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Housing Authority is audited

Federal auditors are poring over financial records at the St. Petersburg Housing Authority as they continue to probe dealings at the local agency, officials say.

The local housing agency is under scrutiny from the U.S. Department of Housing and Urban Development (HUD), which says the agency mismanaged money and violated federal housing rules. The local housing agency is broke, HUD has said.

A three-member team from HUD's regional inspector general's office arrived Tuesday and likely will stay several weeks, said Linda Lipthrott, spokeswoman in HUD's Atlanta regional office.

But the auditors could be here even longer.

"I spoke with the head of the team, and he advised me that they are going to be there approximately 40 days and do a broad examination, although the exact scope has not been determined," said James Gillespie, vice chairman of the Housing Authority's board of commissioners.

"It's mostly financial, but that doesn't mean it wouldn't get into management and other things as well," Ms. Lipthrott said. "It's a little more intensive than our normal program monitoring that we do. It's a little more investigative."

Observed Gillespie: "If 40 days is even close to the amount of time they intend to spend and they're all accountants, they're taking an extremely close look."

The audit team is not connected with HUD's criminal investigations unit, and a criminal investigation might not take place. "We don't have any indication that that will occur," Ms. Lipthrott said. "It would not happen until after the audit. It may not happen at all."

HUD last month barred the Housing Authority's executive director, Edward White Jr., from participating in federally financed housing programs, charging that when he bought and sold property for the Housing Authority, he violated federal rules. Without HUD grants, the authority loses its primary source of income.

Some of HUD's complaints about White centered on the Housing Authority's sale of the Laurel Park housing complex to the city for $4-million. The city wanted the Laurel Park property for additional parking for the Florida Suncoast Dome.

HUD regional administrator Raymond Harris in January said that White started removing and relocating residents of Laurel Park before obtaining HUD approval. HUD also said White used $10,000 from the sale as earnest money for the purchase of another property without written approval from HUD.

White also was accused of deliberately disguising the fact that the Housing Authority was buying 50 houses throughout the city for scattered-site, low-income housing. The Housing Authority used a dummy corporation to buy the houses, fearing that owners would demand more money for their homes if they knew the Housing Authority was the buyer.

HUD said that according to its regulations, homeowners should have been notified up front that the Housing Authority was the prospective buyer.

About half the homeowners received less than the fair market value for their homes, HUD said. If the homeowners had known the Housing Authority was the buyer, they still might have agreed to sell them, HUD said. But, the agency added, "the violation of the regulations deprived the owners of the right to make an informed judgment, and . . . such failure was likely to their detriment."

Ms. Lipthrott said Friday that some of those homeowners have called HUD offices in Jacksonville, Atlanta and Washington to complain. "We haven't heard that anybody's going to file a lawsuit, but that's their right," she said.

Immediately after HUD's sanctions last month, the Housing Authority board suspended White with his full pay of $78,750 while HUD continued its investigation.

White appealed HUD's findings and sued to get reinstated. Those matters are pending.

White has said he did nothing wrong and that HUD acted without taking time to understand the facts. The Housing Authority had been audited by an outside firm, Malcolm Johnson & Co., which found everything in order, White said. He has said he was denied a chance to respond to the claims when HUD and the authority acted against him.

He declined comment Friday.

Ms. Lipthrott said HUD may issue its findings on White's appeal within two weeks and the audit report may be completed by the end of March.

A finance committee appointed by the authority board also has been reviewing finances and may give a report at the authority board meeting Thursday.