MODESTO -- Two people were conspicuously absent from Thursday's City Council workshop on resuming work on Modesto's Neighborhood Stabilization Program.
City Manager Greg Nyhoff dispelled the mystery by announcing that consultants Cynthia Shallit and Jamie McLeod had discontinued their contract with the city, as of Wednesday.
The city hired the consultants in November under a $214,000 contract to take over management of the troubled program and do other work through March.
Nyhoff said the consultants decided to break off the relationship when he talked with them about shifting their focus to economic development, golf course contracts and John Thurman Field.
"Their hearts were on the housing side," said Nyhoff, adding that a recommendation to allocate almost all remaining funding to the Housing Authority of Stanislaus County lessened their role with the program.
The consultants were paid about $75,000, he said.
Reached by phone Thursday, Shallit confirmed she had left.
"We mutually agreed my work was completed," said Shallit, who joined the city staff eight weeks ago. "We had gone there to evaluate the NSP program and make recommendations, and we did that."
The public housing expert said she plans to retire; McLeod has accepted a job offer with a nonprofit housing organization in Sacramento.
It was another in a series of staff departures from the federally funded housing program: Deputy Parks and Recreation Director Judith Ray announced her retirement the day after the council decided to hire Shallit's firm and Administrative Analyst Scott Humphries resigned early this month.
Among the program changes Shallit proposed was to restart the program using the Housing Authority instead of private developers and to use private lenders for mortgages on resale homes.
Nyhoff told lenders attending the workshop he'll bring in a temporary staff member to work with them on financing home sales through the program. The temporary staffer or consultant could also assist with efforts such as building job-creation programs and analyzing golf-course management contracts, he said.
City officials held Thursday's workshop to talk about the purpose of the housing program, clear up what they saw as misconceptions and discuss procedures for spending a remaining $8.1 million in second-phase NSP funding.
In August, the city stopped spending funding on home purchases and renovations amid turmoil over conflicts of interest, questionable spending on home improvements and how a nonprofit housing agency spent $8 million in program funds.
City leaders feel more confident about restarting the program after the December release of an audit report from the Office of Inspector of the Department of Housing and Urban Development, which cited three violations of HUD regulations.
Julie Hannon, director of the Parks, Recreation and Neighborhoods Department, said the city has a year to spend the remaining funds from the $25 million awarded to Modesto in January 2010. If it fails to do so, any unspent funds must be returned to the federal government.
The city has allocated $6 million for the Housing Authority to provide 40 affordable housing units to foster care graduates and homeless young adults. Staff also recommends letting the Housing Authority use $1.5 million to buy and renovate foreclosed homes for resale, based on its success with an NSP-funded county program.
Using private lenders for the mortgages would quickly recycle funding when qualified buyers purchase the homes, staff said. Private developers could be awarded the recycled funding for additional projects to take foreclosed homes off the market.
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