City cuts off funding for housing corporation

October 22, 1994|By Eric Siegel | Eric Siegel,Sun Staff Writer

Baltimore's housing department has cut off funds to a nonprofit corporation that develops and manages homes for the poor because of concerns about the group's suspected misuse of money.

In a hand-delivered letter to the Housing Assistance Corp. (HAC) on Oct. 14, the city's housing department said it was suspending funding "until these matters are fully investigated."

"The nature of the concerns are such that they call into question the ability of HAC to follow established procedures in controlling and accounting for its expenditure," said the letter signed by Harold R. Perry, deputy city housing commissioner. The department provided a copy of the letter yesterday at the request of The Sun.

HAC receives nearly $1 million in annual operating subsidies from the city and runs transitional housing programs for homeless families and manages low-income apartments, according to interviews and a HAC brochure.

It also forms joint ventures and limited partnerships to develop housing for residents with low and moderate incomes, taking advantage of federal tax credits.

The housing department began investigating HAC last month, after receiving a tip that HAC workers were doing work on an employee's home. It began auditing the nonprofit's books, turning up questionable expenses.

Earlier this week, housing officials received an anonymous packet of material, including invoices and canceled checks. The packet -- a copy of which also was given to The Sun -- indicate that high-ranking employees bought meals, wedding invitations, photo equipment, a briefcase and a computer at HAC expense.

"We don't know at this point what we have or don't have," said Zack Germroth, spokesman for the Department of Housing and Community Development. "There was enough there for us to question usage of funds.

"We are doing an independent investigation," he said. "We are very determined to pursue the investigation to a point where it satisfies us as the funding agency that things are as they should be or not."

Jennifer Jones-Williams, executive director of HAC, declined yesterday to discuss the housing department's cut-off of funds.

Ms. Jones-Williams referred questions to Valarie K. Oulds, an attorney representing HAC. Telephone messages left at Ms. Oulds' Columbia office were not returned.

A 1992 federal audit criticized HAC for using loan funds to pay $32,851 in unspecified ineligible administrative expenses. It also said the nonprofit organization improperly advanced $1 million from loan funds to cover operating costs.

Created in 1980, HAC manages and develops properties in some of the city's most run-down neighborhoods, using funds from local, state, federal and private sources. Among its projects are the Rosedale Terrace condominiums in West Baltimore and Sandtown Manor Townhomes in Sandtown-Winchester.

It is one of a handful of nonprofit housing groups to receive annual subsidies from the city's housing department in excess of $500,000.

"HAC is absolutely vital to a lot of the city's interests," Mr. Germroth said. "It is a developer of last resort."

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