The Portsmouth Housing Authority owes a federal agency $150,000. What's being done?

PORTSMOUTH ― Vice-chair Terri Cortvriend filed the Portsmouth Housing Authority’s Jan. 4, 2023 board meeting minutes on the R.I. Secretary of State’s website mere hours after Chairman James Seveney called the meeting into recess, her swift and early completion of a reporting task required by the state’s open meeting law a study in contrast with the lack of transparency and complete dysfunction which once prevailed at the Portsmouth Housing Authority and led the agency afoul of the federal government.

In bright red letters at the top of the page, the Jan. 4 meeting minutes filed by Cortvriend inform the public that this meeting was recessed rather than adjourned, a point of order which allows the board to quickly reconvene and complete the Jan. 4 agenda as soon as the PHA’s legal counsel receives and reviews an official settlement document from the federal Department of Housing and Urban Development (HUD).

Seveney said at that meeting he would ensure notice of the meeting continuation was posted on the door of the Portsmouth Town Hall at least 24 hours in advance, and he said the PHA board would also post notice on the Secretary of State’s open government website if it were possible to do so. He and solicitor Charles Levesque explained this public notice would be in keeping with the current board's track record of transparency but was not bound by the 48-hour notice a new meeting would require under the law.

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Why does the Portsmouth Housing Authority owe HUD $150,000?

The currently serving PHA board, which was appointed to right a sinking ship after multiple members of the previous board resigned in 2018 and the PHA effectively ceased to exist as a functioning entity for about two years, started meeting in November 2020. They inherited a real financial and legal boondoggle from their predecessors.

The PHA is facing penalties of up to $150,000 from HUD, incurred due to years of negligent, non-compliant record-keeping practices on the part of Coastal Housing Corporation, the former property manager for Portsmouth’s Quaker Manor and Quaker Estates senior housing properties.

HUD sent multiple notices of violation over the course of two years to Coastal Housing Corporation, which was overseeing a total of 73 HUD-subsidized affordable housing apartments across the Quaker Estates and Quaker Manor properties.

At some point, HUD imposed fines of $50,000 apiece for three consecutive years' worth of missing audits: 2018, 2019, and 2020. HUD also considers the Quaker properties to be "troubled" (the agency uses four indicators – physical condition, financial condition, management operations, and the Public Housing Capital Fund program – to score properties on a 100 scale, with properties scoring under 59 labeled "troubled") and requires the property manager to file monthly cash flow reports in addition to the annual audits.

According to the PHA’s Annual Report for 2020, the town of Portsmouth was unaware of these notices of violation until HUD required a change in management agent due to Coastal Housing Corp's problematic performance. HUD approved the transition from Coastal Housing Corp to the current agent, Phoenix Property Management, in January 2021.

The PHA board has a good working relationship with the company's ownership and made a point in its 2022 annual report to praise Phoenix for its performance, commitment, responsiveness, and assumption of significant legal costs in retaining expert legal services from the firm Nixon Peabody to aid in the resolution of the inherited HUD issues.

What have the Portsmouth Housing Authority and the town of Portsmouth done to solve the problem?

The work of the reconstituted PHA board of Seveney, Cortvriend, Gary Gump, Sharlene Patton and Ronald Harnois, along with solicitor Levesque, has been mainly focused, according to the PHA’s 2022 annual report, on “(delivering) the delinquent HUD financial reports and (settling) the associated civil complaint brought by HUD’s Enforcement Division.”

The Town Council agreed in January 2022 to pay $30,000 for audits required by HUD for the years 2019, 2020 and 2021, which were completed and submitted over the course of the year with the 2021 draft report submitted in October 2022 bringing the PHA up to date with all HUD-required financial reports.

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The PHA is also close to reaching an out-of-court settlement with HUD regarding the fines and has been meeting with HUD enforcement lawyers on a bi-weekly basis since February 2022 “to negotiate a reasonable settlement of the civil penalties they demand for the late audit reports.” It is this final settlement which will be voted on when the PHA board reconvenes, potentially on short notice, to conclude the agenda of the Jan. 4 meeting.

Settlement with HUD needs to be finalized by Jan. 17 to avoid court proceedings

The board decided to recess rather than adjourn on the advice of their solicitor Charles Levesque, chiefly because the matter is somewhat time sensitive and they need to be able to move quickly – the PHA’s appeal for more time to settle with HUD was denied, meaning in the absence of a settlement, court proceedings would begin on Jan. 17.

At this point, the PHA's legal representation is waiting to receive and review the settlement document from HUD, after which it will be passed on to the PHA board. Once they receive the document, they will reconvene their Jan. 4 meeting, discuss and vote on the settlement (presumably in executive session without the public present) and then announce the results of the vote to the public immediately afterwards, with the obvious goal of approving a final settlement before Jan. 17 and thus avoiding court proceedings.

Levesque told the Daily News over the phone that the legal interactions started with HUD filing a complaint against the Housing Authority. "We responded," he said, "and then we got into negotiations."

"As those discussions seemed to be going well," he continued, "we jointly requested from the administrative hearing judge who would hear the HUD complaints against the Housing Authority, that we be allowed to pursue those negotiations and that any date the court had set would be put off. We – and this is both parties, HUD and the Housing Authority – received at least three continuances; the last was to end on Jan. 17 of this year. As we came very close to settlement, we asked the judge for one additional continuance – that, the judge refused and said 'No, if you're not resolved entirely, I want to begin on the 17th of January.'"

Sale of Quaker Manor LLC to Sabattus Housing, a nonprofit specializing in HUD properties

The PHA board agreed at its Feb. 28, 2022 meeting to transfer ownership of the Quaker Manor property to Sabattus Housing, a non-profit company specializing in the preservation and maintenance of HUD-regulated properties. The Board reviewed a draft purchase and sale (P&S) agreement offered by Sabattus Housing, Inc. at its most recent meeting, where Gump raised the point of ensuring that all outstanding debt service be specified in the P&S. Sabattus Housing agreed it was unclear that the remaining debt obligations to RI Housing were included and took action to update the P&S to include clear definition of all outstanding debt.

The board voted unanimously to approve the draft P&S agreement contingent upon Solicitor Levesque’s review and approval of the proposed changes, and Seveney indicated the transfer of ownership could be completed by next month. This will remove any ownership element from the PHA’s mission and fundamentally alter the purpose and functionality of the agency. Chairman Seveney asked the board members to consider the philosophical mission of the Housing Authority absent the ownership component, with some members pointing out that Portsmouth's seniors in public housing will always need some sort of advocacy body to support them.

This article originally appeared on Newport Daily News: Portsmouth Housing Authority settles with HUD over $150,000 fine