Some Norfolk City Council members want answers on housing authority subsidiary’s investments

‘What I’ve read thus far is very concerning.’

By: - January 3, 2022 5:53 pm

The Norfolk Redevelopment and Housing Authority offices are at 555 E. Main Street in Norfolk. (Jim Morrison/ For the Virginia Mercury)

NORFOLK — Some Norfolk City Council members want answers about the housing authority’s for-profit subsidiary that has invested the bulk of its federal tax subsidies in far-flung projects in 15 states and the District of Columbia, but not in Norfolk. 

Following a two-part Virginia Mercury series, three members say they have asked for a report from City Attorney Bernard A. Pishko about the activities of Hampton Roads Ventures, a community development entity that has won $360 million in new markets tax credits since 2003 but put only a fraction of that into projects in Norfolk.

Pishko said last week that representatives of the Norfolk Redevelopment and Housing Authority and Hampton Roads Ventures provided information about HRV’s operations. “The city has met with NRHA and HRV officers who agreed to work to try to assure that HRV does not miss an opportunity to maximize benefit to Norfolk,” he said in an emailed statement. He declined a request to answer questions in a phone interview.  

 “I’ve got lots of questions and not any answers,” said council member Andria McClellan last week. “We anticipate getting a briefing from the city attorney in the new year. What I’ve read thus far is very concerning.”

Why is a Norfolk community development entity investing everywhere but Norfolk?

Tommy Smigiel Jr. expressed his concerns to Mayor Kenneth Alexander and City Manager Chip Filer.  “I have been on City Council for 11 years and never knew this (Hampton Roads Ventures) existed,” he said in an email. 

“While the HRV seems legal, I am bothered by multiple things,” he added. Those include the lack of investment in Norfolk, staff members receiving payments from NRHA and HRV, NRHA’s refusal to make HRV’s complete financial records public, and the NRHA asking the city to offset funding for projects when it had a potential funding source in Hampton Roads Ventures. 

Alexander and Vice Mayor Martin Thomas Jr. did not respond to an email and phone messages left with their offices. Council members Paul Riddick, Danica Royster, and Mamie Johnson also did not reply to requests for interviews. 

Companies like Hampton Roads Ventures are called community development entities. They may be offshoots of banks, nonprofits, public agencies, or other financial institutions. They apply for new markets tax credits from the U.S. Treasury Department and, if they prevail in the highly competitive process, they match projects and investors who earn a 39 percent tax break over seven years.  

Of the $250 million Hampton Roads Ventures had invested by the end of 2019, the last year federal records are complete, only $35.2 million was in Norfolk. While Norfolk’s neighborhoods sought to alleviate food deserts, the housing authority’s subsidiary remedied them with investments in cities in Illinois, Oklahoma, Louisiana and Ohio. HRV has also funded health clinics, senior housing, a cotton mill, an aluminum plant and a hair gel company in places ranging from Texas to Tennessee.   

Administrative fees from those projects also haven’t created a windfall for the housing authority. Records obtained through the Virginia Freedom of Information Act show that by 2016, Hampton Roads Ventures claimed it had only $2.3 million in profits to offer NRHA. So far, only $1.3 million of that has been transferred to the housing authority. 

NRHA has twice refused requests under the Freedom of Information Act to release the complete financial records of Hampton Roads Ventures, claiming it receives no public funds. 

Summaries of Hampton Roads Ventures finances filed with NRHA’s budgets show that HRV has paid nearly twice as much in the last decade — $2.5 million for “labor/administration” — as it has funneled to NRHA. That’s a departure from other community development entities created by public agencies that are staffed — and paid — by those authorities. 

The mystery of the management fees

On Oct. 29, The Virginia Mercury requested audits of HRV in the possession of NRHA or NRHA commissioners through the Virginia Freedom of Information Act. On Dec. 13, NRHA sent 10 years of HRV audits. The audits deal in broad categories, but they confirm the figures in those NRHA budget summaries for HRV’s salaries and legal expenses. But they do not detail what individual HRV staffers, who were also working for NRHA, were paid. Nor do they reveal what individual legal and other consultants were paid or what organizations other than NRHA received donations. 

Earlier in 2021, Delphine Carnes, the lawyer for NRHA and HRV, had twice refused a public records request for HRV’s “annual financial reports/balance sheets” saying the community development entity, which has won $360 million in federal tax subsidies, received no public funding.

Carnes, in a reply to another email request sent Monday seeking to make HRV’s complete financial records public, pointed to the release of the audits. “You keep alleging that NRHA has failed to provide the financial records you requested, yet you are in possession of 10 years of HRV’s audited financial statements,” she wrote in an email. “What exactly are you requesting at this time?”

She did not answer a reply noting the audits address only broad categories and do not reveal what individual employees and consultants were paid, including people who were on staff for both the housing authority and its for-profit subsidiary. Nor did she reply to whether she was now saying HRV’s records were subject to the Freedom of Information Act. 

NRHA officials, she said, declined to be interviewed. “NRHA has decided not to give an interview,” she wrote in an email. “NRHA and HRV representatives met with Mr. Pishko last week and they are providing information to the city.”

Outside Hampton Roads Ventures’ office in Norfolk. (Jim Morrison/ For the Virginia Mercury)

Since its inception in 2003, according to a federal database of projects through 2019, HRV has invested $6.7 million for the Attucks Theatre renovation, $3.5 million in the then-Harrison Dry Storage  Boatel (now Morningstar Marina) on Shore Drive near East Beach, NRHA’s upscale waterfront development, $13.3 million in the Marriott  Springhill Suites at Old Dominion University, and $11.6  million in the Fort Norfolk Medical Center off Brambleton  Avenue. The last of those projects, the only ones in Norfolk, began in 2008. 

 The Mercury series raised questions about why Hampton Roads Ventures has focused on investing outside Virginia, about the overlap between NRHA and HRV staff and about the oversight by NRHA’s board of commissioners, who are also the board of managers for HRV. 

Hampton Roads Ventures appears to be the rare community development entity created by a public housing authority that operates largely out of the public eye. In Chicago, for instance, the city founded the nonprofit Chicago Development Fund (CDF), which has won $411 million in new markets tax credits since 2006, all used for projects in the city. The CDF’s finances are public as are its quarterly governing board of directors and advisory board meetings.  

Like the others, council member Courtney Doyle wants answers and transparency from the housing authority, including an explanation of why the federal tax subsidies have not been used in Norfolk. 

“I think the questions you posed should be answered by NRHA and I encourage NRHA to embrace full disclosure and transparency on this matter,” she said in a phone interview. “If everything’s been done according to correct protocol, why not disclose it?”

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Jim Morrison
Jim Morrison

Jim Morrison has been a freelance writer since 1990. His stories have appeared in Smithsonian, The New York Times, The Washington Post, Wired, and many other outlets. He won the 2021 Excellence in Reporting award from the American Society of Journalists and Authors and was a finalist for best feature story in the 2021 Covering Climate Now Awards administered by the Columbia Journalism Review. Prior to freelancing, he was a staff writer at The Virginian-Pilot. He lives in Norfolk. Contact him at [email protected]

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