Little Rock housing authority will ask for meeting with HUD after report shows management troubles

The governing body of Little Rock’s federally-funded public housing authority hopes to meet with U.S. Department of Housing and Urban Development officials to discuss what the federal department called “performance deficiencies” in a letter to the local agency earlier this month.

HUD issued a “troubled” designation to the Housing Authority of the City of Little Rock, known as the Metropolitan Housing Alliance, in an Aug. 9 report after assessing its physical condition, financial condition, management and use of its capital fund. The Arkansas Times first reported on the assessment last week.

MHA is Arkansas’ largest federally-funded public housing agency and provides rental assistance to about 8,000 low-income people. The five-member board of commissioners voted unanimously at its monthly meeting on Wednesday for MHA Executive Director Ericka Benedicto to contact HUD and ask for a meeting to clarify the problems cited in the Aug. 9 report.

The report shows that the agency scored 40 out of 100 possible points, with 35 out of 40 for physical condition, 0 out of 25 for both financial condition and management, and 5 out of 10 for the use of its capital fund.

The “troubled” label applies to a cumulative score below 60. MHA previously received this designation after scoring 57 for the fiscal year 2017 assessment, the Arkansas Democrat-Gazette reported in 2021.

MHA’s management scores were consistently below the standard performance threshold of 15 points, or 60%, in the HUD assessments from 2011 to 2018, according to the Democrat-Gazette. Kenyon Lowe, the MHA board chairman at the time, said the agency had fixed its management problems.

In April 2022, HUD’s Departmental Enforcement Center found that MHA routinely failed to comply with federal, state and its own purchasing rules after reviewing samples of two and a half years of the agency’s contracts and financial documents, the Arkansas Advocate reported last October.

Action plan required

Little Rock HUD field office director Anthony Landecker said the MHA board “should take immediate action” to address HUD’s concerns in an Aug. 16 letter to the board, Benedicto and Little Rock Mayor Frank Scott Jr. The Advocate obtained Landecker’s letter via a Freedom of Information Act request to the city of Little Rock.

“It is critical that the Agency assess its current situation to determine if recovery is feasible or if alternative options for affordable housing should be considered,” Landecker wrote.

MHA’s financial score of zero came from the agency’s failure to submit required financial information to HUD in a timely manner, and this contributed to the management score of zero, Landecker wrote.

Board chairman Lee Lindsey did not answer questions from reporters after Wednesday’s meeting about the failure to submit financial information. He instead said the board would discuss it with HUD at the meeting they hope to have.

He also said the board seeks clarity on every suggestion in the letter, “line by line,” that Landecker included for the MHA board to use to identify the sources of problems and come up with solutions.

MHA is required to submit a “proposed recovery plan” to HUD for approval within 30 days of receiving Landecker’s letter.

Commissioner Leta Anthony said the board needs to talk to HUD representatives about potential obstacles to the requested changes.

“Even with the recommendations that we have, [we need to know] whether they see the barriers and how we overcome those barriers,” Anthony said.

HUD is formulating a “binding recovery agreement” with MHA to ensure that the housing authority executes its eventual recovery plan, according to the letter.

If HUD allows MHA to continue providing public housing, MHA must recover half of its current score on its next assessment from HUD and raise its assessment score to at least 60 out of 100 possible points on the next full fiscal year assessment.

Lindsey said during Wednesday’s meeting that the board wrote to HUD acknowledging the receipt of Landecker’s letter.

HUD bases its fiscal year assessments of public housing agencies on required annual third-party audits. BKD, a Little Rock accounting firm, has been in charge of MHA’s audits since 2012 but still has not completed the one for fiscal year 2019, Anthony said Wednesday.

HUD extended the deadline for this audit in light of the COVID-19 pandemic in 2020, but there was a subsequent 18-month delay that BKD is responsible for, Anthony said.