AUGUSTA, Maine — John Gallagher said some people questioned his judgment when he accepted Gov. Paul LePage’s nomination in August to become the next director of the Maine State Housing Authority.
After all, the agency was in damage-control mode after being pummeled in the press for reported instances of low-income residents living in substandard housing inspected and approved by MaineHousing or its agents, and for allegations of financial mismanagement, which eventually led to the resignation of the preceding director.
But Gallagher, who assumed the director position at MaineHousing on Monday, Oct. 1, shrugs off the worries and is confident he will be able to lead MaineHousing past the recent controversies and return the focus to the agency’s mission, which is helping Mainers obtain adequate housing. It does that by assisting public and private developers build new low-income housing in the state and by managing federal programs like the Housing Choice Voucher program, which provides rent assistance to low-income residents and is commonly referred to as the Section 8 program.
“I think one of the main goals is trying to regain the trust of the people that oversee us and work with us,” Gallagher said in an interview with the Bangor Daily News. “Obviously this is a big black eye for the agency, but I’m very upbeat about the way … the board and staff have stepped up and made some hard decisions — not in a knee-jerk reaction way, but in a planned, calculated way — to make sure we have a good opportunity to succeed at this.”
Gallagher took over as director of MaineHousing the same day the U.S. Department of Housing and Urban Development, or HUD, issued a report claiming MaineHousing had mismanaged the Section 8 housing program and failed to provide adequate oversight of the third-party agencies that handled the majority of the housing inspections statewide.
The audit was a response to an October 2011 article in the Norway Advertiser-Democrat about substandard Section 8 housing in western Maine, but it revealed that the problem was much more widespread, finding that 53 of the 61 Section 8 housing units it inspected throughout the state, or 87 percent, did not meet HUD’s housing quality standards.
While the audit put MaineHousing in the crosshairs again, it addressed problems the agency already had been working to rectify, Gallagher said. Last fall, as a result of the newspaper article in Norway, MaineHousing underwent its own internal audit and examination of how it administers the Section 8 program with several third-party agencies throughout the state. As a result, MaineHousing developed a corrective action plan, which Gallagher will be tasked with carrying out.
One major piece of the action plan was that MaineHousing would end the use of third-party contracted agencies — Avesta Housing Corp., Aroostook County Action Program, Penquis and Washington-Hancock Community Agency — in its administration of the Section 8 program. It phased those contracted agencies out over the last nine months, Gallagher said. As of Monday, MaineHousing manages all of the 3,900 Section 8 vouchers in the $25.5 million program.
“I think bringing that back in house because of issues that were initially brought up in the Norway area is going to give us a better opportunity to have better control and direct oversight over the program and over, specifically, the inspection process,” Gallagher said.
But how does a government agency suddenly manage a statewide program that oversees 3,900 housing units that require annual inspections when the same job previously required four third-party agencies?
The agency over the past nine months has hired 24 additional staff, mostly inspectors, to help take the administration of the Section 8 program completely under MaineHousing’s direct control, Gallagher said. But it has spent no additional funds in doing so, he said. Instead, MaineHousing used the slightly more than $1 million in federal funds provided for administration of the program, and which was previously flowing to the contracted agencies, to hire the additional staff. And to those who ask if the decision has created a new bureaucratic profit center, “the answer is no,” Gallagher said.
The challenge will be to manage this statewide program from a central location, whereas before the contract agencies were more local to the region they covered. But what the agency may lose in regional efficiencies, it makes up for in the ability to standardize training and inspections, Gallagher said.
“I’m not going to say it’s perfect at this point, but we’re pleased at the way it’s operating to this date,” he said.
Gallagher comes from a real estate and affordable housing background. Prior to his role at MaineHousing, Gallagher was the director of the Westbrook Housing Authority for 14 years. Before that he worked at MaineHousing and in private real estate development.
“I think that this job … [will be] a good fit because of that background and my understanding of the role MaineHousing plays in the development of new units [and] the management of specific federal programs.”
Also on Wednesday, two MaineHousing board members and state Treasurer Bruce Poliquin addressed the federal audit and expressed confidence in Gallagher at a State House news conference.
Responding to the federal audit, they said the authority lost sight of its mission and that it is undertaking measures to fix the underlying problems.
“Our job is to put people in housing units that are safe,” said Lincoln Merrill, who is chairman of the MaineHousing board’s audit committee. “Management did not devote as much time internally as they should have” to doing that work.
“The eye of the previous administration was off the ball,” said Peter Anastos, the board’s chairman.
Anastos said he was confident in Gallagher’s ability to carry out changes at the agency, including more straightforward cost accounting and a new procurement policy that results in a transparent bid process and closer oversight of vendors.
Anastos said Gov. Paul LePage told MaineHousing board members, “I don’t want any political appointments. I want a real affordable housing professional.”
“We have somebody who can really take this forward,” Anastos said.
BDN reporter Matthew Stone contributed to this article.