Chattanooga Housing Authority's board meeting

Chattanooga Housing Authority officials are questioning the numbers in the agency’s budget reports for the second time in as many years.

To help get their finances on track, authority officials have hired Arthur W. Cate Jr., incoming president of the Tennessee Association of Housing and Redevelopment Authorities and chief operating officer of Knoxville’s Community Development Corp.

Mr. Cate, who was hired only a few days ago, said the housing authority’s lack of money is nerve-wracking.

“If I were CEO or the CFO I wouldn’t be able to sleep at night,” he said Tuesday at a housing authority meeting.

Mr. Cate was hired after former Chief Financial Officer John Coxwell resigned in May during the housing authority’s annual independent audit.

Authority board Chairman Eddie Holmes said Mr. Coxwell’s resignation had nothing to do with the budget and that he left because he wanted to work fewer hours.

His departure came just weeks before June 26, when CHA is scheduled to report its 2008 financial audit results to the U.S. Department of Housing and Urban Development.

CHA Accounting Manager Curtis Lokey is the interim chief financial officer.

One problem with CHA finances is that the housing authority does not stick to its internal system of checks and balances, said Bentley D. Stanton, a partner with Novogradac & Co., an Alpharetta, Ga., certified public accounting firm hired by CHA to do its 2008 audit.

There was a system in place, but management officials made exceptions and signed off on them, which led to some of the agency’s financial crises, he said.

The housing authority also has a serious lack of money in its reserves, Mr. Stanton said. According to HUD standards, the housing authority would get an “F” for having only $250,000 in reserve, he said.

In comparison, Knoxville’s Community Development Corp. has $19 million in its reserve fund, Mr. Cate said.

The Chattanooga Housing Authority also is spending more than budgeted in areas such as its utilities, which are $366,000 over budget, he said.

To make sure more-accurate financial reports are made to the board, Mr. Cate is calling a meeting with CHA resident managers this morning so he can examine their utilities figures to determine if they are accurate.

He said the Chattanooga agency has made some improvements in managing to slow its financial fall from May 2008, when CHA announced a $4.5 million shortfall. However, the fall is continuing, he said.

“You’ve got to stop the fall to get started going the other way,” Mr. Cate said.