9 Investigates: Statesville housing program changed rules, cut participants’ savings accounts

STATESVILLE, N.C. — Single mothers working to get off welfare say a federal program to make them self-sufficient is setting them back.

Anchor Brittney Johnson has been digging into the discrepancies for months and learned the Statesville Housing Authority is refusing to give residents thousands of dollars they were told they were saving to build brighter futures for their families.

Johnnie Borders has big dreams. The single mom works full time, is working on an education degree and is also working to become a homeowner.

To reach her goals faster, she joined Statesville Housing Authority’s Family Self-Sufficiency (FSS) Program.

It’s a program funded by a federal grant from the Department of Housing and Urban Development that helps families increase income and reduce their dependency on welfare. To graduate, participants must establish and meet goals like going to school, no longer needing income assistance from welfare programs and maintaining a job. They have up to five years to achieve those goals.

Borders, a teacher at Headstart, signed up in 2014.

“My other goal was budgeting 'cause I wasn’t doing right and I got that down and going to school. And I’m about to graduate next year,” said Borders.

Like many other FSS participants, she was most excited about building a savings account. As participants’ incomes rise, so does their rent. The increased amount is then deposited into an escrow account. When they graduate the FSS program, that extra money is theirs.

“I felt happy 'cause I knew at the end of the program, I knew I would have that money,” said Borders.

She showed Channel 9 a statement showing that by the summer of 2019, her account had more than $12,000 in it.

But two months before her five-year contract was set to end, she received a letter from the housing authority.

“Therefore, October 2017 you successfully completed the FSS graduation program,” Border read from the letter.

It said she should have graduated from the program more than two years ago because that's when she'd reached six months of suitable full-time work.

The change means she'll receive less than half of the money in her escrow account.

“I’m just disappointed, hurt, betrayed because, I trusted these people” she said.

Several others contacted Channel 9 after receiving the same notice that said they, too, should have graduated years ago.

At least one was told she would not receive any money even though her escrow statement showed more than $6,000.

When Channel 9 first questioned the housing authority in October of 2019, the executive director Darbah Skaf sent a response saying they had updated the guidelines in September of 2018.

“After reconstruction of the agency’s FSS department, the department was re-assigned to the director of housing operations. At that time discrepancies were being noted, which started a complete file review of all current participants by SHA staff. Participant’s interims and annual re-certifications from the beginning of the contract of participant were reviewed for proper escrow calculation. All escrow accounts were adjusted to the correct amount accrued."

There were 67 current participants as of December 2019

Thirty percent of total participants had an increase in escrow

Twenty-one percent had a decrease in escrow.

Skaf told Channel 9 that under the new guidelines, once participants reached full-time suitable employment for six consecutive months, they were now considered successful graduates of the program even if they haven’t completed any of the other goals.

Participants told Channel 9 that they didn't sign new contracts agreeing to the new rules.

Channel 9 also confirmed that the money they thought they'd be receiving would go back to the housing authority.

Participant Shacoby Brandon says she's spent years attending FSS meetings and building her credit.

“You told me to do XYZ and you guys would help establish me in my goals and assist me with everything I needed and now all of a sudden you’ve done it wrong. You’re taking escrow from us,” she said.

She hasn't been graduated out yet but just received an email asking for the timeline of her current job and worries that she's next.

“I have two years left, I’m not ready. I have things I want to accomplish in this program in order to be self-sufficient,” said Brandon.

Channel 9 talked to three other FSS program directors in the Carolinas. Each one said participants should have the full five years stated in their contracts, and that if the housing authority makes mistakes, they should find a way to get participants their money.

The head of the FSS program in Washington, DC would not answer questions specifically about Statesville, but she said there’s no HUD mandate that participants graduate after six months of full-time work and unless participants breach their contracts or agree to changes, their five-year contracts should stand.

Current and former participants hope higher authorities will look into what's happening at the housing authority.

“We don’t want to be stuck in public housing. I don’t want to be stuck on Section 8. I want to move out and buy my own house,” said Borders.

She refused to accept the check that was less than half of the amount in her account and signed it back over to the housing authority disputing the amount.

She and others signed a petition and are joining several former housing authority employees vowing to keep fighting for their families

“I am going to get what is owed to me,” said Borders.

HUD told Channel 9 it is now revising how it monitors FSS programs across the nation.

A spokesperson sent a statement saying, “HUD takes these matters seriously and is committed to ensuring that the FSS program is operating in accordance with regulatory requirements. HUD is working closely with the housing authority regarding these matters and has every expectation that they will respond in a timely and appropriate manner.”

When Channel 9 tried to send more questions to the housing authority, an attorney responded saying they were “handling these on a case-by-case basis with Legal Aid.”

Legal Aid confirmed its attorneys are working with three residents with concerns over the FSS program.

Below is the full statement regarding our questions about the FSS program from the attorneys representing the Statesville Housing Authority:

"Dear Ms. Johnson: Our firm represents the Statesville Housing Authority. This letter details our response to inquiries our office has received regarding FSS. Should you need any additional assistance with this topic, please reach out at the email information above and I’ll assist you as I am able. Foremost, I want to stress that the Statesville Housing Authority welcomes and encourages any participants that have questions or concerns with their FSS escrow accounts, or their graduation from the FSS program, to follow the procedures outlined in their handbook, so that the Statesville Housing Authority can inquire into the issues and find a resolution that benefits each resident. Each resident has the right to file a grievance on any dispute on their account and an informal hearing will be scheduled, with an impartial 3 rd party hearing officer, to attempt to resolve the issue. Statesville Housing Authority is committed to ensuring every client is given full review under the requirements in the federal regulations, and is dedicated to reviewing every client grievance on a case-by-case basis. Since the inception of the FSS program, the Statesville Housing Authority has had processes in place to ensure compliance with the guidelines set forth in CFR 984.303-305. In the past year or so, the SHA’s FSS department underwent some change, and was reassigned to the Director of Housing Operations. SHA has conducted a file review of all the current participants in the FSS program. To ensure complete accuracy, SHA management decided to implement the following action items. First, Nan McKay & Assoc. was contracted to provide on-location training for all current FSS Coordinators, PH Managers, HCV staff, and accounting staff, to ensure everyone involved with the FSS program, even tangentially, had updated knowledge to administer the rules and regulations of the program. After the training, the Director of Housing Operations initiated a review of the participants ITSP’s and listed goals, regarding both the CFR’s and Action Plans. The second action item was to contract with an outside accounting and auditing firm, named BDO. This firm completed an investigation of staff audited files, which included the participants’ escrows and the funding of the FSS escrow bank account. BDO reported, after an analysis of the calculated escrow liabilities, escrow cash balances, and requirements for FSS accounts under 24 CFR 985.205, that SHA complied with all of the requirements under the regulation and at no point were any FSS funds misappropriated or insufficient. To conclude our statement on the matter, the Statesville Housing Authority has made every effort to be as forthcoming, transparent, and honest about the changes that have been made in the program. To that end, any SHA policy changes are placed on a 30-day public review for comment. The staff has made every effort to be as efficient, accurate, and precise in calculating the escrow accounts for individual participants, and has been careful in determining each participant’s graduation date, if any. The whole intent of the program is self-sufficiency. As I stressed at the start of this letter, if there are any participants who have questions or concerns, SHA is dedicated to hearing each grievance, reviewing the evidence provided at an informal hearing and, in the event any error was made, correcting such error.

Sincerely, Tyler J. Crawford, Esq. On Behalf Of: Statesville Housing Authority C. David Benbow, Esq. Benbow & Martin, P.C."

Families who would like to file a grievance can call the Statesville Housing Authority or HUD North Carolina, Public Indian Housing (PIH) Office at (336) 547-4000.

They can also contact Legal Aid to see if they qualify for representation.

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