Taylor Housing Authority fights for control of $2 million in property

Did the Taylor Housing Authority lose control of more than $2 million in property?

That question could be decided this year in court.

At stake are 111 low-income housing units at the Mallard Run, Heritage Oaks and Market Street apartments. They are worth a total of $2,032,266.

The Taylor Housing Authority owned them until 2008, when its executive director, Steve Shorts, improperly transferred them to a separate entity called the Mallard Run Housing Development, according to a U.S. Department of Housing and Urban Development audit in 2014.

The audit by HUD, which oversees the Taylor Housing Authority, recommended it reclaim the properties.

The housing authority is suing to take back the properties, which are now owned by two nonprofit organizations: the Mallard Run and Taylor Sunset housing developments.

“I can find no other cases in the state of Texas that this has ever happened, where a housing authority has lost control of its subsidiary corporations,” said Mark Dietz, one of the authority’s attorneys.

The nonprofits are countersuing the authority, saying they are the legal owners because the properties were deeded to them. The Taylor Housing Authority deeded the Heritage Oaks and Mallard Run apartments to the organizations in 1988 and 2001, respectively, said Thomas Turner, a lawyer for the nonprofits.

A trial has been set for December.

“At trial, we are confident that the judge and jury will prevent THA from taking property it does not own from two nonprofits that provide necessary low-income housing to the citizens of Taylor,” Turner said.

The trial will also include the issue of whether Shorts misappropriated $28,546 from the authority. The 2014 HUD audit concluded that Shorts inappropriately approved down payment housing assistance for his son and for a program manager.

Turner, who is also one of the lawyers for Shorts, said Shorts did nothing wrong.

“Mr. Shorts’ actions were at all times made with full knowledge and permission of HUD and the consent of the THA board, and he denies the allegations made against him,” Turner said.

The legal fights do not involve the city of Taylor because the Taylor Housing Authority is a separate entity that receives money from the federal government and not the city, said Mayor Jesse Ancira Jr.

Dietz said that just because the housing authority deeded the Mallard Run and Heritage Oaks apartments to the nonprofits doesn’t mean they control the property. The nonprofits operated as subsidiary corporations under the control of the housing authority until 2008, he said.

But in 2008, he said, the board of the Taylor Housing Authority “either mistakenly, illegally or whatever else allowed control of the boards of the subsidiary corporations to no longer be responsible to the housing authority,” Dietz said.

Turner disagreed. HUD made a rule change in 2008 that would have resulted in the Taylor Housing Authority losing 80 percent of the fees it received to be a contract administrator for the two nonprofit companies, he said.

“So that year the THA board voted to resign as members of the Sunset and Mallard Run boards, and to appoint new directors to those entities,” he said. “The complexes were not owned by THA or THA assets.”

No one seemed to notice what had happened, Dietz said, until HUD audited the housing authority in 2014.

As part of its attempt to reclaim control of the 111 low-income housing units, the Taylor Housing Authority sued the board of directors for the two nonprofits in February.

The members are violating a state law called the Public Facility Corporation Act, Dietz said. The law requires that the board of directors of the nonprofits include at least three people appointed by the Taylor Housing Authority. Currently the boards don’t include a member appointed by the authority.

Turner said the lawsuit against the nonprofits’ board members is a “last-ditch” litigation tactic. He also said the state law is an “esoteric, inapplicable statute.”

Dietz — citing the board members’ violation of the act — asked the Texas attorney general’s office to intervene, according to a letter he sent to the state office in May. The attorney general’s office oversee the actions of nonprofits.

“Mallard and Sunset control public funds which can be misused,” said Dietz. “Governmental statutes and oversight provide protection from such an event. This is the reason the Public Facilities Act governed the appointment of board members by requiring them to be appointed by a process responsible to democratically elected officials.”

Reader Comments ...

Next Up in Local

Officials monitoring wildfire in Blanco County
Officials monitoring wildfire in Blanco County

Fire departments from multiple counties monitored a wildfire Tuesday in Blanco County near RR 962 and Texas 71. The fire was 200 acres and was 0 percent contained as of Tuesday night, according to the Texas A&M Forest Service. Ash from the fire is falling in Horseshoe Bay and surrounding areas, according to officials with the Horseshoe Bay...
Texas Democrats far behind in money race for statewide office
Texas Democrats far behind in money race for statewide office

The newly released state and federal campaign finance reports bore some good news for Texas Democrats. Senate candidate U.S. Rep. Beto O’Rourke, D-El Paso, continued to outraise U.S. Sen. Ted Cruz. Seven Democratic congressional candidates raised more money in the last quarter in Republican-held districts than their GOP opponents. But the fundraising...
Criner trial pauses as prosecutors seek to show jury text file
Criner trial pauses as prosecutors seek to show jury text file

Moments before jurors were supposed to see a digital text file that prosecutors believe strengthens their case against capital murder defendant Meechaiel Criner in the death of University of Texas student Haruka Weiser two years ago, the presiding judge raised questions about whether the writing could be used as evidence. Though prosecutors obtained...
Report: Texas student arrests have soared since Parkland, Santa Fe
Report: Texas student arrests have soared since Parkland, Santa Fe

More Texas students are being arrested for terroristic threats and firearm violations since mass shootings at high schools in Parkland, Fla., and Santa Fe, according to a Tuesday report commissioned by social advocacy groups. About 1,470 law enforcement referrals were made for terroristic threats and exhibition of firearms from January through May...
‘Can we please go back?’ These boys hiking the greenbelt speak for us all
‘Can we please go back?’ These boys hiking the greenbelt speak for us all

“We were gonna go swim,” said 9-year-old Luis Luna, when our photographer, Amanda Voisard, asked him that he and his brother were doing hiking the Barton Creek greenbelt on a hot Monday. Were. Operative word. As Luis and brother Johnny, 7, of Fort Worth explained to us, the first swimming hole they tried was dry. So by the time we caught...
More Stories