Audit flags potential conflict of interest in shelter contracts; Stuckart fires back

Former Spokane City Council President Ben Stuckart may have violated city conflict of interest law when he allegedly helped steer a city warming center contract to Jewels Helping Hands in 2019, according to a state auditor’s report published Monday.

In response, Stuckart immediately and forcefully denied the assertion and the veracity of the entire report.

The inquiry, conducted by the Washington State Auditor’s Office at the request of Mayor Nadine Woodward after unnamed city employees raised concerns, found several flaws in the way the Community, Housing and Human Services Department operated prior to 2020.

The department is at the forefront of the city’s efforts to address issues of housing and homelessness.

City leaders vowed to correct and learn from the issues identified in the auditor’s report.

“This has been a learning experience and it will continue to be an opportunity for us to improve how we deliver critical human services,” Woodward said in a news conference on Monday.

Stuckart described the inquiry as “disgusting politics” and countered that all of the contracts in question were reviewed and approved by the city’s legal department and the full City Council. He denied muscling the city into approving a contract with Jewels Helping Hands, which had won financial support from a donor who also backed Stuckart’s failed mayoral bid.

“It’s a discounted report that besmirched my good name,” Stuckart said of the auditor’s report. “It should be thrown in the trash.”

In three contracts signed with service providers in 2019, totaling more than $2 million, the city “could not provide evidence it followed its practice and solicited a (request for proposals) or performed a competitive bidding process for these agreements,” the auditor’s report states.

The audit did not find fault with the actions of any current city employee or elected official, city officials stressed. The city issued a written response to the audit outlining a plan to address and rectify the findings within six months.

The report was briefed by auditors in a meeting of the City Council’s Finance and Administration Committee on Monday, but the presentation resulted in a flurry of confusion and left council members with unanswered questions.

The auditor’s report does not actually name Stuckart, Jewels Helping Hands, or any other person or organization involved in the contracts it references.

In a news conference on Monday, city spokesman Brian Coddington said the city would not disclose names and instead directed reporters to the auditor’s office, which “asked us to refer those questions to them.”

But when City Council members asked auditors for names and titles during the committee meeting later that afternoon, they said they would ask Coddington before releasing the details.

Kathleen Cooper, a spokesperson for the auditor’s office later clarified that the office typically does not name people or organizations in such an audit, but acknowledged they are public record and disclosed the information to The Spokesman-Review upon its request.

The auditor’s office did not interview anyone accused of impropriety in the report, officials acknowledged Monday in response to a question from Council President Breean Beggs.

Council members agreed that more detail would be needed to correct issues identified in the report.

“I’m more confused now than I was before we started,” said Councilwoman Lori Kinnear.

The report

At the center of the report is Stuckart’s involvement in reviewing applicants to operate a city warming center in winter 2019 into 2020.

Jewels Helping Hands was awarded a $740,000 contract to run a 24/7 warming center as the city raced to expand overnight shelter ahead of cold weather in late 2019.

The auditor’s report states that in July 2019 Jewels was deemed “high risk” by the city, in part due to the unclear relationship it had with the Smith-Barbieri Progressive Fund. The city passed on awarding Jewels a contract in July, but did select it to operate a different shelter in November 2019.

The report notes that, according to the city, the department director and employees felt pressure from Stuckart “to approve projects, contracts, agreements and transactions that bypassed established internal controls, Department practices and the City’s adopted policies and procedures.”

Stuckart dismissed the claim.

“I don’t understand how they can say I pressured the division director when they didn’t interview me or the division director, so that seems like an assertion with zero basis in fact,” Stuckart said.

Stuckart noted that, as a member of the committee reviewing shelter applicants, he backed The Salvation Army – not Jewels Helping Hands – in July to operate a permanent shelter on East Sprague Avenue. Amid public backlash and wavering support from City Council members, that plan was dropped by the administration of then-Mayor David Condon.

That forced the city to scramble to expand shelter as cold weather approached.

“The administration was pressuring staff, the media was pressuring staff, council was pressuring staff to get it done. None of that is pressuring staff to make sure that one agency got the contract, it was ‘we need a warming center because people are going to die,’” Stuckart said.

At the same time the city was weighing proposals to operate the warming center, Stuckart was running for mayor against Woodward.

Sharon Smith and Donald Barbieri, the fund’s co-founders, each donated the maximum $2,000 directly to Stuckart’s campaign, according to Public Disclosure Commission records.

Stuckart lost the election and now serves as executive director of the Spokane Low Income Housing Consortium and is chair of the region’s Continuum of Care Board, which helps set policies aimed at reducing homelessness and distributes more than $4 million annually in federal grants.

The Smith-Barbieri Progressive Fund served as a fiscal sponsor to Jewels Helping Hands, then a nascent nonprofit, as it applied for a city contract, Smith told The Spokesman-Review on Monday. It’s a function the fund regularly serves to fledgling nonprofits, Smith explained, underwriting “the back-of-the-house stuff” without charging a commission.

The fund also fronted Jewels with a “few thousand dollars,” which was later repaid, to buy items in preparation for operating a shelter, Smith said.

The fund did not serve to financially benefit from the city contract, according to Smith.

“We do it purely as a philanthropic effort,” Smith said. “That’s what we did with Jewels so they could apply for this warming center, which was incredibly important.”

Smith-Barbieri pressured Stuckart and numerous other city leaders to approve a warming center contract, Smith acknowledged.

“The only thing that we continue to do is encourage the city to be more proactive and responsible in supporting our unhoused community … did we ever ask Ben to do that? Absolutely,” Smith said, adding that it asked “every single council person to do that, sent notes to the mayor (and) made phone calls to everyone we could.”

Beggs pressed auditors Monday for insight into exactly what constitutes a conflict of interest. If the issue is simply that Stuckart’s campaign and Jewels Helping Hands shared a mutual donor, Beggs said it “would be difficult for those of us running for office to keep track of who our donors are and also (who they are) donating to.”

In response, auditor Tara Alfano said the concern wasn’t just that the two shared a mutual donor, but the donor “actually sat on the board of” the organization that received a contract.

That’s false, according to Smith, who told The Spokesman-Review that neither she nor Barbieri ever sat on the board of Jewels Helping Hands. Smith and Barbieri were not interviewed by auditors.

Cooper, the auditor’s office spokesperson, later told The Spokesman-Review that auditors did not seek to determine whether or not someone served actually on the board of the nonprofit.

“Our goal was to hear and understand what the staff believed was happening and understand their perspective,” Cooper said.

An actual conflict of interest and the appearance of one are different. Alisha Shaw, another auditor’s office official, told Beggs the issue is that “notification” of a potential conflict of interest, which would allow an independent party to weigh in, “did not occur” as required by city law.

Other findings

Stuckart’s was not the only potential conflict of interest flagged in the report.

The State Auditor’s Office also noted former CHHS Director Kelly Keenan left the city in October 2019 just weeks before the city awarded Catholic Charities of Eastern Washington a $495,841 contract in November. Keenan now works for Catholic Charities.

In a statement released Monday, Catholic Charities said it only agreed to operate a winter warming center for the city after repeated requests from city officials, and that Keenan “was not offered a position at Catholic Charities until months after he left the City of Spokane.”

“This is not unusual, as CCEW has been hiring former City employees for decades,” the statement reads.

Keenan was not involved in negotiations with Catholic Charities over the contract, according to the nonprofit. He was not interviewed by auditors.

The audit also flags a $881,482 contract awarded to Family Promise of Spokane to operate a shelter, but does not elaborate on improprieties with the contract except that it is one of the three that did not follow city procurement policy.

In 2017, then-director of CHHS Dawn Kinder approved payments to a consultant with the Center for Justice for personal expenses “as an alternative form of compensation for the employee’s service hours worked under the agreement, contrary to the express terms of the agreement.”

The Center for Justice was used by the city in 2017 to offer free housing legal clinics to citizens, according to the auditor’s report. Kinder also now works for Catholic Charities.

The plan

In its official response included in the audit report, the city pledged to establish a new set of policies to guide the distribution of CHHS funds, train current and future employees on city policies, and require department employees to review conflict of interest laws.

“The city and our CHHS department have committed to a long list of improvements to policies, procedures, practices and training,” said Cupid Alexander, the director of Neighborhoods, Housing, and Human Services division, a division that includes the CHHS department.