Financial irresponsibility, leadership vacuum cited as primary reasons for takeover
WASHINGTON, DC – March 29, 2011 – (RealEstateRama) — The U.S. Department of Housing and Urban Development (HUD) announced today that, effectively immediately, it is taking control of the Housing Authority of the City of Lafayette (HACL), citing numerous financial deficiencies over the past three years and a leadership vacuum following the resignation of the agency’s executive director last October.
In a letter to the Lafayette City-Parish President Joseph Durel, HUD says the agency violated federal law and defaulted on its Public Housing Annual Contributions Contract (ACC) – the agreement that local housing authorities enter into with the federal government to administer HUD’s public housing programs.
“Good management is the cornerstone of running an effective organization,” said HUD Assistant Secretary Sandra B. Henriquez. “The Lafayette Housing Authority currently lacks an executive director and an effective Board of Commissioners. This leaves HUD with no other choice but to assume control of its operations. We have an obligation to protect both the taxpayer and the residents who rely on the agency’s services.”
Henriquez named Daniel Rodriguez Jr, who has been with HUD for 23 years, as the administrative receiver to manage HACL’s day-to-day operations. Rodriguez currently works in the public housing program at HUD’s Houston Field Office. He was selected last October to assist with HACL’s operations, which included reviewing records, paying bills and providing guidance to staff after the HACL’s executive director resigned suddenly.
Rodriguez has acquired tremendous knowledge of public housing oversight over his years at HUD because of similar appointments. He was interim executive director of the Beaumont Housing Authority for nine months before being named chairman of the Board of Commissioners of the Beaumont Housing Authority when HUD took over the housing authority in 2001. He also served briefly as the HUD-appointed Board Chairman of the Orange County (Texas) Housing during a receivership period before the agency was dissolved. From 1997 through 2001, Rodriguez was the deputy executive director for the Houston Housing Authority. He has a bachelor’s degree in business administration in accounting from the University of Texas at Pan-American.
Henriquez also named Ada Holloway, the director for the Office of Public and Indian Housing at HUD’s Atlanta Regional Office, as the one-person board. She will provide oversight and ensure rules, regulations and agreements undertaken by the housing authority are in line with the housing authority’s mission. Holloway has more than 20 years of affordable housing experience, including nine years at HUD. She has a master’s degree in Urban Affairs and Public Policy from the University of Delaware and a bachelor’s degree in Sociology from Hampton (Va.) University.
Henriquez added, “Dan is uniquely suited to hit the ground running. For months now, he’s been helping to resolve some of the short term problems plaguing this housing authority. He’s fully aware of the challenges of getting this housing authority to where it needs to be. In addition, Ada brings the expertise we need in Lafayette at this time.”
HUD requires that all housing agencies conduct an annual audit its financial operations by an independent public auditor. Between 2007 and 2009, HACL’s independent auditing firm cited numerous negative findings of HACL’s operations. Despite HACL awareness of these serious findings, it failed to address them. The major findings cited by HUD in the default letter are:
- HACL has Weak Accounting Controls – In fiscal year 2009, the independent auditor determined that HACL failed to maintain good internal controls. Failure to maintain proper internal controls could result in fraud, waste and abuse of HUD funds. Specifically, in 2009, the auditor tested travel expenses, credit card statements, vendor files, check disbursements, bank reconciliations, general ledger transactions, vendor payments, accounts payable, employees’ salaries, and compliance with state requirements and determined that deficiencies existed in each area. Most of these deficiencies were identified previously in audits for fiscal years 2007 and 2008.
- HACL misused HUD and state funds on non-ACC projects –The independent auditor found that in FY 2009, HACL improperly used $91,000 of HUD funds to pay for the development of a non-ACC project, which is a violation of the contract. The auditor also found that HACL violated a state cooperative endeavor agreement by improperly using state grant funds intended to develop buildings to withstand hurricane force winds. HACL improperly used these funds to pay for the development of the same project that HACL improperly used HUD funds to subsidize.
- HACL lacks effective leadership – In the three years of negative audits, the Executive Director of HACL did not adopt corrective measures to address these problems, and the Board of Commissioners did not demand action to do so even after repeated HUD attempts to stabilize the agency.
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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.
Contact:
Donna White
(202) 708-0685