A Milwaukee housing program is a fraud risk. It will now be run by an outside vendor
Milwaukee Journal Sentinel
January 26, 2024
The Housing Authority City of Milwaukee has been told by the federal government to hire an outside vendor to run its troubled rent voucher program. Genevieve Redsten
A Milwaukee Housing Authority program that's been deemed a fraud risk will be operated by an outside vendor under a new federal government mandate.
The authority has issued a request for proposals from vendors to operate its Section 8 Housing Choice Voucher Program. The program in 2023 administered around $42 million in rent assistance for people who are low-income, elderly or disabled.
That RFP, with a March 1 deadline, is part of "corrective action plans" ordered for the federally funded Section 8 program by the U.S. Department of Housing and Urban Development.
That's according to a memo to city officials from the authority obtained by the Milwaukee Journal Sentinel.
The authority will continue to be the program's administrator, with its staff working with the selected contactor, the memo said.
The contract will be for five years, with the authority having the option to extend that term for another three years, according to the RFP.
The cost to manage the voucher program cannot exceed 80% of the annual administrative fees the authority receives from HUD, it said. Those fees were expected to total $5 million in 2023.
The Section 8 program serves nearly 6,000 households.
'Little or no' impact on tenants expected from new oversight
They should see "little or no effect" from having the program operated by a vendor, said Amy Hall, the authority's marketing and communications officer.
"It is believed these actions will enable (the authority) to house a greater number of people through its voucher program" by accelerating the issuance of vouchers, Hall told the Journal Sentinel.
The Journal Sentinel in September reported that a HUD analysis found that the authority was "at risk for serious fraud, waste, and abuse."
Its Section 8 office was severely short-staffed and lacked basic accounting safeguards, the HUD report said.
A single staff member issued nearly $36 million worth of rent subsidies in 2021, according to HUD.
Also, tenant Social Security cards were "displayed openly on unattended desks" as site reviewers walked through the office in October 2022.
A separate HUD report issued last April found the authority's bank statements and internal books were millions of dollars apart.
Staff couldn’t produce receipts to explain credit card expenses. Records were in such poor shape that auditors couldn't verify key financial balances for the Section 8 program.
Hall said other corrective actions include a reconstruction of financial data from 2017 through 2022; staff training on HUD financial recording and reporting, and a software conversion that will increase efficiency.
The RFP "raises more questions than answers, and some involved seem to be trivializing how serious this is, the impact it will have on our residents, and how broken this system has become," said Common Council President Jose Perez.
Its Section 8 office was severely short-staffed and lacked basic accounting safeguards, the HUD report said.
A single staff member issued nearly $36 million worth of rent subsidies in 2021, according to HUD.
Also, tenant Social Security cards were "displayed openly on unattended desks" as site reviewers walked through the office in October 2022.
A separate HUD report issued last April found the authority's bank statements and internal books were millions of dollars apart.
Staff couldn’t produce receipts to explain credit card expenses. Records were in such poor shape that auditors couldn't verify key financial balances for the Section 8 program.
Hall said other corrective actions include a reconstruction of financial data from 2017 through 2022; staff training on HUD financial recording and reporting, and a software conversion that will increase efficiency.
The RFP "raises more questions than answers, and some involved seem to be trivializing how serious this is, the impact it will have on our residents, and how broken this system has become," said Common Council President Jose Perez.
Perez said the council's limited oversight means the best chance for change is through the authority's board.
"I expect whoever is nominated to the board is prepared to put in the hard work necessary to achieve the desperately needed reform. Nothing less will earn my vote for confirmation," Perez said.
'HACM residents deserve better," he said.
Mayor Cavalier Johnson didn't respond to a request for comment.
The Housing Authority of the City of Milwaukee, which is chartered by the state, is governed by a seven-member Board of Commissioners who are appointed by the mayor and confirmed by the Common Council.
Federal action deemed unusual by Common Ground
It's unusual for HUD to order a housing authority to hire an outside vendor to run a program, according to Common Ground.
That coalition of local faith groups, businesses and other organizations has been campaigning since March for an investigation of the authority's finances and rent collection practices.
"This validates everything HACM residents and Common Ground have been saying about (authority Secretary-Executive Director) Willie Hine's inability to manage," said Jennifer O'Hear, the group's lead organizer and executive director.
"This is damning," she said. "HUD is saying that Hines is not capable of running Section 8. He needs to be replaced."
Other local housing authorities have voluntarily turned to outside contractors to run their Section 8 programs.
That includes the Columbus (Ohio) Metropolitan Housing Authority.
In 2022, it hired CGI Federal Inc., a Canadian information technology consultant, to manage the voucher program. That was done to cut costs.
But The Columbus Dispatch reported in 2023 on numerous problems, including tenants who were mistakenly dropped from the program.
Also, the San Francisco Housing Authority last year sued a firm hired to manage its Section 8 program.
That lawsuit claimed Nan McKay & Associates Inc. breached its contract by providing services poorly, according to a San Francisco Chronicle article.
El Cajon, California-based Nan McKay is one of two outside consultants Milwaukee's authority hired last year to provide advice on managing the troubled Section 8 program, according to Common Ground.
Link to article here.