Dec. 20, 2002 – The Housing Authority's new executive director said at a press conference on Friday that the U.S. Department of Housing and Urban Development has let him know that VIHA's financial reorganization is off to a good start.
Ray Fonseca said he submitted VIHA's 2003 Management Operating Budget to HUD on Dec. 17, and "HUD has indicated that we are moving in the right direction."
Fonseca and the VIHA board chair, Fitzgerald Rowe, called the St. Thomas press conference upon their return from meetings with HUD officials in Washington, D.C., and with regional directors in Puerto Rico last week.
The board is responsible for overseeing all Housing Authority operations, Rowe said, but until recently, due to a lack of communication, it did not know how bad the agency's financial situation was.
Fonseca and Rowe have set Dec. 31 as the deadline to submit an overdue audit report to Washington and to deliver a plan to correct a list of deficiencies spelled out by HUD officials after a review conducted in September.
Prior to the mid-morning press conference, the board reviewed a draft of the 2001 audit report, which was supposed to have been submitted several months ago. Rowe and Fonseca said they were unaware the report hadn't been submitted on time until they met with HUD Assistant Secretary Michael Liu to ask forgiveness of a $12 million hurricane recovery loan.
"It should have been in by Sept. 30," Fonseca said. The board now has nine days to respond to the audit report before it's finalized and sent to Washington.
Fonseca said steps taken to cut costs by $1.7 million include the layoff of 11 upper-management employees and salary cuts for an undisclosed number of managers facing reassignment (See "VIHA cost cutting bites into bureaucracy".)
"All termination notices are implemented," he said Friday. "All that's left are reclassifications, some of which will result in pay cuts."
Several of the terminated administrators sat silently through the press conference. Afterward, one of them, former comptroller Shirley Lake King, said they should have been given a chance to defend their job performance before they were fired.
King said Fonseca never shared the results of the September HUD review with her or any other VIHA executives, although he picked up a copy of the draft report shortly after becoming executive director in mid-October. "That's the same report that deals with the commingling of funds," King said, "and I feel we deserve to give fair representation of the authority's position before it becomes a final report."
In the review of VIHA's operations, HUD cited four deficiencies in need of immediate correction — commingling of funds, poor financial management, unallowable expenses, and ineligible interest expense.
Among the unallowable expenses is a cellular telephone bill for $8,240. Fonseca said the phone bill was discovered at the start of this week after Housing Authority officials reduced the number of staff members authorized to have cell phones to 11 from 61. He said he learned that managers had been making the minimum monthly payments. "VIHA does not have the funds to pay off the entire balance," he said.
Because of delays in HUD's approval of the 2002 budget and the corrective actions ordered by the federal department as a condition of approval, VIHA is now catching up on the submission of its 2003 budget. A request for nearly $28.2 million was submitted a few days ago, Fonseca said, adding that because of the steps already taken toward financial reorganization, "I don't think HUD will have any substantial changes."
High on the priority list for the new year is the rehabilitation of vacant housing stock. There are currently 743 vacant apartments that can bring in revenue once they are ready for the rental market. Among HUD's biggest complaints were the slow turn-around time for rentable public housing units in the Virgin Islands and the loss of revenue from 967 units lost to demolition or converted to home ownership. Rowe said many vacant apartments could have been ready before Christmas — but weren't, for lack of maintenance.
Fonseca is asking authorities to fund maintenance equipment while he goes ahead with plans to recruit plumbers and maintenance workers for both districts. Hiring notices for maintenance and community service workers have been published on St. Croix and are expected to appear soon on St. Thomas, he said.

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