Federal audit raises serious questions about Housing Authority of New Orleans

Children race home from school in the Iberville development last December. Auditors recently found poor conditions at the Iberville and B.W. Cooper housing developments, including missing or loose railings, peeling paint, sewer leaks, and a serious rat infestation.

15 December 2008
by Katy Reckdahl

A report released Friday raised serious questions about the ability of the U.S. Department of Housing and Urban Development to safeguard the tenants it assists in New Orleans and ensure that they live in decent, sanitary conditions.

According to the audit by HUD's inspector general, the federally-run Housing Authority of New Orleans hasn't properly maintained its public-housing apartments or inspected its Section 8 rentals since Hurricane Katrina. The report also found the agency may have paid too much rent for many New Orleans apartments, and that it has created a Section 8 waiting list that's virtually unusable.

HANO had "placed a higher priority on housing displaced tenants instead of ensuring that units were qualified to house those tenants," the audit said.

That's true, HUD managers said in a written response: "Considering the devastation caused by Hurricane Katrina and the dire need to house families, HUD stands by its decision to place a priority on housing families."

The agency's seven-page reply also detailed the systems and procedures that HUD and HANO would implement in response to the audit.

HANO has been controlled by a rotating pair of HUD executives since the federal government took the reins of the failed agency in 2002. Karen Cato-Turner, HUD's current receiver in New Orleans, has overseen day-to-day operations for more than a year; Diane Johnson came to New Orleans from HUD's New Jersey offices in May to act as the sole member of HUD's board.

Between April and September, HUD auditors examined 10 random apartments with tenants who receive rental assistance through HANO's Section 8 program, also known as the Housing Choice Voucher program. All 10 of the units fell short of HUD's quality standards because of loose floorboards, inoperable stoves, leaking water and sewage, mold, peeling paint in units housing young children, missing handrails and insufficient heating.

Two-thirds of public-housing apartments also failed the random inspections. Auditors found poor conditions at the Iberville and B.W. Cooper housing developments: missing or loose railings even on second-story balconies, peeling paint, long-standing sewer leaks, and a network of tunnels along Iberville buildings' foundations indicating "a serious rat infestation."

The head of HANO's property-management department told auditors that he was short-staffed and so hadn't routinely inspected public housing in the city since Hurricane Katrina. Similarly, the annual Section 8 inspections, federally mandated by HUD, were skipped for two years because of staff shortages, HANO said.

In its written response to auditors, HANO called the Iberville development "obsolete" and noted that the B.W. Cooper units are "slated to be demolished." This is despite the fact that the agency, when asked whether the city's public housing can accommodate all returning tenants, has typically described the Cooper and Iberville units as "repaired and ready to be occupied."

The audit also found that HANO didn't have a system in place to review the local rental market to ensure it wasn't paying above-market rates for its Section 8 apartments. And the audit found HANO had miscalculated rents for nearly half of the randomly chosen Section 8 and disaster-voucher tenants. After looking at a random selection of voucher holders, auditors discovered that during March 2008 HANO had paid $3,569 rent for three vacant units, and it had overpaid $1,200 in rental assistance for two disaster-voucher tenants, problems HANO blamed on understaffing.

The agency's Section 8 waiting list, which had 9,700 names before Hurricane Katrina, was missing key federally required data. Without that critical information, such as the date of application, the agency can't pick tenants fairly from the list, the audit found.

The report concluded that "HUD's receiver did not provide adequate management oversight" to ensure that HANO complied with federal law.

According to HUD's managers, Katrina took a toll on the agency's staff, but HUD is confident the agency will be returned to local control by fiscal year 2010 and that HUD is on its way to fully restoring the agency.

"HANO's programs are back on track," they wrote.