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HUD had been aware of negative conditions at Alexander County Housing Authority (ACHA) since at least 2010.  HUD identified issues with ACHA’s governance, including the misuse of funds, conflicts of interest, and a failure to comply with HUD policies and Federal civil rights laws.  Further, about 200 children and their families lived in units with peeling paint; graffiti; pest infestations; and other health and safety hazards, such as inoperable appliances and obstructed accessibility routes.

Despite HUD’s attempts to bring ACHA into compliance, its efforts did not resolve the negative conditions at ACHA.  Residents continued to live in deplorable conditions as ACHA languished, and ACHA officials were generally uncooperative in addressing the negative conditions HUD identified.  Since 2010, the Office of Public and Indian Housing (PIH) had used several oversight tools to identify issues at the ACHA, but major enforcement action against ACHA occurred only after HUD assembled a cross-programmatic team.  HUD hesitated to take ACHA into possession in part because PIH officials believed that they had to allow ACHA an opportunity to improve instead of declaring it in substantial default.  Additionally, HUD guidance and expertise on receiverships were limited.

We recommend that PIH (1) create agreements and strategies with other program offices that describe when cross-programmatic reviews and enforcement actions against Public Housing Authorities (PHA) are required, (2) train PIH officials on the authority and processes for declaring PHAs in substantial default and for taking PHAs into HUD possession, (3) update and strengthen the training program for HUD receivers of PHAs, and (4) update procedures for receiverships to include specific guidance on when initiating a receivership may be appropriate.