HUD Auditors Fault Memphis for Shoddy Home-Improvement Program

Residents of Memphis receiving government loans for housing repairs instead got stuck with termites, leaking roofs, and air conditioning systems that barely mitigated the 100-degree heat, federal auditors have found.

Auditors with the U.S. Department of Housing and Urban Development reviewed work by the city on 65 homes, finding problems with all but four of them, including holes in the walls stuffed with newspaper, leaking pipes, and a breaker box held in place with duct tape.

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In 14 homes, the installed HVAC units were the wrong size, leaving residents sweltering in 95-degree heat, just 5 degrees under the temperature outside. WREG News Channel 3 has more woeful tales, after speaking with residents in the affected neighborhoods last week.

Under the Housing and Rehabilitation Program, homeowners receive deferred-payment loans for work to make repairs and bring their houses up to code. The city hires contractors with federal tax dollars. Auditors looked at a sample of home repair contracts, or $1.6 million of the $3.9 million in projects undertaken in 2010 through 2012.

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They found $400,000 in projects that were not completed or had workmanship problems and estimated that if they had audited all the homes repaired during the three-year period, the figure would have been twice that much.

The city in its response said it would return $19,864 for work that was not completed and fix the faulty work worth $381,855 uncovered by auditors. The city said in its response that home inspectors had been disciplined and were no longer employed by the city and that some contractors had been dropped. The city said it had worked to fix the work on homes that failed to comply with building codes and had stopped taking new applications in May 2012 after complaints from homeowners emerged.

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The audit points to a lack of staff to oversee a program, noting that one person had been responsible for managing all the city’s housing construction programs, not just the home repair effort. The city failed to properly inspect the work under contract or fine contractors for missed deadlines, auditors found, suggesting the policy favored the interests of contractors over that of homeowners.

Accordingly, “a homeowner did not have access to the only bathroom with shower facilities for eight months. … Another homeowner had to endure sewage backing up in the tub for more than a month because the contractor took an extra 50 days to complete the contracted repairs.”

Homeowners had turned to a city government that has shown other recent evidence of mismanagement. Last year, the state comptroller held out the prospect of taking over the city’s finances if leaders there failed to pass a budget or show better stewardship of city funds. Wilson’s office found city funds that had been in the red going back two decades, according to WMC Channel 5.

Messages for city Housing Director Robert Lipscomb were not returned Monday. Tennessee Watchdog reports he is on vacation until next week.

Photos from the U.S. Department of Housing and Urban Development audit of home repairs by city of Memphis.