Contributions fell sharply and cash evaporated while debt soared at the Island Affordable Housing Fund between the years 2007 and 2008, audited financial statements show.

And the public was led to believe that the fund was flush with money from fund-raising, when in fact the opposite was true, said T. Ewell Hopkins, executive director of the fund, in an interview with the Gazette yesterday.

“The accounting is more artistic than I would like the accounting to be,” Mr. Hopkins said bluntly. “Two years ago there was a phenomenal year of giving, and there has been a steady and consistent decline since then . . . and the public was not told that this is the case. People have been nostalgic and embracing the reality of a few years ago, but that is gone.”

The housing fund and its sister nonprofit, the Island Housing Trust, have come under intense public scrutiny following the sudden announcement by the fund two weeks ago that it could no longer pay for the county rental assistance program. After a scramble for short-term emergency money that includes taxpayer-funded aid from West Tisbury and Edgartown, rental assistance subsidies for some 45 low and middle income Islanders who depend on them for stable, year-round housing, are now covered through January.

But the tangled story of the two housing nonprofits, their finances and their relationship, is just beginning to be unraveled, including by Mr. Hopkins, who has been on the job since October.

“I don’t have clear answers yet to a lot of the questions,” he told the Gazette. “But I intend to have them by Dec. 2.” On that date Mr. Hopkins will host a public meeting at the Vineyard Haven Public Library to give a report on the housing fund and its finances. “For the fund to do even more to help create and sustain affordable housing for our community, it must first provide a full public accounting of its finances and decision making process,” Mr. Hopkins wrote in an op-ed which is published on the Commentary Page in today’s Gazette.

Mr. Hopkins also confirmed yesterday that former executive director Patrick Manning, who left abruptly in August, was taking a cut from fund-raising on top of his salary, a practice that has ended.

Mr. Hopkins said he has sold a dance floor that cost the fund $23,000 and was used once for a fund-raising gala at the Field Club in Edgartown last summer. He also has disposed of a Ford Explorer that had been given to the fund and was being driven by a former employee, whom he did not name.

“I made it a priority in my first week on the job to sell the floor, and the car is gone,” Mr. Hopkins said.

Meanwhile, audited financial statements show a dramatically changing picture between 2007 and 2008 at the fund. In 2007 total operating revenues were $1.2 million; $1.1 million came from contributions, $1,500 came from grants and $172,000 from special events. Total expenses were $931,440; $712,000 of that money was spent on housing programs, the rest on administration, salaries and fund-raising. The fund ended the year with $338,000 in cash. Debt in the form of long-term mortgage notes was $500,000. Land held for development was booked at just over $1.1 million.

In 2008 total revenue was $1.8 million, with $722,000 coming from contributions, $684,000 from grant money and $434,000 from special events.

Expenses totaled $1.2 million; $910,000 was spent on programs and the rest on salaries and fundraising. Cash plummeted to $21,000, while mortgage debt climbed to $3.1 million and land held for development was booked at $4.9 million. And unfettered contribution money was even lower; $417,925 came in the form of unrestricted contributions while $304,000 was restricted.

Mr. Hopkins said the increase in grant money as part of the fund’s revenue base highlights a distinct trend in turning to the towns for assistance from their Community Preservation Act funds. “Two years ago you had a very powerful private factor to this organization, but the ratio of public and private support has gone in the other direction, and that is one of the things I intend to turn around. We are not doing our job if we are relying on public money for the majority of our support,” he said.

Mr. Hopkins also conceded that by holding land for development and a large mortgage, the fund strayed from its mission in concert with the trust. The mission of the fund is to raise money to support the cause of affordable housing, while the mission of the trust is to buy property and develop it for affordable housing, ground-leasing the land in order to insure that it remains affordable forever. Some 89 per cent of the operating monies for the trust come from the fund. The third organization in the triangle is the publicly chartered Dukes County Housing Authority, which among other things administers the rental assistance program and manages properties once they are developed by the trust.

But at some point along the way the fund began to buy land too. Mr. Hopkins said the turning point can be tracked directly to Bradley Square, the redevelopment project on Masonic avenue in Oak Bluffs. The fund bought the property three years ago for $900,000 and is carrying a $700,000 mortgage on it. The $5.3 million plan to develop the property into affordable housing, commercial space and an office for the NAACP in the old Bradley Church still depends on significant fund-raising, both public and private.

“The fact that we own Bradley Square is totally inconsistent with our mission and no one can tell you otherwise,” Mr. Hopkins said. He continued: “It was an executive decision in a different economic time. There was a lot of euphoria about saving something and about goodwill and it was all done in a certain spirit. But the point is that it’s not our mission [to own property] and there is no double-talk about that. And now we own a very expensive property in a down economy and it’s my responsibility to deal with it.”

On Dec. 7 Mr. Hopkins will go before the Oak Bluffs Community Preservation Committee to ask for $400,000 to be committed to Bradley Square. The committee already has pledged $400,000 to the project from its affordable housing monies, but this time Mr. Hopkins said the request comes under the heading of historic preservation. He called the meeting pivotal to the project, not in terms of total dollars, but rather because it will determine a direction for Bradley Square.

“The town of Oak Bluffs will be asked to consider the historic renovation portion of this project, and it will be up to the town to say whether it has merit or not. And after the town decides, I will make business decisions based on that,” he said.

The fund also owns property at Jenney Way in Edgartown, at 250 State Road in West Tisbury and at Lambert’s Cove Road in Vineyard Haven.

Notes to the audit show that in 2007 the fund spent $50,000 for lobbying related to the Community Preservation Act and the housing bank legislation.

Expenditures on lobbying for the passage of legislation are reportable to the Internal Revenue Service, but the amount was not reported on the fund’s 2007 tax return.

The notes also highlight transactions between board members, including the construction contracts awarded to South Mountain Company, the West Tisbury design company owned by John Abrams. The fund paid South Mountain $163,358 in 2007 and $2.5 million in 2008. Among other things, South Mountain designed and built the Jenney Way project. Mr. Abrams has been on the board for both the trust and the fund, although Mr. Hopkins said yesterday that he learned last week that Mr. Abrams had recently resigned from the fund as a board member, but not the trust. The two nonprofits share some board members in common.

As for the practice of handing contracts to board members, Mr. Hopkins said: “There is a policy of conflict of interest and everything that was done was legal. But is it right? The appearance of conflict of interest is most unfortunate and can lead to unconstructive dialogue. We need to be held to a higher standard than the standard of legality.” He said he would not eliminate the practice, noting that there are times when board members can provide valuable services for an organization at a savings. “But it will never be done in private; everything will be done in the light of day,” Mr. Hopkins said.