By Michael V. Hannigan
In June 2012, the Malakoff Housing Authority experienced what can only be described as a meltdown. The executive director was fired, two other employees lost their jobs, a commissioner was removed from the board and another commissioner was not only named to the board, but instantly became the chairman.
It was chaos complete with police escorting employees out of the office while residents of the housing authority carried protest signs. At one point the Board of Commissioners held a meeting outside because the doors to the office were locked against them.
And while order was finally reestablished with the help of the U.S. Department of Housing and Urban Development (HUD), there was never much in the way of real answers.
Until now.
In a memorandum dated Sept. 26, the HUD Office of Inspector General blasted the executive director and Board of Commissioners, saying that “the Authority incurred $577,367 in questioned costs.”
According to report: “The Authority … lacked financial and procurement controls to ensure that it made transactions in compliance with Federal regulations and guidance. Testing found significant deficiencies in the Authority’s controls over its bank accounts, fixed assets, and staff compensation.”
The report covered from Jan. 1, 2009 through Dec. 31, 2012.
The Inspector General recommends having the Malakoff Housing Authority (MHA) repay $353,015 and to either provide supporting documentation or repay an additional $224,352.
The report heaps most of the blame on the executive director, but does not name the executive director.
Sandy Sparks is the executive director who was fired in July 2012 and was in charge for most of the time covered by the report. Henderson County Now reached out to Sparks for comment yesterday, but received no response.
THE ISSUES
The Inspector General takes nine-and-a-half pages to list and describe the various problems at the MHA during the reporting period. These include:
- The executive director failed to implement financial controls: “Testing found significant deficiencies in the Authority’s controls over its bank accounts, fixed assets, and payroll, which opened the Authority’s assets to misappropriation, waste and abuse.”
- The executive director endorsed unnumbered checks, did not obtain required signatures on checks, and there were missing checks.
- The MHA improperly purchased equipment, could not locate some equipment, and the executive director “improperly exchanged equipment with a family member.”
- The MHA failed to properly document and oversee its payroll, the executive director paid herself additional payments, and the executive director and staff received unapproved raises and bonuses.
- The MHA did not properly document new commissioners, commissioners varied from meeting to meeting, related parties were allowed on the board, meeting minutes did not always reflect a quorum, and the executive director did not maintain consistent or accurate meeting minutes.
- The MHA did not properly apply tenant rents, did not consistently charge or apply late fees, did not maintain accurate rent registers, wrote off large tenant balances, and failed to complete and maintain receipts.
In addition, the executive director is criticized for contracting with or employing family members and related parties. She improperly hired two family members and paid them a total of $189,758 from 2009 through 2012, according to the report.
“The improper payments occurred because the executive director failed to follow the requirements and the board failed to oversee her actions,” wrote the Inspector General.
THE RESPONSE
In an undated letter attached to the Inspector General’s report as an appendix, current MHA Executive Director ArKita Dowell, who was hired in August 2012, writes that “(t)he new MHA administration has made great strides to restore the public’s trust in the Housing Authority and to improve MHA’s operations.”
Dowell writes that the MHA has already implemented many of the report’s recommendations and corrected the problems listed by the Inspector General.
“In the past 12 months, MHA has made significant changes that address the concern outlined in the (report),” she wrote.
However, paying more than $350,000 — maybe significantly more — is a problem.
“Our response contesting certain recommendations is not a defense of the former executive director or her administration,” Dowell wrote. “Instead, it flows from the new administration’s desire to ensure that MHA and its low-income residents are not burdened with three to four year’s of debt that will cripple the agency’s ability to carry out its mission.”
Later she writes, “To recommend repayment of such a large sum of money simply penalizes the low-income families served by the Malakoff Housing Authority again for the actions of the prior executive director and her administration, and will significantly hinder MHA’s ability to move forward and serve its clients.”
The Inspector General, while acknowledging the changes made by the new administration, including the replacement of the majority of the staff, had a different take on the repayment issue.
“We disagree that the repayment of funds is to punish or penalize the Authority,” he wrote. “Instead, the recommendations seek a return of the ineligible and unsupported Federal funds so they can be used to benefit the Authority’s tenants.”
The Inspector General’s recommendations are directed to the Office of Public Housing in Fort Worth, which has oversight over the MHA.
Henderson County Now called the HUD Office of Public Affairs for further explanation of what comes next, but that office is currently closed because of the Federal government shutdown.