The Chattanooga Housing Authority has had its share of embarrassing problems over the past few years, but it has moved aggressively since a major turnover in mid-2008 to refocus its priorities and shape up its budgeting process. It also remains the most vital public participant in the city's under-served low-income housing market. As such, it merits strong support -- and help when needed -- from the mayor's office.

So it was a hurtful surprise for CHA officials to learn that Mayor Ron Littlefield had described the agency as "an embarrassment to the city" in an Oct. 15 letter to the U.S. Department of Housing and Urban Development. That letter isn't likely to help the CHA.

It's also odd for another reason: Chattanooga's mayor is responsible for appointing each of the CHA's seven board members to their five-year terms. One would think Mr. Littlefield would have communicated his concerns as they arose. Such a dialogue should have obviated the need for such a letter. Small wonder some board members felt knee-capped by it.

A broad, harsh censure

The letter conveyed a harsh and overly broad censure. It read, in part: "The unprofessional conduct of the housing authority continues to defy common sense and has become an embarrassment to our city." He was referring specifically to his immediate concern -- a proposal he opposed by the CHA board to expand a planned apartment unit in North Chattanooga from 24 to 48 units. But his broad-brush statements explicitly implied a far broader criticism of the CHA as a public entity.

If the CHA had merited such a broadside, it would have better served the agency's future and the city if the mayor had addressed his grievances more constructively with his appointed board. That his criticism arose over his differences with the North Chattanooga proposal, and after a year of reorganization work on the older problems he resurrected last week, suggests a different agenda.

The CHA's past problems

The CHA ran into trouble the mayor recited over some operational issues that occurred under previous management. The tenure of former director Bob Dull ended in a financial quagmire because Mr. Dull and his earlier budget director were excessively lax about their bookkeeping for some of Mr. Dull's more visionary goals. They failed to keep adequate financial reserves and allowed unbudgeted or unplanned expenditures to be charged to budgeted categories, and ended up $4.5 million in the hole in the spring of 2008. The board also failed to demand complete and timely financial statements.

The 2008 shortfall forced the CHA to lay off 56 employees between February and May last year, and prompted the resignation of Mr. Dull and his budget officer that spring. Also under Mr. Dull's tenure, the CHA plowed ahead several years ago with a $3 million headquarters renovation that Mayor Littlefield had opposed -- but pointlessly criticized again last week.

Mr. Dull's administration also borrowed $3.65 million from Fannie Mae, a federal mortgage agency, to fund purchase of an 18-unit stake in the planned $16 million Mayfair apartment/condo project in the 700 block of Market Street. After the CHA forked over the first $2 million, developer Trey Stanley proposed development stalled, and it has remained stalled.

Two months ago, the CHA paid another $85,000 to get out of the contract after the developer sued the agency for the pledged balance. RiverCity Co. is now suing Mr. Stanley and his partners to win back possession of the vacant eyesore. The CHA has nothing to show for the $2 million loss.

Since those debacles and the installation of new management, CHA has re-organized its financial affairs and tried to move ahead with its public mission. It was recently awarded a $4.8 million grant from federal stimulus funds to rebuild its old Fairmount Avenue Apartments, its only development in North Chattanooga.

Grant renewed confidence

Receipt of the grant was a coup: The CHA was one of just two housing authorities in the state, and one of just 36 in the country among 5,000 applicants, to win one of the federal grants. Its proposal is to demolish the existing and run-down 24 unit complex and replace it with 48 "green" units that will use solar power, strategic shading and feature a walking trail.

Adjacent residents oppose the development for its location at the dead-end of a one-lane residential street. They cited crime, trash and traffic problems with the prior units. Mayor Littlefield blasted the CHA for lack of notice in changing the proposal from 24 units to 48 units.

For its part, the agency promises cameras, better security and closer attention. It also says a traffic study showed sufficient road capacity.

The resulting controversy merits thorough debate of the issues. But it hardly seems cause for the mayor's sweepingly broad criticism of a reviving agency charged with providing critical low-income housing in a city already notorious for its uncommonly low level of home-ownership.

A 10-year wait list

In fact, the CHA last fall had to close a 350-applicant wait list because its stock of 3,025 housing units -- the unit total of both scattered site and larger family housing complexes -- falls so short of supply. Given its tight budget and the national decline of federal funding for low-income housing, agency officials said the wait list exceeded its 10-year projection for open units.

That's just part of the larger dismal picture for public housing. The mayor's administration drastically cut operational funding of Chattanooga Neighborhood Enterprise, which used to help fill low-to-middle-income housing needs. CNE is now just a shell of its former capacity. Habitat for Humanity has also run into funding-and-sponsor problems in the recession.

If the third and strongest leg of public and low-income housing, the Chattanooga Housing Authority, can't broaden its efforts, more people will go without housing options. In these grim straits, a hurtful, documented feud between City Hall and the CHA is the last thing the city needs. For the public good, constructive engagement is a far better option.