As need mounted, money was misspent

By Timothy Pratt (contact)

Thursday, Feb. 12, 2009 | 2 a.m.

The North Las Vegas Housing Authority failed to spend up to $2 million on federal housing programs even as thousands of people were on lists awaiting that help, a recent audit has found.

The agency was supposed to use the money on rental vouchers and public housing, programs increasingly in demand as the economy sours. The housing authority will now have to pay the money back to the federal government, North Las Vegas City Manager Gregory Rose said Wednesday. The total amount won’t be known until the city audit and a federal investigation are finished, but so far auditors have determined that at least $800,000 was misused, Rose said.

Still unclear is how the money was spent, who is responsible, and whether any crimes were committed, he added.

Federal Housing and Urban Development Department spokesman Larry Bush decried the housing authority’s “unacceptable management practices and their effect on residents and taxpayers.” Bush also said the federal agency must complete its own investigation before drawing any conclusions.

Rose was named the housing authority’s agent after Don England, the agency’s director for nearly a decade, resigned late last month.

After England’s resignation, Rose heard about the agency’s problems handling federal funding, so he ordered an audit.

The turmoil is nothing new for the agency, which is expected to transfer control of its Section 8 voucher program to the Las Vegas Housing Authority in the coming weeks. The North Las Vegas Section 8 program, which pays partial if not full rent for about 1,300 low-income residents, is currently about $500,000 in debt, Rose said.

The Las Vegas agency would cover that debt if it takes over the program and expects HUD to repay the amount when a federal budget is prepared in March.

North Las Vegas’ public housing program was transferred to its Las Vegas counterpart in June.

HUD pressured the agency to make that move because of poor management, including allowing dangerous conditions to spread at the Casa Rosa apartments, which were eventually evacuated.

And two years ago a HUD inspector general investigation found the agency failed to use $4.4 million in Section 8 vouchers from 2005 to 2007, despite overwhelming demand for affordable housing in the valley.

Carl Rowe, director of the Las Vegas agency, said the North Las Vegas housing authority “has been run poorly, and programs have suffered.”

Rowe said it is still difficult to determine how the recently discovered mishandling of funds may have affected residents, but he noted that the neglect at Casa Rosa may have been avoided if North Las Vegas had used some of the federal funding for upkeep.

As for what’s next, if the agency is left without Section 8 or public housing, it would be managing only 120 or so apartments and houses that it has acquired without federal funding.

Rowe added that a plan being discussed to merge the valley’s three housing authorities — for North Las Vegas, Las Vegas and Clark County — would serve to stem the problems at Rose’s agency.

“It will fare better ... under a new regional entity,” he said.

The transfer of the Section 8 program and the merger were on the agenda for the North Las Vegas Housing Authority board’s meeting Wednesday night.

Meanwhile, however, accounts must be reconciled in North Las Vegas. Rose said he hopes to determine “what happened and who was involved, in a transparent manner, as soon as possible.”

Whatever happened, it is unclear how the housing authority will repay the debt. In similar cases — including one at the Las Vegas agency in the mid-’90s — selling off remaining assets was required to make peace with the federal government.

One question Rose’s audit is unlikely to answer is whether the housing authority’s board knew of the misuse of funds or has any responsibility in the matter.

“It’s not the purpose of the audit to determine if the board should have stopped this from happening,” Rose said.

The board includes four North Las Vegas City Council members, including Mayor Michael Montandon and mayoral candidate William Robinson.

Neither official returned calls seeking comment.

In 2007, when asked about the $4.4 million in unused funds, Montandon said he thought the federal government had the agency on some sort of hit list and would visit again.

“That audit is going to trigger another audit, which will trigger another audit. You could still do everything and be shut down,” he said.

In the coming weeks Montandon’s prediction may come true.