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The Boston Globe

Metro

November 3, 2011

Housing director resigns after high salary criticized

Chelsea official agrees to Patrick’s demand $360,000 salary drew wide criticism

Michael E. McLaughlin resigned as executive director of the Chelsea Housing Authority after backlash over his high salary.

Kayana Szymczak for The Boston Globe

Michael E. McLaughlin resigned as executive director of the Chelsea Housing Authority after backlash over his high salary.

The head of the Chelsea Housing Authority abruptly resigned his $360,000-a-year position last evening, hours after Governor Deval Patrick lambasted his salary as outrageous and demanded that he step down.

“If the governor feels that strongly about it, my effectiveness would have been seriously compromised,’’ Michael E. McLaughlin said.

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Patrick also called on the five members of the board that approved McLaughlin’s contract and massive pay increases to step down. The governor temporarily froze state funding to the housing agency because McLaughlin allegedly deliberately underreported his pay to the state.

“Boiling is the word,’’ Patrick said in an interview. “It’s an outrage. Here we are flat-funding public housing, trying to hold on through the worst economy in living memory, and not only is the executive director feathering his nest, but he’s misrepresenting to us what he’s doing. That just can’t stand.’’

Patrick joined a chorus of senior public officials condemning the salary paid McLaughlin, which skyrocketed from $77,500 since 2000. The Globe reported Sunday that McLaughlin had told state housing officials he made only $160,000, less than half his true salary, something he chalked up to “the rebel in me.’’

Last night, McLaughlin continued to insist that “I more than earned my salary,’’ which is almost twice as large as that of his counterpart in New York City, but said he was wrong to not report the full amount to the state.

If he had the chance to do it over, “I would put down the full salary,’’ he said.

Attorney General Martha Coakley said she is “actively reviewing this matter’’ to see if McLaughlin broke any state law.

On the federal level, meanwhile, a US senator has asked the inspector general of the Department of Housing and Urban Development to investigate.

“What we’re seeing is an unprecedented coordinated effort by virtually every relevant agency going at this at the same time with one mission, to protect the taxpayers and try to prevent this abuse from being carried out,’’ said state Inspector General Gregory W. Sullivan, who is also investigating.

McLaughlin, 66, a former state legislator and Middlesex County commissioner who has deftly escaped trouble over his nearly 50-year career, initially declined to comment on the governor’s call for his resignation, saying he had not heard anything directly. But later in the evening, he contacted the Globe to announce his resignation.

“I have been a supporter of the governor since day one, and I feel this is the right thing to do,’’ McLaughlin said.

Henry Cordero - the longtime chairman of the Chelsea Housing Authority, who has said that McLaughlin was “worth every penny’’ of his pay - said he was surprised to learn that the governor who reappointed him to the job now wants him to resign. But Cordero said he had no intention of stepping down from the post that paid him $5,000 last year.

“Resign? Why would I resign? I’ve done nothing wrong,’’ Cordero said in an interview.

McLaughlin is preparing to retire and collect perhaps the largest pension in Massachusetts history. Based on his total compensation and years of service, McLaughlin could qualify for a pension of $278,842 for life.

Joseph Connarton, head of the state’s Public Employees Retirement Administration Commission, which approves local pensions, said McLaughlin is entitled to a large benefit on his generous salary, but predicted that McLaughlin will not get everything he wants.

State Treasurer Steven Grossman oversees the state pension system but has no authority over McLaughlin’s. Grossman called McLaughin’s behavior egregious and urged him to “take a serious look at what he did and take a more appropriate pension.’’

Patrick said he will ask the more than 200 housing authorities across the state to resubmit their financials, including each executive director’s contract, “under the pains and penalties of perjury.’’

“Part of what sets my teeth on edge is that this kind of behavior is isolated, but it splashes back on everybody,’’ Patrick said. “All the people in this government who were here before we got here and are here today trying every day to serve the public’s best interest. . . . There has to be accountability.’’

The state Department of Housing and Community Development provided almost $2.5 million last year to the Chelsea Housing Authority. Patrick said the state will provide no further funding until Chelsea provides copies of its budget, McLaughlin’s contract, and quarterly and annual reports. Chelsea must submit the records, certified as true by each board member in writing, by Dec. 2.

Federal housing officials said that they provided almost $8.6 million this year to Chelsea, accounting for more than half of the housing authority’s $15 million in annual revenues. According to financial records provided the state by the agency, the Chelsea Housing Authority ran a small deficit last year.

McLaughlin’s salary has risen nearly five-fold since he took the position in 2000. He now makes $334,642 a year, plus an additional amount equal to four weeks of unused vacation, $25,741 for this year. His total compensation is 18 times higher than the income of the average family living in Chelsea public housing.

His pay for overseeing 1,415 units far exceeds that of administrators at much larger agencies. The Boston Housing Authority, the city’s largest landlord, pays William McGonagle $135,906. The New York City chief makes $197,364.

But McLaughlin defended his hefty paycheck, saying he is well paid because he turned around the troubled housing agency. He compared his performance running the housing agency to the achievements of his idol, Joe Montana, on the football field.

The five-member board of directors repeatedly supported McLaughlin’s contract with unanimous votes. Though many housing boards are unpaid, Chelsea pays its members 2 percent of net rent collected from state-subsidized apartments. In 2010, that worked out to $5,000 per board member.

Patrick said he would ask all five members to step down voluntarily. Four of the five are appointed by City Manager Jay Ash, and Patrick’s authority is unclear. But Cordero is a gubernatorial appointee and, if Cordero refuses to step down, Patrick said, he will begin the administrative process to remove him.

McLaughlin’s pay is so high it could become part of a national debate. He makes more than ousted Philadelphia Housing Authority executive Carl Green, whose base salary of $306,376 was described as disturbing by Senator Charles Grassley of Iowa, ranking Republican on the Senate Finance Committee.

Grassley, whose outrage over local housing authority salaries prompted HUD to issue regulations requiring local agencies to post the salaries of their five highest-paid employees, has called for a federal investigation.

“Here’s someone whose publicly funded salary is close to the US President’s for managing 1,415 apartments, while the President manages the leading country of the free world,’’ Grassley said in e-mail.

Andrea Estes can be reached at estes@globe.com. Sean P. Murphy can be reached at smurphy@globe.com.
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