HOUSING AGENCY HID $30 MILLION RENT-VOUCHER LIMITS EVADED, AUDIT FINDS.

Byline: Lisa Friedman Washington Bureau

WASHINGTON - The city's Housing Authority ``inappropriately'' shifted $30 million to a nonprofit agency last year to avoid paying the cost of issuing excess rental vouchers, a new federal audit says.

The Los Angeles agency transferred the $30 million from its reserve accounts, then told the federal government it didn't have the money to cover the cost of as many as 1,500 vouchers issued to help low-income residents pay their rent, according to a memo from the U.S. Inspector General's Office and interviews conducted Monday with officials.

According to the audit memo, Housing Authority officials then asked the U.S. Department of Housing and Urban Development to cover the costs of the vouchers in the HUD Section 8 program, which helps low-income tenants pay rent for privately owned housing.

Auditors termed it a ``deviation from program requirements'' and an ``inappropriate advance'' when the Housing Authority transferred the money Dec. 31 to Los Angeles LOMOD West Inc., a nonprofit organization created in 1973 to develop low-income properties.

The money was transferred back March 30 on order of the federal government and used to cover Section 8 voucher costs, officials said. The inspector general did not recommend any other corrective action.

David Clark, the Housing Authority's acting Section 8 director, downplayed the results of the audit. He said the agency has transferred top management into other positions and is working closely with HUD to fix the underlying problem of issuing too many rental vouchers in an effort to ensure that all the money allocated is spent for low-income people needing housing.

``To us, this is sort of ancient history. We are on the road to recovery,'' Clark said.

``The Housing Authority has acknowledged that it did make mistakes and it needs to fix them and is fixing them,'' Clark said.

The fund transfer was discovered while auditors were reviewing Housing Authority operations under an agreement the agency reached to avoid being placed in federal receivership because of problems in the Section 8 program.

The agreement also called for the replacement of the agency's former Section 8 housing director, Steve Renaham. He received an intra-agency transfer and now is the Housing Authority's director of operations and planning, Clark said.

City Controller Laura Chick, City Council President Alex Padilla and Councilman Eric Garcetti, who sits on the council's Housing Committee, did not return phone calls Monday.

Housing advocates say the Los Angeles agency was caught in a no-win situation.

The federal government once encouraged issuing excess housing vouchers - to reduce homelessness - because not all with vouchers were likely to find privately owned apartments that meet government safety standards and price limits, said Linda Couch, deputy director of the National Low Income Housing Coalition.

But last year, as part of a cost-saving measure, Congress removed housing agencies' ability to issue excess vouchers. Couch and other housing advocates maintain that the Los Angeles Housing Authority was caught off guard.

Jan Breidenbach, executive director of the Southern California Association of Nonprofit Housing, blamed a national shortage of voucher funding on the federal government.

``This administration has put good housing authorities in a Catch-22,'' she said. Of the Los Angeles Housing Authority, she said, ``I don't believe they were shifting money around to try to avoid costs. They were trying to get housing out to people who need it.''

The audit memo did not accuse the agency of trying to spend any of the reserve funds inappropriately. Rather, it said, agency officials used about $11 million of the money to operate and provide security for public housing.