The feds have issued a scathing audit of the Little Rock Housing Authority, a public agency that provides more than a thousand tax-funded residences for low-income city residents. Among the findings by the Department of Housing and Urban Development's Inspector General: Top Authority officials have improperly profited from payments from Authority money funneled through non-profit entities. A former employee had access to five Authority bank accounts for two years after she left. The Authority made an unauthorized lease of land to the Audubon Society for a nature center on Granite Mountain. Part of the land can only be used for low-income housing. (A sidebar addresses this issue.) Safety in three-high rises, the subject of a recent Times cover story, remains a serious concern, despite the Authority's previous insistence that it's a non-issue. The feds also cited poor building conditions and maintenance at authority facilities, findings backed up with numerous photos. The Authority restricted most comments to the Times to its formal written response to the audit. In it, officials said the audit "did not result in any significant findings," and that the report contains "broad statements and unsupported allegations." Money questions Authority Executive Director Lee Jones contended money paid to him and Deputy Director Shelly Ehenger - $10,000 each from two of the Authority's non-profit entities - were payment for work done outside their normal jobs on the Granite Mountain Homes housing project and "may have been miscategorized." Regular salaries pay Jones $98,075 and Ehenger $71,028. Auditors noted, however, that the Authority failed to furnish any documentation on "what, when or how" the services were provided or that they were beyond Jones and Ehenger's normal duties. Authority staff told auditors at least one of the entities, Little Rock Housing Redevelopment, had no employees and Jones and Ehenger performed most of the work. Housing Redevelopment also has no procedures to ensure proper use of funds or any contract with the Authority, the audit said. Housing Redevelopment tax filings from 2001 show the entity received over $4 million from government sources. The nonprofit was formed to develop projects at Granite Mountain and Madison Heights, off West Twelfth Street. "Our contention is that these aren't HUD dollars," Jones said in an interview. The nonprofits were formed in order to raise outside funds, like state tax credits, that the Authority itself is not eligible to receive, he said. The nonprofit's directors felt the work Jones and Ehenger did to secure the outside funding went "way beyond the call of duty" and voted to pay them $5,000 each for two years, and the money came from the outside funds. Jones, Little Rock Housing Authority Commission chairman Wooten Epes and former Authority commission member Calvin Scribner are listed as Housing Redevelopment's directors. The auditors, however, cited federal regulations that prohibt Authority employees from accepting "anything of monetary value" from contractors or parties to subagreements. Auditors recommended that HUD review agreements with the nonprofits to ensure proper disbursement of funds and to take "appropriate action" to correct the payments to Jones and Ehenger. A review of accounting practices concluded that the Authority staff is poorly trained and there are few written procedures to prevent theft and misuse of funds. One example was the former systems and finance director who had access to five Authority bank accounts totaling $525,000 two years after she resigned. Jones told auditors that the former employee's access has been revoked and the Authority is currently working on correcting other administrative problems. The audit didn't say the employee took money. As previously reported, the Authority promised to lease 68 acres of its land at Granite Mountain, site of a housing project that has been razed, to the Audubon Society for a nature park. The Audubon Society would pay a dollar a year for the 99-year lease. HUD auditors reported that Jones didn't have the authority to lease the property, and an unnamed portion of the land could only be used for low-income housing. In its written response, the Authority said the lease was "signed, but not effective," pending HUD approval. The approval request has not been submitted to HUD. The auditors argue the lease is a "poor choice," considering the city of Little Rock was prepared to condemn the land and pay the Authority fair-market value for the property. The money from the sale could then be used to purchase other land for housing. The auditors also criticized the Authority's contracts and procurement management. Of the 100 vendor contracts the Authority claimed to have made in 2001 and 2002, only 41 were listed in the Authority's contract register. Of those 41, auditors found the Authority did not comply with federal rules in two instances. From 1995 to 2003, the Authority paid computer consultants John D. Blake and Associates more than $200,000 without having a written contract. Auditors also found that since 1976, the Authority didn't "procure or justify" the money paid to Senior Citizens Activities Today, a United Way affiliate that provides activities to high-rise residents for $12,000 a year as well as managing vending machines, washers and dryers in the high-rises. In its written response, the Authority said it believed two instances of noncompliance is "not an unreasonably large number," and has terminated its relationship with the computer consultant. The Little Rock HUD field office has instructed the Authority to stop paying SCAT. Building safety As reported by the Times in November, many elderly residents in the Authority's three downtown high-rise buildings are fearful of younger neighbors, tenants who often qualify for government support on account of disabilities. Ten of the fifteen high-rise residents interviewed by auditors expressed safety concerns. One Parris Towers resident answered her door with a knife in her hand. A Cumberland Towers resident told auditors about an attack on a friend in the elevator the night before. Auditors noted residents' reluctance to report incidents and statements by residents that complaints made directly to Jones had been ignored. In the written response, the Authority said it is impossible to "control residents' 'feelings.' " "I think we're doing everything we reasonably can," Jones said. One recent incident occurred Dec. 11, when a Parris Towers resident and a security guard were assaulted and robbed by an unknown assailant. Police spokesman Sgt. Terry Hastings confirmed that no videotape of the incident was available because of a malfunction of the Authority's recording equipment. Auditors also noted a lack of cleaning and maintenance at the three high-rises, especially in common areas, but two Authority apartment complexes in East Little Rock "suffer from obvious neglect." The report noted several fire-damaged buildings at Hollinsworth Grove, located at 3111 E. 6th St., posed a safety hazard and should be demolished. The auditors' three attempts to talk to the site manager were unsuccessful because the management office was closed during business hours. Buildings at Amelia B. Ives housing project at 201 E. Roosevelt Rd. are in similar shape, the audit found. The audit reported that one structure is missing approximately 50 percent of its brick on one end; other buildings have obvious fire damage. Residents report extensive termite damage. One resident who reported pest problems was told by the Authority to "use dish soap to get rid of the termites." Another reported that she has been unable to get a hole in her floor repaired. The Authority responded that only 25 residents were interviewed and that the auditors made "blatant accusations" that show a "conscious disregard" for auditing standards required by HUD. The Authority pointed to its near perfect scores (9 out of 10) in the building condition area of its last two reviews by HUD and said that all maintenance is done on a timely basis. (The Authority does concede, however, that they have $14 million in capital needs, about $14,000 for each unit.) The damaged buildings at Hollinsworth Grove are scheduled for demolition this month. The Authority confirmed that other repair requests made by auditors have been made. Jones said the Authority's maintenance workers would repair the buildings at Amelia B. Ives. As reported by the Times, the authority received 55 points out of 100 during its last annual review; the minimum score for HUD compliance is 60. HUD is currently evaluating the housing authority's management and operations to correct deficiencies. HUD spokesman The Authority is funded mostly by federal support payments, though many residents contribute small amounts to rent receipts. As a recipient of public money, the Authority is a public agency, but operates autonomously for the most part. A board appointed by the Little Rock Board of Directors oversees the agency, but those appointments have tended to be routinely made on recommendation of existing board members.