'Bull's-eye on her back': Dale McCormick of MaineHousing

Posted Wednesday, February 22, 2012 in Investigation

'Bull's-eye on her back': Dale McCormick of MaineHousing

by David Kaler and Gina Hamilton

AUGUSTA — Before Treasurer Bruce Poliquin found himself in his own kettle of hot water recently, he had raised questions about MaineHousing, and specifically, about whether that quasi-governmental agency's head, Dale McCormick, had enough oversight. 

As treasurer, Poliquin is a member of the MaineHousing Board of Commissioners. Serving as treasurer is his first governmental position; his previous experience was in financial services and real estate development. McCormick has been director of MaineHousing for going on seven years, having been appointed by former Gov. John Baldacci. Prior to becoming MaineHousing director, she served as the first woman treasurer of the State of Maine for eight years. She also served as a state senator in the Maine Legislature.

Why Poliquin thinks she needs more oversight, and why he thinks he should be among those to do it, is a good question, one that we set out to discover.

MaineHousing is only one of dozens of quasi-governmental agencies in Maine, including the Employee Retirement Plan, the Bond Bank, FAME, the Potato Board, and the Turnpike Authority.

As has been reported here, the Turnpike Authority ran into some very dark days last year, when it was discovered Director Paul Violette ... who had been reappointed by Republican, Democratic, and Independent governors alike ... had embezzled hundreds of thousands of dollars. He got away with this for so long because there was very little oversight at the Authority. Naturally, anyone would be concerned about a large quasi-governmental agency, who handles enormous sums of money ... both taxpayer funds as well as operational funds that come from bond margins ... in which there is no oversight of a director after the Turnpike debacle.

Trouble is, from a political perspective, no single party can be considered to be at fault in the Violette situation. His tenure was extended for 23 years, and everyone shared a bit of the blame in that case. Dale McCormick, however, an unapologetic Democrat, was appointed by a Democratic governor. In the brave new world of tea party politics in Maine, that makes her immediately suspect. Indeed, she is the last Democrat standing; all other female Democrats have been fired by the LePage administration. Gov. Paul LePage could fire McCormick too ... but according to statute, only for cause.

And LePage doesn't have cause. Unlike Violette's, McCormick's agency runs like clockwork. All of her expenditures are posted on the website at MaineHousing, along with every other financial document related to the agency. 

"We're run like a business," McCormick said. "We use private means for public purpose." While federal tax dollars pay for some of MaineHousing's programs energy, programs for the homeless and first-time homebuyers, for instance all operations expenses come from the margins from the bond investments. And MaineHousing, unlike a lot of state agencies, has done well during the recession. It has maintained its credit rating, and has never stopped any of the programs it funds ... unlike many of its sister organizations across the country.

"We administer $1.2 million per day," she said. "We've helped about 90,000 people per year get into affordable homes, buy a home of their own, or provide a place for them to live in a sheltered environment. We supply an average of 2,500 jobs to Mainers annually."

MaineHousing is already subject to strict oversight. The Board of Commissioners (one of whom is Poliquin) has control of the budget, the agency rules, and the bonds. The governor has to sign the budget every year. The governor appoints the director, and the board, for set terms. And he can fire them if he has just cause. 

That's why the administration and its supporters in the Statehouse have been searching for some cause ... any cause ... that would compel McCormick to resign. (No governor in Maine state history has ever actually fired a housing director for cause.) Failing that, the policy toward McCormick seems to be one of political intimidation, in an agency that should be strictly non-political.

"It's as though she's wearing a big bull's-eye on her back," said director of communications Peter Merrill. "They're not going to stop until she quits in frustration, because there just isn't any cause to fire her."

Does cost containment contain costs?

McCormick meets monthly with her board of commissioners, most of whom are new members appointed by the governor.  (New Maine Times reporter David Kaler planned to attend the Tuesday morning meeting, but since we had an early deadline, his reporting of that meeting will appear in next week's edition.)  The new majority on the board determined to more greatly weigh cost containment when accepting bids for contracts in the last few months, after Poliquin made it a major issue.  But the greater weight to cost structure may not do what Poliquin hopes ... indeed, it may end up costing the agency ... and the state ... more money.

Poliquin had gone on record numerous times as criticizing a MaineHousing development that he said cost $314,000 per unit.  The number was incorrect, and at several of the board meetings, Poliquin had had that explained to him.  The developer turned in an invoice including cost overruns, but MaineHousing doesn't pay for cost overruns, so the actual cost per unit was about $242,000.  "And that is because the units in question were in a historic zone," McCormick said.  "Historic preservation has been one of our missions for years." 

Historic preservation is also lucrative for MaineHousing, because the federal government pays more per unit to preserve a historic building than it does to build one from scratch ... in some cases, a lot more.  "Because we get our funding from multiple revenue sources for historic preservation, developing a historic unit, even though it costs more on paper, actually costs MaineHousing about a third less," she said.  "We've tried to explain this to the board numerous times, but it is something that they don't seem to understand."

Energy efficient housing is also strongly federally supported.  Housing and Urban Development will pay more for an energy efficient home than it will for a cheaper housing unit.  And homeless intervention, a program that MaineHousing shares in common with the Department of Health and Human Services, is heavily federally supported, too.

"When it looked like we were going to lose Private NonMedical Institution funding from DHHS, it was our money, our tools, that were being left on the table," McCormick said.  "It would have cost MaineHousing about $10 million.  We don't like to take properties that were designated for the use of the homeless, mentally ill, or mentally handicapped and turn them into something else.  We always lose money at it, and there aren't too many applicable uses for these properties.  Besides, we've already done all the work in the community to accept the facility, and we have a 90-year covenant on the properties.  That, alone, is priceless."

Other areas that have been weighted more heavily in the past are smart growth and aging in place, which consider the amenities in a community, its public transit, and other items, while weighting a particular project.

A tale of food, massage, and Zumba

Poliquin also singled out some line items in the MaineHousing budget for extra scrutiny, including a catering bill for about $15,000, some staff day perks, and a few other items.  McCormick said that the catering questions are easily explainable.

"We hold meetings here and at area meeting spaces for staffers and others who come from all parts of the state," she said.  "We offer coffee, tea, bagels, and that sort of thing for breakfast, and sandwiches for lunch."

Looking at other state and quasi-governmental departments' budgets, there is a catering line for virtually every one, including the Treasurer's office. 

The staff perks, as it turned out, included a staff day which included a Zumba class for interested staffers, a chair masseuse (for which the staff paid themselves), and a few other exercise options, such as karate and gym memberships.  McCormick pointed out that these have paid off for the agency.  "We have had zero health insurance premium increases because of these programs," she said.  "In the last three years, our premiums have not increased at all."

That is not true for the state as a whole.

McCormick also says that during high stress periods, these stress reducing programs can help to retain workers, which is more cost effective than having them leave and training new people.  "We don't pay our staff as well as they do in the private sector," she said.  "We're the biggest bargain of the year.  But even though we pay about 19 percent less than a similar position in the private sector, we retain our workers."

While their payroll has increased by some 30 percent from 2005 - 2010, McCormick says that the majority of that occurred in the last couple of years, as a result of stimulus funding.

She also points out that MaineHousing's overhead is incredibly low ... about six percent.  "Our salary information is on our website," she said.  "We have nothing to hide.  Poliquin isn't going to find a situation here like existed at the Turnpike Authority, and we are looking forward to the OPEGA (Office of Program Evaluation & Government Accountability) findings when they complete their study."

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