The mission of the state agency that finances low- and moderate-income housing has been jeopardized by a management that damaged employee morale, risking the departure of critical staff members, a report concludes.
The report says management of the Minnesota Housing Finance Agency under Commissioner Dan Bartholomay is plagued by "ineffective communication and perceived shrouds of secrecy and incidents of intimidation."
One manager hired by Bartholomay made some employees take a loyalty oath, said the report, which was commissioned by the board that oversees the agency.
The report called Bartholomay "a polarizing figure," adding that he "appears to have misread the level of distrust he has generated, as well as his lack of credible knowledge of housing programs and housing finance."
Bartholomay on Monday defended his management, which involved a major restructuring of the agency.
"It's very difficult to get 100 percent agreement on change," Bartholomay said, adding that some longtime employees had difficulty accepting the changes.
He said that only a relatively small number of people are discontented.
But Mike Finch, chair of the board overseeing the agency, said the problem "runs much, much deeper."
The report was completed this month by LarsonAllen consultants at the request of the board after it heard complaints about morale and other problems in the agency, Finch said.
Earlier this year, Finch said he and state Auditor Rebecca Otto, who also sits on the agency board, asked Gov. Tim Pawlenty to consider replacing Bartholomay.
The report noted that the governor's office "intervened to restrain certain of the commissioner's activities and initiatives."
Otto said Monday that most of the problems in the agency could be resolved with a new commissioner, which incoming Gov. Mark Dayton could appoint.
"Hopefully, it will stabilize the agency," she said.
Pawlenty spokesman Bruce Gordon said Bartholomay "took seriously the Pawlenty administration's eight-year standing order to reform. Unfortunately, change can be difficult." Gordon noted that the report recommended that the agency's board "define its own mission in order to aid in the reforms."
The report noted that discontent and staff departures could affect the agency's work.
"The agency's ability to continue fulfilling its mission is at risk if it does not regain the level of trust and respect among its board and staff and if it fails to retain current knowledgeable staff," the report said.
In particular, it said, the agency's multifamily-housing programs could be hurt by further staff turnover.
The 16-page report describes a reorganization done "on the fly, with the hope that it would all work out in the end." The results, according to the report, are that "trust and respect overall appears to have significantly declined."
Among the report's findings: At one point, a top manager hired by Bartholomay, "in a seemingly strange requirement," told subordinates to "raise their right hands and pledge a loyalty oath to not speak out of context to others."
Bartholomay said he was unaware of such an episode, but said that if it happened, "I can only imagine she was trying to impress upon people the importance of trust and respect."
The report said employees interviewed by LarsonAllen feared being fired if they spoke out about the working conditions, and any such terminations "may place the agency at risk of litigation for wrongful dismissal."
The report cited "a general theme that Commissioner Bartholomay does not understand the agency's business and is not very interested in learning it, that he refuses to tap into the in-depth knowledge and experience of his staff to learn the business."
Bartholomay defended his credentials for the job, noting that he directed affordable-housing programs while working at the McKnight Foundation before Pawlenty appointed him commissioner at Minnesota Housing Finance.
He said he is learning more about housing finance.
"I have learned a lot and continue to learn a lot," he said.
Pat Doyle • 651-222-1210