New housing chief sparks conflict of interest worry


In articles March 5 and 6 about Daniel P. Henson III, Baltimore's new housing commissioner, The Sun reported incorrectly that Struever Bros., Eccles & Rouse Inc. receives millions each year from the federal government in loans for housing projects.

In fact, the company has received $12.5 million in government loans since the early 1980s, most of which was awarded prior to the beginning of the Schmoke administration.

The Sun regrets the errors.

Mayor Kurt L. Schmoke named Baltimore developer Daniel P. Henson III as commissioner of the troubled Department of Housing and Community Development yesterday, but found himself fielding questions about his appointee's possible conflicts of interest.

While Mr. Henson's appointment was applauded as a bridge between the business community and the housing agency, some public officials and others were wary about Mr. Henson's many ties to development projects paid for with city and federal funds -- money dispensed and monitored by the department he would head.

"Clearly the housing commissioner has to first win the public confidence by exempting himself and his partners from all future development projects with the city of Baltimore," said City Council President Mary Pat Clarke. "Otherwise, we have a serious conflict of interest."

Alan R. Yespeh, chairman of the city Board of Ethics, agreed that Mr. Henson's many business interests raised concerns.

"I think it would be prudent for me to ask the mayor if he would like us to assist him in structuring something that would ensure the integrity -- and the appearance of integrity -- of Mr. Henson's serving in public office," said Mr. Yespeh, a Washington lawyer and Schmoke appointee.

Mr. Henson, a longtime confidant and political supporter of Mr. Schmoke, would be the first developer to become housing commissioner. The mayor acknowledged that there are ethics issues that must be resolved.

"There are clearly some projects that he will not be able to participate in decisions on," Mr. Schmoke said.

Mr. Henson, 49, is president of the Henson Co. Inc., a development consulting firm often linked as minority business partner with Struever Bros. Eccles & Rouse Inc., the politically well-connected developer-contractor that receives millions of dollars in federal housing money for city projects each year.

Even before starting his own company in August 1991, Mr. Henson was employed by Struever Bros. as a senior developer and vice president -- a post he continues to hold.

Mr. Schmoke said lawyers for Mr. Henson have been working with city officials on ways for the housing commissioner-designee to divest himself of multiple investment interests -- including stock holdings in Struever Bros.

The mayor said "a formal mechanism" will be established for Mr. Henson to either place that interest in a trust or sell it.

Mr. Yespeh said in his five years as chairman of the Ethics Board, he could not recall an instance where an official's "prior business affiliation posed these kinds of questions."

Mr. Yespeh said he would recommend to the mayor that, in addition to Mr. Henson's divesting his business interests, that the appointee sign a formal "disqualification" that would remove him from any dealings with his former partners.

Mr. Henson said he has faced possible conflicts with business associates, friends and others during his tenure as regional director of the U.S. Small Business Administration. But, he said, he has always resolved them by removing himself after declaring the conflict, describing the conflict and "in most cases, leaving .. the room."

"Clearly there will be times when Struever Bros. will come before" the agency, he said. "And that's the process I'll use . . . basically to say, 'I'm outta this.' "

As for his stock and equity stake in some Struever Bros. projects, Mr. Henson said, "I am resolved to the fact that I've got to divest. It's just a matter of how fast I can do it."

Mr. Henson takes over for Robert W. Hearn, whom Mr. Schmoke removed from his $89,600-a-year post Feb. 22, after fierce criticism of his leadership of both the housing department and Housing Authority of Baltimore City, which oversees the city's 18,300 public housing units.

"I'm excited about it," Mr. Schmoke said of his appointment. "He knows housing locally, but he's also been a federal official and knows how to work the governmental bureaucracy on all levels."

Mr. Schmoke said Mr. Henson's salary would be more than Mr. Hearn was paid, although the exact amount is still being negotiated.

Mr. Schmoke said he has delayed his expected restructuring of city government -- including the housing department and Urban Service Agency -- until Mr. Henson is on board. The mayor said he expects to have that plan in place by July 1, when a new fiscal year begins.

The appointment must be approved by the City Council, which Mr. Schmoke said he believed would go smoothly. The mayor said he hoped to have Mr. Henson in the new slot "within 10 days to two weeks."

Mr. Henson's company most recently was the minority element of a joint venture with the Rouse Co. and Whiting-Turner Contracting Co. in a thus far-unsuccessful bid to build the U.S. Health Care Financing Administration headquarters in the city, north of Oriole Park at Camden Yards.

The U.S. General Services Administration awarded a $122.6 million contract last August to another joint venture to build the headquarters in Baltimore County. But in January, Mr. Schmoke asked President Clinton to launch an independent investigation into the award, charging that Republican politics influenced the decision.

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