KEY TAKEAWAYS: Federal inspectors found deficiencies in 74 of 75 Section 8 homes that had recently passed contractor inspections. Auditors estimate HANO could pay more than $171 million over the next year for units failing federal standards if problems persist. Inspectors identified 591 defici encies, including 303 life-threatening deficiencies across 66 homes. HANO terminated its inspection contractor in February and hired a new permanent contractor that began work in June.   The Housing Authority of New Orleans could pay landlords more than $171 million in taxpayer-funded housing assistance over the next year for units that fail federal standards unless it fixes major weaknesses in its inspection program, according to a new federal audit released Sept. 18. The U.S. Department of Housing and Urban Development’s inspector general reinspected 75 Section 8 homes that had recently passed inspections conducted by HANO’s private contractor. Federal inspectors found deficiencies in 74 of them. Auditors identified 591 deficiencies, including 339 that they determined existed when the contractor previously approved the units. Sixty-six homes had a combined 303 life-threatening deficiencies that required correction within 24 hours. Those included electrical hazards, blocked exits, missing or inoperable smoke and carbon monoxide detectors and mold-like substances. The findings matter not only for tenants but for taxpayers. HANO administers more than 18,000 housing vouchers in New Orleans. HUD authorized $229.2 million in voucher funding for the authority. From 2022 through 2025, HANO received roughly $808 million in voucher budget authority, plus about $64 million in administrative and other fees. The inspector general estimated that, based on its statistical sample, HANO could pay more than $171 million over the next year for units that do not meet federal housing quality standards if the problems persist. The figure does not mean HANO has already improperly spent $171 million. HANO objected to earlier audit language saying it “will pay” that amount, prompting the inspector general to revise the final report to say the authority “could pay” it without corrective action. Auditors did identify $22,992 in actual improper payments to landlords. In five of 25 cases reviewed, HANO continued paying landlords after they failed to repair deficiencies within required deadlines. For three units, payments continued between five and nearly eight months after the landlords’ repair periods expired. HUD’s inspector general recommended HANO recover the $22,992 from landlords or repay the voucher program using non-federal money. The audit placed much of the blame on HANO’s inspection contractor and the authority’s failure to adequately monitor it. When federal auditors followed eight contracted inspectors through 20 inspections, the inspectors missed 82 of 222 deficiencies, or 37%. They did not consistently check smoke detectors, test electrical outlets or determine whether appliances worked. The contractor also performed quality-control reviews of its own inspectors. HANO lacked an adequate independent process to determine whether those reviews were accurate, auditors found. Despite the deficiencies later uncovered by federal auditors, the contractor had not failed one of its own quality-control inspections since 2023. HANO terminated the contractor in February after auditors alerted officials to conditions in one home that had passed inspection with no deficiencies despite numerous problems. The authority later hired a new permanent inspection contractor, which began work in June. ...read more read less