Maine Taxpayers Pay for Housing Authority Malpractice

By S.E. Robinson

Maine taxpayers will be forced to repay more than $150,000 to the federal government – and could pay more than $250,000 – as a result of Maine State Housing Authority’s (MSHA) mismanagement of funding from the U.S. Department of Housing and Urban Development (HUD).

The repayment of federal funding is the result of a September 2012 audit by the HUD Inspector General which found two instances where MSHA had violated federal regulations. The federal investigations follows a review by Maine’s Office of Program and Government Accountability (OPEGA) which found systemic corruption and waste during the tenure of former MSHA director Dale McCormick.

The Inspector General’s first finding was MSHA’s failure to adequately inspect several Norway housing units subsidized under the Housing Choice Voucher program (Section 8). The sub-standard condition of federally-subsidized units in Norway was brought to the attention of state and federal officials following an exposé by a Norway-based newspaper, the Advertiser-Democrat. The ensuing investigations, which peaked with the involvement of Sen. Susan Collins (R-Maine), found that MSHA, which is responsible for administering the Section 8 program, failed to properly inspect several housing units.

Units were deemed below standard for reasons ranging in seriousness, from smoke detectors with dead batteries and rusty bathtubs, to missing fire escapes and human waste bubbling up in drains. But regardless of the nature of the violation, the result was that MSHA used HUD money to improperly compensate landlords.

“[MSHA’s] failure to properly oversee the inspection of several Section 8 units caused HUD to provide Housing Choice Vouchers to units that did not meet federal standards,” said Lincoln J. Merrill Jr., Vice Chair of the MSHA Board and Audit Committee Chair.

“Now, HUD has asked us to repay those funds,” said Merrill.

Merrill said MSHA had sub-contracted with Avesta Housing, a not-for-profit housing developer headquartered in Gorham, to inspect the Norway units.

A spokesperson from Avesta has said the mishandled inspections were the work of a “rogue” inspector.

While Avesta vowed to improve its inspection process, steps taken by MHSA since the incident have include bringing all inspections in-house, meaning Avesta is no longer partnering with MSHA for Section 8 inspections. Merrill said roughly 20 people have been hired to perform inspections.

While the federal government initially requested reimbursement of nearly $200,000, Merrill said this figure was reduced to $150,062 through negotiations. He said Avesta will not pay any fees for its role in the HUD violations.

The same HUD audit that uncovered misuse of Section 8 funding in Norway determined MSHA improperly used $111,000 in federal funds when it awarded a no-bid contract to an information technology consultant.

The HUD Inspector General wrote in his report, “[MSHA] awarded a contract by noncompetitive proposal to an information technology consultant without providing proper written justification and without providing the required cost analysis.”

“This condition occurred because [MSHA] officials did not follow HUD’s procurement regulations or their own procurement policy… As a result, they could not assure HUD that $848,096 paid for these services represented the most favorable price.”

MSHA has contracted with CohnReznick, a New York-based firm, to conduct an audit of the IT consultant’s contract. Depending on that audit’s finding, MSHA could be forced to repay an additional $111,742 to the federal government, payments that will ultimately come out of taxpayers’ pockets.

The inappropriate spending on computer systems is reminiscent of a story first reported at The Maine Wire in September, where MSHA spent more than $7 million on contracts with two tech consultants.