Chattanooga Housing Authority Board of Commissioners and

Chattanooga Housing Authority officials were shocked Tuesday when they learned that the agency shows a $2.5 million shortfall in its reserve fund just as the annual financial audit is under way.

“I know you’ve got to do some kind of analysis, but to me this is a troubling situation,” James Sattler, vice chairman of CHA’s board of commissioners, said at CHA’s monthly board meeting. “How are we going forward with that kind of a shortfall? Where are we getting the cash?”

“We’re living month to month,” CHA’s Chief Operating Officer Kari Blakney responded.

Mr. Sattler raised the questions after Ms. Blakney presented a report that included CHA’s unaudited 2007 financial records and its financial report for the first quarter of 2008. The 2008 report indicated a $287,000 loss in low-income public housing and a $228,000 loss for CHA’s central office in the first quarter of 2008.

“We’ve got to know, if we’ve got shortfalls, how we’re going to fund things,” Mr. Sattler said. “We’ve got to put a plan together.”

Housing officials said the final 2007 audit probably will show less of a shortfall than presented Tuesday.

At the suggestion of board member Connie O’Neal, the board agreed to table the discussion to give CHA Chief Operating Officer Betsy McCright an opportunity to review the information.

CHA Executive Director Bob Dull said the reserve-fund money helped pay authority employees before the agency laid off 10 percent of its staff earlier this year. The layoffs included 26 people and nine management positions. CHA officials also used reserve funds to remodel 600 vacant units, he said.

Saying he was “under advice of counsel,” CHA Chief Information Officer Bill Lord declined Tuesday to give copies of the financial reports to the Chattanooga Times Free Press, saying he would decide whether to release the information by no later than May 2.

By the numbers

According to a report that included CHA’s 2007 financial statement and its first quarter financial report:

* $2.5 reserve fund shortfall in 2007

* $228,000 loss for CHA’s central office (first quarter 2008)

* $287,000 loss in low-income public housing (first quarter 2008)