Federal officials told the Roanoke Redevelopment and Housing Authority board Wednesday that a soon-to-be finished audit will explore conflicts of interest and whether the authority got enough for its money on several contracts.

Bill Tamburrino, a ranking administrator with the U.S. Department of Housing and Urban Development, said he considers the issues serious and added that enforcement actions will depend on how the Roanoke Authority responds to HUD's final audit report, which should be complete sometime in the next 30 days.

Tamburrino did not detail any specifics during the public meeting with the authority board Wednesday, and he said afterward the report will do that.

Tamburrino acknowledged that federal regulations can be tedious at times, but he said what HUD has found so far is "much more substantive than merely following the tedium of the requirements."

"These are serious issues, and we want to see a serious response," Tamburrino said after the meeting.

Authority board chairman Ben Fink said, "It sounds like, yes, we've got some serious problems."

The authority has done lots of good work for its clients, he said. "It's too bad this has to blemish that record," Fink said.

Jim Allen, an authority board member, said he's hopeful the authority can address HUD's concerns and avoid an extended investigation by HUD's Office of the Inspector General.

Allen said he doesn't believe the authority board ever wanted to "bring scandal" to Roanoke, especially when it's a volunteer board that has tried to do its job the best it could.

Ellis Henry, the director of the Roanoke authority, pushed for the federal audit when he became concerned about potential preferential treatment and conflicts of interest after he was hired in May. Henry and his staff compiled a 400-page report, submitted to HUD, that focuses on a series of contracts over the past nine years between the authority and a private consulting firm, The Issues Management Group, led by former authority board chairman Rob Glenn. City Councilman Bev Fitzpatrick, also a former authority board member, was a paid IMG associate while he was on the authority board.

Glenn, through his lawyer, has had little to say about the situation to this point.

Fitzpatrick, in a statement to The Roanoke Times last month, said he didn't knowingly do anything wrong.

John Baker, who retired as authority director in May, has declined comment on the matter to date.

The HUD audit began last month, and Tamburrino, who is based in Baltimore, and two other HUD officials met with the housing board face-to-face Wednesday to give them notice of all the issues to be addressed in the report. Tamburrino began his remarks with a compliment, praising the authority on its completion of a $41 million remake of the Lincoln Terrace public housing community.

The meeting got started about 15 minutes late because not enough authority board members had shown up to form a quorum.

That incensed City Councilman Sherman Lea, who attended the meeting to hear what the HUD officials had to say. The Roanoke City Council appoints the authority board, and Lea is concerned about the issues being probed in the audit.

"That's a lackadaisical attitude and I'm troubled by that," Lea said of the authority board and the meeting's late start. The council will meet with the authority board today at city hall.

Potential ramifications

HUD's actions following the audit could include taking back grant funds or, as a last resort, dissolving the board of commissioners and taking over management of the authority.

Tamburrino said it's too early to talk specifics.

But HUD has a range of options for dealing with wayward authorities, according to Lee Jones, spokesman in HUD's Richmond office.

"If there are administrative procedures that should have been followed," Jones said, "we're going to demand of the authority that it begin following them."

If the problems are more serious, HUD could demand that certain employees no longer be permitted to handle HUD funds.

Vendors can be barred from doing any business, not only with the authority and HUD, but with any part of the federal government.

If auditors suspect criminal activity, Jones said, they'll refer those matters to the proper authorities. That could mean HUD's Office of Inspector General stepping in to review private money transactions.

HUD's most serious actions begin with recapturing grant funds if the grants were not administered properly.

Less than two months ago, the authority had to return $750,000 in replacement housing funds because they were improperly placed in an interest-bearing account and not spent, authority documents obtained by The Roanoke Times show.

HUD also could declare the authority "troubled" for a period of time, Jones said. That would mean a "shortening of the leash" on HUD's oversight of the agency. HUD could require pre-approval for certain actions by the authority.

Jones said six to eight of Virginia's 30 housing authorities are currently labeled "troubled" by HUD.

Finally, if an authority doesn't improve, HUD could put in receivership.

HUD considers that a measure of last resort. Between 1979 and 2002, just 15 authorities were placed in receivership, according to a report from the U.S. Government Accountability Office. At least two more have been received since then.

Receivership is generally the result of "long-standing, severe and persistent management problems," the GAO report said, and it's a measure taken only after other efforts have failed.

HUD has the authority to take over a housing authority's operation and management and dissolve its board of commissioners.

Whatever action HUD takes, Jones said, two things will be certain. "Taxpayer dollars will be protected ... and the supply of affordable housing in Roanoke will be maintained."

Henry, the authority director, is concerned about being declared troubled or even going into receivership. Troubled status might actually be a blessing, he said, because that means the authority could rectify its problems with HUD's help. Fixing problems on their own could be time consuming and expensive, he said. "I just don't think we can afford to do it."