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Report: Housing authority going broke

Wednesday, June 10, 2015 by Caleb Pritchard

Two agencies that help provide affordable housing for Travis County’s most vulnerable residents are in dire financial straits, according to a study conducted by the County Auditor’s Office. The report notes that the situation at the Housing Authority of Travis County as well as the Strategic Housing Finance Corporation is “rapidly decaying” and that they could both run out of money for projects within 15 months.

Staff members from the Auditor’s Office, Health and Human Services and the housing authority were on hand to discuss the findings at Tuesday’s regular voting session of the Travis County Commissioners Court.

According to the report, the reserves of HATC and SHFC fell by more than $2 million from 2012 to 2014. The Auditor’s Office puts the bulk of the blame on the federal Department of Housing and Urban Development and its Housing Choice Vouchers program.

Under that program, HATC makes housing assistance payments directly to the landlords of qualified tenants. The federal government is supposed to reimburse the housing authority, but, as the report notes, “expenditures for administrative costs exceeded HUD reimbursements” from 2012 to 2014.

The Auditor’s Office said tracing the exact cause of the shortfall would require further review. However, the report does offer several theories, including improperly handled paperwork and even outright failure to file reimbursement requests with HUD.

The report suggests that management changes at the two agencies could be to blame for these mistakes. It says the previous executive director, Craig Alter, was the primary person who handled HUD procurements. His departure last year cost HATC a “significant loss of institutional knowledge,” according to the auditor’s report.

Alter’s replacement, Interim Executive Director Melvin Wrenn, is overseeing both HATC and SHFC without compensation. He told the Austin Monitor that he would be stepping down from that position at the end of the month, pending the hiring of new management officers. Wrenn will continue in his capacity as a board member, preventing further leadership exodus at the two agencies. SHFC has lost three board members in the past 12 months, while HATC has lost one.

In a letter sent to the commissioners that he also shared with the Monitor, Wrenn disputed the findings of the Auditor’s Office and suggested its staff is simply unfamiliar with the recondite nature of the housing authority’s operations.

“The challenges the County Auditor’s office faced were and are horrendous due to the complexities and HUD regulatory requirements,” he wrote. “HATC has the ability to financially sustain itself well beyond the timeline stated in the report.”

An official with HUD seemed to corroborate that optimism in an email to Wrenn. Regional Public Housing Director David Pohler noted that the housing authority had $428,996 in housing assistance payment reserves as of June 30, 2014.

“So $400,000 is a little less than 10 percent reserve going forward,” Pohler wrote. “We consider anything above 8.5 percent reserve to be in excess, so you are still financially sound as far as (housing assistance payments).”

Pohler did, however, echo concerns aired by the Auditor’s Office that the housing authority’s administrative expenses are too high. The auditor’s report claims that some programs run by HATC are nearly twice those of its peer agencies. Among other things, the report says that these high costs “can be indicative of waste, ineffective internal controls, lack of management oversight, and conflicts of interest.”

As far as the openings on the boards of both the housing authority and SHFC, commissioners voted Tuesday to extend the application deadline for another two weeks.

Before the vote, Commissioner Brigid Shea voiced her opposition to the idea, saying she was too rattled by the auditor’s report. “I can’t support continuing on the same path that we’re on. I think we’ve got to take a different direction,” she said.

Commissioner Gerald Daugherty agreed with Shea about the gloomy story told in the report. However, he said he was willing to give the housing authority at least one more chance.

“But I think we’ve got some work ahead of us,” Daugherty told Shea. “And if we can’t see a pathway to making it work, then I think you and I could probably get on the same page real quickly with what we’re going to do with it because I think it’s headed in a direction that’s maybe tough to turn around.”

The final vote to extend the application period was supported by County Judge Sarah Eckhardt, Daugherty and Commissioner Ron Davis. Shea opposed it, and Commissioner Margaret Gómez was off the dais.

Photo by William Ross, made available through a Creative Commons 2.0 license.

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