The North Las Vegas Housing Authority missed an end-of-year deadline to resolve its millions of dollars in debt, leaving the troubled agency's future in limbo.
The agency had been scrambling to meet a Dec. 31 deadline imposed by the U.S. Department of Housing and Urban Development to address its $3.2 million in debt stemming from a bad investment and the misuse of federal funds that should have gone to help some of the city's neediest families get housing.
"Unfortunately, we have been unable to make the numbers work," Maryann Ustick, North Las Vegas's acting city manager, said last week.
Federal and local officials have worked to ensure the city's public housing residents will not be harmed by the agency's problems. They have shifted management of most of its programs to the Las Vegas Housing Authority.
But it remains unclear how the North Las Vegas agency will repay the millions in lost or misspent tax dollars.
North Las Vegas took over management of the housing authority in 2008 after the agency's longtime CEO, Don England, resigned amid controversy over unsanitary conditions found at a public housing complex for families.
The housing authority was supposed to be absorbed by Jan. 1 into the new Southern Nevada Regional Housing Authority, which is one of the largest public housing agencies in the nation.
But as long as it carries significant debt, the North Las Vegas Housing Authority, which is the Las Vegas Valley's smallest, isn't welcome in the new "superagency."
The Clark County and Las Vegas housing authorities already have merged into the larger agency. That merger became official Jan. 1.
State legislation approved last year allowed the merger of the three agencies, which together would have a $113 million budget, employ 250 people, and manage roughly 3,000 public housing units and 10,000 Section 8 vouchers used to rent housing.
The legislation required that the merger be completed no later than Jan. 1. But it didn't spell out the repercussions for missing that deadline.
Federal officials remained confident that the North Las Vegas Housing Authority would merge into the larger agency in the future.
"Certainly that's the intent," said Larry Bush, a HUD spokesman.
HUD's Dec. 31 deadline, meanwhile, "got set aside while we continue to work on the issues," Bush said.
The housing authority's debt includes:
• $1.9 million lost on the failed Desert Mesa project, which was planned to be a residential development for low-income families.
• $937,691 from the agency's Section 8 program misspent on administrative costs or improperly loaned to other agency programs.
• $400,372 meant for the development of affordable housing used to cover expenses in other programs.
North Las Vegas officials, working with HUD, had come up with a tentative plan to pay down some of the agency's debt. It included making monthly payments for 20 years from income generated from the agency's 132 non-federally funded, low-income housing units.
But officials realized the units are not profitable enough to meet that goal.
"They can't bargain themselves out of this," said Carl Rowe, interim director of the regional housing authority.
Rowe said he doesn't see how the agency can resolve its financial problems unless HUD forgives much of the debt or North Las Vegas, which is suffering its own financial woes in a down economy, ponies up some funding.
City officials have balked at the latter idea.
HUD wouldn't comment on specific debt talks while they are in progress.
But Ustick said she was optimistic about the negotiations.
HUD is "very interested in making the regional housing authority work," she said. "I think the wind is at our back."
The North Las Vegas Housing Authority has for years faced financial and administrative problems.
England, its former CEO, blamed shrinking funding from HUD. Board members said they were unaware how serious the problems were.
For years, HUD has said the agency was mismanaged.
William Robinson, longtime chairman of the housing authority's board, said the sooner the failing agency goes, the better.
"This thing here's driving me crazy," said Robinson, who has served on the board since the mid-1980s and is a North Las Vegas city councilman. "This has been a nightmare."
Contact reporter Lynnette Curtis at lcurtis@review journal.com or 702-383-0285.