The federal department of Housing and Urban Development is supposed to help the nation’s most vulnerable populations find affordable housing while fighting discrimination and reducing homelessness.

But some of the agencies and programs doing HUD’s work in Indiana are marked by a host of problems, including:

• Placing the poor in unsafe housing, violating HUD standards.

• Finances in such disarray that millions of dollars earmarked for help with rent is going unspent.

• Financial controls so lacking there is no way to know whether help is going to those who actually need it.

The findings appear in audits conducted by HUD’s Office of the Inspector General, which reviewed several housing authorities and programs across Indiana.

Among the findings was that the Fort Wayne Housing Authority will overpay an estimated $1 million this year to recipients who don’t need the money, and that while the agency has a yearslong waiting list for rental assistance, it had millions of dollars available that went unspent (see related story on Page 1A).

The audits, available to the public, date back to 1996, but the lapses found just in the past three years include taxpayer-provided housing in Indianapolis and Evansville that not only failed HUD standards for safety and quality but had also failed local inspections before. These lapses were never corrected, the audits said.

And the private-sector non-profits that would normally fill the gaps left by government agencies are overwhelmed by the nation’s mortgage foreclosure crisis.

“We’re looking at the very fabric of society falling apart at the seams,” said Dave VanThournout, executive director of Association of Community Organizations for Reform Now in Indianapolis. ACORN is a non-profit housing advocacy group.

So many people are facing or are already in foreclosure that groups such as ACORN are overwhelmed, VanThournout said, meaning they’ve had to essentially abandon their watchdog role over government agencies such as housing authorities.

“There are huge areas of Indianapolis that are struggling just to keep the neighborhood together,” he said. “What we’re seeing now is just a drop in the bucket in terms of assistance that will be needed.”

A host of problems

Housing advocates warn the worst is yet to come: If government housing agencies are already overwhelmed, they may fail completely under the crush of people losing their homes to foreclosure.

Eric Weathersby, head organizer of ACORN’s Gary chapter, said the Gary Housing Authority already cannot pay its bills.

“They’re deep in the hole. They owe a lot of money,” Weathersby said. “They’re absolutely broke.”

Not quite.

A March 2007 audit by HUD found the Gary Housing Authority had nearly $800,000 available to help the poor that it did not realize it had after the agency refinanced debt. Savings from other refinancing moves couldn’t be properly accounted for, the audit found, or the agency couldn’t show the money had been used properly.

In their official response to the audit, Gary Housing Authority officials pledged to keep better records and said their board of commissioners has since been replaced.

An audit of Muncie’s HOME program – which makes loans to build, buy or rehab affordable housing – found that Muncie might lose $1.2 million because it is unlikely to be able to spend it before a July 31 deadline, and that it may have improperly spent more than $200,000 after an agreement with a partner group expired.

The audit also found that of the $3.2 million Muncie had available since January 2003, $1.5 million was spent improperly. In their response to the audit, Muncie officials blamed the previous city administration.

A November audit found that in Michigan City, less money was available to serve the poor after its housing authority transferred ownership of $1.1 million worth of houses to a non-profit development agency. Now HUD wants the houses transferred back or to be reimbursed.

The audits also showed poor Hoosiers in some cities were not only being forced to live in substandard housing, but also that local housing authorities knew the housing was unsafe and did not fix the problems.

In Indianapolis, an April 15 audit inspected 65 Indianapolis Housing Agency housing units and found 52 of them did not meet HUD or local standards. In fact, 38 of them had 402 violations that showed up in previous local inspections that were not fixed, with some of them having as many as 29 pre-existing violations. Violations ranged from electric boxes with no covers to ceilings falling down to second-floor railings that were unattached.

HUD estimates that more than $5.2 million in taxpayer money will be spent in Indianapolis to house the poor in unsafe conditions over the next year. HUD is demanding $291,000 be returned, plus documentation or reimbursement for $587,000 more.

Those findings came on the heels of a July 2007 audit that found the Indianapolis Housing Agency improperly spent $1.6 million on administrative costs instead of housing the poor.

Indianapolis Housing Agency Executive Director Rufus Bud Myers said HUD’s findings were mainly mistakes in judgment made by individual employees and will be addressed. He disputed some of the findings, but said the agency can – and must – do better.

“Every time HUD goes out there and finds something, we have to use that as lessons to improve and that’s what we intend to do,” Myers said.

At the same time, he said, the money to do the things HUD demands is getting scarcer, and HUD wants more from local housing authorities than it is willing to pay for.

“We’ve had over a $15 million budget cut since 2001,” Myers said. “You have to lay off staff and take shortcuts where you can. … I’m telling you, it’s a conundrum. Everything is going against us, but somehow we’ve got to figure it out.”

In Evansville, 48 of 63 inspected housing units did not meet standards, a 2007 audit showed. Forty-four of those units had 230 violations the Evansville Housing Authority had found itself in previous inspections. And those inspections were severely lacking, HUD found, as housing authority inspectors asked residents whether there were any problems instead of actually inspecting the units.

HUD inspectors found numerous violations that local inspectors in Evansville missed, from windows without screens to missing handrails on stairs. Local inspectors also failed to properly test outlets designed to keep residents from being electrocuted when using electricity near sinks and bathtubs, the audit said.

HUD inspectors found broken windows, exposed electrical outlets and doors that do not latch.

Evansville officials, in their response to the audit, said many of the violations were from tenant damage or poor housekeeping, but vowed to follow HUD standards. They also took issue with HUD’s statistical analysis of the problems and said some HUD findings were in error.

In Gary, a 2005 audit found 90 percent of the apartments HUD inspectors visited did not meet standards.

In Marion, a December 2006 audit found the Housing Authority there was improperly using money meant to house the poor to run a non-profit Affordable Housing Corporation.

“The distributions were clearly unauthorized,” the audit said, meaning the Marion Housing Authority had defaulted on its contract with HUD. “Further, HUD would not have approved the Authority’s disbursements if the Authority had requested approval.”

Marion Housing Authority now has a new executive director, and much of the board of commissioners has been replaced, its response to the audit said.

Housing advocates say the affordable housing system is clearly stretched to its limit.

Holly Hintz, director of the Homeless Management Information System at the Indiana Coalition on Housing and Homeless Issues, said there are an estimated 10,000 Hoosiers outside of Marion County who are homeless, and up to 4,000 more inside Marion County. But those numbers do not include the thousands of people already in subsidized housing, the thousands living with relatives, or the thousands in foreclosure who are in danger of losing their house.

Tip of the iceberg?

Housing advocates say they believe Indiana’s housing authorities have good intentions but are stretched too thin by overwhelming need, staff shortages and money problems – not to mention stringent requirements put on them by HUD.

“To do everything the way they want it done, the staffing costs are astronomical,” said Ann Helmke, executive director of Vincent Village in Fort Wayne, which provides transitional housing to homeless families.

“Maybe if housing authorities all across the state are having problems, it might not be them; … HUD only allows so much to go to administrative costs. If it’s not enough to get the job done and get it done right, what do you do?”

Advocates also worry what will happen if the system is flooded with people losing their homes to foreclosure.

Mary Etheart, chairwoman of the Northeast Indiana Interagency Council on Housing & Homeless Issues and executive director of Hope House in Fort Wayne, said most people don’t realize there are thousands of people who already cannot afford housing, and those numbers are only expected to grow.

“There’s a huge demand. All the shelters have very long waiting lists,” Etheart said. She fears the system could break down entirely if demand for affordable housing rises as much as some predict.

“Before long,” Etheart said, “it’s going to be a lot worse.”

dstockman@jg.net