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Monday, May 27, 2024

City, county to temporarily bail out housing authority

The Wilmington Housing Authority is out of money and is requesting financial aid from New Hanover County and the City of Wilmington. (Port City Daily/Amy Passaretti)

WILMINGTON — The Wilmington Housing Authority is out of money.

With 151 families still displaced and no sign of receiving emergency federal funds any time soon, WHA has requested help from New Hanover County and the City of Wilmington. Based on city manager Tony Caudle’s recommendation, the county and city would evenly split the $6.3-million bill, dishing out $3.15 million each.

WHA communities have suffered severe mold damage, exacerbated by Hurricane Florence and compounded by shut-down orders from the pandemic. For almost 14 months, no units were able to be inspected, allowing issues to reach inhabitable status. It’s an estimated multi-million-dollar fix that has resulted in nearly 400 individuals living in hotels, attributing to an additional $300,000 WHA is paying out weekly.

The organization applied for emergency funding from the U.S. Department of Housing and Urban Development, but leadership said WHA has been getting the run around with its application process.

“[T]he money it’s using runs out this week,” Caudle told council at Monday’s agenda briefing. “We’ve been working through this over the past two weeks and trying to figure out what we can help them with. The fact remains, there is no cash flow beginning this week and they’ve exhausted their cash flow with regard to remediation and operational aspects of their ongoing initiatives.”

Caudle made clear the city is in no way responsible for WHA’s shortcomings and, therefore, he would not be comfortable covering operational expenses, such as salaries, office space, etc. The city has established a commitment to affordable housing, however, through gap financing and loan options to developers. Caudle believes the city could lend WHA the money to cover capital costs of fixing up the apartments.

The city’s only direct authority over public housing is that it appoints its board members.

“They run the entity,” Caudle said. “We have not participated financially and I don’t anticipate taking over the administrative side. Honestly, I have been an opponent to participating financially, but I don’t see any way around this right now.”

Council raised concerns about whether WHA could possibly ask for more down the road. Caudle assured only if the estimated costs the city agrees to cover exceed WHA’s expectations.

The total amount needed is $15.5 million, which also includes HVAC work, additional mold testing, purchasing furniture, relocation costs and hotel expenses (including per diem costs for food). The $6.3 million to be shared by city and county budgets is related strictly to unit construction needs.

According to volunteer WHA board member Jeff Hovis, there are 152 units that need some type of restoration; 45 of those have been taken down to studs and 14 are under construction with contractors on site.

The units are covered for property and casualty insurance, but Hovis said submitted claims were denied for mold issues. He said there was up to $15,000 in the policy for mold coverage, which was released by the insurance company, but “they’ve washed their hands from that point [on].”

According to Hovis, the WHA board was able to scale back the scope of work requested on 105 units. Instead of a complete rebuild on some units, it was determined repairs could be sufficient. It would decrease the cost per unit to $25,000, originally estimated up to $80,000.

With the fund assistance from county and city, Hovis said the work could be completed in 26 weeks, with an end-of-the-year goal at the latest. The sooner more units come online, the less WHA has to pay in hotel expenses and per diem.

WHA is also paying $4,000 per week for storage costs to keep residents’ belongings safe while their homes are under construction.

The plan is to tackle the units that can be restored the quickest to rehome as many individuals as possible. WHA also will continue mold testing on repaired units to prevent future crises.

Council member Charlie Rivenbark questioned where the federal government’s involvement was in all of this. The housing authority receives annual allocations from the HUD and applied for emergency grant funding in February.

It requested $12,682,000 to cover six months of financials, but Hovis said Monday the application had been redirected 12 times and sent back a handful of others asking for additional information.

READ MORE: Housing authority’s $13M grant request delayed

“They determined the first go-around, it was too much focused on the fact that it was related to hurricanes,” Hovis explained to council. “Hurricanes are a federally mandated situation and there is funding out there for that, so we have applied to those state funds.”

WHA then tried to approach the grant from a Covid-related aspect, since unit inspections couldn’t occur for 14 months as a result; however, Hovis said there is only roughly $28 million of a Covid-related emergency funding pot available for the entire country’s public housing entities.

“This situation doesn’t fit into one box,” he added. “They want it to be all hurricane or all Covid, or some other type but it’s combined. And our entity didn’t really have a person skilled in HUD language. They are a difficult organization with many regulations.”

Caudle explained the city cannot use American Rescue Plan Act funds to assist because the situation does not fit the intended guidelines. Since the mold and leaks occurred over time, the city could not connect the dots to Covid-19 entirely.

“You’re caught in the bureaucracy of different buckets of money for different things,” council member Neil Anderson said. “If we’re going to help, what’s fair to the city taxpayer? I’m not trying to be cold or calculated, but how do we split it?

An even split was proposed by Caudle after conversations with the county, even though shared expenses in the past usually result in 40/60, with the county taking the latter. Caudle explained the county has already chipped in the costs for furniture, supplies for relocation and storage. It is also allocating $5.6 million to cover hotel expenses, even though it is actually coming from federal money for homelessness, as a pass-through of the county (pass-through money is funneled through a state agency to a non-state entity).

The city’s portion would come out of its fund balance, as well as dip into the $1.5 million set aside for affordable housing.

“It’s designed for gap financing, but is this a more important or pressing need for a forthcoming set of units?” Caudle asked council.

Any city and county funds not used would be returned immediately, with the remaining paid back at an unknown time. The council members also requested the city be paid back first. Mayor Pro Tem Margaret Haynes explained the county is responsible for social services and the health department, and the bulk of its budget comes through federal and state money, unlike the city.

“We’re doing this because we’re responsible local leaders and we have a crisis here,” Haynes said. “The federal government should be paying, not the county and certainly not the city. We have a fiduciary responsibility to our taxpayers, and if we do something with no mandatory reason to participate, we ought to get our money back first.”

However, the council came to terms with the fact that it may never get refunded from the “loan.” 

To ensure WHA receives the money as quickly as possible, an ordinance will be added to Tuesday’s council meeting at the last minute requesting the $3.1 million come out of the city’s fund balance and reducing the $1.5 million budgeted for affordable housing. It leaves the city with just $400,000 to spend on workforce housing efforts over the next year, if approved.

“Obviously, we have to step up whether it’s our role or not,” Haynes said. “Our citizens are in dire straits, and by no fault of our own, we’re going to have to try to help solve this problem.”

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