Clint Zweifel seeks ethics policy for housing commission

By Virginia Young

Post-Dispatch Jefferson City Bureau

June 23, 2009

JEFFERSON CITY - State Treasurer Clint Zweifel called Tuesday for a new ethics policy aimed at preventing state housing commissioners from having private financial relationships with developers who receive subsidies.

Zweifel is the new chairman of the Missouri Housing Development Commission, which hands out millions of dollars in tax credits each year to finance apartments and single-family homes for low-income people.

His proposal for full disclosure of any conflicts of interest comes as the housing agency faces a federal inquiry into some of its activities.

Pete Ramsel, the commission's longtime executive director, has been questioned by the FBI "more than once," Zweifel said at a news conference in the Capitol on Tuesday.

In an interview, Ramsel confirmed that he had been contacted last year by the FBI. He declined to elaborate.

FBI spokeswoman Bridget Patton in Kansas City said the FBI could neither confirm nor deny that it was investigating the housing agency.

Private dealings between commissioners and developers drew fire in 2007, after then-Commissioner Bill Luetkenhaus of St. Charles County made a profit by selling land to a developer who receives housing tax credits. Luetkenhaus disclosed the deal in a letter to the commission's chair at the time.

Zweifel, however, said commissioners should divulge such relationships in public meetings, then recuse themselves from participating in any vote related to the applicant.

"We should never have a repeat of a situation where a commissioner does business with - or has a financial interest in any way - with a developer who then comes before the commission to do business," Zweifel said.

Zweifel plans to present his proposed ethics policy to a commission subcommittee on July 7.

"This is an issue that cannot be swept aside," he said. "It must be dealt with directly."

He said punishment for violating the new ethics policy could include banning the developer from applying for tax credits.

Luetkenhaus said Tuesday that he had done nothing wrong. He said he had not been interviewed by the FBI.

Luetkenhaus sold 20 acres in Wentzville in 2006 to Columbia, Mo., developer Jeffrey E. Smith for $1.7 million. Luetkenhaus, a former state legislator, had purchased the land two months earlier for $932,000.

Luetkenhaus said Tuesday that the land was appraised for $10,000 an acre more than his asking price, so "I sold it for $200,000 less than what the appraisal was."

By reporting the matter to the chairwoman, Luetkenhaus said he "became the first person in history trying to be honest" about such deals. No commissioner had ever filed such a disclosure before, he said.

He said the deal has been fully studied and he was cleared.

"All those documents I turned over to the state," Luetkenhaus said. "Everybody and his brother pored over them. The attorney general looked at it. The governor's office looked at it. Nothing was wrong."

Luetkenhaus said he had no conflict because Smith never sought tax credits for the tract in question.

However, Smith has received millions in tax credits for other projects. Smith also owns companies that manage and invest in the housing projects.

The Post-Dispatch reported in April that Smith had set up a network of political action committees to funnel hundreds of thousands of dollars in campaign cash to key decision makers in state government.

Zweifel acknowledged that his ethics proposal would not touch the campaign finance system, which permits unlimited donations to statewide officeholders such as those who sit on the housing commission. Zweifel said he would support restoring caps on campaign donations but that is not part of this ethics proposal.

The housing commission is made up of four statewide elected officials - the governor, the lieutenant governor, the treasurer and the attorney general - and six people appointed by the governor. Two of those slots currently are vacant.

The commission has long been dogged by questions about whether taxpayers get their money's worth out of the low-income tax credit program.

Only about 35 cents of each dollar the state spends on the program actually goes toward construction. The rest is divided up among those who buy and sell the tax credits.

The tax credits can be redeemed by investors over 10 years. A dollar's worth of credit eliminates a dollar's worth of tax liability.

Last year, Auditor Susan Montee urged the Legislature to revamp the program, which she said primarily benefits developers and investors. Montee plans to release another audit of the agency Wednesday.

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