By Erica C. Barnett

Seattle and King County owe the King County Regional Homelessness Authority around $8 million, KCRHA associate director William Towey told the County Council’s committee of the whole last week, referring to the $8 million in spending that, according to a forensic audit, “could not be reconciled” by auditors and “may have to be written off.” The $8 million made up the bulk of more $13 million the homelessness agency had either overspent or could not account for when Clark Nuber released its forensic audit in April.

“Basically, these are the funds that we should have billed to King County in the city of Seattle, and that we didn’t, and we are in the process, in phase one, of completing a cash accounting, which will help us identify what the amounts of those funds are and who they accrue to,” Towey said. A KCRHA spokesperson confirmed that the agency doesn’t know the exact amount they failed to bill for and how much they believe they are owed by the city and county, respectively.

Towey attended the council meeting without KCRHA CEO Kelly Kinnison, who was on a family vacation.

Committee vice-chair Claudia Balducci expressed incredulity that King County may be expected to pay KCRHA additional money, on top of its regular funding and whatever it will cost to untangle the agency’s finances and fix the most critical issues outlined in the audit.

Even if the city and county decide to take over control of the region’s homelessness contracts and shut down the agency, they could end up spending millions winding it down; already, the city and county have committed to funding a team of outside accountants, and KCRHA’s finance committee has recommended hiring seven new staff despite a hiring freeze.

“Did I hear you correctly to say that KCRHA believes that King County and Seattle owe the agency money, and if so, how much?” Balducci asked.

“Yeah, you heard me correctly,” Towey responded. At some point between 2021 and mid-2025, the years the audit covered, “a situation occurred where we expended funds to providers and failed to bill either the city of Seattle or King County for those expenses,” Towey said.

It’s “not great,” Balducci responded, “that there was an $8 million that was unaccounted for, that now will have to come out of the backs of our taxpayers.”

Towey suggested that the $8 million that remains accounted for is as much the county and city’s responsibility as the KCRHA’s, because the two governments should have noticed that KCRHA wasn’t billing them and taken action to make them do so.

“Again, I tend toward being generous, but if I have a great relationship with a vendor, and I want them to come work on my business regularly, and they bill me every month, and I notice that they fail to bill me for some funding, I would probably try and correct that myself,” Towey said.  “Now, that is in no way meant to say that this is not our fault,” he added.

As he and Kinnison have done previously, Towey downplayed the audit findings, saying that since Kinnison was hired, the agency has addressed or is in the process of addressing most of the major issues Clark Nuber identified, such as poor financial management and potential misuse of “cash-equivalent” funds,  as credit cards and gift cards. “In the grand scheme of what this is about, these are relatively small dollar amounts,” he said. (Clark Nuber has strongly disputed the KCRHA’s positive spin on its findings, and urged the city, county, and KCRHA governing board to closely verify every claim from the agency, given its history of failing to follow through on commitments.)

Towey also suggested that the vast majority of the problems the auditors identified were long in the past, resulting largely from inept past leaders, early mistakes, and efforts to respond to homelessness quickly during the COVID pandemic. In “hindsight,” he said, people will look back and say, ‘”Gosh, that could have been done a bit more efficiently, but again the expenses are clearly to the right people for the right things.”

Balducci was taken aback by at the blithe tone of Towey’s presentation, which she called “completely at odds with where my constituents are,” Balducci said. “My constituents think that we are done with this organization. … As policymakers, we all own part of how we got here today. We made some decisions that in retrospect we probably should have done differently. But here we are, and I’m just afraid that this is a sinking ship, and regardless of all the work that’s going in, it feels like fiddling on the Titanic.”

Balducci was “shocked,” she added, that Kinnison didn’t make time to attend the meeting of “one of the organizations that’s going to decide the future” of the agency she leads. “That’s not a good look.”

Committee member Rod Dembowski, who was among the first councilmembers to call for dismantling the KCRHA, seemed more impressed by Towey’s presentation, noting that he had worked with Towey when he was head of Lake City Partners, a North Seattle homelessness agency.

“And so I would just say, William, I’m glad you’re over there at KCRHA, and I hope that your time there is short, and that we can get you over here at the county when that’s done,” Dembowski said.

In response to PubliCola’s questions about whether and how the city will pay the money KCRHA says it owes, a spokesperon responded, “The City, County and KCRHA are in conversation about how to resolve this and other on-going financial management issues at the agency, starting with embedding a financial firm this summer.”

We’ve also reached out to King County Executive Girmay Zahilay’s office and will update this post when we hear back.