Little Rock housing authority will provide auditing firm with range of requested documents

Little Rock’s federally-funded public housing authority will provide a wide range of documents to a local auditing firm to obtain a qualified audit and attempt to improve its standing in the eyes of the federal housing agency, the authority’s governing body decided Wednesday.

The Housing Authority of the City of Little Rock, known as the Metropolitan Housing Alliance, has until Sept. 14 to notify the U.S. Department of Housing and Urban Development of its plan to improve its finances and management after HUD labeled the agency “troubled” in an Aug. 9 report.

HUD assessed MHA’s physical condition, financial condition, management and use of its capital fund and gave it 40 points out of a possible 100. The agency scored zero for both management and financial condition due to its failure to submit required financial information to HUD in a timely manner, Little Rock HUD field office director Anthony Landecker said in an Aug. 16 letter to the board, Executive Director Ericka Benedicto and Little Rock Mayor Frank Scott Jr.

Landecker and three other HUD officials discussed potential solutions with the MHA board of commissioners Wednesday at a meeting that the board requested last month after receiving the letter.

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

Landecker told the board that MHA should acknowledge its various issues with HUD’s suggestions for “self-diagnosis” in mind while responding to the federal agency by Sept. 14.

“It doesn’t mean that you all need to figure out exactly what all these deficiencies are,” he said. “HUD’s going to come and do that. We’re going to do an independent assessment of the agency [after MHA responds].”

MHA is Arkansas’ largest federally-funded public housing agency and provides rental assistance to about 8,000 low-income people.

HUD labels housing authorities “troubled” if they score lower than 60 out of 100 on a cumulative assessment. MHA previously received this label 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.

Landecker wrote in the Aug. 16 letter that MHA “must determine if recovery is feasible or if alternative options for affordable housing should be considered.”

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.

Auditing firm conflict

The accounting firm FORVIS, formerly BKD, has been responsible since 2012 for conducting the annual audit of MHA that HUD requires of all public housing agencies.

The firm still has not completed the fiscal year 2019 audit. MHA Commissioner Leta Anthony said last month that FORVIS was responsible for an 18-month delay, but the firm sent a letter to the board last week claiming a HUD investigation into allegations of board misconduct put the audit on hold.

Former MHA Executive Director Nadine Jarmon filed a 161-page complaint with Landecker’s office in June 2021. The memo alleged widespread wrongdoing, including unnecessary and unauthorized spending, by the five commissioners and requested their removal.

Little Rock housing authority failed to follow spending and contracting rules, HUD finds

HUD’s Departmental Enforcement Center was “unable to substantiate the allegations,” according to an April 2022 memo to the board that claimed MHA spent years failing to comply with federal, state and its own purchasing rules.

FORVIS attempted to resume the 2019 audit in January 2023 but has been unable to do so because it hasn’t been provided many documents, including meeting minutes, financial statements, communications with HUD and Jarmon’s 161-page memo, among other things, according to the letter from the firm.

FORVIS gave MHA three options: finding and providing enough documents for the firm to conduct a qualified audit, accepting an unqualified audit from the firm without the documents to back it up or hiring a new firm to conduct the audit.

Landecker recommended the first option to the board and discouraged the second one. The board approved the first option with no dissent.

Little Rock city attorney Tom Carpenter said the third option “shocked” him because it was “a tremendous public statement” for the firm to suggest MHA take their business elsewhere.

“Statements of that sort can lead to tremendous distrust on the part of city officials, and more importantly for this group, on the part of the vulnerable people you serve at the Metropolitan Housing Alliance,” Carpenter told the board of commissioners. “You represent [people who are] the least able to fight for themselves.”

Carpenter later said the board’s decision to provide FORVIS with the requested documents was a “big step” in favor of MHA.

Two members of the Little Rock city board of directors, Virgil Miller and Joan Adcock, were present at Wednesday’s meeting. Adcock has publicly expressed concerns about MHA management in the past.

At Tuesday’s board of directors meeting, Adcock and fellow director Lance Hines suggested that the city remove the MHA board of commissioners. The suggestion arose from another HUD review that alleged improper management and spending behaviors, the Arkansas Democrat-Gazette reported.

Miller said after Wednesday’s meeting that he appreciated the MHA board’s vote to provide the requested documents for the audit and that he will continue to keep an eye on the agency’s decisions.