Housing Official’s Hire As Developer CEO Sparks Ethics Concerns Over Real Estate Contracts
A top Montgomery County housing official has accepted the role of CEO at a development firm after his agency gave more than 30 property management contracts to its closely affiliated sister company.
Stacy Spann, the executive director of the Housing Opportunities Commission of Montgomery County, announced on June 8 he plans to leave the agency to become CEO of MidCity, effective July 30. In his tenure at HOC, the quasi-governmental agency awarded a majority of its third-party property management contracts to Edgewood Management.
Edgewood Management and MidCity are both part of Bethesda-based The Ford Family Cos., founded by the late Eugene Ford Sr. His son, Eugene Ford Jr., currently serves as chairman of both entities, and MidCity’s website describes them as “sister companies.”
“It is problematic for Stacy Spann to have awarded all of these contracts to a company and then he goes to work shortly thereafter for a sister company that has the same ownership,” said Del. Al Carr, a state legislator who has passed legislation to increase oversight of HOC. “That is problematic.”
The ownership structure of the two companies is more than 90% identical, three sources with knowledge of the companies’ ownership tell Bisnow. Four Ford family members each own 22.5% of each company, and the remaining 10% is owned by other individuals close to the family. The companies typically hold their board meetings on the same day, the sources said.
Edgewood is named as the manager for 19 of the 22 communities listed on the “properties” page of the housing commission’s website, which notes that it doesn’t include mixed-income properties. A list of HOC properties shared by a spokesperson showed that Edgewood manages 31 properties, with seven other third-party managers combining to manage 26 properties. HOC also manages 21 of its own properties, according to the list.
MidCity executives have been discussing plans to hire Spann since at least September, according to three sources with knowledge of the conversations. It remains unclear when Spann himself began talks to join the company. Through HOC’s spokesperson, Spann declined to be interviewed or answer questions for this story.
A MidCity spokesperson said the company started the hiring process for its CEO in September, when it retained an executive recruiter.
Montgomery County law includes a one-year prohibition related to public employees leaving the county to work in the private sector.
The law sets a one-year bar on former county employees entering into an employment agreement with a business with which they significantly participated during the prior three years, either through regulation or contracting activity. The law defines “significantly participated,” as “making a decision, approval, disapproval, recommendation, rendering of advice, investigation, or similar action.”
HOC, which draws nearly 50% of its funding from taxpayers, has renewed 12 contracts with Edgewood totaling over $800K in annual payments since October, according to a Bisnow review of public records. Two of those renewals were approved at an HOC meeting on June 9, the day after Spann announced he planned to depart the agency in July to join MidCity.
MidCity and Edgewood each sent unattributed statements to Bisnow through the same spokesperson. The companies declined to make Ford or Edgewood CEO Cindy Sanquist available for an interview.
In MidCity’s statement, the company said it hired Spann because he is the best person for the job and has extensive experience in multifamily development.
“We see no conflict of interest since MidCity, an independent development and asset management entity for affordable housing, has never done, nor plans to do, business with HOC,” the spokesperson said on behalf of MidCity.
Edgewood said it has worked with HOC for 22 years, and the spokesperson noted that it hasn’t received any new contracts over the past year, only renewals of existing contracts.
“During the pandemic, HOC decided not to issue any RFPs and instead extended all existing contracts — a common practice among housing authorities across the country,” the spokesperson said on behalf of Edgewood. “We are extremely proud [of] our work with the residents at HOC projects as well as our management and thorough compliance reporting efforts for their affordable housing properties.”
HOC Commissioner Roy Priest, who serves as chairman of the seven-member panel, said Spann informed him of his plans to join MidCity about a week before the public announcement, and he doesn’t know how long Spann had been in talks with the company prior to that.
“We have not had any specific in-depth conversations about the relationship between MidCity and Edgewood,” Priest said. “I’ve known about MidCity for a long time. I didn’t know until recently there was a relationship between MidCity and Edgewood. I’ve always known them as separate companies.”
Spann informed Priest that he has requested an opinion on the move from the Montgomery County Ethics Commission, which enforces the county’s ethics laws, Priest said. He said he didn’t see the language of Spann’s request and doesn’t know exactly why he chose to submit it, but he assumed it is because of the connection between Edgewood and MidCity.
Priest said he didn’t know until after Spann announced his departure for MidCity that the company was owned by the same family as Edgewood. He said he hasn’t had discussions with other commissioners about the connection between the companies, but he thinks it is “worth looking into.” Still, he thinks it is important to note that the companies are separate business entities.
“If he was going to be the CEO of Edgewood Management, I could clearly see that would be a problem; no question about that,” Priest said. “And that would only be a problem in terms of when he went to do that. Because if he went to work for them a year or two years later after he left us, that would not be a problem. It would be a problem if he would leave us and go right to work at Edgewood Management. He’s not doing that. He’s going to be CEO of MidCity.”
Carr, who represents Montgomery County in the Maryland House of Delegates, filed a complaint in March with the county’s inspector general that alleged Spann violated ethics rules in the awarding of contracts unrelated to MidCity and Edgewood. In a report issued earlier this month, the IG found no wrongdoing on Spann's part, Bethesda Magazine reported.
In an interview, Carr said HOC has lacked transparency in its oversight of Spann. After learning about Spann’s departure to MidCity and the company’s connection with Edgewood, he told Bisnow he has new concerns about the housing agency.
He said that if Spann had been in talks with MidCity to take the CEO job in the days and months prior to the announcement, when HOC awarded Edgewood several contract renewals, that would create conflict-of-interest issues.
“If he’s been discussing employment with them for a certain time period, and he’s continued to renew contracts with their sister company during the same time period, that would be concerning,” Carr said.
Amy Millar, who represents HOC’s unionized employees as special assistant to the president at Local 1994 MCGEO, said she wasn’t previously aware of the connection between MidCity and Edgewood. But she thinks it presents a potential ethical issue, even though they are separate business entities.
“What that does is just makes it certainly worthwhile to take another look at how Edgewood won so many contracts,” Millar said. “I think there’s the appearance of a potential conflict of interest.”
Montgomery County Council Member Hans Riemer, who chairs the council’s Planning, Housing and Economic Development committee, said he couldn’t speak to the specifics of Spann’s situation, but he thinks these types of moves generally merit oversight.
“I think that every move between the public and private sector deserves scrutiny, and I think we should always be concerned about revolving doors wherever they might be,” Riemer said.
The Housing Opportunities Commission of Montgomery County is the county’s main public housing agency, according to its website, which describes it as “a government organization that administers federal, state, county, and private affordable housing programs.”
The agency received 46% of its operating income for Fiscal Year 2022 through federal and county grants, according to public budget documents. An HOC spokesperson said that this grant income is restricted to specific uses.
Federal funds from the Department of Housing and Urban Development go toward Housing Assistance Payments for its voucher-holding residents, and county funds predominately go toward resident services programming. HOC also receives funds from property-related sources such as rent collection, management fees and interest.
The agency, formed in 1974, has seven volunteer commissioners who are appointed by the county executive and confirmed by the Montgomery County Council to serve five-year terms. The full commission meets once a month to approve management contracts and other deals made by the agency’s full-time staff, and it has three committees that meet regularly. The commissioners appoint and oversee the executive director, a full-time staff position.
Spann has served as HOC’s executive director since February 2012. Prior to that, he worked as executive director of Howard County Housing.
The full commission’s monthly meetings are held publicly, with detailed minutes published on HOC’s website and meeting recordings posted to YouTube. The commission doesn’t appear to have issued new management contracts to Edgewood over the past several months, but it has renewed several existing contracts that add up to nearly $1M in annual payments.
At the June 9 meeting, one day after Spann announced his plans to join MidCity, the commission approved two contract renewals for Edgewood: a $62K annual contract for the 124-unit Fenton Silver Spring apartments and a $58K annual contract for the 120-unit Oaks at Four Corners apartments in Silver Spring.
The commissioners acknowledged Spann’s planned departure at the start of the meeting, but they didn’t mention the connection between MidCity and Edgewood when approving the contract renewals. The memorandums proposing the renewals are addressed to the commission from individual HOC staff members, and each one includes a line that says: “Via: Stacy L. Spann, Executive Director.”
When renewing property management contracts, the commission staff presents performance metrics including building occupancy, resident surveys and inspection results. Edgewood’s properties have maintained strong performance scores, according to the minutes from the past several meetings, and commissioners have praised Edgewood for its management of the properties.
“After reviewing all these other corporations that we’ve dealt with, I am struck by the occupancy rates that Edgewood Management has maintained in a significant number of the units that they manage for us,” Commissioner Jackie Simon said at the June 9 meeting. “I think the occupancy rate, the inspection results, just cry out for acknowledgment of the fine job that Edgewood has done for us.”
At its March 3 meeting, the commission voted to approve six one-year contract renewals with Edgewood: a $158K contract for the 308-unit Alexander House Property and a $70K contract for the 147-unit Georgian Court property, both in Silver Spring; a $48K contract for the 94-unit Stewarton Homes property in Gaithersburg; a $70K contract for the 97-unit Glenmont Crossing property in Wheaton, a $52K contract for the 102-unit Glenmont Westerly property in Wheaton and a $43K contract for the 90-unit Brookside Glen property in Wheaton.
At its Nov. 4 meeting, the commission voted to approve two one-year contract renewals with Edgewood: a $93K contract for the 195-unit The Willows property in Gaithersburg and a $66K contract for the 144-unit Shady Grove Apartments in Derwood.
At its Oct. 7 meeting, the commission voted to renew a $65K contract with Edgewood for the 129-unit Montgomery Arms apartments and a $41K contract with Edgewood for the 83-unit Spring Garden apartments, both in Silver Spring.
These 12 contract renewals between October and June — a period after sources said MidCity executives had begun discussing hiring Spann as their next CEO — add up to $826K in annual income for Edgewood Management.
While Edgewood holds a majority of the third-party management contracts that HOC has awarded, Priest said the commissioners don’t consider how many contracts a particular company already has when making an award, and he said it focuses on the recommendations from staff.
He didn’t see Spann’s departure to Edgewood’s sister company, MidCity, as an issue that needed to be brought up at the June 9 meeting where the commission approved two contract renewals with Edgewood.
“I didn’t see that as an issue related to the contracts,” Priest said. “The contracts went through a normal process. They were contracts that were extensions of contracts they had with HOC related to the management of specific properties. The fact that it followed our requirements and protocols for procurement, we had no reason to question that.”
The Montgomery County Ethics Commission, a five-member body, enforces county ethics law. It has authority to grant waivers to employees to avoid these prohibitions, but the law states it must find that failing to grant the waiver would reduce the county’s ability to hire or retain qualified employees and that the proposed employment doesn’t create a conflict of interest.
State officials have sounded the alarm before over HOC’s lack of transparency during Spann’s time as executive director. In November, Maryland’s Open Meetings Compliance Board ruled that HOC violated state transparency rules by holding committee hearings in closed sessions that were not accessible to the public.
Maryland lawmakers have passed three bills that Gov. Larry Hogan has signed into law over the past three years to increase the transparency of HOC. A law passed in March 2019 allowed Montgomery County to grant its inspector general the same authority over HOC that it has over county departments. A law passed a year later required HOC to prepare written minutes and stream live video of each of its meetings. And a law passed this April codified the OMCB ruling that HOC is a public body for purposes of the state’s Open Meetings Act.
“HOC had become very opaque in recent years, that was one of the concerns that people were having and legislators began having,” said Carr, one of three delegates who represent Montgomery County in the statehouse. “A number of us became concerned about the oversight of HOC a couple years ago, so we began putting in legislation to try to improve the governance.”
Millar has supported the efforts to make HOC more transparent, because she said it is important that it is held accountable to its mission of providing affordable housing.
“If there isn’t that openness, we don’t know what’s happening, and they’re not as accountable to the public as they need to be,” said Millar, whose union has 235 members at HOC. “It’s a crucial mission for Montgomery County, and our members are really committed to that work, so as an agency, it needs to have the highest level of transparency and accountability.”
Priest said the commission has addressed calls for more transparency and is now holding its committee meetings publicly.
“I do not see a problem with transparency at the agency,” said Priest, who was appointed to the commission in April 2018. “We have responded to all of the complaints that have been made about that, and we are in compliance with the Open Meetings Act.”
Marsha Coleman Adebayo, a community member who has testified to HOC several times as president of the Bethesda African Cemetery Coalition, has previously called for Spann to be fired for his handling of a contentious issue involving a burial site under an HOC property.
Adebayo, who was named to the Maryland Women’s Hall of Fame in 2007 for her work on protecting federal employees against discrimination and whistleblower retaliation, said she has closely followed HOC in recent years and thinks it has lacked transparency and accountability.
“There is a problem at the HOC, and the problem fundamentally is the HOC doesn’t have adequate oversight,” Adebayo said. “They’re a quasi-government entity, and I think what has happened is that because HOC falls into this gray area, it has escaped any kind of scrutiny, any kind of adequate oversight of just fundamental ethical issues.”
Adebayo wasn’t aware of the connection between Edgewood and MidCity, but she thinks it is worthy of more scrutiny.
“I’d like to see an investigation of Mr. Spann’s relationships between developers and the HOC and members of the commission,” she said. “Because from a cursory look, there are a lot of conflicts of interest going on between the commission and real estate interests.”