HUD REPORT SHOWS SERIOUS SHORTCOMINGS IN HANO OPERATIONS
Assessment is First Step to Fixing Troubled Agency

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) issued today the results of its 90-day assessment of the Housing Authority of New Orleans (HANO), which found that the agency has suffered from severe management, operational and staffing problems. The operational assessment was prepared by Gilmore Kean, LLC, the consultant HUD named in October 2009 to stabilize and assess HANO.

"The report's findings are serious, but are not unexpected," said HUD Assistant Secretary for Public and Indian Housing Sandra B. Henriquez. "That's why HUD Secretary Shaun Donovan and I took this important first step toward HANO's recovery by calling for the operational assessment to identify exactly what needs to be done to strengthen the agency and regain the public's trust."

The report highlights numerous shortcomings and systemic problems across most of HANO's departments and programs. Specific findings show that HANO:

• Is both under and inappropriately staffed across most departments, and is overly reliant on contractors to perform daily activities. In addition, current staff is not provided sufficient training.
  
  
• Is operating its public housing and Housing Choice Voucher programs without accurate data on the programs' financial condition.
  
  
• Has weak or no internal audit and compliance functions leading to fraud, waste and abuse.
  
  
• Has a highly inefficient procurement process.
  
  
• Does not have a strategic housing management and maintenance plan to adequately organize work to repair, renovate and reoccupy units.
  
• Is plagued by inadequate senior oversight of strategic decision-making, staffing and contractors for the "Big Four" redevelopment projects.

"Henriquez said that while Gilmore Kean, LLC will continue managing the day-to-day operations at HANO through July 2010, HUD has already begun its search for a long term consultant to implement a new recovery plan based on the findings in this report. HUD estimates it will be three to four years before HANO is returned to local control.

In the coming weeks, Gilmore Kean, LLC will hire a chief financial officer who will closely monitor HANO's day-to-day cash management. In addition, work has begun to restructure the staffing patterns and personnel policies at HANO, to ensure new leadership of its Housing Choice Voucher Program (HCVP). HANO will also issue the results of the HCVP lottery and begin issuing vouchers to the highest priority applicants soon.

"David Gilmore, the administrative receiver, has assured HUD that HANO is operationally solvent and families and clients of the agency will continue to receive services and payments for services rendered," said Henriquez. "We believe that HANO is fixable with hard work and the right leadership. The assessment acknowledges that many HANO employees are eager to see changes made, and with sufficient training they can work to meet HANO's mission to provide high quality, affordable housing for New Orleans families. This assessment is the first step that will lead this housing authority toward achieving that mission."

In addition to conducting this assessment, the Gilmore Kean, LLC team has also managed HANO's day-to-day operations and has taken quick action to resolve several critically important staffing and redevelopment challenges. Gilmore Kean, LLC has made a substantial effort to ensure HANO fully obligates the $34.5 million in funding received through President Obama's American Recovery and Reinvestment Act (ARRA) of 2009. The deadline for full obligation is March 17, 2010 and as of February 18, HANO has obligated more than 70 percent of those funds, most of which will be used to rebuild vital public housing units in New Orleans. In addition, Gilmore Kean, LLC has maintained a zero-tolerance policy for unethical and illegal behavior by HANO employees and has taken immediate action when a problem has been discovered. Gilmore Kean, LLC and HUD are also working very closely with Providence/Enterprise, the Lafitte developer, to accelerate the number of affordable public housing units built in the first phase of development.

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