GOSHEN — The future of assisted housing in Goshen is at stake unless there is an immediate infusion of half a million dollars into the coffers of the revamped Goshen Housing Authority.

That was the warning from Pam Kennedy, executive director of the Goshen/Warsaw Housing Authority, who outlined the crisis scenario to board members of the Goshen Housing Authority Tuesday.

The housing authority staff was expected to begin informing about 29 families who were in the midst of seeking federal housing assistance — including some who have already paid a down payment on apartments that their chances for assistance is close to nil.

But that is only the first step. The agency must identify and remove 100 more families over the next nine months, Kennedy said.

On top of that, the federal government is advising the agency to identify three more families per month for the next year to be removed from the program.

All of that is the result of a new federal effort to crackdown on agencies with large reserves built up over the past 10 years.

But Goshen’s agency, which has been wracked with financial mismanagement in recent years, apparently was supposed to have about $714,000 in its reserves, according to Kennedy, but only has a current balance of $151,836.

And the government wants its money back.

Payments to be reduced

Kennedy said the agency learned two weeks ago from representatives of HUD that the federal government is seeking the return of $571,050 and demands that it be achieved by reducing monthly payments to the agency, thus forcing the agency to reduce services by eliminating rental-assistance vouchers.

The agency is also facing another constraint since federal support of administrative costs for local agencies is based on the number of vouchers it administers. As a result, Kennedy anticipates the consortium will lose funding for up to two office workers — a cut she says would make it impossible to oversee the program effectively.

If the agency is somehow able to come up with the money, it could stave off almost all of the mandates being handed down by HUD, Kennedy said.

More than a dozen people attended Tuesday morning’s meeting and the outlook among many after hearing the update was grim.

“If you do not come up with a half a million dollars, the long-term reality is there will be tremendous social impact because this agency will not be able to perform at the standards that will allow the voucher system to be maintained,” board member Wayne Kramer said.

Goshen Mayor Allan Kauffman attended the meeting and said he will ask the City Council next week to see what kind of role the city can provide. He said he’s looking at various options and believes there could be multiple sources of support, but declined to say exactly what he might seek from the council.

He said the council needs to rethink its role and pointed out that Warsaw provides the housing authority $25,000 annually.

“It won’t be an easy sell,” Kauffman said, “but I think it can be a compelling argument that the city can ... justify playing a part in this.”

He said he and others realize there is a sense of immediacy.

“The crisis is on our doorstep and we don’t have a lot of time to figure it out,” Kauffman said. “We’re scrambling.”

Mismanagement?

Goshen Housing Authority started fresh last year when it merged with Warsaw Housing Authority after its director was let go and staff quit amid allegations of serious mismanagement. An independent audit looking into records has been under way for several months and could be finished within weeks.

Officials have been leery of speculating what exactly was happening at the agency, but have come to believe much of it was mismanagement.

“We know bits and pieces,” Kennedy said.

Once the audit is complete, officials hope it will shed light on what was happening for years with the housing authority.

According to Sandra Austin, deputy director of the new housing authority, some of the problems found with the former Goshen Housing Authority were related to some voucher recipients living outside of Goshen. Also, in some cases tenants were being given more money than what was permitted under HUD guidelines.

At the close of Tuesday’s meeting, Goshen Housing Authority, which continues to have its own board, announced plans to have an executive session that will look into whether it can make a claim on an old insurance policy and to look at “legal implications,” according to Kramer.

A $50,000 insurance policy held by the Goshen Housing Authority was canceled in August, but officials expressed doubt that much would come from filing a claim.

“It’s unfortunate there wasn’t more coverage.” said Tammy Kiern, a board member of the Warsaw Housing Authority.

The new federal directive that led to the crisis came in part because HUD knew some local agencies had built up huge reserves, some of which exceeded $1 million, Kennedy said.

Kramer said he knew some kind of action by HUD was possible because of the severity of financial problems associated with the Goshen office, but he and others expressed dismay at the way HUD was moving to shore up its on fiscal picture.

“With a $16 trillion federal deficit,” Kramer said, “we’re going to see additional cuts along the way and HUD is going to be one of them. You can bet on it.”