$12/year lease cited in housing authority audit

Besides $56,000 of questioned bonuses during the 2013 fiscal year ending Sept. 30, the Morgan City Housing Authority had seven findings in the audit released Monday including failure to perform required income verification, checking for rent reasonableness, having funds in an uninsured account and a $12-a-year lease arrangement that The Daily Review reported last June.
Out of about 58 tenant files, 12 were tested, with deficiencies in multiple files, the audit stated. Deficiencies lead to charging an incorrect amount of rent and/or housing ineligible tenants as well as being unable to prove payments to landlords are reasonable, the audit stated.
U.S. Housing and Urban Development regulations require such tests and verification, the audit stated.
Clarence Robinson, interim executive director, said in March the authority is now performing those things.
The housing authority used an outdated amount to calculate property management fees charged, the auditor said. The authority was also cited in the audit for making prohibited loans from the public housing program to other programs that did not have the ability to repay the debt.
Daniel McCaskill, a Mandeville certified public accountant performing the audit, recommend in the audit that the authority immediately take steps to eliminate operating losses in a pair of funds and “develop and implement a plan to ensure that inter program loans are eliminated ASAP.”
The audit said $146,093 of authority funds were on deposit with a bank whose securities were not federally guaranteed. This was a violation of HUD regulations.
McCaskill questioned the arrangement the housing authority has with Glenda’s D&B Seafood for leasing about an acre and a half of its land located along La. 70 for $12 a year. The Daily Review reported this lease in June 2013.
The property was leased in 2007 to Glinda’s Convenience Store. The agreement said the housing authority would lease the land to Timothy Armond, co-owner of Glinda’s Convenience store, for 10 years with an option to renew in another 10 years. The leased property is part of the tract, which houses Brownell Homes.
Victory Ho, housing authority commission chairman, questioned the lease last year when it was brought to his attention.
“I am a businessman and I can tell you that I would never have approved that,” Ho said then.
With its inclusion as an audit finding, the housing authority has added reason to investigate the lease’s validity, Ho said Tuesday.
The audit stated the authority did not provide documentation of HUD prior approval of the lease and has not previously properly recorded the land lease.
A copy of the lease was sent to the Office of Receivership Oversight in Memphis, Tenn., in 2007. A letter asked that the housing authority be contacted if there were any questions about the agreement. Last year, former housing authority director Charles Spann said he was not aware of any further communication with HUD regarding the lease.
Management’s response to the audit finding stated, “We will request HUD approval of the lease arrangement already in place … We will contract for a real estate appraisal to determine the present value of the lease … We will review the lease for consideration of future negotiation upon the expiration of the lease.”
HUD regional public affairs officer in Ft. Worth, Texas, Patricia Campbell, said it is “the New Orleans HUD Office of Public Housing’s understanding that the (housing authority) has hired an attorney to look into the land lease issue. To date, we have not received any request … asking HUD to approve the lease of the commercial property at $12 a year.”
Robinson did not respond to messages left on his cell phone seeking comment for this story.
The auditor said he was required to make material audit adjustments to the financial statements and he recommended procedures and controls to ensure material mistakes would be corrected during the course of normal housing authority activity.
McCaskill said in his March 27 preliminary presentation that the misstated financial information was not of a fraudulent nature.
“I don’t see anything that points the finger that somebody did anything wrong,” McCaskill said. He then added, “I am not talking of the bonus thing. I don’t know where that is going.”
Ho said local and federal authorities are investigating bonuses questioned in last year’s audit. He expected to learn further bonuses were paid before Spann resigned June 4, 2013, he said. Ho does not believe any bonuses were made since Robinson, who is also the executive director of the Berwick Housing Authority, was appointed interim director.
Robinson refused Monday morning to provide requested information on the bonus payments.
The Daily Review faxed a public records request Monday afternoon to Robinson for pay and bonus records. Newly retained authority attorney Robert L. Duffy said the request will be filled this afternoon.
The housing authority refused an initial request for similar records last year after the 2012 fiscal year audit revealed about $123,000 in questioned bonuses to three office workers. The records were turned over by then-director Charles Spann after a public records request was filed.
Robinson has said in the past that no one has proven criminal wrongdoing regarding bonus payments and civil service employees are protected by due process rules. He said a civil pursuit of the matter would be premature until criminal investigations are done.