The Richland City Council isn't quite ready to let the Richland Housing Authority close up shop June 30 as the embattled agency's board members have planned for the last few months.
Council members discussed the housing authority at a workshop meeting Tuesday and said they're worried about the city being left holding the bag if the housing authority's bills aren't paid before the end of the month.
"There could be some financial risk depending on the status on June 30," Mayor John Fox said.
Although the housing authority was created by state statute, the city council has the power to activate or deactivate the agency and to appoint members to its board.
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So despite its plans, the agency can't actually dissolve without an action by the council -- but if the council takes that action, the city could become liable for bills the housing authority still owes.
The housing authority is shutting its doors after years of financial troubles that culminated in the federal Department of Housing and Urban Development yanking the authority's Section 8 housing voucher funding when a HUD report revealed the authority couldn't account for nearly $500,000 in Section 8 money.
The report also found the authority had misused housing assistance payments and continued to allow a perceived conflict of interest it previously told state auditors was resolved.
The board has spent the last several months selling off assets to pay debts -- including a fire sale of miscellaneous items last Saturday -- but still owns two Richland houses leased to Lourdes Health Network for housing for people with mental illnesses.
Housing authority board members have told the council they intend to resign June 30, leaving the agency essentially rudderless, and either the city would have to take over or all operations and decisions would fall on Peggy Brown, the authority's part-time acting director and sole employee.
Brown brought a balance sheet to the council on Tuesday showing the nonprofit agency is about $4,000 in the black if it can sell the two houses for their full $118,500 value.
But because the houses were purchased in part with grant money, they have to continue to be used as housing for mentally ill people, said Joe Schiessl, Richland's planning and community development manager.
Remaining liabilities include about $20,000 owed to HUD, more than $32,000 owed to Benton City as payment in lieu of taxes, $58,300 on the loan for the two houses, and $50,000 for a line of credit.
The agency's debts total nearly $203,000. It has $88,500 in cash plus the value of the two houses, totaling $207,000 in assets.
Schiessl said he thought it likely some of the liabilities listed would remain on the books come June 30.
But the clock is ticking on the board's liability insurance policy, which expires at the end of the month. Schiessl said that's why authority board members want to jump ship now -- before the coverage ends and they're stuck with any personal liability.
The housing authority board may be able to purchase an extension, known as tail insurance, for $11,000. That would provide another year of coverage and allow the agency more time to pay its debts and do any work necessary for taxes and state audits, Schiessl said.
Consensus among council members was that purchasing the additional insurance and keeping the board in place was preferred, although the council has no power to direct the board to buy insurance or to stay.
The housing authority board has scheduled what is supposed to be its last meeting for next Tuesday.