Iola Housing Authority will join a class action lawsuit that may lead to it recovering reserve funds it has lost and will lose in the months ahead.
Carol Ross, executive director of Iola Housing Authority, told the Register Wednesday afternoon Iola’s Community National Bank contributed $1,000, half of what IHA needed to participate in the lawsuit. Allen County commissioners agreed Tuesday to provide the first $1,000, if another entity would pony up the remainder.
The local housing authority, which manages 198 units in two townhouses and duplexes, normally maintains reserve funds equal to 10 months of its operating budget. The Department of Housing and Urban Development ordered that cut to six months, or $324,000 of IHA’s $648,000 operating budget.
Iola stands to lose $151,000, being paid to HUD in monthly amounts of about $12,500 starting last January.
Ross said she didn’t know if the lawsuit would be successful, but that Iola would have no chance of recouping reserve funds without being a participant.
IHA had to find money outside of its budget to join the lawsuit, Ross explained, because its funding comes from the federal government and federal tax dollars legally can’t be used to pay for a lawsuit against the government.
HUD reduced reserves for Iola and other housing groups in the nation after Congress declined to lower the percentage that determines rent subsidies HUD provides, thus putting HUD’s budget in a pinch.
