The Annapolis housing authority is in a financial crisis.
Facing a nearly $800,000 budget deficit — driven largely by unpaid rent — the Housing Authority of the City of Annapolis has begun to cut staff and reduce the hours of some of its full-time workers, which in turn has hurt the agency’s ability to provide services and continue housing hundreds of public housing residents across more than a half-dozen properties.
“We are in a serious deficit financially,” Executive Director Melissa Maddox-Evans said Monday as she fielded questions from City Council members for nearly 90 minutes about the financial health of the agency she has led for more than two years. She estimated the housing authority would need about $1.5 million to cover the unpaid rent and future operating funds to keep it afloat until July.
“I would really like to hear ideas to help us generate the funding that we need to operate,” Maddox-Evans said. “It’s a complicated situation, but it’s not any more complicated than that.”
Since she was last before the council in October, the agency began the first wave of cost-cutting measures that included reducing the hours of 10% of full-time staff from 40 hours to 30 hours and suspending merit increases. The reduction in staff hours has led to delays in processing vouchers and public housing applications and the suspension of sidewalk, erosion control and other capital improvement projects.
“Any deficit, particularly one to the level that this is, could result in us not being able to operate long term,” Maddox-Evans said. “One, you need staff to operate. We need maintenance to keep the units up. We have to be able to pay them to do so.”
More cuts could be on the way with the agency considering every position, including her own, she said.
In a meeting this month with the city, Maddox-Evans said she was told by City Manager David Jarrell to seek funds from Anne Arundel County’s Renter Eviction Avoidance Program, a multimillion-dollar program set up to aid renters hurt financially by the coronavirus pandemic.
But the mechanics of the process are such that it takes time for money to reach residents. To date, the housing authority has received $122,000 from the program, Maddox-Evans said, adding that she is scheduled to meet with County Executive Steuart Pittman and his staff Wednesday to discuss the crisis and seek solutions.
The financial constraints have also hurt the housing authority’s redevelopment efforts.
The housing authority’s redevelopment of Newtowne 20 is currently about $322,000 behind in payments to contractors, with an additional $208,000 expected to be incurred, Maddox-Evans said. Despite the shortfall, the 78-unit development is still slated to be completed in April, with some residents getting to return to completed units as early as next month.
“They’ve been extremely patient and understanding of our situation,” she said of the contractors, “but there’s only but so much understanding you can do when you have to pay your workers.”
Several council members expressed concern about the health of the housing authority, calling for meetings between various stakeholders to take place as soon as possible.
“There’s a lot of issues and there’s a lot of people’s lives at stake. These are our constituents and we have a responsibility to them,” said Alderman Ross Arnett, D-Ward 8. “Maybe there is nothing we can do, but I’d like to believe there are things we can do.”
The culprit of the budget crisis is roughly 40% to 50% of residents not paying rents, a trend that began during the pandemic and has continued for nearly two years, Maddox-Evans said. In the current fiscal year, rent revenue loss is $766,855. The housing authority is a federally funded agency, overseen by the U.S. Department of Housing and Urban Development, that relies heavily on collecting rent to balance its budget.
As eviction moratoriums were imposed during the pandemic, it “resulted in a perception to many residents that they don’t have to pay rent at all during that period,” she said. “There wasn’t a rent moratorium; there was just an eviction moratorium to allow you to pursue rental assistance. But that did not translate.”
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Another financial problem has been a growing list of fines issued by city inspectors for violations in housing authority units. In the coming months, the agency will go to court to contest $22,000 in fines for things like broken smoke alarms or resident-install locks. Previously, about $18,000 in fines had been incurred from inspection violations but were reduced to $1,500 by a judge. Still, the legal fees related to defending itself in court — ranging from $6,000 to $10,000 — have added to the authority’s financial woes, Maddox-Evans said.
She has requested the city put the fines paid by the housing authority into a special repair fund that would go toward fixing the violations. The city has declined for now, citing it has to continue issuing fines to comply with a consent decree imposed following a settlement with housing authority residents in 2020.
“When you’re in a position like we are with huge deficits, we don’t have the resources to pay the fines, but we have now even less resources to actually do the repairs,” she said.
A procedural vote to suspend the rules and pass an emergency resolution sponsored by Alderman Rob Savidge, D-Ward 7, at the meeting of its introduction fell one vote short of passing. The resolution and three amendments will be up for final deliberations at the council’s Feb. 14 meeting.
The lone vote against, Alderwoman Sheila Finlayson, D-Ward 4, the newest member of the Environmental Matters Committee, said she didn’t see the need to pass the bill Monday night and looked forward to further discussion.
Nearly 50 people submitted live and written testimony in support of the resolution, which calls on the city to be more strict in applying its environmental protection rules. Savidge drafted the bill after a series of environmental violations were found at a construction site of a future residential development near Quiet Waters Park last week.
The city found new violations Friday and imposed a stop-work order, which remained in effect Monday and will continue until the contractor, Reliable Contracting Co., fixes them, Department of Public Work Director Michael Johnson said.