The Herald, Sharon, Pa.

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January 9, 2014

Board bristles over HUD mistake

MERCER COUNTY — Sometime about 10 years ago, someone at the U.S. Housing and Urban Development messed up.

Mercer County Housing Authority and other housing authorities across the country are being made to pay for that error.

“It’s not our mistake,” Mercer County Housing Authority Executive Director Nannette Livadas told her board Wednesday. “I really think it’s unfair. It makes me so mad.”

The authority got a letter from HUD Jan. 2 saying it has 30 days to pay back $97,762 that was spent during the redevelopment of the former Steel City Terrace in Farrell into Centennial Place.

The so-called HOPE VI project knocked down the existing barracks-style public housing units and replaced them with single-family homes and multi-family buildings that were offered for public housing, market-rate rentals and sale, remaking an entire section of the city.

The problem goes back to an audit performed by the U.S. Office of the Inspector General that was completed in 2006. Auditors found that HUD misinterpreted regulations that resulted in the federal government overpaying authorities to the tune of $35 million, Livadas said.

The authority received money for the Steel City project that it was not entitled to, she said.

The authority was aware of the problem after the audit was completed, but HUD was granted a five-year extension to review the issue, arguing it did not have the staff to deal with it definitively then, she said.

“We heard nothing about it since 2007,” Livadas said, galled that it’s still an issue a decade later.

“Tell us in a timely manner – don’t wait seven years,” she vented.

The one-month payback window adds more salt to the wound, by penalizing the authority for sound fiscal management, she said.

HUD will not allow the authority to make payments because it has four months of reserves – about $265,000 – the maximum allowable by HUD.

Livadas noted that the authority had no reserves when she became executive director, has increased rent collection, decreased vacancy rates and cut costs, including reducing staff from 44 full-time workers and eight part-timers to 39 full time and two part time.

Board President Carol Gurrera asked if the authority could appeal.

“No, because it’s not ours,’ ” Livadas said of the mistake.

“I think all the housing authorities should bring a class-action lawsuit,” said board member Timothy Jablon.

Livadas said she has given documents to solicitor William J. Madden to review, will talk to other housing authorities about how they might respond – she said she knows the Allegheny County authority has been told to repay $500,000 – and will contact the office of U.S. Rep. Mike Kelly, R-3rd District, Butler, for help.

She added that she hopes the publicity will embarrass HUD into changing its stance.

“We have no intention of deciding anything at this point,” Livadas said. “I can’t say whether we will pay or won’t pay. I’m sure we won’t pay within 30 days.”

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