On the eve of delivering money to help flood victims rebuild their homes, the federal agency is demanding the state repay $6.6 million because of sloppy handling of funds for building low- and moderate-income housing over the past decade, according to a report released to The Advocate as part of a public records request.
Louisiana Housing Corp. Board Chairman Buddy Spillers doesn't disagree with the complaints filed by the Department of Housing and Urban Development. The report made 17 findings of faulty procedures from improper inspections to ineligible clients receiving funds to allowing projects to sit idle for years.
HUD also found the state gave out the federal grants "without support for eligibility or work performed" as well as having "a shortage of qualified inspectors, which further perpetuated inspection delays."
"I don't want to throw stones at the previous staff and board members, but I think there is merit to most of the complaints," Spillers told The Advocate in an interview Monday.
"I don't know if it was intentional wrongdoing, but some of the activities raise suspicions for me and I want answers to some questions," he added.
The HUD findings and demands for repayment comes at a touchy time.
State lawmakers are preparing for another legislative session that will focus on trying to bridge another gap between the money available and the cost of services promised. At the same time, HUD is preparing to disburse more than $1 billion, in a couple of phases, to help homeowners rebuild their flood damaged homes.
Spillers said he's not sure where the $6.6 million would come from and the Louisiana Housing Corp. has addressed many of the faulty policies and procedures that led to HUD's complaints, some of which date back more than a decade.
"We need their support right now for flood recovery. I want to be fair and reasonable with them," Spillers said.
The Louisiana Housing Corp. administers federal and state funds for programs aimed at providing affordable housing for low and moderate income families.
HUD's HOME Investment Partnership is the largest federal grant to state and local governments to accomplish those housing goals.
The LHC board will meet Wednesday to discuss how to react to HUD's criticisms outlined in its 23-page report.
For instance, the Louisiana Housing Corp. in 2011 provided developers $1.06 million grant from the federal Home Investment Partnerships Program to build a 35-unit affordable family apartment complex in Natalbany, a community just north of Hammond in Tangipahoa Parish.
Developers poured a slab, then all construction ceased in March 2013 for three years. Much of the money was released before third party funding was found, which was required as part of the grant.
HUD wants $468,493 of its money back.
Edselle Keith Cunningham Jr., who became LHC executive director earlier this year, countered that the official deadline for the project is March 2018 and asked for time to see the project through.
"We would like the opportunity to move forward with the project. Should it fail, we will follow appropriate and swift recapture protocol," Cunningham wrote to HUD.
In a Lafayette case, the state agency in June 2011 gave developers $500,000 towards a project to build 33 single-family homes. Developers used part of the money, but after four years the only thing the project has to show for itself is a vacant lot.
HUD wants its money back.
Cunningham wrote that the Housing Corp. is working with HUD to "properly account for these funds."
HUD was complaining about the state agency failing to comply with the federal agency's policies from 2008 to 2014.
Previously, the LHC would promise to take corrective actions then not follow through, Cunningham said in an interview Monday. He and his staff already have met with HUD officials and have started implementing the policies and taking steps to clean up LHC's procedures.
"We look at this as an opportunity," Cunningham said. "We've already made vast changes on those issues."
