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.