Federal audit dings San Mateo county

A federal audit of the San Mateo County Housing Authority has turned up two significant potential violations, one of which could cost the county $2 million in repayments.

While the U.S. Department of Housing and Urban Development audits the authority routinely, most discrepancies and violations are resolved quickly, according to authority Director Duane Bay.

This time, HUD is investigating two issues — one related to fund transfers, and one related to 71 families who were bumped to the top of the waiting list for Section 8 housing — that could be more challenging to resolve.

Audits of paperwork from 2004 through 2006 show that the Housing Authority took $2.3 million from several of its funds to repay cost overruns incurred during the construction of Colma’s 30-unit El Camino Village project in 2001.

While HUD approved those internal loans, some of those approval documents have been lost during leadership changes at the County Housing Authority, Bay said.

In a separate alleged violation, the Housing Authority pulled 300 families from a list of those waiting for federally subsidized Section 8 housing and moved them into its Moving to Work program, which helps working families find housing. However, 71 of those families did not get housing. They were placed at the top of the Section 8 waiting list, Bay said.

“It turns out there’s a regulation that says if you [give a preference to working families], you have to also give a preference for seniors and disabled people,” Bay said.

At the time, HUD gave approval for the Housing Authority to move those families to the top of the waiting list, he added.

“We thought we were abiding by the rules, or we wouldn’t have done it,” Bay said.

If HUD disagrees with the Housing Authority’s stance, the county could be ordered to pay $2 million to the 71 families displaced from the top of the Section 8 waiting list.

San Mateo County’s Section 8 waiting list had 2,025 families on it as of July 1, according to Bill Lowell, deputy director of the Housing Authority. Most of those should be placed or will take themselves off the list by the end of 2007, he said.

HUD officials said they would not discuss the audit, citing confidentiality.

It could take another three months for HUD to make its findings public and to review the county’s response to its audit, according to Bay.

“We’re hoping that, through the appeal process, HUD will mitigate some of the sanctions,” Supervisor Jerry Hill said. “I hope they will not see fit to charge us.”

bwinegarner@examiner.com

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