The Aurora Housing Authority has, for the second year in a row, been designated “troubled” under a U.S. Department of Housing and Urban Development program.

Housing authority officials attributed the label largely to the failure to submit an audit, which caused the agency to receive a score of zero on the financial portion of its review. Documents recently obtained by the Beacon-News show the authority was also docked significant points in categories that measure its capital fund and management, and note the low scores were due in part to a low public housing occupancy rate.

Executive Director Ralph Jordan and board chairman Joe Grisson said the audit that led to the low financial score has since been submitted, and occupancy is up.

“I think we’ve done the work,” Grisson said. “And, again, I think we would have certainly been out of (troubled status) had it not been for that audit.”

The designation, published in July, covers the fiscal year ending in March 2017. Because of the label, the Aurora Housing Authority is likely to be subject to a HUD review and had to submit a correction plan. The agency’s use of a certain pot of money is also likely to be restricted.

Though widespread information about other housing authorities’ assessments has not been made public this year, HUD data made public last year shows that of 63 Illinois housing authorities that were assessed for 2016, the Aurora Housing Authority was one of just five deemed troubled.

The agency’s designation for the year ending in March 2016, issued in 2017, was based in part on an independent audit that raised several concerns. Those included spending on a scholarship party, personal use of housing authority vehicles, record keeping and aspects of the agency’s close relationship with the now-dormant Northern Lights Development Corporation. That relationship was detailed in a Beacon-News investigation published in June 2017.

The agency challenged many of the findings in the audit and unsuccessfully appealed the troubled designation issued last year. Grisson and Jordan took on their roles afterward.

The label is assigned to any housing authority that scores below 60 points out of 100 under the Public Housing Assessment System, which factors in financial, physical, management and capital fund categories. Under the assessment that led to the most recent troubled label, the agency scored 47 points.

Jordan estimated the agency’s financial score if the audit had been submitted on time would have brought the overall score above 60 and pulled the housing authority out of troubled status. He could not say why the audit was not submitted on time because he began working at the agency in July. The audit was submitted shortly after he came to the agency, Jordan said.

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Grisson, who became board chairman in late 2017, attributed the late submission to complications with a submission system.

“It could have been a couple things, but at the end of the day it’s no excuse,” he said. “It was turned in late, and now we’re designated troubled as a result.”

The agency is addressing areas other than the audit as well, Grisson said.

Many of those were identified when the agency underwent a HUD assessment in the spring, which was required because the housing authority was designated troubled. HUD listed nine findings, or violations, and additional concerns. In mid-October, HUD told the housing authority in a letter that all but two of the issues had been corrected.

One of those remaining issues centered around nearly $91,000 in public housing money spent in 2015 and 2016 on a scholarship gala sponsored by the Northern Lights Development Corporation, an affiliated company that once shared board and staff members with the housing authority, documents show. In an August response to HUD about the findings, the Aurora Housing Authority said the development corporation had already paid back $30,000. Jordan said this week another $15,000 has been repaid, and the remaining $45,000 is expected to be paid back by spring 2019.

The other outstanding violation was a lack of financial policies, and the housing authority told HUD in the August response is expected to begin updating policies in September.

The Aurora Housing Authority submitted plans to correct both the findings from the spring review and the findings that led the agency into troubled status most recently, as well as a correction plan based on a separate, third review, Jordan said.

Auditors were on site recently to conduct the 2018 audit, which is scheduled to be submitted on time, Jordan said. The agency had also been without a budget but has since created one that was approved at an August board meeting, he said.

“At the end of the day, I’m here to do a job,” he said. “And we’re going to do a good job turning this agency around.”

In 2017, the Aurora Housing Authority was labeled troubled for 2016 because it scored 58 points under the Public Housing Assessment System. For 2015, the agency was labeled substandard physical and for 2014 substandard financial, meaning the agency scored low based on only its physical or financial measures but higher overall. Housing authorities can also receive other designations, including standard performer or high performer, based on their assessments.

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After it was labeled troubled in 2017, the housing authority contracted with a firm to address the designation and review the agency as a whole, working with Joseph Galvan. He was soon after appointed to oversee HUD’s Midwest regional office and left the firm, and the Aurora Housing Authority then began working with his brother. The agency did not work with Galvan after he began working at HUD and has not worked with the firm since the process of hiring a new executive director finished, Grisson said.

The Beacon-News has previously documented expenses at the housing authority’s administrative offices and the close relationship between the housing authority and the affiliated Northern Lights, which were both overseen by the former housing authority executive director. Northern Lights won at least two publicly-bid contracts from the housing authority, including one in which it did not offer the lowest estimated cost.

The former director left in June 2017 for a job in Juneau, Alaska, and the agency was without a permanent executive director for nearly a year. Jordan was selected to take over leadership of the agency in May and began working in July.

After the former director left, Grisson said his efforts were focused on the housing authority, rather than Northern Lights. The development corporation, which operated in a setup regulated by HUD, is now “essentially defunct,” Grisson said, and documents show the housing authority ended its contracts with the company in February. The agency could revisit its relationship with the developer in the future, but the relationship will likely look different than it did previously, he said.