Director resigns over HUD audit

AUSTIN (KXAN) - The director of the Housing Authority of Travis County has resigned in the wake of an audit that cited $4.1 million in prohibited transfers between federal and non-federal projects.

The Housing Authority of Travis County is the sister organization to the larger Housing Authority of the City of Austin, both of which are accountable to the US Department Housing and Urban Development.

According to the audit dated August 17, HUD found both the illegal interprogram transfers and a negative $579,783 administrative fee reserve. Further, HUD wanted to know if federal funds had been used to underwrite three market-rate complexes the agency financed with tax-free bonds.

"Specifically, the Authority haphazardly transferred more than $2.5 million between its federal and nonfederal programs and activities without proper support or justification," according to the audit. "Further, its books and records were not auditable, and it did not properly allocate costs."

HATC and its auditor did not follow federal guidelines, according to the audit. Limited testing of accounting records by HUD also showed that HATC could not provide documentation to support more than more than $600,000 in federal spending. Another $3,000 in spending was ineligible. And HATC did not always follow the proper  procurement procedures.

"Consequently, HUD did not have a true understanding of the Authority's financial position, which was deteriorating," according to the audit.

Wiley Hopkins, who had served as executive director of HATC since 1999, resigned at the end of July. Interim Director is Craig Alter,who swas chief executive of Strategic Housing Finance Corp, the company that partnered with with HATC on three apartment complexes. In exchange for access to HATC's tax-free bonds, Strategic Housing offered to share its revenue stream with HATC.

That revenue stream, from Strategic Housing's three apartment complexes, made up about 12 percent of HATC's total budget. While HATC has had some financial challenges since 2002, those problems accelerated in recent years when developer fees did not materialize on schedule.

The transfer between funds was a way to reduce that financial strain, Alter said. And past accountants raised no issues with the practice. As to the future, Alter is unequivocable.

"There will be no more transfers," Alter said.

HATC has agreed to repay the $3,000. And, in the coming months, the agency will be unraveling the transfers, transaction by transaction. If a shortall exists in the federal funding account, revenue from the three apartment complexes' non-federal funding stream will be diverted to restore a balance to the federal account.