The Roanoke Redevelopment and Housing Authority wants to negotiate the amount it must pay back to the federal government as a result of an audit that found it misspent $1.9 million.

In its response to the audit, sent Tuesday to meet a final deadline, the agency points out that while the contracts the U.S. Department of Housing and Urban Development cited as faulty had a value of nearly $2 million, the actual amount paid out by HUD was $1.6 million. Whatever funds the authority has to repay must come from non-federal sources. Currently, the authority has cash reserves of less than $2 million.

Authority Executive Director Ellis Henry, in a letter accompanying the response, asks for "the opportunity to negotiate a reduced reimbursement amount so that the agency can move forward with adequate resources to fulfill its mission."

"We're just hopeful that our response will spark ... reconsideration," Henry said Tuesday afternoon.

"This is the first step," said authority board vice chairman Joseph Lee. "Obviously, we're cooperating and working as closely as we can with HUD."

Henry said in his experience there is some precedence for HUD being willing to negotiate.

His staff pulled together everything they could to help make their case to HUD, he said, "so that we don't miss an opportunity in their being generous."

The report is accompanied by more than 400 pages in supporting documentation for HUD to consider in re-evaluating how much the authority must repay.

Henry, director since May, triggered the audit when he discovered potential preferential treatment and conflict of interest in the awarding of authority contracts. HUD conducted its own audit and found problems with nearly 20 contracts.

Besides requiring repayment of the funding spent on the contracts, HUD also pointed out numerous procedural problems with the authority's procurement practices.

HUD questioned some of the contracts based on a lack of documentation in files.

Authority staff was able to fill some of those information gaps, but not all of them. The authority found no additional information on contracts with Roanoke consulting firm The Issues Management Group, for example.

The response notes that questioned contracts with the Woods Rogers law firm, IMG and John Lambert and Associates public relations firm have all been terminated.

The Lambert contract was questioned because it involved a $2,000 monthly retainer for the firm. Research by authority staff found that had the contract been paid at an hourly rate instead of by retainer, the same work would have cost the authority an additional $5,000.

Other remedies to HUD concerns include:

n Creating a centralized filing system for all contracts.

n Updating the authority's procurement manual.

n Plans to send all employees involved in procurement to training in early February.

n Providing all board members with training in board service and ethics by early March. After suffering three resignations in recent months, the board now has a full complement, including Gail Burruss, appointed by the Roanoke City Council recently to replace Christie Meredith Wills, who resigned.

Henry said HUD officials have been supportive of the authority during and since the audit but have stopped short of saying they'll forgive some of the funding.

Henry hopes they'll change their mind. He pointed out that it was the authority under his administration that drew HUD's attention to these issues in the first place.

For HUD to then punish an agency harshly and without forgiveness, he said, doesn't give executive directors much incentive to report their own problems in the future.