Dear Stakeholder,

As many of you know, the United States Department of Housing and Urban Development (HUD) has been conducting a lengthy and thorough audit of the Lowell Housing Authority's Public Housing and Recovery Act Capital Fund programs, including the force account labor program. The results of that audit will soon be made public and I wanted to take this occasion to discuss a few key points.

Let me begin by acknowledging the close working relationship the Lowell Housing Authority (LHA) maintains with state, federal and municipal regulators, including the U.S. Department of Housing and Urban Development, to ensure compliance with safety, health and environmental regulations, fair housing practices, and financial policies through a wide variety of regulatory and record keeping protocols. Since 2008, the LHA has undergone a number of audits related to Capital and American Recovery and Reinvestment Act Funding through HUD as well as annual independent financial audits. Any time these audits identified issues they were corrected.

In any review the most important question any government auditor asks is whether there are indications of waste, fraud or abuse. As my colleagues at the LHA and I expected from the outset, there were no such findings from the most recent HUD audit. Auditors found no signs of wrongdoing on the part of any current or former LHA employee. Additionally, the audit found no evidence of ineligible expenses or misspent funds. This too, is important.

The auditors did, however, find fault with some of the record keeping practices employed by the LHA during the surge of work the Authority engaged in when increased federal money became available following the 2008 financial crisis.

To satisfy federal regulations, my staff and I will spend considerable time over the next two- to six months producing the necessary documentation to justify LHA's use of what is called force account labor. The use of this process allows the authority to hire local union workers directly at a critical time for many families. The practice is not new to LHA or to our public housing counterparts in other metro areas. I'm confident that force account labor was the right thing to do - and I'd do it again. But our record keeping was deficient, the auditors found, and in retrospect I realize I should have spent more time attending to that aspect and not just focusing on finding innovative ways to improve conditions for our residents by advancing projects as quickly as possible.

While I am gratified that HUD's auditors found no wrongdoing at LHA, inadequate record keeping is never acceptable. I want to acknowledge that we take their findings seriously and are committed to addressing the findings contained in the audit and, where required, implement corrective action. I am also confident we will be able to produce adequate documentation for every expense to HUD's satisfaction. Furthermore, this is an appropriate time to underscore our commitment to constantly updating our policies and procedures to the highest standards.

Finally, I have every confidence in the 98 men and women who work for the Lowell Housing Authority and am gratified that their integrity was substantiated by the HUD auditors. With the addition of some key personnel over the last few years, we have begun an extensive effort to ensure all of us here fully understand the responsibilities that come with spending federal money.

We have learned a great deal during this process and believe we are a stronger agency because of it The LHA, its employees and subcontractors are committed to delivering quality services, facilities, procurements and recordkeeping that meet government compliance standards.

Thank you for your review and understanding of our position.

Gary K. Wallace