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HACM CFO says agency facing cash shortages, outlines centralization and asset plans
Summary
Housing Authority of the City of Milwaukee Chief Financial Officer Brad Leake told commissioners the authority is operating with short-term cash constraints for 2024 results and outlined steps including centralized purchasing, reassessing LLC waterfalls and using an income-producing asset to shore up operations.
Brad Leake, chief financial officer for the Housing Authority of the City of Milwaukee, told the authority's commissioners on Wednesday that preliminary fourth-quarter 2024 financial results are rough estimates while staff complete the 2023 audit and finalize uploads to HUD.
Leake said the agency is “still experiencing serious cash management shortages” and that staff are holding some checks until they can confirm funds are available. To stabilize cash flow, he told the commission staff are negotiating with key vendors, implementing corrective-action plans and centralizing purchasing so developments negotiate as a single organization rather than individually.
The fiscal picture is mixed, according to Leake. Public housing operations posted an estimated $1.6 million operating shortfall for 2024, he said, and vacancy-related write-offs contributed about $1 million of noncash loss. By contrast, the central office cost center was roughly breaking even, helped in 2024 by about $2 million in development fees. Leake said those development fees and the LLC “waterfall” are a priority for producing unrestricted revenue that would give the authority more discretion for operating needs.
Leake described one strong performing set of properties — referenced in the meeting as Berryland, Northlawn and Southlawn (BNS/Vets) — as a “phenomenal, performing asset” that has helped the agency avoid deeper shortfalls. He said the development portfolio has also created intercompany balances: Trevo (the authority’s development arm, referenced in the meeting under several variant spellings) currently owes HACM roughly $5.3 million, and the BNS-related entity has provided cash infusions the authority has used over the years.
Leake told commissioners HUD has allowed the authority to reallocate $1.1 million of a $1.5 million land-lease payment to address development cost overruns and other immediate needs. He also said the authority owes PNC (a lending partner) in multiple respects and that staff and PNC will need to agree a path forward.
Leake said the finance and executive teams plan a deep review of every development expense line after audited 2024 results are submitted to HUD and the first-quarter 2025 audit cycle is complete. He listed specific cost controls: central purchasing, limiting discretionary purchases and reviewing fees paid from developments to the central office. He also said the authority will slow spending on units that are vacant but not ready for lease-up to pace outlays until cash stabilizes.
Separately, Leake announced the promotion of Pam Watson to interim director of finance and praised her for securing a HUD permission that yielded $350,000 in soft-cost funding that the authority can use for near-term payroll and other immediate obligations.
The CFO said staff expect to be “comfortable” with bill payment processes within about nine months and that the authority is aiming to rebuild three months of operating reserves by 2026, a threshold he tied to HUD scoring and recovery planning.
The authority accepted Leake’s report and asked staff to return with more granular capital-fund and unrestricted-revenue detail in future board presentations.
