El Paso food bank claims vindication after feds say city report shows compliance for $3.7M grant

UPDATE, Oct. 27: At a news conference on Thursday afternoon, officials with the City of El Paso and the El Pasoans Fighting Hunger Food Bank announced that the U.S. Dept. of Housing and Urban Development (HUD) had reviewed the food bank's activities with $3.7 million of Cares Act funding.

After rejecting it earlier this month, HUD has now accepted a supplemental or "proxy" report produced by the city detailing the city's unemployment rate, the locations where the food bank provided emergency assistance and the community's demographics -- all in an effort to show EPFH used 51 percent of the grants to serve low- to moderate-income residents as required by the federal agency.

"We just received an additional response from HUD today that reverses their previous decision and supports the documentation in the report relative to full compliance of federal requirements," senior deputy city manager Cary Westin told reporters.

"The demographic analysis report demonstrates compliance to federal requirements based on the federal government coming back and saying that was appropriate," he added.

After HUD initially notified the city last week that the documentation was not sufficient and it would have to pay back the $3.7 million if records were not produced, the city made the issue public as it asked EPFH to produce the records. Food bank leaders said all along they were in compliance and had paper documentation to support their activities, but were unable to provide a digital report as the city had been requesting since January.

The city had maintained the food bank violated its agreement by not providing the proper documentation. In a letter to the city on Thursday, HUD suggested in light of its decision to accept the proxy analysis that the city "make the appropriate amendments to the subrecipient agreement with EPFH."

Food bank board president Stuart Schwartz claimed vindication on Thursday, saying "it has been a very difficult two weeks for the food bank. We believe we have complied completely - and this letter exonerates the food bank." City officials, nonetheless, stood by their belief that the food bank wasn't in compliance.

Schwartz also spoke of what the lesson ought to be, referring to the previous weeks' tense and public fight.

"Don't hold press conferences," he said. "Don't force the other, the other side to hold a press conference. None of this should have happened. None of this should have happened this way. It all should've been resolved and could've been resolved if the parties had been able to speak together about it. That didn't happen. And the lesson is: communicate, listen, participate jointly to get these matters resolved."

You can watch that entire news conference in the video player atop this article.

UPDATE, Oct. 25: After much public attention, the City of El Paso and the El Pasoans Fighting Hunger food bank have now agreed to keep discussions secret over a contract dispute about $3.7 million in taxpayer money.

On Monday evening, the city issued the following statement about a meeting between city and food bank officials involving the alleged default involving federal Cares Act funding...

"On Friday, representatives from the City and El Pasoans Fighting Hunger Food Bank met to address the CARES Act funding.

Both sides engaged in discussion in order to respond to food insecurity in our community. These discussions will continue in the coming days.

There will be no further public comment from either the City or the Food Bank while both sides work to resolve this matter."

UPDATE, Oct. 21: Officials with the El Pasoans Fighting Hunger food bank blasted city leaders at a news conference Thursday afternoon, saying the organization was in full compliance with contracts tied to a $3.7 million federal grant it received under the Cares Act.

The city had claimed the non-profit group was in default because it failed to provide proper documentation for the funds. But the food bank maintains it has hard copy records for every dollar spent - as required in the contracts - but the city has never made any effort to examine those documents. It displayed boxes upon boxes of records brought in on pallets by forklift at the news conference.

Food bank CEO Susan Goodell said she was taken aback by the city's accusations - calling it a "sucker punch" - and was highly disappointed at its treatment of her organization. She indicated city officials had requested that the food bank digitize its records - something not required by the contracts - but noted that it would be extremely difficult, if not impossible, at this point to digitize 20 million pieces of data.

The city and food bank leaders are slated to meet Friday morning to discuss the situation.

ORIGINAL REPORT, Oct. 21: EL PASO, Texas -- At a news briefing Thursday morning, city of El Paso officials said the El Pasoans Fighting Hunger food bank is in default on a $3.7 million federal grant it received under the Cares Act.

The Cares Act is a congressionally-authorized coronavirus relief fund; the city was allocated money under the act which it in turn doled out to nearly 100 sub-recipients including the food bank.

City officials said the food bank has failed to provide any of the required documentation outlining how the money was spent in compliance with federal requirements - and it has been a problem for many months now.

“We have been working for eight months and we will continue to work with the food bank during an unprecedented humanitarian crisis to bring them into compliance and it is unfortunate that they remain out of compliance with the requirements set out by the federal government,” said Nicole Ferrini, who serves as the city's chief resilience officer and its community and human development director.

If the documentation outlining how the food assistance dollars were spent isn't produced soon, the city indicated it will have to repay that grant money to the federal government. The food bank is the only non-profit entity not in compliance out of the 96 that received federal funding through the city.

Food bank leadership had reportedly told the city they lacked the staffing manpower to compile the needed documentation; the $3.7 million received by the food bank has already been spent providing food to those in need.

Ferrini said the city will make every effort necessary to work with the food bank in an effort to bring them into compliance on the federal requirements and avoid embarrassment for the community.

El Paso City Council voted late Wednesday to formally notify the food bank of its default and directed city staff to try and negotiate a settlement agreement with food bank officials to bring it back into step with the federal regulations.

“Again, we will continue to work with the food bank to bring them into compliance because we know and appreciate the need to address food insecurity in our community," Ferrini told reporters at City Hall.

Following the city's news conference, El Pasoans Fighting Hunger CEO Susan Goodell issued a statement:

"Because of the efforts of El Pasoans Fighting Hunger Food Bank, hundreds of thousands of people in our Borderland community received food assistance and were able to put food on their tables during the pandemic. The food bank continues to be committed to our mission of providing nutritious food to those who need it.

We have been very open with the city and have done everything we can to work with them. We are very disappointed and will continue to work with the city to find a resolution. Format of records are in compliance. We followed written and verbal guidance. The city was invited to review documents and files."

Marty Otero, a spokesperson for the food bank, indicated the organization planned to hold its own news conference later Thursday to further respond to the city's allegations.