In Special Meeting, Housing Authority Advances Controversial Privatization Deal

Houses along S. 15th Pl. in the Polonia neighborhood. Photo by Jeramey Jannene.

The board of the city’s beleagured housing authority didn’t waste any time calling a special meeting to keep a controversial outsourcing agreement moving forward.

After holding off on any action during its regularly scheduled meeting Wednesday, the board of the Housing Authority of the City of Milwaukee (HACM) held a special meeting Friday and broadly endorsed advancing a contract with Florida-based CVR Associates to take over the agency’s troubled voucher management program. The federal government is requiring the city to ultimately outsource the work.

The board, led by acting chair Brooke VandeBerg, stopped short of approving a five-year agreement. Instead, it directed HACM leadership, including director Willie Hines, Jr., to continue negotiating with CVR to “hone in a final contract” on the multi-million deal.

Common Ground Southeastern Wisconsin and Council President José G. Pérez have opposed the board moving forward, citing the fact that the majority of the board’s seven seats are vacant or filled by members with expired terms. They’ve also raised concerns with the process, with Common Ground implicitly endorsing Milwaukee County to become the outside operator.

But board members sidestepped those concerns Friday to address their own issues with the agreement itself.

“There are a few things that give me pause,” said VandeBerg. “Around the subcontractors [is issue] number one.” She also wants to see tenant and landlord council’s built into the agreement, as other housing authorities have implemented with outsourced management.

CVR intends to hire a “minority-owned, woman-owned” Arkansas firm as a subcontractor for 20% of the work.

The firm would also have a manager that isn’t required to be based in Milwaukee. CVR would hire its own staff to administer the program, with no guarantee that any HACM staff would be rehired.

Following a federal audit that found HACM’s internal practices “at risk for serious fraud, waste and abuse,” a corrective action plan from the U.S. Department of Housing and Urban Development (HUD) effectively requires HACM to outsource the voucher management. Section 8 is a federal assistance program that provides cash payments (vouchers) to private landlords to provide housing for qualifying low-income households.

In 2023, according to a January request for proposals, the agency was responsible for administering $42 million in vouchers and expected to receive $5 million in administrative fees. The vouchers cover approximately 7,800 housing units, of which 1,700 are HACM-owned. The majority of the vouchers go to pay for private-sector housing used by lower-income residents who qualify for the vouchers.

CVR would be paid up to 80% of the administrative fee, approximately $4 million per year.

Hines said there is no requirement that a Milwaukee company do the work, since the vouchers are a federally funded program. “This is not Milwaukee money,” said Hines.

HACM’s executive team is steadfastly recommending the board approve the agreement with CVR. The firm has already worked with HUD and HACM on the corrective action plan.

“CVR offers the highest quality service, both to HACM and our participants,” said HACM COO Ken Barbeau in summarizing the agency’s recommendation. The firm provides voucher management for public housing authorities in Chicago, Westchester County New York, San Francisco and Buffalo.

“They would have the exact same level of transparency,” said Barbeau. “They would be reporting to the board and to HUD.”

Six bidders went through successive rounds of evaluations, with CVR emerging as the highest scoring over Quadel. Milwaukee County bid, but was eliminated in the second round of interviews when the field was narrowed from four to two. According to a written report, the county was dinged for not having previously taken over an outside voucher program, questions about its capacity, its transition plan and not using the YARDI software system for payments, which HACM desires.

Common Ground had called for Milwaukee County to be given greater consideration.

“It is wrong to privatize public services, waste taxpayer dollars, and lose out on local jobs all because you failed at managing Section 8 in the first place,” said Common Ground organizer Kevin Solomon in a statement emailed to the board and other city officials earlier this week.

In a separate agrement, HACM would also pay CVR up to $990,000 to conduct a “100% participant file review to ensure all documentation and calculations are correct with all participant files.” The review was required as part of HUD’s corrective action plan.

Board member Irma Yépez Klassen, participating virtually, endorsed VandeBerg’s call for more review of the contract before a final approval. She asked for more feedback from CVR’s other customers.

Board members Darian Luckett, who missed Wednesday’s meeting and was the reason a special meeting was called, and Sherri Reed Daniels also participated virtually, but did not substantially participate in the discussion.

For more on the issue, see our earlier reporting.

Shortly after the meeting, HACM, in a press release, said it has jointly agreed to a delay with a Common Ground-affiliated class action lawsuit about the conditions at the College Court housing complex.

Dave Reid contributed to this report.

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