The federal government has reduced by $600,000 the amount the Roanoke Redevelopment and Housing Authority must repay after an audit found problems with numerous contracts approved by the agency in recent years.

Instead of $1.9 million, the authority must return $1.3 million to its own public housing fund coffers.

The U.S. Department of Housing and Urban Development is also willing to consider reducing the amount further if enough documentation can be produced to substantiate a $625,000 contract for legal services with the Woods Rogers legal firm, HUD said in its latest correspondence with the authority. The reconsideration is based on a letter produced by the authority in which a Richmond-based HUD official approved the contract.

The authority's board "views the response positively in light of the fact that HUD's original claim has been reduced by approximately $600,000," the board said in a statement.

The HUD audit in September was triggered when authority Executive Director Ellis Henry, on the job since May, discovered potential preferential treatment and conflict of interest in the awarding of authority contracts. HUD's own audit found problems with nearly 20 contracts.

Besides requiring repayment from nonfederal sources of funds spent on the contracts, HUD also pointed out numerous problems with the authority's procurement policies and procedures.

The authority responded to the HUD audit in January with a revised procurement manual and several hundred pages of additional documentation on some of the questioned contracts in the hopes that HUD would reduce the amount to be reimbursed. A lack of documentation had been the problem in some cases.

HUD's latest review also made recommendations to further revise the procurement policies, with a March 30 deadline.

"We are confident that the systems improvements currently being implemented will strengthen RRHA's capacity to serve residents and the community," the authority board said in its statement.

The audit also led to the authority being declared "troubled" by HUD. The declaration is based on a numerical scoring of the authority's management systems. HUD revised that score by a few points in the authority's favor, but not enough to lift it out of troubled status.

Finally, in response to apparent conflict of interest in some contracts, HUD required authority board members and staff to complete ethics training.

In its latest report, HUD noted that it can bar individuals or contractors involved in conflict of interest from further work on federally funded contracts.

"This corrective action is still under consideration," the report said.