photo by: Mike Yoder

Lawrence City Hall, 6 E. Sixth St., Thursday, July 7, 2016

After a member of the city’s Affordable Housing Advisory Board expressed concerns about conflicts of interest among members — who provide funding recommendations for more than $1 million annually — the board is set to consider potential changes.

The advisory board was set up after Lawrence voters approved a 0.05% sales tax in 2017, which will provide funding for the affordable housing trust fund for a period of 10 years. One of the board’s main roles is to review funding applications and make recommendations to the Lawrence City Commission, which makes the ultimate decision but has typically gone with the board’s recommendation.

The 13-member board was set up to include multiple representatives of nonprofit agencies that work on affordable housing projects, with the idea being that the experience and expertise of those members would be beneficial to the board. Specifically, there are representatives from Tenants to Homeowners, Habitat for Humanity, Family Promise and the Lawrence-Douglas County Housing Authority. However, after the board recently denied a funding request for a for-profit affordable housing project because of its timing, one board member expressed concerns that having board members from nonprofit agencies that often apply for funding represents a conflict of interest.

“… We have failed to confront an issue that has been sitting in front of us and ignored,” board member Ron Gaches, who represents the Chamber of Commerce, wrote to the board and city officials in July. “We have a serious problem with Conflicts of Interests on the Affordable Housing Advisory Board that is working against meeting the affordable housing needs of our community.”

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Though board members who represent nonprofit agencies recuse themselves for voting on recommendations when a project from their organization is in the running, such recusals were not necessary earlier this year when Tony Krsnich, the for-profit developer of the Warehouse Arts District, submitted an application for funding outside of the board’s regular funding cycle. Krsnich requested a $550,000 grant for an affordable housing project on New Hampshire Street. The project plans to build 48 apartments that will remain rent-controlled for 30 years as part of a federal affordable housing program and would accept housing vouchers.

The Affordable Housing Advisory Board had not yet opened its funding applications at the time of the request, but Krsnich told the board the timing of his application was based on the timeline associated with his application for state tax credits for the project. While the board expressed support for the project, members voted on July 11 to deny the request for a funding award outside the board’s usual cycle and instead recommended that Krsnich wait until the next application period opened in the coming weeks. Some board members said they wanted the request to be evaluated alongside other requests for 2023 funding, and that not doing so could give the request an advantage. The application opened on July 22 and closed in September, and the board will make its funding recommendations on Nov. 14. Krsnich could have appealed the board’s decision to the commission, but he did not, and has since applied for the 2023 funding as part of the regular application process.

One of Gaches’ points was the board has approved out-of-cycle funding requests in the past, including one earlier this year from Tenants to Homeowners, and he thought the July decision represented a “clear conflict of interest.” As the Journal-World reported, the board recommended and the commission approved a $200,000 grant for Tenants to Homeowners after awards for the year had already been made. The grant went toward the purchase of a residential lot, and the organization stated the opportunity to purchase the lot had arisen outside of the funding cycle.

Vice Mayor Lisa Larsen, who was on the commission when the board was set up, said that she understood the points made by Gaches, but also brought up that the funding request was made only a few weeks ahead of the opening of the application. Larsen said she understood that the timing of other funding application processes could play a role in whether a project can apply for funding within the city’s window, and she thought that and procedures for out-of-cycle requests deserved a look.

“I understand that happens, but this is to me, all the more reason that this entire process probably needs to have a lot further discussion as to what are some of the guardrails that need to be put in place so if something does come out of cycle, how do they deal with those?” Larsen said.

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The question of board membership representing a potential conflict of interest has been raised in the past, and the board even discussed potential changes in the summer of 2021. However, while the board discussed the topic, it did not move forward with any changes to board membership or operations, according to Affordable Housing Administrator Lea Roselyn.

When the board previously discussed potential conflicts of interest, three potential changes were discussed. Those included changing the affordable housing providers to ex-officio, nonvoting members; changing all or some of the current ex-officio seats to at-large seats that would also vote on recommendations; and dividing the affordable housing trust fund into two distinct and separate grants managed by two committees. In the third option, board members would be appointed to committees where they did not have a conflict of interest.

Ahead of the upcoming board meeting, which is scheduled for Thursday, a fourth option has been added, which is for the board to recommend that the commission review and consider board membership and revisions to the board’s bylaws “to change all or some of the current board seats as appropriate.”

Any changes to board membership or operations would require a change to the board’s bylaws and city code, and would need to happen very quickly if they were to be done before the board makes its next 2023 funding recommendation on Nov. 14. The board received 10 funding requests totaling about $3.3 million. Roselyn said the city has $1.66 million in affordable housing funds to award as part of the 2023 process. While some of the four nonprofit agencies represented on the board do have some projects on the horizon, none of them ended up submitting funding requests for 2023.

Mayor Courtney Shipley said that Lawrence taxpayers graciously approved the affordable housing sales tax, and that since the Affordable Housing Advisory Board was one of the city’s newer boards, it was a good idea to reevaluate its makeup and how it functions. When asked whether she thought changes needed to be made, Shipley said it was a good idea to talk about changes, but emphasized that conflicts are something that can happen on any board and the goal wasn’t to single out one board or the nonprofits in particular.

“We are taking their conversation very seriously, I assure you, but we also don’t want to make it seem like we’re attacking one particular board or something they have been doing in great earnest,” Shipley said.

Shipley noted the commission has asked to discuss all the city’s 48 advisory boards and commissions, and she was looking forward to the broader discussion to improve functioning of all boards and provide clarity on their work.

For her part, Larsen said she did think the board should take a look at the existing process, and that she would like to hear the board’s response to the letter to get a fuller picture of what’s going on.

“Anytime there is conflict, the best thing to do is have a discussion about that by all parties,” Larsen said. “The letter from (Gaches) is out there and I understand that. We haven’t heard from the board. I want to know what the board’s response to this is.”

The board will discuss the conflict of interest concern at 3 p.m. Thursday. It will make its 2023 funding recommendations at its meeting on Nov. 14, and the commission will consider that recommendation on Dec. 6. A table listing the details of the 10 grant requests and the full applications for each project are available on the city’s website, lawrenceks.org.