© J. Adrian Wylie

AAHC v HUD

Good records, bureaucrat avert tragedy

by James Leonard

posted 1/3/2010

Thanks to good records--and a helpful bureaucrat--the city has dodged a half-million-dollar bullet.

It was a financial nightmare that nearly caused a human tragedy: a bookkeeping error that threatened to force the Ann Arbor Housing Commission to evict families supported by "Section 8" vouchers from the federal Department of Housing and Urban Development.

"We found it in August," says Marge Novak, the commission's interim executive director. "HUD was starting to pull together information for next year's budget, and they wanted us to review and confirm their numbers. And their numbers put up a big red flag that was like 'Whoa!'"

Whoa, indeed. HUD planned to scale back its Section 8 payments this year, and expected the city to make up the difference from a reserve fund built up from prior payments. But the feds thought that reserve was much bigger than it was. If its budget went into effect, by December the AAHC would have been short $450,000--forcing it to cut off half of the households supported by Section 8.

Nor was the commission alone. "This was something that happened to public housing authorities across the county," Novak says. "I brought it to the board, and they told us to do everything we could to not have to terminate families."

So they dug into the numbers. "Fortunately we had documentation back to 2006," says Novak, "and that's how we found that huge mistake they made three years ago." It turned out that HUD had tried to pay the city more than it had coming that year. The city caught the mistake and the agency corrected the payment--but its internal records continued to show the phantom overpayment as part of the city's reserves.

After "making phone calls all over the place calling HUD," Novak says, she got lucky: "Assistant secretary David Vargas was extremely helpful. We had the backup we needed to prove to HUD they made a mistake, and they acknowledged it....It was only two months until we got the money. And

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we were lucky compared with others. There were some housing authorities that did have to terminate families."

Amazingly, HUD made yet another $390,000 error while correcting its earlier mistake. But the Housing Commission caught it and quickly got those funds reinstated as well.

"HUD is a phenomenally labyrinthine bureaucratic agency," says AAHC board chair Alan Levy, "and it didn't used to be this way. Much as the Bush administration hated regulating the financial industry, they loved regulating public housing. An important part of good government is seeing to it that agencies are held responsible. But HUD goes a little crazy."   

[Originally published in January, 2010.]

 

 

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