Three Willacy Co. Housing Authority board members heard presentations on the proposed Cottonwood Apartments project at a meeting Thursday, but it is doubtful HUD grants will be forthcoming due to the lack of a $541,224 local match from the WCHA.

The only match the Housing Authority can come up with is the 15 acres site where the project is supposed to be built. Meanwhile, the State of Texas is offering to provide $1.9 million of the estimated $4.9 million $4 million cost. Grantsman Francisco Briones told county commissioners in May that the new apartment project has been in the planning for two years and the U.S. Dept. of Housing & Urban Affairs has approved a $4.9 million grant.

If the project goes though the WCHA will build seven, oneand two-story buildings containing 68 different sized apartments, a community building, a cabana,swimming pool, laundry room, rest rooms, a computer room, asphalt parking lots and driveways, a maintenance building, landscaping and a sprinkler system.

Bill Montez and Tim Smith made the presentation to WCHA board members. Montez said, "We are providing financing, we need equity."

A 90 day extension to allow the WCHA to come up with matching funds will expire in August, he said.

After that the WCHA would have to re-apply for the grant at a likely higher interest rate, growing from 4% to 9%.

"HUD wants to work with us badly," said Tim Smith, "because it has been 50 years since they did anything in Raymondvile."

"I think if we file an application, maybe we get it, maybe we don't," said Mike Lopez.

"We are at a fork in the road."

With him was Gilbert Ortiz, both men representing the HUD application.

The WCHA now operates 104 units, 53 frame cottages built in the 1940's as farm labor housing and 100 brick veneer 1-2 and 3-bedroom apartments built along the expressway in the 1980's.

Not all of the apts are rented and one burned down recently. Rent for the units begins at $295 month for the frame cottages.

The WCHA has been tainted with scandal over the past few years as bills have been slow to be paid, under several different board members and executive directors.

Current board members of the WCHA are Gabe Guzman, chairman, Moseis Robles, vicechairman, Martha Mend-oza, Hector Galindo and Delores Strader. Mendoza and Strader were absent Thurs. evening. TURF FIGHT BETWEEN 2 BOARD MEMBERS

Next item on the agenda was an audit report for 2008/2009, presented by Juan Rivera, CPA.

Rivera said the WCHA has $1.3 million in fixed assets, 236,950 in liabilities and $851,773 in net assets. During the year ending June 30, 2009 the WCHA had a decrease of $32,756 in operating losses and a change in the fund balance of negative $39,106.

He said the previous executive director "was missing a few months of bank reconciliations" and it was difficult to restructure the information but he discovered no major issues and gave the budget an "unqualified" opinion.

Board chair Gabe Guzman commented that "there is $33,000 missing that cannot be recovered," with no further explantion.

Following the financial budget report, board member Hector Guzman exploded. (He is a former Raymondville city commissioner and has been on the WCHA board for about 8 years).

Galindo attacked the board's executive director hired after Guzman and Martha Mendoza came on the board a year ago. The executive director is Paul E. Valencia, hired after Kim Rains resigned. Several others have served in that position in recent years after Paul Kiefer was fired by the board.

Galindo blasted Valencia and Guzman.

"No bills have been paid," Galindo charged while the May 31 financial report was being reviewed.

Valencia claimed "everything has been paid."

Next,Galindo accused Guzman and Valencia of committing illegal acts involving WCHA business.

According to Galindo, Guzman and Valencia hired a man to paint and remodel apartments and paid him as much as $50,000 in increments of less than $5,000 to avoid bidding out the entire job as legally required.

"The guy you hired is getting a bunch of money and we need liability insurance and workers compensation if he is working on our property. If he falls down and gets hurt, we are going to get sued."

"If its $50,000 you can't do it $5,000 at a time to avoid bidding it out,” he said.

He told Valencia, "All you showed us was an unsigned Social Security card. "Where is his 1099, WW4, and driver's license?"

"I object to the deficit we are running. We've paid over $50,000 for materials and it didn't get bidded out the way it was supposed to."

Valencia claimed "there were 19 vacancies," when I came here, to which Galindo said, "Not true."

Guzman had a reply for Galindo.

“In previous years $154,000 was spent for remodeling and we couldn't see any evidence of anything being done. These apts are in a shameful condition. Why do you let people live in those conditions?,” he wanted to know.

Galindo answered, "That project needed to come before the board. We have a budget and this violates our procurement policy."

It's not "Gabe's" Housing Authority, its Willacy County Housing Authority. We've paid him over $40,000 plus materials, it should have come to the board and it should have been advertised.

"When the budget was done we had no way of knowing the nightmares we were uncovering. Now, the executive director is fixing the problem," said Guzman.

Galindo said that if half of the estimated $90,000 spent for remodeling had been saved, the WCHA would not have a deficit.

Guzman supported his executive director, Valencia.

"We need to do what we need to do. He discovered other things that the previous director failed to do -- pay employee payroll taxes." RIO BANK THREATENS TO SUE WCHA

The next issue of contention was an item that discussed hiring an attorney to prevent Rio Bank from suing the WCHA over a $450,000 note that came due on June 9.

"We need to hire a legal counsel to protect us from Rio Bank. They want us to pay $49,000 and we don't have it," said Guzman.

Galindo claimed, "Mr. Moreno from Rio Bank called me. He promised to work with us, but he said he couldn't get in touch with you, or Mr. Valencia and that you don't reurn his phone calls."

Both Guzman and Valencia denied avoiding the banker's phone calls.

Mike Lopez explained that Rio Bank "agreed to issue the loan and the board wanted the bank to disburse the checks."

Guzman said. “We approved a $69,999 draw to use for fixing up the apartments. The contract we signed was for "improvements," he said.

But Galindo argued, "The $450,000 was for the Cottonwood Apartments (matching funds) and that is all."

Guzman (also a banker) claimed he was given an ultimatum by Rio Bank.

"He (Moreno) said we have to reduce the amount by $40,000 and then they are going to give us a loan for 90 days of $369,000. He denied our draft ($69,000) for improvements. I call it a Breach of Contract, causing us to be in default. We had a legal right to ask for a draw and they denied it, while they have $1.3 million in collateral."

Gilbert Ortiz told the board, "If we move on this (project) we will have an answer in two weeks."

Guzman explained that Rio Bank is requiring the WCHA to open an account. “They don't trust us so they want to take their money (payments) out of our account. I hate for it to get nasty but we have more to lose than they do. We are not asking for money we just want to get renewed until December.”

The board did not hire an attorney Thursday because the agenda item did not call for hiring, only discussion.

Guzman said, " I believe the executive director had the power to hire an attorney on an emergency basis," referring to the last attorney later fired by Guzman.

This remark set Galindo off again, "Gabe, we already had legal counsel and you went ahead and hired another attorney. You are a loaded gun and you need to stop. Its not Gabe Guzman Housing Authority and you need to learn that."

"I'm just protecting the Housing Authority," said Guzman.

Apparently, firing the previous attorney cost the board $160,000. "That's a lot of money," said Galindo.

Guzman explained that his wife was in critical condition in the hospital at the time.

"You brought me the bill. The only reason I signed it was because they said they needed it.”

Galindo, said, "You don't have that authority. I can show you the Texas Government Code.”

"We are out a quarter-of-a-million dollars and we don't have anything to show for it," replied Guzman.

"That's why I have Angie (Garza) taking notes all the time," said Galindo refering to his friend, who was at the meeting. FINAL ARGUMENT INVOLVED MISSING BOARD MEMBER

Galindo complained that board member Martha Mendoza has missed five WCHA meetings in a row and that the board policy requires any member missing three meetings consecutively, to be removed.

"Its not fair (that Mendoza be permitted to miss meetings). We have already kicked out 5-or-6 members for the same reason."

Guzman explained that three of the meetings missed by Mendoza were for medical reasons. (Her daughter was seriously injured in a car crash last year).

No mention was made of the absence of Delores Strader.