Editor's note, 2:55 p.m., Sept. 26: The Dallas city council voted Wednesday to approve new rules that will prohibit the Dallas Housing Finance Corporation from awarding contracts to its board members. The council also gave the housing agency the authority to appoint its own manager.

An obscure city housing agency has been awarding thousands of dollars of contracts — and in one case a bonus — to members of its board, a Dallas Morning News investigation has found.

The Dallas City Council may take steps to rein in such inside deals at its meeting Wednesday.

The agency — the Dallas Housing Finance Corporation — is one of the city’s tools to address the lack of affordable housing for people with limited incomes. Over the years, the agency has issued over $180 million in bonds that have financed more than a dozen apartment complexes around the city, and it has an ownership stake in several of those properties.

In 2014, the board voted to give a $14,000 contract to a nonprofit controlled by one of its members, Sherman Roberts, a developer in southern Dallas. When the contract to do maintenance and other work at senior-citizen apartments near Fair Park ended late that year, Roberts’ nonprofit received a $25,000 “exiting bonus.”

Roberts, through a spokeswoman, said the directors of his nonprofit told him not to respond to questions from The News.

Two years later, the agency entered another contract — this time to make sure apartment complexes were providing required services like after-school tutoring and swimming classes for their residents. Again, the job — worth up to $30,000 — went to a board member, this time Jim Harp, a real estate agent.

Harp said that in accepting the contract, he simply did as he was asked.

Giving board members contracts was legal under the city code, said council member Scott Griggs. But he and some newer members of the board have raised questions about the practices.

"Exiting bonus"

Roberts, currently the board's president, has served on the agency for almost a decade. He was most recently appointed by Tennell Atkins, head of the City Council's economic development and housing committee.

Through the nonprofit he runs, City Wide Community Development Corporation, Roberts has won funds — approved by the council — to buy land and build apartment complexes in the southern part of the city. Much of that money has been spent in the Lancaster Boulevard corridor, efforts showcased in Mayor Mike Rawlings' GrowSouth initiative.

Sherman Roberts, president of City Wide Community Development Corporation, speaks during a grand opening event at Serenity Place in 2015. The 45-unit apartment complex provides housing for homeless women and children in the Dallas area. (G.J. McCarthy / Staff Photographer)

According to its most recent tax filing, City Wide pays Roberts an annual salary of $113,000 and has given him personal loans worth at least $70,000.

City Wide was in line to rent out office space on Lancaster that would have served as former Mayor Pro Tem Dwaine Caraway’s satellite office. The deal died when Caraway pleaded guilty to federal corruption charges.

Being a member of the housing-finance board gives Roberts oversight over funds that other developers want. Even though City Wide receives city money, nothing in city code prohibits Roberts from serving on the board. The new rules up for vote this week wouldn’t change that.

“We went as far as we could with these ethics rules,” Griggs said.

But the new rules would prohibit deals like the 2014 job awarded to City Wide to manage a property now known as Gurley Place, a 24-unit apartment complex for senior citizens. The arrangement is described in a 2014 audit report posted on a municipal bond website.

When that year-long deal ended, city records show, the agency paid City Wide a $25,000 bonus. Meeting minutes say Roberts recused himself from the discussion and vote.

Harp said he and some of his fellow board members approved the bonus because the original contract paid too little.

"Sherman and City Wide did that as a favor to the city for almost no money," Harp told The News. "We allowed Sherman to escape. We gave him an exit payment to make up for the fact that he had been underpaid so badly. We felt guilty."

The board approved the bonus with one member abstaining.

Second contract

Harp, a long-time board member most recently appointed by Caraway, has also benefited financially. Recent meeting minutes obtained by The News include a 2017 contract to pay Harp up to $30,000 a year. Board members said recently that they didn't know about the contract at the time, according to minutes.

Harp was to check up on a variety of properties around the city, to make sure they were providing required social services.

He told The News that rules didn't require the agency to do this but that it was the correct thing to do.

“No good deed goes unpunished,” Harp said. “You can make a spin that the board shouldn’t have conflicts of interest. That’s fine. Then you get different disasters.”

One of the apartment complexes Harp checked on, a document obtained by The News shows, is owned by City Wide, the non-profit that Roberts runs.

Harp said he didn't remember how the complex, known as Serenity Place, got on the list. City staff referred The News to the agency's lawyer, who didn't respond to phone calls or email messages.

Reforms possible

The city has had extensive problems with its efforts to improve housing options for people with limited incomes. This year,The News found that in 2015 a city housing department official helped steer more than $800,000 in federal funds to a friend to build eight homes; all were riddled with construction problems and built behind schedule. Two years ago, a city audit couldn't find paperwork related to millions of federal dollars spent on dozens of housing projects.

Problems at the housing agency go back even further. In 2010, for instance, the city staffer who oversaw it sued the city, saying she had been wrongfully terminated after superiors complained about her work. She settled the claim and continued to manage agency operations until she was replaced late last year.

Despite its high-dollar portfolio, the agency has operated without much public scrutiny.

It doesn’t post its minutes on the city’s website or list its board members. Also missing: financial disclosure reports from board members that list potential conflicts of interest.

Dallas City Council member Scott Griggs.

This spring, Griggs told fellow council members that he had learned of the inside deals and that the agency’s financial books were a “complete mess.” In one memo, Griggs described the deals without mentioning Roberts and Harp by name.

In addition to preventing self-dealing, the new rules would increase the size of the board to 15 from 11, with each council member and the mayor responsible for appointing a member. Board members would be limited to four consecutive two-year terms. City staff told The News they want to start posting agency records on the city's website.

David Noguera, the city's housing director, said his staff has been working with the board to "improve transparency and functionality."

Members of the board and city staff have disagreed on how the agency's manager should be chosen. The board has proposed appointing its own manager. City staff wants the head of the city's housing department to be the manager. On Monday the board and staff were working on a compromise to bring before Wednesday's council meeting.