Chattanooga Housing Authority board members, staff and residents cheered Thursday when board members approved a settlement agreement for its $4.1 million debt to Fannie Mae.
“We walked this road together,” said Betsy McCright, CHA’s executive director. “It’s a day of celebration for everyone.”
Fannie Mae agreed to release CHA from its debt if the housing authority pays back $1.25 million using nonfederal funds by Dec. 21.
“We’re probably going to write the check within the next week,” said Eddie Holmes, board chairman.
The board also announced that because of the agency’s better financial position, its 130 staff members will get a 3 percent raise in January, their first in two years. And CHA staff who volunteered to take a salary cut during the agency’s financial turmoil will have their salaries restored.
“It’s a success story from where we’ve come,” board Vice Chairman Jim Sattler said.
CHA staff members last got a raise in 2008. That year a federal investigation found that between 2006 and 2007 CHA’s payroll increased by almost $650,000, from $8.5 million in 2006 to $9.1 million in 2007.
Holmes said the agency now has better reporting of its financial situation to make sure overpaying and hiring too many people doesn’t happen again.
McCright thanked Knoxville Community Development Corp.’s chief operating officer, Art Cate, and former chief financial officer, John Coxwell, for helping correct agency finances. She also thanked CHA’s current CFO Philippe Lindsay for his work.
Sattler also thanked the staff.
“This gives us opportunity to be more attentive to the needs of the residents,” he said.
Fannie Mae loaned CHA $3.6 million in December 2007 to help fund a downtown condo development called Mayfair on Market that would include affordable housing. However, the development was never built, and CHA used $1.2 million of the money for operational expense.
CHA was put on HUD’s list of troubled agencies, which meant it had a tougher time applying for grants and loans.
The agency laid off a third of its staff and replaced its executive director and CFO and began submitting monthly reports to HUD.
CHA officials said the housing authority could be off HUD’s troubled list within one year after paying the debt to Fannie Mae.