Feb. 23, 2007 | Mayor: County can fix agency | Miami Herald

While agreeing with most findings of mismanagement in a new audit, county leaders said it does not justify a proposed federal takeover of the Miami-Dade Housing Agency.

"This hasn't informed us of anything we were not aware of and taking action on, " County Mayor Carlos Alvarez said Thursday. "We have taken the most aggressive steps we possibly can, and I don't believe the federal government can do a better job."

The audit concluded the agency routinely overdrew its accounts by millions and appears to have been poisoned with bad management systems, sloppy record-keeping and conflicts of interest on massive development deals.

Many conclusions in the report, commissioned by the U.S. Department of Housing and Urban Development, were already widely known through previous government investigations and The Miami Herald's House of Lies series last year.

"We all know that this agency has been suffering, " said Cynthia Curry, the senior advisor to County Manager George Burgess who has overseen the rebuilding of the Housing Agency since spring 2006.

HUD Assistant Secretary Orlando Cabrera has repeatedly cited the audit as evidence that the Housing Agency's problems are beyond county leaders' ability to repair. His boss, HUD Secretary Alphonso Jackson, said he will wait until at least early March to decide whether to take over the Miami-Dade agency.

The Alvarez administration's first-look response to the audit -- begun Wednesday and finalized Thursday -- confirmed many of the findings and outlined steps already taken to address them.

"The agency now, for the first time in probably 10 years, has individuals who have the requisite housing experience, " Curry said.

In addition to recruiting new managers who have started fixing internal procedures, the county has also canceled more than $18 million in contracts with deadbeat developers, begun repairing hundreds of unliveable public housing units and rewritten rules for developing, leasing and selling subsidized homes.

"We're headed in the right direction, " Alvarez said.

Senior administrators also disputed a handful of the audit's findings, and said they could not understand others until HUD provided the thick folder of backup documents that support the 35-page report.

Burgess' office requested that material Thursday, and HUD spokeswoman Donna White said the agency would provide anything it could under law.

"To make improvements and make corrections, we need to see the backup, " Curry said.

For example, auditors wrote that the agency was investing federal housing money in low-risk ventures -- an acceptable practice -- but improperly mixing interest from those investments with local funds.

But the audit also found multimillion-dollar deficits in those federal funds, and the agency managers could not understand how the audit found those shortfalls on one page and interest-bearing investments on another.

"I need to see the data, " said Glenda Blasko, the Housing Agency's chief financial officer.

On the job less than three months, Blasko said the only investments she has found use local money produced by a surtax on commercial property sales. Only one federal fund had a positive balance, she said, and its interest was properly kept separate.

Curry and Housing Director Kris Warren also complained that auditors rebuffed requests for a meeting to discuss the findings before a report was written. As a result, they said some data collected by auditors were misunderstood or mischaracterized.

The audit cited the use of surtax funds to cover shortfalls in federal programs as an example of "poorly defined and executed business practices and operational inefficiencies."

But Warren said more than $28 million of surtax transferred to those federal programs was a legitimate policy decision, approved by the County Commission in response to rising costs and insufficient HUD funding.

"You either fire half your staff and board up units or you borrow from county resources, " Warren said.

The audit also said Burgess waited until mid-July to assign a "management-assistance team" of senior staff members -- days before The Miami Herald began its series.