Federal investigators recommend that MaineHousing pay back $200,000

An investigation into the Maine State Housing Authority has revealed mismanagement and a lack of oversight that could cost taxpayers hundreds of thousands of dollars.

Federal investigators have recommended that HUD’s Boston Office of Public Housing should require MaineHousing to pay back almost $200,000 in housing assistance payments for units that did not meet federal housing quality standards.

A further investigation will be made into $112,000 in payments to an information technology consultant who worked on the Homeless Management Information Systems program. The consultant was paid $848,000 in just two years.

The Office of Inspector General at the U.S. Department of Housing and Urban Development found that 53 of 61 Housing Choice Voucher program units in Norway, Maine did not meet HUD’s housing quality standards.

Under the leadership of former executive director Dale McCormick, Maine State Housing Authority “officials did not have adequate oversight of contracted program agents and had an ineffective quality control system for their own inspectors,” the report stated.

“There were units that should have failed inspection due to deficiencies but were instead passed, and authority officials continued to make housing assistance payments for these inadequate units,” according to the report. “As a result, some tenants lived in units that did not meet HUD’s standards for decent, safe, and sanitary housing, and authority officials made at least $194,956 in housing assistance payments for units that did not meet housing quality standards.”

MaineHousing agrees that several units failed inspections, but disagreed with the number of units. “Basing a repayment of HAP (Housing Assistance Payments) on units with material deficiencies, consistent with OIC practice, we calculate the repayment to be $109,601.30,” Peter Merrill, then acting director of MaineHousing, wrote to The Office of Inspector General in a letter dated Sept. 21.

While the report found that Maine State Housing Authority officials charged some expenses to HUD programs that were eligible, reasonable and supported, “they awarded a contract to an information technology consultant without following HUD’s or their own procurement regulations or policies for noncompetitive proposals. From January 1, 2010 to December 31, 2011, the Maine State Housing Authority paid the consultant $848,096, of which $111,742 was charged to the Homeless Management Information Systems program.”

Because of the findings, the Office of Inspector General said it will recommend that HUD’s Boston Office of Public Housing require Maine State Housing Authority officials to: repay the Housing Choice Voucher program $194,956 from non-federal funds; and conduct an independent cost analysis for the $111,742 charged to the Homeless Management Information Systems program to determine whether costs were eligible, reasonable and supported.

Merrill wrote that MaineHousing “will demonstrate through an independent audit that the $111,742 paid to the consultant from HUD program funds was reasonable.”

The Maine Wire reported extensively on inappropriate spending at Maine State Housing Authority, and the Norway Advertiser Democrat published reports about slumlords, shoddy oversight and wasted tax dollars in properties administered by the Avesta Housing Corporation, one of the MaineHousing’s four program agents. After finding out about the deplorable conditions, U.S. Senator Susan Collins in December requested an investigation by the the Office of Inspector General.

Democrats and partisan supporters accused The Maine Wire, State Treasurer Bruce Poliquin and Republicans of going on a “witch hunt” to oust Dale McCormick, the former executive director of MaineHousing who resigned amid allegations of inappropriate spending and mismanagement.

As recently as September 9, the Portland Press Herald—one of McCormick’s biggest supporters—published an editorial about the quiet nomination of John Gallagher as new executive director at MaineHousing. Ignoring the findings by Maine’s legislative oversight committee about inappropriate spending at MaineHousing, the editorial continued to portray McCormick as a victim: “The lack of friction around this appointment is notable because of the recent history of the agency, in which Executive Director Dale McCormick was driven to resign by a witch hunt, orchestrated by state Treasurer Bruce Poliquin.”

The Bangor Daily News reported today on the OIG report, but buried the recommended repayment of almost $200,000 in the third paragraph. The Portland Press Herald ran a short story from the AP about the report, which took its information from the BDN story. The AP’s five-sentence story did not mention the requirement to repay the $200,000.

But the report by the Office of Inspector General at HUD cannot be dismissed as a “witch hunt.” It is just one in a series of investigations into mismanagement and wasteful spending at MaineHousing.  The MaineHousing board has also voted to approve a forensic audit to determine why McCormick spent $7 million in less than eight years on two computer consultants.

The Maine Wire will continue to update this story.