The U.S. Department of Housing and Urban Development Inspector General (IG) in July 2013 found that the Stark Metropolitan Housing Authority used public housing operating and capital funds for ineligible programs, including its credit union -- Stark Metropolitan Housing Authority FCU (Canton, Ohio).
The report noted that the Housing Authority inappropriately allocated $190,547 to pay the salaries and benefits of credit union employees.
The report also noted that the Housing Authority did not provide documentation to justify paying $1,170,364 in credit union salaries and benefits, $227,500 in annual contributions to the credit union, $18,423 lawn and maintenance expenses; $14,472 in training expenses; and $32,270 in utility expenses.
In addition, the Housing Authority purchased a non-interest bearing account at the credit union despite the Housing Authority's general depository agreement noting that all funds should be deposited in an interest bearing account. As a result, the Housing Authority failed to earn almost $16,000 in interest income.
Furthermore, the IG report found that the Housing Authority provided a significant subsidy to the credit union by leasing its office space to the credit union for $1 per year over 12 years, when the monthly fair market value rental value of the property was approximately $10 per square. The report, using an $8 per square foot rental value, found that the Housing Authority could have earned almost $226,000 in rent from the credit union.
The IG report recommended that the Housing Authority reimburse its operating and capital funds and charge and collect fair market rent from its credit union.
In a related story, the credit union has filed a complaint in Stark County Common Pleas Court claiming the Housing Authority has wrongly attempted to recoup $2 million allocated to the credit union over the years; withheld $100,000 in promised subsidies; and threatened to raise the credit union's rent.
Read the report.
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