MILWAUKEE — The Housing Authority of City Milwaukee (HACM) is at risk of filing for bankruptcy in as little as 45 days partly due to misusing Section 8 housing funds, sources said.
HACM is the city's second-largest landlord and home to thousands of people.
TMJ4's Jenna Rae has been investigating HACM for the last year and a half after residents voiced health and safety concerns about their living conditions.
This week, Rae obtained an internal email that details the dire financial situation HACM faces.
Multiple sources have confirmed this email was sent by HACM's Chief Financial Officer, Brad Leak, and was sent to several board commissioners on Monday.
The email states unreconciled cash balances in the agency’s audits show that since 2019, $2.8M in funds were removed from the Section 8 program to cover agency overhead salaries and benefits in order to make payroll.
This means that HACM employees improperly removed money from the Section 8 Housing Program, a federal program that assists very low-income families, the elderly, and the disabled to afford housing, in order to pay themselves and their benefits.
Documents obtained by TMJ4 state this was not reported to the Department of Housing and Urban Development (HUD), the agency that oversees HACM.
During audits of HACM, HUD reportedly noted there were financial inconsistencies, but was unable to pinpoint the source, leading to the federal agency’s decision to mandate HACM outsource its Section 8 program.
RELATED COVERAGE: Feds require Milwaukee's Housing Authority to outsource one of its largest programs, Section 8 Housing
Watch: Sources: HACM at risk of bankruptcy for misusing Section 8 funding to pay staff
That's not all.
HACM's allegedly been informed that its construction loans are at full capacity and leadership has requested PNC bank to "bail [HACM] out to meet the obligations."
The document also details the agency currently does not have enough funds to cover payroll processes for the week of January 27th and states "at this pace the agency will be bankrupt in 45 days."
The CFO said "the impending cost-cutting measures imposed are essential to the short-term success. If not implemented in two weeks, I can not promise how payroll will be met."
The email ends with "HELP!!!!"
On Thursday, Rae broke the news that 20 HACM employees were laid off. Inside sources said it was mainly office, maintenance and Travaux employees. Travaux is HACM's development and construction branch.
HACM’s board is holding a special meeting on Friday afternoon where they will update the agency’s financial status, according to the meeting agenda. They also plan to approve a 'recovery agreement' with HUD to fix all these issues. You can read more about that plan, here.
This is a developing story and will be updated.
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