NEW DIRECTIONS Homestead
Audit ConcludesAFFORDABLE HOUSING FINANCE • July 2008
PORTLAND, ORE.
Homestead Capital, a nonprofit syndicator of low-income housing
tax credits (LIHTCs) that came under investigation last year, avoided penalties
but not the criticism of the Oregon Department of Justice, which reviewed the
compensation and expenses paid to the organization’s former president and
CEO. The department did not take any action against Homestead, saying the
organization had made recent changes and is “poised for a new chapter.”
“We are pleased that the board has already implemented a number of changes
based on our recommendations,” said Stephanie Soden, spokeswoman for Oregon
Attorney General Hardy Myers, in a written statement. “We believe that those
changes will lead to a stronger organization that will continue to have an important
role in the development of affordable housing.” William McCormick,
who took over as Homestead president in June 2007, said he was pleased with the
outcome. Justice officials launched an investigation of Homestead in March 2007
that looked at several areas, including the reasonableness of compensation paid
to former President and CEO Deborah Saweuyer-Parks. Portland, Ore.-based
Homestead syndicates tax credits in several Western states. In LIHTC syndication,
for-profit and nonprofit entities compete side-by-side for rights to a limited
pool of credits. Although there are many people who suggest that charities should
be more “business-like” in their operations, some nonprofits have had
their tax-exempt status revoked on the basis that the groups operated too much
like for-profit businesses, noted the department’s 21-page report.
In Homestead’s case, it was difficult to distinguish how some of its practices
differ from its for-profit counterparts, according to the audit. Justice
officials looked at the compensation paid to Saweuyer-Parks, who served as president
and CEO from 1993 to 2007. In 2004, she earned nearly $479,000 in pay and benefits,
including a $175,000 bonus, according to the report. She earned less in subsequent
years. When Saweuyer-Parks resigned in 2007, she received severance pay for one
year at her base salary of $283,500, plus employer contributions toward health
benefits through June 2008. Justice officials were critical of some of the compensation
studies that Homestead had used. They also looked at expenses incurred
by the former executive, including those for stays at premium hotels and lunches
at top restaurants. The audit noted that the expenses “appeared to create
considerable tension within the organization,” but Justice officials said
they were OK because many of the expenses were charged to the for-profit limited
partnerships involved and not paid out of charitable assets. Homestead has since
adopted a new expense policy. | 
