AUGUSTA — An audit of the Maine State Housing Authority showed that 87 percent of the subsidized units that were inspected statewide failed to meet federal housing quality standards.

The U.S. Department of Housing and Urban Development’s Office of the Inspector General found that 53 of 61 units in the Housing Choice Voucher program, also known as Section 8, did not meet minimum standards. Twenty-eight units, or 46 percent, had emergency or life-threatening violations that required correction within 24 hours.

The authority made at least $194,956 in housing assistance payments for units that failed to meet the standards and it should have to pay the money back without using federal funds, according to a report by HUD dated Sept. 28.

The problems were a result of the housing authority’s lack of oversight of the organizations that administered the program and a lack of quality control for its own inspections, the report said.

There are 3,199 housing units in the voucher program in Maine. Four outside organizations administered the program for most of the units. HUD inspected a statewide sample of units administered by the four organizations: the Aroostook County Action Program, Avesta Housing Corp., Penquis, and the Washington-Hancock Community Agency.

The problems documented in the report include:

• A fire hazard caused by a propane tank on top of a plastic container and tires, near a gas can and an oil tank.

• A missing toilet flush handle.

• Duct tape used to hold a door closed to a separated door frame.

• A sagging roof that allowed water leaks.

• Exposed wiring in an entrance area.

Because of the poor inspection results, HUD has decided to inspect all housing units under the Maine State Housing Authority’s jurisdiction in the Section 8 program. The report estimates that will be finished this fall or winter.

“I don’t think you’ll find anybody here that will deny we had a lapse in the program,” said John Gallagher, who took over Monday as the housing authority’s director.

Problems with Maine’s Section 8 housing program were exposed in October 2011 by the weekly Advertiser Democrat of Norway.

Gallagher said the authority’s staff took steps immediately when it learned of the problems. About three dozen people have since been hired to handle the Section 8 program within the authority, and inspectors are working with a single trainer to standardize inspections, he said.

Responding to a draft copy of the HUD report, the housing authority immediately moved tenants, according to an email by Peter Merrill, who was acting director until Sept. 30. The authority also took action against the property owners and removed one from the program.

An internal auditor investigated and compiled a report that prompted a plan for the housing authority to administer the program directly and improve its inspections, Merrill wrote.

He wrote that the housing authority disagrees with the amount it owes HUD. The authority believes the figure is $109,601.

Dale McCormick, who resigned as housing authority director in March, said the agency was deeply distressed about the substandard Section 8 housing units in Oxford County.

“Substandard housing is never acceptable anywhere,” she wrote in an email Tuesday. “I ordered an immediate investigation and we moved quickly to relocate the tenants, sanction the landlords and restructure the entire program so that Maine Housing had control over inspections and quality of units.”

The housing authority and McCormick have been criticized by state Treasurer Bruce Poliquin and the Maine Heritage Policy Center, a conservative organization. McCormick, a Democrat who was appointed by Gov. John Baldacci, denied her critics’ accusations of misspending but said she was resigning to end the rancor.

In a report in May, the state Office of Program Evaluation and Government Accountability found no indications of fraud in the housing authority. It reviewed $4.3 million in housing authority spending from 2007 to 2011, based on the criticism.

On Tuesday, Poliquin said the HUD report confirms that the housing authority’s past senior management mismanaged taxpayers’ money.

“The end result is that many disadvantaged Maine families have been living in these subsidized apartments that were unsafe and poorly maintained,” Poliquin said.

U.S. Sen. Susan Collins, R-Maine, requested the HUD review in December after learning about safety problems from Paris Fire Chief Brad Frost. On Tuesday, she echoed Poliquin’s sentiments about the past leadership of the housing authority.

“I am hopeful that the unacceptable conditions revealed by this investigation are being corrected by its new management,” Collins said in a prepared statement. “Going forward, it is absolutely essential that Maine State Housing not only be steadfastly committed to ensuring safe and healthy housing for qualified residents, but that it also uses taxpayer dollars prudently.”

The HUD review also showed that the housing authority awarded an information technology contract through a noncompetitive process without maintaining records. The report said the authority did not adhere to proper procedures and cannot justify that the $848,096 paid for the services in 2010 and 2011 represents the best price.

The contract was awarded after the authority lost the employee who administered its Homeless Management Information Systems program. The authority was at risk of losing funding for the program if it did not meet its reporting requirements. Of the total amount paid to the consultant, $111,742 was charged to the program.

A new procurement policy was adopted in September, Merrill said.

Staff Writer Ann S. Kim can be contacted at 791-6383 or at:

akim@pressherald.com

Twitter: AnnKimPPH