Housing authority feels heat over Affordable

April 07, 2006

By PAT LITOWITZ
plitowitz@ncnewsonline.com

(Fifth in a series)

The dismantling is nearly complete.

Affordable Housing of Lawrence County's funds are all but exhausted. Thursday, the board's remaining members, Bill Bonner and Deno DeLorenzo, ended their association with the beleaguered nonprofit organization.

Attorneys for Affordable Housing, the Lawrence County Housing Authority and First Commonwealth Bank are addressing issues involving the foreclosure of the group's eight properties.

In just over three years, Affordable Housing accumulated approximately a half-million dollars in debt -- $200,500 owed to the authority and $289,500 to First Commonwealth.

The blame game has just started.

"I believe I would have a strong case for negligence (against the housing authority)," said DeLorenzo, Affordable Housing's secretary and treasurer.

An accountant in New Castle, DeLorenzo bases his argument on a management agreement that existed between the two entities.

THE REASONS

He points to two of its provisions. The first states that the housing authority will conduct the business affairs of Affordable Housing. The second places responsibility for the nonprofit housing agency's financial well-being on the authority.

"The (housing authority) shall ensure such control over accounting and financial transactions as is reasonably required to protect (Affordable Housing of Lawrence County's) assets from loss or diminution due to error, negligence or willful misconduct on the part of the (authority's) associates or employees," the agreement reads.

"Losses caused by such error or activity shall be borne by the (authority)."

Robert Heath, the housing authority's chairman, said he did not receive a copy of the agreement when he, Gary Felasco, Jeffrey Scrim and James Graves approved it in 2003. He was recently made aware of its contents.

"The housing authority had a management agreement that read they were an intricate part of Affordable Housing," DeLorenzo said. "That's unbelievable that they didn't know they had a management agreement under their own roof."

NO PROBLEM

Robert Evanick, Affordable Housing's former president and the authority's executive director, downplayed the agreement's impact.

The agreement "establishes a relationship between the housing authority and Affordable Housing," he said.

"The use of it was limited" because Affordable didn't build a planned housing development in Union Township.

Authority board member Donald "Ducky" Conti disagreed with Evanick's assertion.

"It was so goofy," said Conti, who also served on Affordable Housing's board. "Apparently (Evanick) never paid attention to (the agreement).

"Technically, we're liable for the properties that Affordable Housing bought."

Both sides have since voted to terminate the agreement, and Affordable Housing officials said they have no plans to sue the authority. The housing authority, however, has felt the impact of Affordable Housing's collapse.

The U.S. Department of Housing and Urban Development issued two findings against the authority.

The first highlights the ineligible transfer of $200,500 to Affordable Housing. The second states the authority improperly gave ownership and control of 20 washers and 19 clothes dryers to the housing group.

The authority has until Monday to recoup its money. It is not expected the deadline will be met.

TROUBLING

"The findings in the review are deeply troubling," said Maria Bynum, a HUD spokeswoman based in Philadelphia. "HUD is continuing its ongoing review of the Lawrence County Housing Authority."

Legislators representing the county also have expressed their displeasure.

State Rep. Frank LaGrotta has been joined by U.S. Rep. Melissa Hart and U.S. Sen. Rick Santorum in calling for investigations of the authority and Affordable Housing.

"I think Mr. Evanick cannot, and should not, escape scrutiny and responsibility for whatever improper actions were committed by the housing authority or Affordable Housing that he participated in or had knowledge of," LaGrotta said.

No law enforcement agency has addressed the issue of Affordable Housing's missing funds.

With the housing authority board's approval in 2003, the group managed the coin laundry business on four authority properties. Agency records show the funds taken in were significantly less than when the authority was overseeing operations.

DeLorenzo reported that no deposits of laundry proceeds were made in 2005.

The authority has since taken the machines back. Authority controller, Holly Girdwood, reported laundry income has rebounded considerably.