SAN FRANCISCO Housing agency 'troubled' again Finances land S.F. authority on federal list

SAN FRANCISCO
Housing agency 'troubled' again
Finances land S.F. authority on federal list

Rachel Gordon, Chronicle Staff Writer
Wednesday, August 25, 2004



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The federal government has placed San Francisco's Housing Authority on its list of "troubled'' agencies, a designation that could result in the loss of millions of dollars in grant money to rebuild public housing developments and aid residents, local and federal housing officials said Tuesday.

Another potential ramification: The U.S. Department of Housing and Urban Development, which funds local housing authorities, could take the rare step of seizing control of San Francisco's troubled agency. But San Francisco's problems don't appear that severe -- HUD found serious fault in just one of four areas reviewed, making the prospect for placing the agency in federal receivership unlikely.

In 1996, at the request of then-Mayor Willie Brown, HUD temporarily took over the Housing Authority to turn around years of mismanagement, property neglect and financial problems. A so-called federal recovery team ran the agency for 18 months before determining that the operation was stable enough for the city to regain control.

In the latest case, HUD authorities alerted San Francisco officials of the "troubled'' designation on Aug. 12. The San Francisco Housing Authority has been given a month to appeal the decision, and it will, said agency executive director Gregg Fortner.

"We will fight the 'troubled' designation as far as we have to because of the dramatic improvements we have made to turn this agency around,'' Fortner said Tuesday.

HUD faulted the Housing Authority for its financial shortcomings, said Larry Bush, spokesman for HUD's regional office in San Francisco.

Specifically, HUD found the San Francisco agency lacking in two areas: the amount of its cash reserves and the size of its outstanding legal bills, which total nearly $9 million and stem from court-ordered judgments from lawsuits against the Housing Authority.

Fortner said the Housing Authority is appealing the judgments, one involving a fatal fire and two involving sexual harassment cases.

The Housing Authority maintains two reserve funds, one for operation of its authority-owned housing units and one for the Section 8 program, through which low-income residents get help paying their rent in private-sector housing. The reserve fund for public housing is $3.8 million in the red, Fortner said.

However, Fortner said, the Section 8 reserves are $7.8 million. And when the two pots are combined, he noted, the Housing Authority has a $4 million cushion, a point he said he will make in the authority's appeal of HUD's decision.

Almost 200 of the 3,200 housing authorities in the United States are on the list of troubled agencies, according to Donna White, a HUD spokeswoman in Washington, D.C.

The San Francisco Housing Authority, with a $225 million annual budget, operates 6,400 units in public housing developments throughout the city and administers 10,300 vouchers in the Section 8 and related programs. Thousands of poor residents rely on the agency in a city where rents are among the highest in the nation.

"We have turned the agency around, and we are paying our bills as far as the operational component,'' said Fortner, who came to the agency more than three years ago and says the worst of the problems are over.

HUD, in fact, gave San Francisco passing marks in three of the four areas assessed to determine whether a troubled designation is warranted: management, condition of the properties and resident satisfaction. It failed on the financial component.

HUD has designated the Housing Authority's finances "substandard'' since 2000, Fortner said. The troubled designation is more serious.

Being on the troubled list does not automatically disqualify an agency from competing for HUD grants, but it could put the money in jeopardy, said White, the HUD spokeswoman. Among the grants in jeopardy are those for the HOPE VI program for reconstruction of public housing projects and a program to help residents improve their lives.

If San Francisco loses its appeal regarding the troubled designation, HUD will enter into a formal agreement with the Housing Authority that maps out an action plan to resolve the problems. If that fails, HUD could put the agency in receivership, taking away local control.

E-mail Rachel Gordon at rgordon [at] sfchronicle.com.