Inman reported that HUD officials said the issues raised by the independent assessment of the Housing Authority last fall "have not been addressed."
He said a memorandum specifying remedial actions the authority was to have carried out to address issues raised by the assessment was never executed.
Inman said the authority's funds were "locked down" as of Tuesday morning.
"The (Housing Authority) has no legal right to expend any money" without consent from HUD officials, he said.
In addition, funds that had been available for future housing programs have been reclaimed by HUD. Inman said there were the possibility of sanctions from the Office of the U.S. Inspector General.
"(The officials) said HUD has spent $150,000 to address the problems here," he said.
Inman said if the council did not take action to remove the board, "HUD will take immediate action to address these issues and there would be a total loss of local control."
After a pause in which there was hardly a sound inside City Hall's council chambers, Mayor Pro Tem Frank Montoya said, "It's pretty much cut and dry then."
Councilman David Ouzan said Inman's report showed that "the house is beginning to collapse."
He added, "There needs to be some major construction to the foundation of this house."
Ouzan noted HUD's two options meant "we don't have a board anymore."
Then, he said, "The council will take over. We should get involved and fix it. You can come and criticize us. We'll work for the benefits of the residents of Calexico."
Councilman Victor Carrillo said, "We'd be remiss if we didn't applaud the actions (the board has) taken. We allowed them to serve their community, to try to right the ship in a political process. … That's not how it was viewed by HUD, though."
Montoya said, "This is a situation we've been faced with in the past."
Late last year and last summer, the council voted to leave the board in place even though HUD officials and some community members recommended its removal.
Montoya said the difference now is the council needed to make sure everything was "squared away" when faced with HUD's ultimatum.
Mayor John Renison said, "I'm saddened."
He paused, then continued, "May 7, 2002, will not be forgotten by me anytime soon."
He closed by saying, "I'm confident that this city will regain total control in a few months. Everything will be fine."