The Department of Housing and Urban Development (HUD) declared on May 5 that the Housing Authority of the City of Little Rock (LRHA) — operating as the Metropolitan Housing Alliance — was in substantial default for failing to meet the terms of its federally-mandated recovery agreement. As a result, HUD took possession of the Arkansas housing authority’s programs, operations and assets and dissolved its locally appointed governing board of commissioners.

“Federal housing programs come with clear obligations to residents,” HUD Secretary Scott Turner said in release. “When those obligations are not met, specifically after formal recovery measures are put in place, HUD will make it right with a hands-on approach.”

“Under Secretary Turner’s leadership, HUD will continue to act where warranted to uphold our responsibility to the residents who rely on federal housing programs and the taxpayers who fund them,” Assistant Secretary for Public and Indian Housing Benjamin Hobbs said. “HUD is grateful for the efforts of the House Financial Services Committee and Chairman French Hill (R-Ariz.) for shining a light on [Public Housing Authority] mismanagement and the need for strong accountability."

HUD notified LRHA of its determination of substantial default on April 23, pointing to LRHA’s prior designations as a “troubled performer” under the Public Housing Assessment System and its recent breach of its recovery agreement, executed on Oct. 28, 2024.

LRHA had an overall score less than 60 (of 100) points for fiscal year 2022, a subsequent designation as a troubled performer for fiscal year 2023. For fiscal year 2024, LRHA received a 78 (of 100) for its Unaudited Financial Data Schedule submission, but when adjusted to reflect its Late Presumptive Failure, received a final score of 53 (of 100).

Some conditions from the recovery agreement remained unmet. As Feb. 1, 2026, LRHA failed to reach 96 percent occupancy of its public housing program for the period of Jan. 1 to Dec. 31, 2025, reporting only approximately 89 percent occupancy. LRHA also failed to contract with a third-party managing agent to operate any properties that did not meet the performance standards, as required by the agreement.

HUD will maintain control of LRHA until it determines that the housing authority has achieved sustained compliance and is capable of operating independently in accordance with federal standards.