A Blade investigation found that vacant tax-credit properties were blighting several city neighborhoods and that inspections had fallen short of requirements
The Blade/Dave Zapotosky
COLUMBUS — The director of a state housing agency told a legislative committee on Thursday that steps to remedy blighted tax-credit homes in Toledo have progressed, with nearly 80 housing sites inspected and disciplinary action taken against employees.
In addition to the Ohio Housing Finance Agency's sole Toledo-based employee having been fired earlier this year, that employee's supervisor was asked to resign, and a third employee was disciplined by being suspended for five days without pay.
Furthermore, a nonprofit community development agency — Organized Neighbors Yielding eXcellence — that had developed two of the most troubled projects could be reported to the IRS, said Doug Garver, finance agency executive director, during testimony at the Statehouse for a meeting of the Ohio Housing Study Committee.
A Blade investigation this year found vacant tax-credit properties blighting several city neighborhoods. The homes were built as part of a federal tax-credit program in which local developers can sell tax credits to investors, such as banks, to raise funds for acquisition, rehabilitation, and construction. Of the 21 projects built in Toledo since 1997, six have vacancy rates of 25 percent or more. IRS regulations require the Ohio Housing Finance Agency to inspect the homes a minimum of once every three years, but The Blade found some had not been inspected in six years.
Mr. Garver told the committee on Thursday that the agency has inspected all but one of its 80 Toledo projects, as they pledged to do after The Blade's stories. He said the housing agency could not inspect one because ONYX officials would not allow access.
Brian Carnahan, director of program compliance for the finance agency, said a visit to another ONYX development revealed issues such as poorly maintained units and ONYX unable to provide documentation on tenants’ qualification to live in the homes.
ONYX officials could not be reached for comment Thursday.
City of Toledo officials also have said they are seeking to take control of some of the developments plagued with the most vacancies from the community groups that developed them and turn them over to more capable property managers.
Last month, the city sued ONYX over repayment of a note; a judge ruled in the city's favor and said the city was entitled to $30,000 from ONYX.
Also discussed at the Columbus meeting was a performance audit released Thursday by the Ohio Auditor of State's office, which detailed 12 recommendations to improve the Ohio housing agency’s performance, management, and oversight and to keep the finance agency in compliance with federal regulations.
Among the auditors' concerns was that it was difficult to compare the achievements or effectiveness of the agency's programs because of multiple names and reporting periods used for the same programs. Additionally, costs claimed under federal grants must be supported by documentation, and because OHFA's employees do not identify their hours worked by a particular program or activity, the audit found more than two years’ worth of salary claims totaling $2.9 million to be "noncompliant" costs.
Another part of the audit focused on the agency's mortgage assistance program; OHFA received $570 million from the U.S. Treasury to assist homeowners with financial hardships, but the audit noted the application process for this assistance should be improved or the agency risks not using all the funding by the 2017 deadline.
Committee Chairman Rep. Cheryl Grossman (R., Grove City) said this issue was of particular concern to her if Ohioans were not receiving needed federal funds to remain in their homes. "To me, that's a travesty," she said.
Mr. Garver said $86 million in the funds had been used, and the program was running well after a slow ramp-up. "We embrace the idea of, how can we help more people, faster," he said.
The audit also noted required public hearings on its program administration were not conducted.
Overall, however, auditors said the agency generally "did an efficient and effective job in managing its programs."
Mr. Garver told the committee headed by Ms. Grossman that the agency welcomed the audit as an opportunity to "learn more about ourselves." He said he intended to follow through on the audit's findings and would take corrective action where needed.
Ms. Grossman asked and Mr. Garver agreed to assist in drafting legislation dealing with the audit's findings.
Responding to inquiries from state Sen. Tim Schaffer (R., Lancaster), Mr. Garver said the problems with tax-credit housing highlighted by The Blade were limited to Toledo.
"OHFA did not meet its responsibilities in that particular geographic area," he told the committee.
Contact Kate Giammarise at: firstname.lastname@example.org or 419-724-6091 or on Twitter @KateGiammarise.