Milwaukee housing authority misused $2.8M from feds, leaders say
Housing authority misused $2.8M from feds
Milwaukee's housing authority on Friday said prior leadership misused millions of federal dollars that was intended to provide rent assistance.
MILWAUKEE - Milwaukee's housing authority on Friday said prior leadership misused millions of federal dollars that was intended to provide rent assistance. Instead, the agency said it was used to pay staff – and now it's at risk of going bankrupt.
Misused money
What they're saying:
Housing Authority of the City of Milwaukee leaders said former management incorrectly used $2.8 million of Section 8 federal funds to pay staff. Now, the agency must pay back the money or risk bankruptcy in as little as 45 days.
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Brad Leak only joined HACM's finance team a few months ago, but in those few months he discovered a million-dollar problem. The issue dates back to 2019, leaders said.
"The intent was not to say we will go into bankruptcy in 45 days. If we did not swiftly act this week, we would be," Leak said.
Housing Authority of the City of Milwaukee (HACM)
What's next:
During a special meeting on Friday, HACM outlined a number of actions it took to cut costs. The agency let go of 24 staff members and implemented a hiring freeze.
"We want to be transparent," said Ald. Sharlen More, HACM's commissioner. "There is no longer ‘we are going to hide things and sweep it under the rug.’"
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The other side:
While the new board of commissioners is focused on fixing the issue, some renters and leaders from the advocacy group Common Ground are turning their attention to the official who was in charge at the time: Willie Hines.
"It feels like Hines scammed Milwaukee – scammed poor people – and now these folks have to play cleanup," said Common Ground's Kevin Solomon. "Doing it with transparency and accountability and apologies, but fundamentally, this isn't their mess."
‘Milwaukee Recovery Plan’
What's next:
HACM also announced on Friday that it reached an agreement to partner with the U.S. Department of Housing and Urban Development on an effort to "improve resident housing facilities, upgrade agency operations and improve financial controls."
In addition to adopting the "Milwaukee Recovery Plan" with HUD, the Housing Authority of the City of Milwaukee notified officials that previous fiscal management deficiencies and accounting errors had allowed restricted federal funds to be used incorrectly for some administrative costs and staff salaries.
As a result of these previous decisions and a changed fiscal position, HACM also notified officials that its rating agency had adjusted its bonds to A‐ from its previous A+ ranking.
Feds' scathing Milwaukee housing authority report; critics respond
The U.S. Department of Housing and Urban Development (HUD) wrote a scathing letter to Milwaukee's housing authority.
The Milwaukee Recovery Plan, HACM said, is meant to "shore up management and the fiscal health of the agency and its real estate asset base." Specifically, the agreement requires HACM staff to follow a defined timeline and take action to address a range of issues – including fiscal management, tenant services, housing conditions, facility operations, and related matters.
Also included in the Milwaukee Recovery Plan are steps aimed at adding and improving financial controls and internal audit tools; adopting new efforts to increase occupancy rates; improving collections efforts; and upgrading the physical conditions of the various HACM properties.
The Milwaukee Recovery Plan is a public document and is posted on the HACM website.
The Source: Information in this report is from the Housing Authority of the City of Milwaukee, Common Ground and prior FOX6 News coverage.