Zurik: Fun with "change orders" at JP Housing Authority - FOX 8 WVUE New Orleans News, Weather, Sports

Lee Zurik Investigation: Fun with "change orders" at JP Housing Authority

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File image of former interim exec. director Dalton Simmons File image of former interim exec. director Dalton Simmons
Gretna, La. -

Audio from a local board meeting has elected officials in Jefferson Parish calling for authorities to investigate.

The audio recording comes from the July board meeting of the Jefferson Parish Housing Authority. It features a contractor admitting to what could be illegal activity, right in front of the board.

"I think most of the board was shocked," says Housing Authority board member Jonathan Liberto.

Last September, the Housing Authority's interim executive director, Dalton Simmons, signed a contract with Show-Me Quality Construction for repairs to sidewalks and curbs on Betty Street in Marrero. The cost of the work was $49,000.

But apparently, the contract doesn't tell the whole story.

"At the time I didn't know he was trying to circumvent the system," contractor Tommie Johnson is heard telling the board in the recording.

Johnson said that the interim executive director tried to circumvent the system by reducing the cost of the work. At the Housing Authority, any work over $50,000 requires board approval; work below $50,000 may be approved by the executive director himself.

"I gave them an estimate for $58,000, which was a really good deal," said Johnson. "And when I took it into him, he said make it for 49 because I can't go over 50 without getting permission. "

When a board member asked Johnson to clarify who made the suggestion, he told them, "Mr. Dalton."

So, according to the owner of Show-Me Quality Construction, the Housing Authority worked out a scheme in which the contract would be for just $49,000, and the construction company would later bill another $9,000 in change orders to cover the costs.

"He said make it $49,000, which is this, and give him a $9,000 change order. And that's what I did," said Johnson. "Now, I did not know that it was against HUD's rules to do that - because he's the administrator. I'm just doing the work he asked me to do."

When we suggest to Parish Councilman Chris Roberts that this is an apparent manipulation of the system, he tells us, "Well, correct, based upon what we have heard from the most recent meeting, in testimony that was pretty much given on the record by a vendor."

Instead of signing a $58,000 contract that would require board approval, the vendor submitted a bid below $50,000, and planned to get paid the additional money through change orders instead.

Roberts says, "That in my opinion is a violation, definitely of state law, and likely federal law as well, that needs to be addressed."

The councilman explains that change orders are called for only when projects are underway, to address unforeseen circumstances.

"For instance, if you're in the process of renovating a building, and you take sheet rock down and you determine, well, you have termite damage now, we've got to replace studs," Roberts explains. "Then that may be something that a change order would be, because it was unknown that that additional damage existed. In this case, they went into the transaction up front, knowing that this extra work needed to be done. They structured the deal in order to fall below the threshold."

We went to former executive director Dalton Simmons' house. We didn't get an answer at the door. The contractor himself, Tommie Johnson, didn't return our phone calls and wasn't at his office when we went looking.

Was this simply an agency director attempting to avoid the hassle of seeking board approval, or something much more serious?

"I think that's the big question," says Roberts. "Because if it was a brazen, common practice to sit down with a vendor and tell them how to structure a transaction in order not to have to get certain approvals, then one has to question, well, what's the ulterior motive here?"

The contractor himself is in a bad spot. Johnson told the housing board, "I'm left here with about… these two change orders that I've already paid for, because Mr. Dalton did not correctly do the administrative part of putting it on one page, one contract."

Board member Liberto says he doesn't want to pay the contractor. Both he and Chris Roberts hope investigative agencies will take a close look at this arrangement, from a housing authority that's already under investigation for questionable management.

Roberts says, "What's even more amazing to me, as it relates to this, is inquiries had already begun, investigations had already begun. And to know that light is being shined upon the activities of this organization, and to realize that there's still engaging in activities that we consider to be questionable and illegal, is just mind boggling to me."

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