NORWAY — The final report from the Housing and Urban Development Inspector General has determined that the Maine State Housing Authority mismanaged its program and failed to ensure that participants in its Housing Choice Voucher program were living in decent, safe and sanitary conditions.

The report, which reaffirms an interim report issued by HUD in May, states that 53 of 61 units, or 87 percent, of the units it inspected statewide, including some in Norway and Paris, did not meet MSHA’s quality standards.

As a result, taxpayers paid at least $194,956 in housing assistance payments for tenants who were living in units that failed to meet quality standards, the report states. In addition, the report concludes that Maine State Housing officials did not always comply with either HUD or their own policies on procurement and expenditure practices.

The 29-page report from HUD’s Office of the Inspector General was issued this week by Sen. Susan Collin’s office and HUD.

“Unfortunately, this final report is only further proof that, under its previous leadership, Maine State Housing Authority failed to live up to its own mission — to help Maine people obtain and maintain decent, safe and affordable housing. No one should ever be living in federally subsidized housing that fails to meet basic safety and health standards, and certainly taxpayers should not be footing the bill,” said Collins in a statement released Monday evening.

Collins requested the review of the state agency’s oversight of the Section 8 program in May following a three-month investigation in October of 2011 by the Sun Media’s Advertiser Democrat. The report, which was initiated after a rooming house fire in a Main Street, Norway, apartment building, documented serious safety and health violations in more than a dozen apartment buildings. Within four hours of publication, the state launched an official probe that expanded into a statewide review of Section 8 properties under the Maine State Housing Authority.

The properties exposed in the newspaper report were administered by the Avesta Housing Corp. The company is one of four MSHA’s program agents that oversee Section 8 housing. As a result of the report and inquiry by state and congressional officials, the MSHA reviewed 125 units throughout Oxford County and many more beyond and found the majority of them did not meet HUD standards.

The report stated that more than half of the failing units had defects serious enough that HUD recommended remedy within 24 hours. Three units had conditions so bad that residents were moved due to eminent health and safety risks. It was recommended that all deficiencies be fixed and that controls be put in place for future inspections.

MSHA said Wednesday steps have been taken to improve housing.

“Since last fall (2011), MaineHousing has taken strong, far-reaching steps to ensure that its HCV program provides quality service to tenants living in apartments subsidized by Section 8 vouchers,” John Gallagher, director of MaineHousing, said. “We thank all of the landlords and tenants who have endured numerous inspections for their cooperation and patience over the last few months. We appreciate your willingness to learn what factors can cause a housing unit to fail an inspection, and your actions to remedy them.”

In response to the recommendation that MSHA repay the $197,000, a spokeswoman said Wednesday some form of repayment is under consideration.

“The $197,000 is not a fine. It is a recommendation from the OIG to HUD that it ask MaineHousing to repay the money into the federal program,” Deborah Turcotte, spokeswoman for the MSHA, said Wednesday. “We will be discussing this with HUD, as we believe OIG is calculating the repayment in a stricter way than has been applied in similar investigations nationwide. We believe the repayment should be about $109,000.”

According to the HUD report, inspectors from HUD looked at more than 3,000 state voucher program units during their audit, including 19 that were inspected by Avesta. Only one of the 18 selected units passed inspection by HUD investigators. Avesta oversaw inspections in the Norway-Paris and Lewiston-Auburn area. Although the inspections failed, the landlords continued to receive monthly payments from the program, according to the report.

The Authority decided to phase out the four program agents and are expected to begin to administer the Section 8 program from their office by next year. The Housing Authority has increased its staff to perform its own inspections while HUD works with the state agency on a corrective plan.

MSHA was created in 1969 by the state Legislature to assist residents of Maine in obtaining and maintaining decent, safe, affordable housing and services.

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