City Councilman Andraé McGary resigned from his job as interim executive director of the Chattanooga Regional Homeless Coalition on Thursday amid controversy over possible conflicts of interest.
"I felt it would be best for the sake of the coalition and the sake of the city," he said.
Mr. McGary took the job with the coalition on a temporary basis for $50,000 annually while the organization searched for a permanent director.
The City Council votes every year on providing HUD funds to the homeless coalition.
He was hired March 10 by the group after its previous executive director, Karen Blevins, resigned unexpectedly.
PDF: Andre McGary letter 2 PDF: Andrae McGary letter 1
City officials said Thursday they thought there could be a conflict of interest with Mr. McGary holding the homeless coalition's top job because the agency receives federal money from the U.S. Department of Housing and Urban Development.
Mr. McGary said Thursday he heard from the city about possible conflicts with HUD funding, but city officials never provided him with specific HUD officials to call and, when he did call the federal agency, he and his attorney were given the "runaround."
"We never got any substantial information," he said.
He said he did not have any evidence, but it seemed there might have been some retaliation by the city administration for his efforts to have alcohol served in the Tivoli Theatre and Memorial Auditorium and also voting against a contract for former police Chief Freeman Cooper.
"I can't help but think it's completely political," he said.
Richard Beeland, spokesman for Mayor Ron Littlefield, said Thursday that was not the case and the mayor, along with his staff, were not involved.
"It has absolutely nothing to do with us," he said. "It's coming from HUD and the city attorney's office."
City Attorney Mike McMahan said Thursday that HUD officials had told them the federal agency might conduct its own audit and, if it found problems, ask for grant money back.
"It looked like all the grant funds were in jeopardy," he said.
HUD officials could not be reached for comment.
Mr. McMahan said a federal code specifically states that elected officials cannot receive any kind of financial interest through HUD money. There were questions about whether Mr. McGary would reap any kind of benefit from that money, including his salary, Mr. McMahan said.
City officials then talked about suspending funding to the agency and possibly conducting an audit of the Chattanooga Regional Homeless Coalition.
Mr. McMahan said the city wanted to conduct an audit to protect both the city and the homeless coalition. The audit would have provided evidence that Mr. McGary was not receiving HUD money as part of his salary, Mr. McMahan said.
He said the intention was to "protect the grants."
"It's not suggesting we were looking for improprieties," he said.
The city sent a letter to the Chattanooga Regional Homeless Coalition Thursday morning, outlining that the city's HUD portion could be withheld.
Julianne Crow, president of the board of directors of the homeless coalition, said Thursday she was surprised by the city's reaction.
"I thought it was a bit strong," she said.
HUD FUNDSThe city divvies out four separate funds to the Chattanooga Regional Homeless Coalition that come from U.S. Housing and Urban Development money:* $84,000: Money for Centralized Intake Program to pay salaries and benefits for case managers* $71,295: Homeless prevention and rapid rehousing program* $34,000: Annual match for U.S. Housing and Urban Development funding* $25,000: Money provided for the Continuum of Care applicationSource: Chattanooga
She said she and other board members thought everything was fine and had been worked out as far as the HUD money was concerned. She said the board made a decision to pay Mr. McGary through private donations instead of federal funds.
"We just felt it was better to pay through private funds," she said.
The coalition never heard from HUD officials, she said, but it never reached out to them, either.
But she said Mr. McGary first was told by the city attorney's office that there should be no conflicts if he took the job at the coalition.
Everett Hixson, an attorney who is a board member for the coalition, said Thursday that board members "were kind of stunned" when they received a letter that the city might conduct an audit and withhold funding.
He said everyone on the board agreed the best thing would be for Mr. McGary to resign. He sent a letter back to the city on Thursday saying Mr. McGary no longer worked for the coalition.
"We certainly weren't going to go to war over this," he said.
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