AUSTIN, Tex. - Leaning against one wall of Susan Leigh's immaculate fifth floor office is a board listing what the new director of the Texas Department of Housing and Community Affairs wants to tackle this particular day.
In light green ink, one item tops the list: "Whatever it takes."
To many, that sums up what one of the nation's largest and most troubled housing agencies needs right now.
"Most of my time has been spent just putting the agency back together," said Ms. Leigh, who says she has made plenty of lists since she took the job eight months ago.
When she was hired by Gov. Ann Richards in February, she received a personal directive to make affordable housing a top priority.
Before Ms. Leigh came to the agency, its critics say, the only lists anyone kept were of problems and of the people who turned her office into a revolving door.
"I think the direction of the agency is turned the right way now, but I think the key will be in the results," said Paul Williams, chief of staff to the governor. "I think they have just begun to scratch the surface on what they need to be."
On the outside, the most notable change is the new name, which results from a legislatively ordered merger of the old Texas Housing Agency and the state's Department of Community Affairs. The consolidation was the first of its kind in Texas.
For lawmakers, the merger was an attempt to bring together two agencies with similar goals and long histories of critical audits that called the agencies unfocused and out of control.
"It was kind of like taking two wrongs and trying to make one right out of it," said a Texas Senate aide who helped draft the merger legislation. "Time will tell if it works."
An investment banker who has worked on Texas housing deals for many years said, "The whole problem was a lack of oversight of any kind. They had a small library of audits that pointed that out."
When Ms. Leigh took the job, one of her first tasks was to read the audits and the state's Sunset Advisory Commission report, which was ultimately the catalyst for the merger.
What I learned was that nobody was in control, there was no leadership," Ms. Leigh said. "No one was taking a path or a specific direction, and I think the result was a bunker mentality among the people who were here. It's a long, long-term problem."
"The audits didn't cite things where people were trying to go out and do illegal activity," she said later. "It was a matter of not filing reports and things just not getting done."
Few personnel changes have been necessary in realigning the agency, she said. One of her first efforts was to create its first-ever finance department. The agency had issued nearly $2 billion in bonds over the past decade without one.
Steps have also been taken by the agency to turn around poor record keeping that once made it difficult for the agency to track its properties. At one point, auditors found that scores of agency properties that the books listed as empty were in fact occupied by renters.
In one of its most publicized and embarrassing incidents, a junior clerk mistakenly deposited $21 million in an off-shore bank. The money was later put in a collateralized account, but not before the agency lost an estimated $80,000 in interest.
But the most severe criticism from auditors and legislators has been that the housing department did not do enough to serve the housing needs of low-income residents.
Between 1984 and 1987, applicants with incomes below $24,000 a year received less than 45% of the 17,150 loans made from bond programs, auditors found. In fact, one out of five loans went to households with annual incomes greater than $60,000.
Ms. Leigh said that more recently the program has been providing 60% of its loans to households with incomes of $30,000 a year or less. "I think we're more than meeting our goal of serving low-income individuals," she said.
Where the state may have been missing opportunities, many local agencies were filling the gap. Ms. Leigh said that as the state agency becomes more focused, the role of local issuers may diminish.
"This agency just hasn't been a player, and I think some of the local agencies developed as a result of that," she said. "I would hope that in the future that we do have a presence, and I would hope that those that don't really want to be in the business can get out of."
But not everyone believes a revitalized state agency will lessen the role of the nearly two dozen local issuers.
"They both have roles to play," said Bob Peterson, senior vice president at First Southwest Co. and financial adviser to many of the state's local housing corporations. "The problem is that [housing] is like most bureaucracies - it's easier to go through a local agency."
Mr. Peterson said that local authorities are experienced and can often do more for the specific needs of their areas because the median incomes they use to qualify people for loans are generally higher than the state average.
But Ms. Leigh said that some nonprofits that have been doing housing programs also run other projects that may include such unrelated activities as meals programs for the elderly.
"They realize that all that glitters is not gold," she said. "These agencies require a tremendous amount of day-to-day attention and not everyone wants to provide that."
While the future role of local agencies is not yet clear, Ms. Leigh said her department must respond to the very different housing needs of a state as big and economically diverse as Texas.
For instance, while the state is nearly 83% urban, a sparse population in the wide-open areas of rural Texas does not have the same needs as migrant farm workers living in colonias - unincorporated housing developments along the Mexican border - or the working class poor in Dallas or Houston.
While Texas still has a surplus of single-family housing, Ms. Leigh said it is difficult to convince the U.S. Department of Housing and Urban Affairs of the need to build new homes for families.
"There are a lot of empty units, but they are not where the poverty is in the state," she said. In fact, many homes are in upscale suburbs of cities or are repossessed vacation homes in Gulf of Mexico resorts such as Port Aransas.
"How they view it is they look at statistics that say you have a certain number of vacant units in Texas, but they don't see that the [available] housing is not usually where the need is," she said. "They don't understand that the needs are different between North Dallas and South Dallas."
"In the colonias, you have a culture of not renting," Ms. Leigh added. "They would rather live in a shanty than something that's not their own."
However, she said the HUD officials point to a large surplus of homes in Texas, noting that many are controlled by the Resolution Trust Corp. as a remnant of failed banks and thrifts that collapsed in the state's real estate and energy bust of the last decade.
However, to make her case that the numbers are misleading, Ms. Leigh needs to look no further than her own agency's bond program. The program was developed in 1990 in a bold move to help the RTC sell a housing inventory then estimated to exceed 100,000 single-family homes in the state.
But today, little of the $141 million, first-of-its-kind mortgage revenue bond program has actually been used to help buyers purchase eligible properties from the RTC in Texas. In fact, much of the money was shifted to other, broader loan programs.
The RTC "did not have the inventory they thought they would have because I think they overestimated the need," she said. "I do not consider it a very successful program."