A year-long U.S. Department of Housing and Urban Development review into the Hot Springs Housing Authority found that the authority didn't follow procurement requirements when awarding contracts and improperly spent public housing funds, according to documents released Monday.
The review -- completed this March -- generally covered from September 2010 to March 2014.
According to an Aug. 14 memorandum from Gerald R. Kirkland, a regional inspector general for audit with HUD, the authority "improperly procured or lacked support for the 10 contracts reviewed totaling $611,338."
The review also found that the authority "spent at least $11,651 of its public housing funds on unallowable costs" and didn't have supported documentation of another $51,470 in expenses.
HUD's office of inspector general performed a review of the authority after a contractor's complaint and as part of a regional plan to review public housing programs. HUD was also concerned about the authority's travel costs and staff turnover, with 64 staff members leaving the authority in 42 months.
"These conditions occurred because the former executive director ignored or failed to follow federal regulations and the authority's consolidated annual contributions contract with HUD," according to the memorandum. "In addition, the board of commissioners failed to provide adequate oversight of the authority and former executive director. As a result, the authority incurred at least $677,459 in questioned costs."
The amount includes $3,000 in public housing funds the authority "inappropriately used to maintain non-public-housing properties."
Barbara Baer was the authority's executive director from September 2010 until her termination in April 2014. The memorandum does not refer to her by name.
Baer told The Sentinel-Record in April 2014 that HUD's allegations of improper spending and poor compliance with federal regulations were "unsubstantiated." A working phone number for her was not found Monday; her LinkedIn profile shows her as having moved to Wichita, Kan.
Richard Herrington Jr. became the authority's executive director in September 2014.
The reiew recommends the authority be required to support or repay its public housing program a total of $677,459 from non-federal funds.
The review also proposes that the authority "implement adequate controls, policies and procedures to ensure compliance with regulations, including maintaining complete and accurate records, appropriate board of commissioners' oversight and proper spending of funds."
The review also states that the authority's board of commissioners should be reviewed to determine its effectiveness and whether it is "presently responsible."
Herrington replied to HUD by letter that he disagreed "with the method of how [the review] arrived at the $614,338 in questionable costs" involving the contracts, which includes the $3,000 spent on non-public-housing properties.
His letter challenged $425,405.12 in questionable costs, but he agreed to pay back $188,932.88 regarding contracts.
"Please also note that I believe that the [authority] has made many successful strides," Herrington wrote. "As the executive director, I am planning on having a comprehensive and thorough board ... training this fall along with a procurement and contract management training for my staff and all board members."
State Desk on 08/25/2015