Iowa says United Neighbors did not follow federal regulations

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DAVENPORT, Iowa (KWQC) - The State of Iowa is raising new questions about United Neighbor's ability to properly spend federal money. Last week TV-6 Investigates reported on Davenport records going back years detailing United Neighbors' compliance problems with federal law.

In a new letter, the State of Iowa is asking about a rental assistance program United Neighbors offered that was suspended. The state said United Neighbors was not following federal rules and regulations. It also said it has never seen a program with so many flaws.

The Iowa Finance Authority's letter said it reviewed several of the files United Neighbors sent to it, and found numerous problems. Among them, the state found a lack of income verifications, lead and housing inspections, and leases that could even be read. It also found thousands of dollars were overpaid to landlords housing these tenants.

United Neighbors Executive Director Evelyn Nelson sent a statement which said, "I (Nelson) discovered troubling discrepancies in the rental assistance program, which lead to the state's review."

When the Iowa Finance Authority suspended United Neighbors rental assistance program back in November, all 95 tenants were forced to re-certify their eligibility before United Neighbors could continue subsidizing their rents. United Neighbors re-certified 21 of those 95. A board member said United Neighbors was able to get some emergency funding for those 21 from other sources. The state reviewed five of those 21 files. IFA Program Manager Carolann Jensen said those files had many flaws.

"Clearly we found they had not improved their work on the project," said Jensen.

The state said United Neighbors files lacked housing inspections, lead inspections, and proper income verifications. All of those are required to get rental assistance. Based on the files, the state determined nearly $10,000 had been overpaid to landlords. Jensen said her staff has never seen this many problems.

"Nobody had seen files missing so much," said Jensen.

Jensen told TV-6 Investigates the program's suspension remains in effect. She said the state is waiting for a forensic audit before taking more action.

"The forensic audit hasn't been produced yet, and we believe we've afforded them enough opportunities to try to turn the ship around," said Jensen.

But she doubts United Neighbors can make any more improvements.

"At this point we haven't seen any evidence that they have that ability," said Jensen.

The dates on these files put them under former director Ida Johnson's stewardship. She and her program manager Tonya Williams are suing United Neighbors for wrongful termination and breach of contract. In their lawsuits both say United Neighbors complied with all regulations while they worked there.

We stopped by Johnson's house Tuesday to show her the state's letter. She didn't come to the door.
Their lawyer is out of town and hasn't returned our phone call.

Three other programs United Neighbors runs with federal money paid through Davenport are on hold at the moment.
The city is waiting for United Neighbors to give it a copy of an ongoing forensic audit.

Here's Executive Director Evelyn Nelson's full statement:

"Immediately after becoming Director of United Neighbors, I discovered some troubling discrepancies in one of our housing programs, the Tenant-Based Rental Assistance (TBRA) program. Eight days after I started as Director, I contacted the Iowa Finance Authority (IFA) with concerns about how the program was managed under previous staff and leadership. This initial action by my office led to the eventual decision to suspend TBRA funding to United Neighbors and IFA's January file audit.

Regarding the concerns noted in the IFA letter, United Neighbors used emergency funds-not TBRA funding-to continue to serve families after IFA suspended the TBRA grant. We instituted policies and procedures to ensure that those funds were used as appropriately as possible-including identification, income, landlord and address verification. However, our emergency program wasn't intended to be a full-time re-qualification under the comprehensive restrictions IFA requires for TBRA. Our priority was to ensure that deserving recipients received their funding in a timely manner.

The past several months have been challenging for United Neighbors, however, we are confident that the IFA review supports our board of directors' decision last fall to terminate four employees."