A state agency charged with providing housing assistance to Michigan's poorest residents misspent millions of tax dollars in a series of blunders that left some of the neediest residents without help, according to a wide-ranging, two-year investigation by the state Office of the Auditor General.
The audit early this year found that the Michigan State Housing Development Authority subsidized rent payments and home costs for thousands of people who were in prison or dead, sending the money to landlords of phony tenants.
The agency also violated federal law by giving housing assistance to more than 1,000 violent criminals, including sex offenders, according to the audit, which covers 2004 to 2008.
MSHDA spokeswoman Mary Lou Keenon declined to discuss the violations but said the agency is now in full compliance.
"All steps have been taken to resolve the issues," Keenon said. "We pride ourselves in helping people who are underserved or have low to moderate incomes. I would like to think that MSHDA is playing a good role in that."
But Deputy Auditor General Scott Strong said the agency never issued a corrective plan, despite a now-passed March 7 deadline.
"We don't have enforcement powers, so it's up to the agency to implement the corrective actions," Strong said.
Ultimately, concluded an investigation by the auditor general's office, MSHDA failed in its mission to help the poorest residents, families with children and elderly people by randomly distributing tens of millions of dollars to those less needy between 2004 and 2008.
The agency "did not give preference to projects serving the lowest-income residents," according to the audit, released in January. "Also, MSHDA had not established and exercised effective criminal history screening practices for housing assistance programs."
And even after 27 people could not have been tenants anymore because they were in jail or prison, the agency continued paying landlords on their behalf. In one case, the agency paid a landlord for someone who had been in prison for six years.
MSHDA's job is to distribute various tax dollars to create affordable housing for the state's poorest residents. The agency of 341 employees provides rent subsidies, home loans, tax credits and foreclosure assistance, with an annual operating budget of $565 million.
The audit repeatedly criticized the agency for lax oversight of its programs.
Among the most egregious findings, according to the audit, was the agency's failure to effectively screen applicants for criminal backgrounds.
MSHDA offered financial assistance to more than 1,000 violent criminals, including sex offenders, and hundreds of people convicted on drug charges, despite a federal law that prohibits such residents from getting funding.
The audit also found that landlords continued collecting rent subsidies on behalf of 2,805 lower-income residents who had been dead for a period from five days to a year and a half.
