HUD finds FRHA ‘unsatisfactory’

Published 7:29 pm Friday, March 13, 2020

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That was the overall rating the U.S. Department of Housing and Urban Development gave the Franklin Housing and Redevelopment Authority following its on-site management review of Franklin’s public housing complexes in early January.

According to HUD’s Feb. 26 report, the rating is attributed to “policies and procedures which are ineffective or lacking, thus resulting in frequent findings and a general failure to comply with HUD Multifamily requirements.” Specifically, it states the FRHA had a backlog of over 600 unresolved requests for maintenance in January, but only three people on staff in its maintenance department to address these concerns.

Further, numerous bills from third-party vendors had gone unpaid for 90 days or more at the time of HUD’s Jan. 7-8 walk-through, with some contractors now refusing to perform the necessary repairs until payment is received. As a result, current tenants may not be residing in decent, safe and sanitary conditions, the report concludes, adding that vacant units are remaining so for months because management has stated there are no funds nor personnel available to make them ready for new tenants.

At a joint meeting of Franklin’s City Council and the FRHA board, held Monday evening, Mayor Frank Rabil said he himself had received calls from vendors who do business with the FRHA concerning lack of payment.

There have been occasions where I have received three to four calls a week [from contractors] inquiring about payments or lack of responses from FRHA,” Rabil said. “This is not an every week occurrence, but happens all too frequently.”

Reese — who would not give his full name to the paper — is an accountant who began assisting the FRHA in 2017. When contacted on Friday afternoon, though, Franklin Councilman Linwood Johnson said his first name is James.

Reese was called back in 2019 following the departure of former FRHA Executive Director Philip Page Jr., and confirmed to the mayor at Monday’s meeting that “a significant number of vendors” are still 30 days or more overdue for payment.

Some vendors won’t be able to get paid 100 percent,” Reese said. “We’re going to try to take care of the critical folks … If we spent every penny, we could probably come within $20,000 to $30,000 of paying everybody off.”

HUD’s report also identified deficiencies in the FRHA’s background check process for accepting tenants, stating that one who had moved into the Pretlow Gardens apartment complex on Feb. 9, 2018, should not have been deemed eligible for admittance, owing to that person’s criminal record. Specifically, this person served four years in prison after being convicted in 2011 on charges of burglary, use of a firearm and kidnapping. The report then states there was no background check on file for this particular tenant, and that Interim FRHA Executive Director Loretta Batten had told HUD inspectors during their January walk-through that there was at least one other tenant with a felony background living at Pretlow Gardens.

At Berkley Court Apartments, HUD found that one tenant’s file reflects numerous court dates for non-payment of rent, as well as several incidents in which this person was involved in fights with other tenants and guests. Franklin Police Chief Steve Patterson further confirmed that in December 2019, the FPD responded to four citizen calls for service and one disturbance at Old Town Terrace, two citizen calls and one disturbance at Pretlow Gardens and eight citizen calls and one disturbance at Berkley Court. Yet when HUD inspectors inquired as to why there was no security in place at any of the three FRHA-administered apartment complexes, the report states that management and the FRHA’s Board of Directors had claimed contracting private security was “too costly” and that there was “no need, as there have not been any incidents.”

Numerous other tenants also show delinquencies in their rent payments, which HUD says has affected the FRHA’s ability to fund daily operations. Some tenant records also show unauthorized fees such as $10 per month for trash collection and $25 late fees for not paying rent in full by the end of the day on the fifth.

According to the report, any fees other than rent, security deposits or late charges must be pre-approved by HUD, with late fees mandated at $5 if not paid by the fifth of the month. An additional $1 may be charged for each day after the fifth that rent is not paid in full, not to exceed $30 per month. In one case, a tenant with zero income who moved into Berkley Court Apartments on March 18, 2019 was charged a $100 security deposit, when this should have been only $50.

Rabil then inquired as to when the FRHA first learned of these concerns and asked what the FRHA has done since HUD’s January walk-through to remedy these findings. Scott Alperin, the FRHA’s new legal counsel, said the report came out on Feb. 26 and that he had not yet reviewed it. The mayor then read aloud a passage from the report, stating that these findings had been discussed at the closeout session following the Jan. 7-8 HUD walk-through and again on Jan. 9 with Batten, Reese, FRHA Board of Directors President Cheryl Vincent and Christopher Sterling, who is identified as a representative of the investors in Berkley Court Apartments LP — credits to fund renovations. Reese then acknowledged that a closeout session had taken place.

“So you knew on Jan. 7 and 8 that you had things that needed to be addressed,” Rabil concluded.

Prior to being questioned by Rabil, Alperin had handed City Manager Amanda Jarratt a document he referred to as a “zero balance notice,” which he said indicates that “all the debts the FRHA owes to the city are paid to our knowledge.” According to Jarratt, the document contained receipts from electric bills that were recently paid for various accounts in the name of the FRHA.

“They have not paid the $300,000-plus in back taxes owed to the City of Franklin,” she said, referring to the $313,869.68 on record as of Sept. 1, 2019, at the city treasurer’s office in delinquent taxes, penalties and interest owed for Berkley Court Apartments LP and another limited partnership the FRHA created in 2013, Pretlow-Old Town Apartments LP. Though housing authorities in Virginia ordinarily operate as tax-exempt non-profit organizations, and in fact are prohibited by state law from constructing any project for profit or as a source of revenue to a city or county, the city treasurer’s office has taken the position that, by virtue of deeding these properties from FRHA ownership to limited partnerships with investors, they no longer fall under the FRHA’s tax-exempt status, and as such should have been paying taxes for the past several years.

Councilman Greg McLemore then asked Reese if he was the one now making decisions as to what bills get paid.

“No, I’m not,” Reese replied. “Ms. Batten makes the final decision. She and [Cheryl] Vincent sign the checks.”

“My understanding was the board was the housing authority, not one individual,” McLemore continued. “Ms. Batten, who instructed you which bills to pay? Did you make the decision?”

“Yes,” Batten answered.

“Have you guys as of yet advertised for a full time executive director?” McLemore asked.

“We have not,” Batten answered.

“Were you not instructed by the board to advertise?” McLemore asked.

“We were, but we had no funding,” Batten answered.

The report gives the FRHA until April 10 to take the needed corrective actions and states that if the unsatisfactory rating is not appealed within 30 days, or if it remains unchanged following an appeal, the FRHA could lose its previous participation clearance. Lisa Wolfe, regional public affairs officer for HUD, explained that previous participation is a HUD system used when a business or individual wishes to do business with HUD. If the FRHA loses its previous participation clearance, no future business dealings between HUD and the FRHA would be permitted until the deficiencies in the report are resolved.

“At this time, HUD’s Multifamily Housing has concerns about two properties in the Franklin Redevelopment and Housing Authority portfolio that have converted from public housing to multifamily through HUD’s Rental Assistance Demonstration program, Berkley Court and Pretlow Old Town,” Wolfe said. “HUD has requested that a HUD-approved management company be put in place to oversee the day-to-day management of the two properties.”

Following the joint meeting, when approached by The Tidewater News, Reese declined to comment further on the FRHA’s situation, deferring to Batten. Batten too declined to comment that evening, deferring to Alperin. Alperin, on Wednesday, deferred back to the FRHA, which by press time on Friday, had yet to respond to any of the questions the paper had posed to Alperin.