Disturbing Findings in Ferndale Housing Commission’s HUD Report
(Crystal A. Proxmire, orig. June 11, 2015, republished June 16, 2015)
The mess left by the former Ferndale Housing Director and the Ferndale Housing Commission has become even more clear as a June 10 report by HUD shows several major problems, and imposes a list of corrective actions expected to cost the struggling program hundreds of thousands of dollars. The recommendations, which must be implemented by September 30, 2015, should bring relief to residents who have suffered for years in a program plagued with malfeasance on many levels.
Blame is placed on the Housing Commission, with the report repeatedly pointing out ways that Commissioners failed to exercise their responsibilities. Since the problems became uncovered (mainly by oc115 reporting), one Commissioner has resigned and another was replaced at the end of their term. Mayor Dave Coulter was able to appoint Ann Heler and councilperson Dan Martin to be on the board, and they have already begun making some changes. The report puts much more on their plates than was known at the time they applied to serve. The City can only appoint Commissioners. Any further oversight is in HUD’s hands.
$130,000 SETTLEMENT UNJUSTIFIED
Former Housing Director Deborah Wilson left the organization on Dec. 1, 2014 after pleading no contest to three felonies related to her habit of breaking into the apartments of elderly and disabled residents’ and stealing their prescription painkillers. Wilson’s life has since unraveled, and she is currently locked up in Kalamazoo County after leading police on a high speed chase with her SUV on rims and an empty wine bottle on the floor.
The Commission gave her a $130,000 severance package in spite of the felonies. Finding No. 1 of the report is that “The Housing Commission used Low Rent Public Housing funds to pay an unreasonable settlement to the former Executive Director.” The $132,461.50 is now the responsibility of the Commission, not HUD. HUD determined that terminating Wilson was justified.
They also determined that “The Housing Commission failed to conduct an audit of leave balances prior to agreeing to pay the former Executive Director for unused leave. This amount is identified in the settlement agreement as 1440 hours.” A previous agreement with Wilson capped this at 720 total hours. They also determined that Wilson used 540 hours of official Commission time for non-commission business between Oct. 2011 and Oct. 2014. “These conditions occurred because the Authority’s Board failed to exercise their fiduciary responsibilities and did not act in the best interest of the Housing Commission.”
CHARGE CARD ABUSED, INELIGIBLE EXPENDITURES
“FHC did not provide all requested document; however, upon review of the documents that were provided it was determined that FHC used approximately $184,000 on expenditures that failed to meet federal requirements,” the report stated. “Ineligible expenditures at the Ferndale Housing Commission include; but are not limited to, excessive travel, alcoholic beverages, personal expenses, food and beverages, various payment to the former Executive Director, and use of Commission time for non-Commission business.”
The HUD report determined that “The Housing Commission’s charge card was abused, and it appears that the former Executive Director was overcompensated.” The travel amount totaled $35,184.06 between June 2011 and Nov. 2014, of which $17,030.34 was reimbursed.
The Housing Commission must reimburse its program for all funds used on ineligible expenditures. The reimbursement of funds must be derived from non-federal funding sources and the Commission must document where the money is coming from.
ATTORNEY CONTRACT TO END IMMEDIATELY
The HUD Report found that the contract with Attorney Justin Smith is not in line with Federal guidelines. Any contract over two years must be approved by HUD, and Smith’s was not. The corrective action required by HUD is “Take immediate action to cancel the existing contract.”
For months Acting Director Emily Vickey and current Commissioner Paul Stewart have stated at public meetings that the FHC has received near perfect inspections and that there are not problems with the facilities, contrary to the many complaints of residents.
The HUD report revealed however that in 2011 the FHC had actually received a “substandard physical” designation. “The designation was removed in 2013, but the physical condition score remained marginal as the FHC attained a score of 62. This score was only slightly above the minimum acceptable score of 60.”
MAINTENANCE INEFFICIENCY AND OVERCHARGING RESIDENTS
HUD determined there is a backlog of 71 outstanding work orders. There is a staff of three, but one person has been out with injury for six month. The two remaining maintenance workers have been completing work orders at a rate of 0.7 per day.
FHC policy states that vacant apartments should be made ready for new tenants within ten days. However, the average turn-around time has been 58 days.
There were many other problems with maintenance, including no inventory being kept of supplies, work orders missing information, and inconsistent billing of maintenance services.
The inconsistent billing “may cause the Housing Commission to pay more to maintain its units than budgeted and wastes scarce resources.” They also are requiring FHC to submit all “receipts of maintenance charges collected from tenants within the past 12 months in an effort to determine if and which residents should be made whole.”
82.5% OF VOUCHERS ISSUED, COMMUNITY UNDER-SERVED
HUD found that as of Dec. 2014 the FHC had 82.5% of its available vouchers under lease. There is a waiting list of people wanting vouchers, and not maximizing available vouchers is a missed opportunity for funding into the program, however 100% is not a realistic expectation either because of shifts in funding from year to year.
It also determined that the FHC is projected to end the year with its reserve balance to be about 14.7% of its Annual Budget Authority for the voucher program. “When a PHA [Public Housing Authority] retains a reserve balance in excess of 8.5% of ABA [Annual Budget Authority], the Department considers the program to be under-leased and that additional low-income families could be served,” the report states.
For Section 8 Management, HUD ranks programs on 15 indicators. “Since 2010, the FHC has received scores ranging from 78 to 89 out of a possible 100. On April 30, 2015, the FHC was notified that it received an overall score of 89… The FHC failed to meet the minimum threshold for one indicator…related to its success with enforcing Housing Quality Standards.” They must now submit a Corrective Action Plan in regard to that.
The HUD report indicates concern over the lack of customer service at FHC. Customers cannot be seen without an appointment and requests to meet with staff must be put in writing. Waiting list and admissions inquires may only be made on the first Friday of each month from 8:30am to 11:30am. HUD also found that the front desk was not consistently attended to.
“Based upon customer complaints and the restrictions noted previously, there appears to be insufficient attention to customer service. It also appears that staff has become unaccountable for communicating with customers in a clear and concise manner,” the report states. “If improvements are not made to improve customer service it many lead to unnecessary adverse actions against participants and litigation against the FHC.”
IMPLEMENTED POLICY BEFORE BOARD VOTE
The Housing Commission has a history of simply approving what the Director put in front of them, and in one example found by HUD, a policy was put into place before it was even voted on. They discovered an administrative plan that was implemented by Wilson on Feb. 10, 2014. However, this plan was not even voted on by the Commission until Feb. 19, 2014. The reported stated that “all decisions requiring board approval (with some exceptions) must be made at a meeting open to the public… It does not appear that the Board of Commissioners and public were afforded appropriate opportunity to review and comment on the policy change.”
The HUD report documented many procedural issues that impact the financial health of the FHC. Most notably it stated “Based upon the unaudited 2014 financial statements, the Housing Commission maintained an approximate operating reserve balance of $157,000 at the beginning of the 2015 funding period. This is below the $506,000 recommended by HUD. The FHC must take steps to increase its reserves.” The FHC must come up with a plan to increase reserves and give the first status report about that plan on July 1, 2015.
HUD reports that the cost allocation plan is insufficient and that they’d been mis-allocating funds, including improperly allocating costs to various programs that it should not have. “The Board of Commissioners failed to establish controls over its operations,” the report states.
Another problem is that not providing documentation for expenditures charged to HUD programs means that there may be more reimbursements of program funds from non-federal funding sources. FHC must provide the required documentation or they will have to repay the program for amounts that are not yet known.
In Dec. the oc115 reported on the manner in which the budget was passed. Vickey added it to the agenda at the meeting and Commissioners were given five minutes to look it over before it was approved. Media and public that requested copies were denied and told that the budget would not be public until after it was adopted. The HUD report made clear that the Commission was responsible for reviewing and monitoring budgets. “Commissioners must have knowledge of the agency’s financial status and the quality of its operations. To do this, Commissioners must have an understanding of program requirements.
Documentation was not provided to support that contracts for certain services were obtained in conjunction with HUD requirements. Those contracts are for ERADICO, VisiCom Services, Law Offices of Justin Smith, SREE Accounting Services, 5 Points Elevator and McCoy Maintenance Inc. Without proper documentation, expenditures to the providers must be reimbursed to the applicable program for non-federal funding sources.
In January 2015 the oc115 reported on the bidding process used to hire the auditor for the FHC. The auditor was not included in the HUD report, but the process still raises questions about what procedures are used. For the auditor, bids were sought from only four companies. And of those four companies, three were based in Florida. Of course the Michigan company had the lowest bid and was awarded a renewal of the contract they’d had for years.
OTHER FINDINGS AND RECOMMENDATIONS
Other findings include that confidential information of residents is being stored inappropriately, that a utility assessment is needed, that inventory is not tracked, and that Resident Councils need to be re-established at Autumn House and Withington West.
There is no lead-based paint testing report for the properties which could expose residents to health risks and could expose the FHC to liability.
The HUD Report listed corrective actions and recommendations. Among those not mentioned above include: ensuring that Commissioners and staff receive training in financial management, and that all staff should receive training in ethics, diversity and customer service. Several recommendations included looking for more competitive pricing and more Board of Commission oversight of the Executive Director.
RESPONSE FROM HOUSING COMMISSION
When asked about the HUD report, Commissioner Ann Heler stated that she’d not received the report from Vickey yet but that she was “ready to dive in” once it comes. “This is hanging over our heads,” Heler said. “I know we have a lot of work to do and this report will let us know just what we are dealing with.”
Vickey responded “nothing yet” when asked if she had heard from HUD about the report. The oc115 obtained the report, dated June 10, 2015, from HUD directly through a FOIA request.
FOR PREVIOUS FERNDALE HOUSING COMMISSION STORIES, SEE:
Disturbing Findings in Ferndale Housing Commission’s HUD Report