,” the report states.

Though, this seemed to be a point of pride for Wilson.

In the memo referenced above in which Wilson announced a temporary freeze on cost-related benefits, Wilson notes that the ACHA has been good to employees. “There is not one union contract that has better vacation, pensions, sick or holiday benefits,” he wrote in the 2005 memo. “Additionally, we currently have the best insurance the union offers.” Wilson further noted that the ACHA hosts staff parties and allows employees to take leave for doctor’s appointments without charging them for the time they are away. In noting another benefit, Wilson wrote: “Many times employees borrow housing equipment – trailers, mowers, trucks, etc. – THIS IS AT NO COST!”

Ultimately, the cost would be borne by taxpayers whose government contributions purchased these items and paid for maintenance, fuel and replacement vehicles and equipment when these items were worn out, but Wilson’s note doesn’t mention that. 

Wage discrepancies questioned 

In response to a public records request, the newspaper received employee contracts signed in 2005 and 2010. The most recent contract expired in 2015, but remains in effect until which time a new agreement is reached. 

While Wilson bragged about benefits for employees, the vague language in the ACHA's bargaining agreement with the Local 773, for both office staff and maintenance workers, resulted in some people making quite a bit more than others in similar positions without written explanation, which runs contrary to standard bargaining agreements designed to establish uniformity in pay for equal work.

Most contracts specify ways employees can earn more within a job classification, such as through longevity, additional education and extra assigned duties, but the contract was silent on this point. 

This was the subject of a lengthy write-up by HUD’s Region V Office of Fair Housing and Equal Opportunity (FHEO), which participated in the 2014 multi-pronged team review of the ACHA.

The report indicated that FHEO staff, among the multitude of issues it reviewed, analyzed alleged disparities in pay and workload among white and black maintenance staff. The review found examples of black workers who had more experience with the ACHA, and assignments considered to be more difficult, but who made less than their white counterparts.

“To summarize, there is a disparity with respect to the rate of pay among ACHA maintenance technicians, on the basis of race,” the report stated. “The African-American employees are paid less, however, they are more likely to be assigned to (Elmwood and McBride), the buildings that in poor physical condition and more prone to crime, compared to similarly situated white employees.”

“At the same time, ACHA assigns more maintenance staff resources to AMP 3 (the Connell Smith and Shuemaker apartments for seniors and people with disabilities), buildings that are newer, closer together, and happen to be more racially integrated.”

Local 773 funded Wilson's mayoral race 

As previously noted, the relationship between Wilson and the Local 773 was mutually beneficial. During the time he was executive director, from 1989 to 2013, Wilson served as mayor for 12 of those years, from 1991 to 2003. 

In 2003, the final year he ran for mayor, Wilson raised $52,200 in donations — in the month of January alone. James Flummer, then a private attorney living in Cairo, donated $200 to his campaign. The remaining $52,000 came from political committees associated with Illinois chapters of the Laborers’ International. The largest chunk, $37,000, was transferred into his campaign account from the Southern and Central Illinois Laborers’ Political League, which is presently based in Marion and managed by Local 773 employees or affiliates.

An additional $12,000 donation that year was made by the Illinois Laborers’ Legislative Committee, based in Springfield. And a $3,000 donation was made by the North Central IL Laborers Council PAC, based in Peoria. 

In his campaign against Paul Farris for the part-time position of mayor, Wilson spent a small fraction of that money on advertising on the local radio station and in the local paper and other costs that do not appear out of the ordinary for a competitive campaign in a city of about 3,500 people — the population of Cairo in 2003.

But Illinois State Board of Elections records indicate Wilson paid himself the vast majority of the funds — $43,550 — between January and March of 2003.

The handwriting on Wilson’s campaign spending forms is difficult to read, but in the purpose section he — or someone associated with the committee on his behalf — wrote that Wilson paid himself for such things to as organize workers and GOTV — which is likely an acronym for "get out the vote" — though it’s not further specific as to how that money was spent in those efforts.

There’s no indication that the big money — by Cairo's standards — fueling the bitter mayoral election that year was directly tied to activities or interests associated with the housing authority. But it is illustrative of Cairo politics and Wilson's relationship with the Local 773. 

Around this time, a public feud was brewing between Waterfront Services and the Local 773, which involved members of the Smith family.  

ACHA high-rise named for Local 773 founder  

The Local 773's influences on the ACHA can be observed most notably from the local agency's high-rise development for seniors on the Ohio River — The Connell F. Smith Senior Building.  

The headquarters for the Local 773 is currently headquartered on Ed Smith Way in Marion. 

But it began in March 1940, when the chapter was given to late Connell F. Smith, of Cairo, Ed Smith’s father. It came about at a time of exploding public works projects across the country, and its original membership was largely unskilled laborers. Of note, the union was formed around the same time as the apartment complexes known today as Elmwood and McBride came online — one built for white residents, the other for black residents.  

Over the years, the union’s reach extended to the construction industry and the public sector throughout the 1970s, according to the SIU Special Collections Research Center. In 2003, eight local Laborers’ unions across Southern Illinois joined together to make up the current-day Local 773. The Local 773 currently represents more than 4,500 workers nationwide — about 2,200 of whom are public sector workers in Southern Illinois employed by regional cities, counties and housing authorities.

Prior to serving as mayor, Wilson served as chairman of the Alexander County Democratic Party. He made his first run for mayor of Cairo in 1991 and won. At this point, he'd been director of the ACHA for two years. 

HUD approves waiver for Wilson 

In 2000, HUD signed off on Wilson serving a dual role as mayor and housing authority executive director. Records obtained by the newspaper dated 1999 and 2000 show that Wilson and HUD’s then-Region V acting director, John Dibella, discussed, via written correspondence, whether Wilson’s dual roles as mayor and ACHA executive director presented a conflict of interest. In one of the letters, Dibella noted that the issue had been pending for years. 

In a letter dated May 25, 2000, Dibella instructed that HUD had found it was a conflict of interest under the terms of the Annual Contribution Contract that governed HUD’s allocation of federal housing dollars to the ACHA. But he also informed Wilson that he could request a waiver, which Wilson did promptly. 

In a response letter, the then-attorney for the ACHA, John Holland, wrote that he disagreed with HUD’s finding that it was a conflict of interest. Holland opined that there was no overlap in legal jurisdiction between the city and housing authority, the latter of which operates as a function of county, rather than city, government. Nonetheless, he requested the waiver as HUD had advised was necessary.  

In July 2000, Dibella granted Wilson the waiver to hold both positions.

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molly.parker@thesouthern.com

618-351-5079

On Twitter: @MollyParkerSI ​

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Molly Parker is general assignment and investigative projects reporter for The Southern Illinoisan.

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