Norfolk City Council members clashed with the city’s housing authority last week over the authority’s little-known for-profit entity that has financed dozens of projects in low-income communities across the country but none in Norfolk in more than a decade.
Council members requested the Norfolk Redevelopment and Housing Authority publicly answer questions about the company, Hampton Roads Ventures, following recent reporting by The Virginia Mercury, a nonprofit online news organization.
During a tense meeting, NRHA officials gave mixed signals about whether the housing authority’s actions amounted to misconduct. They also provided conflicting information about Hampton Roads Ventures’ dealings and finances. Several council members chastised the officials for what they considered a lack of transparency, while Mayor Kenny Alexander threatened to direct Hampton Roads Ventures’ future profits to the city government.
“You ought to be ashamed of yourself,” Councilman Paul Riddick said to the housing authority officials. “You need to tighten up. That’s all I’m gonna say.”
NRHA Executive Director Ronald Jackson defended Hampton Roads Ventures’ out-of-state developments, saying the profits funded critical services for Norfolk residents. But the authority’s board chair, Alphonso Albert, appeared to concede there were problems with the decision to pursue out-of-state projects.
“We’ve set some things in motion that I think are improper and suggest somebody’s being a bad actor,” Albert told council, without elaborating.
Hampton Roads Ventures was created in 2003 as a “community development entity” owned by the the city’s housing authority with the city council’s approval. Its purpose was to generate revenue streams for the authority to offset budget cuts from the U.S. Department of Housing and Urban Development, Jackson said.
Community development entities compete for federal tax credits through private investment in low-income communities.
Hampton Roads Ventures received $360 million in tax credits between 2003-20. Those credits allowed the company to finance more than 30 projects in economically distressed communities across the country. But only three were in Norfolk — all in 2003 — including renovations of the Attucks Theatre and the Old Dominion University Marriott Springhill Suites.
Dozens of other projects financed by Hampton Roads Ventures were in states as distant as Nebraska, Idaho and Louisiana. It helped build a Kroger grocery store in Columbus, Ohio, renovate a historic market in Roanoke and develop a peanut processing plant in Kennett, Missouri.
The company now bills itself on its website as a “rural community development entity committed to attracting private investment capital … primarily in severely distressed rural areas.”
Jackson did not say why the company shifted its focus to rural areas beyond Norfolk, only that the decision was made by housing authority officials in 2007 without any apparent public disclosure. Former executive director Shurl Montgomery led the authority at the time. Former deputy executive director Robert Jenkins served as Hampton Roads Ventures CEO from 2003-11 and could not be reached for comment.
Jackson said there was little interest in the program from the Norfolk business community because of the program’s stringent requirements.
“HRV has offered to provide new market tax credits financing to several Norfolk businesses and developers who ultimately declined to participate in the program citing the complexity of the program,” Jackson said.
The Virginian-Pilot could not immediately verify this claim.
Councilman Tommy Smigiel said despite close relationships with some housing authority officials, he had never heard of the company until he read Virginia Mercury articles about it. Councilwoman Courtney Doyle also said she didn’t know the company existed until recently.
“What’s the big secret with HRV?” Smigiel asked. “It’s almost like it was purposely left out of any conversations because nobody wanted us to know about it. When the business model shifted to focus more on rural areas, why wasn’t council notified of that?”
Housing authority officials gave no response.
John Kownack, former Hampton Roads Ventures CEO and a former NRHA executive director, told the Pilot on Thursday that Hampton Roads Ventures would have gone out of business had it not expanded its reach outside Norfolk. Kownack provided documents to the Pilot showing the company began financing projects outside Norfolk in 2005, contradicting Jackson.
Hampton Roads Ventures initially received credits for three Norfolk-based projects in 2003. In 2005, the company financed six projects in other Virginia rural areas. In 2007, the company financed its first out-of-state project, in Mississippi. Since then, the vast majority of its projects have been outside Virginia, according to the documents.
“It is unusual, I think, for a local housing authority to have an entity that evolved into a national service area. That’s unusual. But we did it because the alternative was to go out of business. It’s not that anything bad was happening. We just didn’t have enough good projects to secure new (tax credits),” Kownack said.
Kownack left the housing authority in 2020 after nearly 20 years. He continued working for Hampton Roads Ventures until the end of last year. He began as executive director of the Chesapeake Redevelopment and Housing Authority in November.
NRHA officials also struggled to answer council members’ questions about Hampton Roads Ventures’ finances.
Jackson said the company’s profits amounted to just $2.3 million between 2003-22. But he said, without explanation, that those funds only began being transferred to the housing authority in 2017. Jackson said the profits were used to support local initiatives like resident transport services, youth summer programs and workforce development.
Hampton Roads Ventures CEO Jennifer Donohoe, however, was unaware that transfers of the company’s profits went to the housing authority. She has held the position since 2019.
Delphine Carnes, the authority’s attorney, contradicted Jackson on more than one front. She confirmed that $2.3 million was transferred to the housing authority but said Hampton Roads Ventures has $8 million more stashed away — $2 million in “pure profit” and another $6.3 million in reserves in case a project falls through. Carnes told council nothing legally prevents the city from taking the profits from Hampton Roads Ventures.
“The problem is you’re sitting on $2 million,” Councilwoman Andria McClellan said. “You all come to us all the time saying you need more money. And now we find out that y’all have a pot of gold. What the hell are you doing with that money?”
After the meeting, Kownack said Jackson greatly understated Hampton Roads Ventures’ gains. He said its profits have actually topped $10 million. The company makes roughly $1.5 million in profit for every $50 million in tax credits it receives, Kownack said. The company generates profits by charging allocation and asset management fees on the projects it finances, he added.
There was little discussion during the meeting about the company’s out-of-state developments, or whether council would seek to have the company refocus any future development efforts in Norfolk.
Alexander told the Virginian-Pilot after the meeting that he would consider drafting a resolution for the next city council meeting that would “redefine” the Hampton Roads Ventures and dedicate its current and future gains to the city rather than the housing authority.
“Before you send those profits over to NRHA, which then becomes federal money, what about some of the needs that the city may have?” the mayor said.
Alexander and Kownack argued in the hallway after the meeting about whether the $2 million in profits currently held by Hampton Roads Ventures should go to the city. Kownack told Alexander that, ideally, the company would be able to provide $500,000 to the housing authority every year for local programming.
“If we can come up with $500,000 a year for support services, new services and workforce development, we’re doing our job,” said Kownack, who no longer works for the authority or Hampton Roads Ventures.
“I want the whole $2 million,” Alexander replied.
Daniel Berti, daniel.berti@virginiamedia.com