A controversial $47,909 study of the Baltimore Housing Authority by one of Mayor Kurt L. Schmoke's closest legal friends was paid for by the agency over the strenuous objections of its top finance official, an internal memo shows.
At the time Mr. Schmoke turned over the bill two years ago -- without asking for a written report -- William J. Schmidt, then the finance director, warned that the payment would violate federal procurement rules and create more problems for the beleaguered agency.
Mr. Schmidt protested that the authority did not hire or have a contract with C. Edward Hitchcock, the lawyer tapped by Mr. Schmoke to find ways to overhaul Baltimore's public housing. The only way to pay the bill, Mr. Schmidt wrote in a May 12, 1993, memo obtained by The Sun, would be to declare an emergency and dip into a limited expense account.
"We are already suspect in our procurement of legal services, and this will add to the problem," he wrote. "I feel very strongly that HABC should not pay this bill."
His objections were overruled by his supervisor, Danise Jones Dorsey, a trusted aide of the mayor who was then serving as deputy director of the Housing Authority.
Ms. Dorsey, who told Mr. Schmidt to "process the attached invoice and expedite payment to Mr. Hitchcock," said she was authorizing the bill by "declaring this item an emergency based on the turmoil in senior management, the lack of public confidence in the authority's operating systems . . . and HUD's concern regarding how the authority was conducting business."
Daniel P. Henson III, named by the mayor two months earlier to revamp and head the Housing Authority, upheld her decision and signed off on Mr. Hitchcock's legal fees.
Mr. Henson paid the fees from his own account as commissioner. "I did not fully agree with Mr. Schmidt's opinion, and his supervisor had refuted it," he said yesterday. "I took my lead from that and concurred."
Mr. Henson also emphasized that the review of the Housing Authority came at a critical time, when tenants were refusing to pay rent and one in five apartments in the city's high-rises stood empty, even though 33,000 poor families were waiting for places to live.
Reached at home last night, Mr. Schmidt, who retired in December, declined to comment on his memo, saying only, "I think it's self-explanatory."
His memo reveals that questions were raised within the Housing Authority long before the Hitchcock contract came under public scrutiny and criticism.
It also provides a glimpse at the internal struggle over the awarding of bids on an emergency basis, a process used to bypass the lengthier procurement process required by the U.S. Department of Housing and Urban Development.
The city Housing Authority was sharply criticized in a federal audit last year for failing to develop adequate safeguards in awarding $25.6 million in no-bid repair contracts. That program was undertaken as an "emergency" to speed up the renovation of more than 1,000 run-down homes.
Earlier this year, Mr. Schmoke and Mr. Hitchcock refused to make the study public, saying that the findings were confidential and protected by a lawyer-client privilege -- even though taxpayers paid the bill.
Two weeks ago, a city councilman challenged the lawyer-client privilege by disclosing records that showed Mr. Hitchcock had been paid by the Housing Authority, not by the mayor or his legal office. Third District Councilman Martin O'Malley said the mayor had been less than forthcoming about what the public received in return for the $47,909 bill.
Mr. Hitchcock responded by calling a news conference to release an outline that was the basis for his oral presentation to the mayor. He gave a spirited defense for never putting his findings in writing, saying that the mayor had insisted the briefing was enough.
Nevertheless, Mr. Hitchcock refused to disclose any of the backup documents contained in seven thick files.
Last night, Mr. O'Malley narrowly persuaded the council to give his committee the power to subpoena the five public housing commissioners. He had asked them to testify before his Legislative Investigations Committee, but Reginald Thomas, chairman of the five-member board, refused on their behalf.
"I really do not understand what it is people with the housing authority have to hide, or what they fear from coming to this forum," Mr. O'Malley said.
The councilman, who said the memo raised even more questions about the Hitchcock contract, won the subpoena power in a 10-8 vote. Several council members objected strongly, saying his committee does not have the right to summon the commissioners who oversee the public housing authority, which is largely funded by federal subsidies and monthly rents.
Sixth District Councilman Melvin L. Stukes read a memo from City Solicitor Neal M. Janey, who suggested that the council wait until a federal investigation into corruption at the agency is completed.
"We have never heard of a situation where the United States attorney defers to a committee of a municipal or county governmental council while it is conducting an investigation. It works the other way," Mr. Janey wrote in his memo.
Mr. Henson said he does not believe the housing authority still has any memos related to the Hitchcock contract, but said he was willing to look into the matter.
He noted that the authority already has given Mr. O'Malley's committee more than 22,000 documents related to the no-bid repair program that was faulted in a federal audit for shoddy work and inflated costs.