Feds say Indy public housing agency is ‘insolvent’

INDIANAPOLIS — After auditors from the Department of Housing and Urban Development spent just three days examining the books of the Indianapolis Housing Agency, federal officials found IHA “insolvent,” or unable to pay its bills.

“We’re operating upside down,” IHA Interim Executive Director Marcia Lewis said after delivering the bad financial news to her Board of Directors. “I can’t fix it without help.”

Those federal auditors, including a team from the State Board of Accounts, will not report their findings back until this summer. However, Lewis said her agency needs $10 million to balance its books, begin fixing up its properties and pay off old debts to HUD.

Lewis said HUD risk management group experts will determine if the agency can be turned around, dissolved or its properties and work parceled out to investors and private management companies.

“They’re gonna look at whether they should smother this agency with technical assistance, they’re gonna look at whether they should refer this agency to the Department Enforcement Center which could lead to receivership, they’re going to look at whether they feel like we’re heading down the right path and maybe there may be some additional funding they could release to help us.”

Mayor Joe Hogsett said he will wait until those audits come back and IHA develops a financial recovery plan before determining the future of the agency, which provides housing assistance to 24,000 low-income Marion County Residents.

Barton Tower, one of more than a dozen IHA properties, looms high above downtown Indianapolis, but residents who live there say it is the pits.

“Right now, we don’t have a manager on our property,” said Eric Hibbler, Sr.

“We need more maintenance people,” said Nina Himes. “We have one maintenance woman here and she works her butt off.”

“These problems are results from past years,” aid Mary Chapman, “because of the wrongdoing, misappropriation of funds from past years, it is coming on us, the residents, the problems. Where is the money from past years that was taken and why is no one held accountable?”

This is a question Lewis is asking as she has been tasked to keep the agency afloat while local and federal officials decide what to do with the operation.

“When I walked in the door, I was like, ‘This is the financial report we get?’,” Lewis said.

HUD auditors have found the agency’s books, “in disarray” and that there were, “individuals who were touching the financials who shouldn’t have” in the past.

The auditors are looking at IHA records extending back to 2007 for clues as to the financial chaos at the public housing agency. Lewis said to have four different audit teams looking an agency’s records is “unprecedented.”

“The ship is off the rails,” she told her Board. “I’m trying to sell everything.”

Lewis said that both essential and excess IHA property, including housing sites, could be sold to raise cash.

“We’re reviewing our headquarters. I have checked our title work to see if we are free and clear, do we owe any money on it, was it used as collateral on any of the other deals,” she said. “I have found nothing that will prevent me from selling the headquarters that we are in right now, and if that happens, we are already talking with the City about moving us into the City County Building.”

Lewis said IHA owns vacant properties and commercial sites that could be sold to developers and landlords.

“We’re trying to find out if there are other parcels out there,” she added. “There are other parcels, but they have such costly repair bills on them that we’re simply trying to give those away because I can’t do what it takes to bring them back.”

Lewis cited deferred maintenance expenses including air conditioning, boilers and elevator service in several properties.

Some private lenders are moving to seize management of public housing properties currently under IHA control, though Lewis said she doesn’t think this current financial crisis will lead to the demise of the agency.

“I don’t see it going away in its entirety, but I see a significant change in how we do business on the property management side of the house as opposed to the Section 8 side,” she said of the operation that provides housing rental vouchers to nine thousand people residing in private property. “We’ll survive. We’re not gonna look the same, but we’re gonna survive.”

Lewis said the agency will step up collection of overdue rents and fees from residents.

“We will enforce fees for damages, we will enforce late pays, we will enforce other types of activities,” she said. “We’re gonna give people notice that there’s a new sheriff in town.”

Lewis said IHA has stepped up its law enforcement to protect its properties and neighbors, though Barton Annex resident Mary Jo Evans said she remains afraid of strangers in her building.

“Homeless people, I feel for them, but we don’t know what they’re up to,” she said. “Anybody can get in here. If you press a button, they’ll let you in. They don’t know who you is. They just open the door and its been broke for a month, the door’s been broke for a month, so everybody’s been coming in, sleeping.”

Lewis recently released the IHA “Moving Forward” Transition Plan which lays out a path to stabilize the agency while developing a long term strategy. Evans said it can’t happen soon enough.

“I think someone should come in, take over the place,” she said. “[Someone] who is willing to do the right thing for us.”