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HUD: New London Housing Authority is substandard

New London — The U.S. Department of Housing and Urban Development has downgraded the New London Housing Authority’s status from standard performer to substandard, citing potential financial improprieties in authority accounts along with physical issues found during inspections at the authority’s two federally funded housing complexes.

HUD’s Office of Public Housing has given the New London Housing Authority 30 days to propose a recovery plan and 90 days to correct problems or face HUD intervention.

New London Housing Authority Executive Director Sue Shontell is challenging the findings and will ask the five-member housing Board of Commissioners next week to approve a written response that rejects assertions by HUD that, among other things, there were any financial issues that were not due to rules on recording requirements.

Shontell also contends the low scores after the inspection of the buildings was based on the behavior of the inspector.

“We took issue with the way it was conducted,” Shontell said.

The inspections were conducted at various units at the two federally funded properties managed by the authority — the 124-unit Thames River Apartments off Crystal Avenue and the 99-unit Williams Park Apartments on Hempstead Street.

The inspection at Thames River Apartments turned up issues ranging from mold and leaky faucets to rodent infestations and air-quality issues. Based on a class-action lawsuit from residents there, the housing authority already is under a court order to improve conditions for residents.

The company the authority enlisted to find new housing has purchased the site of the former Edgerton School and plans to build an entirely new complex there. The plan is now working through the zoning approval process.

HUD based its overall designation on a formula and weighted scores compiled in a Public Housing Assessment System during an assessment for 2015. Scores are based on four categories: financial conditions, management operations, physical condition and resident service and satisfaction.

The financial score dropped severely, from 21 to 14 out of 25, according to HUD. The primary reason cited was that the Thames River Apartments scored zero points because of an apparent lack of available resources to cover operating expenses.

“This is a very concerning development because it speaks to the lack of liquidity and poor cash management of the property,” HUD Program Center Coordinator Jennifer Gottlieb Elazhari wrote in a Sept. 29 letter to Housing Authority board President Tambria Moore.

A review of financial statements also showed a transfer of $88,317 in federal funds to cover state expense. The use of federal funds for state programs is a “serious violation” of HUD regulations, Elazhari wrote. The authority has been given 30 days to repay the loaned funds back to the Thames River account.

Shontell said there was no federal money transferred to the state program and that federal funds were instead transferred to a revolving fund which contains both state and federal funds and is used to separately pay for invoices on behalf of the state and federal program. She said mandated changes on how accounts are recorded may have led to some confusion by HUD officials looking into the accounts.

She said it was incorrect for HUD to assume that a low score in the financial assessment and lack of liquidity related to Thames River apartments is due to poor cash management. Instead, she said, it is related to changes in recording requirements linked to pension expenses, the timing of the inspection and some unexpected costs. Shontell said she planned to submit bank statements as evidence to HUD.

“It looked like we had no funds because we had to account for retirements funds,” she said.

She said the simple fact is that the Thames River Apartments has aging infrastructure requiring larger amount of money to maintain. It is part of the reason the authority is working to find a better home for residents.

Attorney Robert Reardon, who filed suit on behalf of residents at Thames River Apartments because of the conditions there, fought for more than a decade against the housing authority until they signed an agreement mandating improvements.

He said the news from HUD substantiates what he already has proved — that the entire complex needs to be taken out of the hands of the housing authority and turned over to a private entity with the financial wherewithal the housing authority lacks.

The authority is not capable, based on its history, of adequately providing safe, clean conditions for the residents in the outdated high-rises, he said. Affordable Housing and Collaborative Inc. and Peabody Properties, if they secure the appropriate approvals, would take over management of the new housing development.

“All that (HUD) letter indicates to me is there is a deep need that must be addressed right away,” Reardon said. “The New London Housing Authority, state and city must move forward to get this project approved.”

HUD spokeswoman Rhonda M. Siciliano said HUD staff is poised to work with the housing authority to ensure deficiencies are corrected and that the top priority will be to address the safety of residents along with the financial stability of the housing authority.

HUD will continue to monitor the situation, Siciliano said, and consider any information the housing authority provides that is contrary to its own findings.

g.smith@theday.com

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