Less than two years after moving into its new central office on North Holtzclaw Avenue, the Chattanooga Housing Authority is thinking about selling it.

The authority needs the money to make up for its $4.5 million budget shortfall.

“CHA’s overall position may be better enhanced by selling the building outright,” according to a letter written by the authority’s interim executive director, Betsy McCright.

Mrs. McCright’s letter was in response to a request from U.S. Department of Housing and Urban Development Program Center Coordinator Charles T. Barnett, who wanted to know what CHA properties might be available to sell or lease to make up the budget deficit.

Before Mr. Barnett’s request, the housing authority had said it was trying to sell the James A. Henry Family Resource Center on Grove Street, the Grove Street Center and several vacant lots, but the sale of those properties would fall far short of $4.5 million.

HUD officials have been reviewing financial records at the housing authority since Tuesday, weeks after the authority announced a budget shortfall and laid off 30 employees. The housing authority has laid off more than 50 employees this year, reducing its staff from 206 to 147 people.

Representatives of HUD’s Real Estate Assessment Center probably will remain in Chattanooga for another week, said Mark Brezina, HUD’s field office director in Knoxville. They are trying to discover the root causes of the housing authority’s financial problems and recommend solutions for a draft recovery plan, he said.

“The ultimate goal is a sound financial recovery plan for the housing authority,” he said.

Chattanooga housing officials proposed a $5 million selling price for the 3.6-acre central office site, located at 801 N. Holtzclaw Ave., according to records. The site also includes the Homeless Coalition, a nonprofit agency that works with other social services to end homelessness. The coalition office is in a secondary building near the main building and leases space from the housing agency.

CHA officials also may lease a portion of the space, or lease all of the space in the 26,933-square-foot building for $403,995 a year, records show.

It is too soon to tell if selling the property is necessary or if it’s the best option for the agency, said Bill Lord, CHA’s chief information officer, but “it is certainly a scenario that has been placed on the table as part of a possible solution.”

“Obviously the purpose of disposition would primarily be to create proceeds that could be used to replace the balance of the funding needed for the Mayfair project,” Mr. Lord said. “Any excess funds created would be used as approved by CHA’s Board of Commissioners.”

The housing authority overspent $1.1 million on employee-related costs earlier this year and used $1.2 million in unauthorized borrowings from the Mayfair on Market downtown condominium development to cover those costs, according to Mrs. McCright’s letter.

Chattanooga Mayor Ron Littlefield strongly warned the housing authority against moving to the Holtzclaw property two years ago.

“That’s one of those situations where you take no real delight in saying I told you so,” Mr. Littlefield said this week.

Housing officials are spending $29,000 a month — about $350,000 a year — to pay the office’s mortgage, Mr. Littlefield said.

“That certainly would have gone a long way toward helping with some of their financial difficulties,” he said.

Also, the building now is holds only half as many staff members as it did when CHA moved in two years ago. At that time, about 80 employees were in the building, and now there are only 40, Mr. Lord said.

Many staff members once located in the central office have been moved since the layoffs, officials said.

“With the recent staff reductions, CHA now finds that it has more square footage than is absolutely necessary,” Mrs. McCright said in the letter.

Of the housing authority’s remaining 147 employees, 85 of them, or 58 percent, work directly at public housing sites. Ten staff members, or 15 percent of the staff, work for the Housing Choice voucher program, located in the Holtzclaw office building, officials said.

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