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HUD issues scathing audit of county housing agency

Jayme Frase, Houston Chronicle
Published 11:00 am, Tuesday, June 25, 2013
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The Harris County Housing Authority could be forced to pay back millions of dollars to the federal government following an audit by the U.S. Department of Housing and Urban Development.

The regional inspector general for HUD concluded the county housing authority had mismanaged up to $27.5 million in federal funds and ignored a $3.8 million debt. It recommended policy changes, administrative actions against individuals at fault and for the county to reimburse much, if not all, of the funds spent questionably.

"They neglected their management and oversight responsibilities; wasted Authority funds, at times for personal gain; circumvented existing internal controls; and manipulated accounting records," read the report. "These conditions occurred because the Authority's management and board failed to exercise their fiduciary responsibilities and did not act in the best interest of the Authority."

The audit began after a Houston Chronicle investigation revealed rampant mismanagement, overspending and nepotism that left the agency in financial shambles.

Authority CEO Guy Rankin IV was fired last year and four of five members of the agency's governing board were replaced.

The audit highlighted expenses it says were not eligible uses for federal housing funds, including $8,780 for five helicopter flights over developments classified as office supplies and $1,440 for entry fees to golf tournaments that were classified as staff training.

In its response, the housing authority, now under new leadership, said that many of the policy changes already made to prevent further abuse are among HUD's recommendations. It noted that some of the questionable expenses could be legitimate uses of funding even if they were "bad business decisions."