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A Review of Selected Operations of the State Housing Finance and Development Authority
December 2003

FOLLOW-UP (PDF)     REPORT (PDF)     SUMMARY (PDF)

Members of the General Assembly requested that we conduct an audit of the State Housing Finance and Development Authority. The requesters were concerned about program efficiency and why more aid for affordable housing was not reaching the needy community. We reviewed the housing trust fund program, a state-funded program created to provide affordable housing. We also examined operations of a private, non-profit corporation created in part to develop affordable housing. In addition, we reviewed the marketing of certain housing programs and the extent to which minorities and particular income levels have been served by the agency’s homeownership program. Our findings are summarized as follows:

  • The authority has not adequately monitored housing trust fund projects. Agency officials have not conducted property inspections to ensure that construction has been completed. Also, funds have not been disbursed and projects have not been completed as required.
  • The agency has awarded some housing trust funds which did not meet funding criteria. Over a four-year period, authority officials have awarded over $2.6 million for ten "special projects."
  • Relationships between a private, non-profit corporation and the authority constitute conflicts of interest. In addition, the authority has used state resources to subsidize this corporation. The agency has made two loans totaling almost $5 million to the corporation and agency employees have spent work time on corporation-related activities. Further, in its efforts to provide affordable housing, the corporation has given little consideration to competition with other private organizations.
  • The rate of minority participation and the authority’s homeownership program has greatly increased. In our 1991 audit of the agency’s homeownership program, we concluded that the authority was not providing adequate guidance to lenders on the calculation of minority participation in the program. Further, the percentage of mortgage loans to minorities was substantially less than the percentage of the minority population in the state. Statistics on minority participation now conform to federal standards and the rate of minority participation, 33%, coincides with the percentage of minorities in the state.
  • The authority has more effectively targeted low-income participants in its homeownership program. In 1991, the authority provided more mortgage loans to moderate- to low-income households than to low-income households. During this review, agency documents indicated that more loans were made to low-income households.