Little Rock housing authority dissolves nonprofit board in effort to complete financial audit
Removing the board will help the housing authority provide an accounting firm with documents it needs to finish HUD-required audit, city attorney says
From left: Metropolitan Housing Alliance commissioners Karen Buchanan, Bruce James and Kerry Wright and executive director Ericka Benedicto meet Wednesday, Oct. 25, 2023. James and Buchanan were appointed a week earlier by Little Rock’s Board of Directors., Two seats remain vacant due to a pending lawsuit from former commissioners. (Tess Vrbin/Arkansas Advocate)
The governing board of Little Rock’s public housing agency dissolved the board of an affiliated nonprofit Wednesday in an effort to fix problems that have brought the agency under local and federal scrutiny.
The three commissioners at the federally-funded Housing Authority of the City of Little Rock, known as the Metropolitan Housing Alliance, voted unanimously to oust the five-member board of the Central Arkansas Housing Corporation (CAHC). Four of the five ousted members have served as MHA commissioners in the past, and two were removed from their seats on the authority board by the Little Rock Board of Directors last month.
Kerry Wright, Bruce James and Karen Buchanan — all new MHA commissioners as of this year — agreed to give CAHC until Monday to provide MHA with a range of financial documents required for a local third-party accounting firm, FORVIS, to complete an audit of the agency. The firm hasn’t completed a 2019 audit because of a lack of documents.
The U.S. Department of Housing and Urban Development requires annual third-party financial audits from public housing agencies. As of September, MHA still had not provided FORVIS with the financial documents required to complete the fiscal year 2019 audit.
The MHA board voted Sept. 6 to provide FORVIS with the required documents, with encouragement from HUD officials and city attorney Tom Carpenter.
The board also voted unanimously Wednesday for MHA to enter a contract with MRI Software, which has experience working with public housing agencies, in order to monitor MHA’s finances.
MRI Software owns the company that MHA has used in the past to maintain records, so it should be able to access years’ worth of data on the agency, MHA executive director Ericka Benedicto said during the meeting.
“With every month we don’t have 2019 [audited], we’re further and further behind, so we’ve got to get 2019 done quickly,” she said.
Wright said he believed contracting with MRI Software is “a home run” and will improve MHA’s financial status and its standing with HUD.
“HUD is 150% behind this,” he said. “They’re encouraging us to move forward with this.”
CAHC has been MHA’s nonprofit arm since 2006 and exists “to facilitate the development, financing and construction of multi-family and single-family residential housing” in Little Rock and the surrounding area, according to the housing authority website.
The nonprofit has four offices in the city, and MHA is its only member, Wright said.
Most of the documents HUD and FORVIS have requested are related to CAHC rather than MHA, and the nonprofit did not comply with the requests, Wright said.
This lack of information contributed to HUD labeling MHA “troubled” in August after surveying its physical condition, financial condition, management and use of its capital fund. It was one of several reports from HUD in the past few years that have pointed out red flags in MHA’s financial and management practices.
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A Sept. 1 report from HUD’s Quality Assurance Division within the Office of Housing Voucher Programs flagged several “potentially disallowed” spending decisions, including financial transactions between MHA and CAHC.
Benedicto said Wednesday that she and the board will meet with the Quality Assurance Division by Nov. 1 in order to come up with a corrective action plan in response to the report.
If CAHC does not provide MHA with the requested financial documents by Monday, MHA staff and board members will retrieve them from the nonprofit’s offices, according to the board’s approved resolution.
Carpenter told the MHA board at the meeting that removing the CAHC board was “essential” and “a first step” to resolving MHA’s financial issues.
The MHA board currently has two vacant seats due to a pending lawsuit from two former commissioners. Lee Lindsey and Leta Anthony were the chair and vice chair of the MHA board until the city board of directors removed them Sept. 26 with a 6-2 vote in response to HUD’s two recent reports raising concerns about agency management.
Little Rock Mayor Frank Scott Jr. asked the entire housing board to resign in September; Lindsey, Anthony and Wright all refused. The city board voted to keep Wright on the MHA board since he has only been a commissioner since March and was not privy to most of the issues that concerned HUD.
Lindsey and Anthony sued the city in Pulaski County Circuit Court earlier this month, claiming the directors breached their due process rights.
The two removed commissioners were also on the CAHC board until Wednesday. Another CAHC board member, Branndii Peterson, was a member of the MHA board before resigning in September at Scott’s request; Louis Jackson, the remaining MHA board member, had already said in August that he planned to resign.
The remaining two CAHC board members removed Wednesday were Kenyon Lowe and E. Regina Pierce.
Lowe served two five-year terms on the MHA board, including several years as chairman, before the city directors denied his reappointment last year. The MHA board attempted to resubmit Lowe’s name to the city, but the attempt was moot because the city had already rejected Lowe, Carpenter said in January of this year.
The city confirmed Wright into Lowe’s seat in March and selected James and Buchanan last week from a pool of 12 applicants.
The commissioners named Wright the MHA board chair and Buchanan the vice chair at Wednesday’s meeting.
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