Cheryl Marsh

Amid a sea change of direction for public housing nationwide and questions about local spending, the Chattanooga Housing Authority is finding itself $4.5 million in the hole and at a crossroads in deciding how to provide homes for low-income people.

CHA officials Thursday announced the resignation of Executive Director Bob Dull and the layoffs of 30 staff members, on top of 26 people let go in February in what officials called “work force reductions.”

Chief Operating Officer Betsy McCright, who will take over Mr. Dull’s responsibilities along with her own, said CHA administrators and board members are trying to sort out the deepening financial shortfall that took a turn for the worse about two months ago.

“We realized about two months ago that we were not privy to some of the financial realities going on in our accounting department,” Ms. McCright said.

But Ms. McCright and CHA Chief Information Officer Bill Lord said it would be “misleading” to indicate there was misspending.

Since 2002, they said, the U.S. Department of Housing and Urban Development has been cutting funding to housing authorities nationwide and urging them to find alternative revenues to make themselves self-sustaining — a tall order for public housing authorities responsible for the upkeep of aging facilities but restricted by both the rents they can charge and the low incomes of their customers.

At the beginning of this fiscal year, Mr. Lord said, CHA built its $40 million budget on an amount expected from HUD, only to learn eight months later that HUD would provide only 83 percent of the anticipated funding.

“That’s a huge amount on a $40 million budget,” he said.

As CHA struggled to make ends meet, authority officials made payroll payments with sources of federal money intended for other uses, according to CHA board member Eddie Holmes.

“I don’t think there was misspending,” Mr. Holmes said. “Looking at projections, we maybe did some things we shouldn’t have done. And it may have been (technically) inappropriate to use reserve funding to pay salaries — that should have been paid from a different pool of money.

“But now we’re going to go back and look at funding and expenditures for three years,” Mr. Holmes said.

Mark Brezina, HUD’s Knoxville field office director, said HUD officials began reviewing CHA records about a month ago.

He said reviews to date have found nothing “illegal,” but CHA concerns are not misplaced.

“It’s not happening to all public housing agencies,” he said of the current financial squeeze and CHA’s actions to solve it.

He said CHA’s use of HUD money now has been restricted.

“We control the dollars,” Mr. Brezina said. “Any drawdown of federal funds must be approved by HUD.”

Mr. Dull, the former executive director, did not return phone calls Thursday, but Mr. Holmes and others praised his vision and leadership since 2005.

“He was not forced out,” Mr. Holmes said. “With the layoffs, (Mr. Dull) felt it would be unfair for him to remain. In baseball terms, he took one for the team.”

Mr. Dull on many occasions told the CHA board and other officials that the future of public housing would have to be different and more self-sufficient because the federal funding that had sustained it was going away.

“Public housing as we know it is going away,” Mr. Dull told the Chattanooga Times Free Press in 2006. “It’s going to be transformed into something more sustainable and more focused on outcome.”

Moving forward

In addition to the 56 layoffs and Mr. Dull’s resignation, CHA also is reducing its pension contributions for employees and reducing all contract services by 25 percent to make up the $4.5 million deficit.

Ms. McCright said the housing authority’s 5,600 residents should not feel the impact of the shortfall or workforce reductions.

But at least one resident said Thursday he already sees a change.

“They closed our office at 3 p.m. today for a meeting at headquarters,” said Bobby Paris, president of the Dogwood Manor apartments. “People have been calling me asking why there’s no one there to answer the phone.”

CHA board resident commissioner Betty Robinson said she was surprised by the layoffs.

“I was knocked clean off my feet,” she said. “The board members had no idea. We’re waiting to hear for another meeting to see what’s going to happen.”

Bernie Miller, former CHA board chairman, said he agreed that housing funding expectations are changing, but he was surprised to learn of still more shortfalls and layoffs.

“I was deeply saddened and really shocked by it,” he said. “I feel we were adjusting very nicely. We were anticipating changes, and we were ahead of the curve in our thinking. I don’t know how we got behind the curve.”

Mr. Miller was referring to CHA efforts to diversify its role and ease into property management, which is less expense-ridden than public housing property ownership. The authority last year took over management of the city-owned Dogwood Manor from Chattanooga Neighborhood Enterprise. CHA also is helping to finance a portion of the planned $16 million Mayfield on Market condominium complex being built in the 700 block of Market Street.

Janna Jahn, a former housing authority policy planner laid off in February, said her separation agreement forbids her from speaking about the specifics of the layoff or her agreement, but in general she said many workers understand that federal funds for housing authority operations are drying up.

“I feel for the people (in the newest reduction) and what they’re going through. It’s devastating,” she said. “But it’s also an opportunity to build a stronger organization, and we need them (CHA) to be a viable part of the community.”

Ms. McCright said housing authority employees laid off Thursday would be offered a separation package similar to what was provided to displaced workers in February.

She said the staff met Thursday afternoon to discuss the situation, and she asked the remaining 150 workers to pull together.

“I told them many of them will be reassigned. And this is a time for us to work together, to keep this agency moving and to give the best to our residents,” she said. “We don’t know all the answers yet, but we are determined to get to the bottom of it and get answers and move forward.”