Nearly a year after the Housing Authority of New Orleans returned to local control with a mission of rebuilding its damaged reputation and with millions of dollars in construction projects on the table, the agency finds itself hamstrung by a legal battle between the city and an association that represents public housing tenants.

At issue is whether the appointment of two public housing residents to HANO’s board will present a conflict of interest for the panel.

With the question unresolved and the board short two members, two of HANO’s last eight board meetings have had to be canceled and, public housing residents say, the board’s ability to efficiently respond to the many issues before it has been impaired.

Civil District Court Judge Kern Reese is aiming to sort it all out by the end of this month.

HANO was seized by the federal government in 2002 after years of chronic local mismanagement. The city recaptured the agency last May. For the five preceding years, it had been run by David Gilmore, a one-man board and executive director. As part of the transition agreement governing the handoff, Mayor Mitch Landrieu agreed to name seven board members who, in turn, would select the agency’s new executive director.

The executive director and five board members have been in place since July.

But two public housing residents, elected by the Citywide Tenants Association, have yet to be seated because Landrieu contends they have potential conflicts of interest. His attorneys say he has an obligation under the transition agreement to “ensure all appointed commissioners are free of conflicts of interest.”

Landrieu submitted the names of the seven candidates he intended to appoint to the Department of Housing and Urban Development in September 2013, according to court documents. In a Nov. 13, 2013, response, Sandra Henriquez, who at the time was assistant secretary of HUD, said the appointments of Constance Haynes and Donna Johnigan would raise concerns with the HUD Office of General Counsel.

Haynes is on the boards of the Citywide Tenants Association and the Fischer Resident Council. She also manages a community center that received a Hope IV grant from HUD as part of the redevelopment of the Fischer community. Haynes testified Thursday that she receives about $39,000 in annual compensation from the grant. The grant is administered through HANO.

Johnigan does not have any personal or business relationships with HANO, but she is employed by Urban Strategy, which has a memorandum of understanding with the B.W. Cooper Resident Management Corp. to administer a social services program. Johnigan is on the board of the Cooper Resident Management Corp.

Johnigan’s appointment, Henriquez said, would violate HUD rules about tenant members serving on public housing authority boards if they might stand to gain personally from the role.

Haynes might violate that same rule, but her appointment also raised red flags because it was in “clear conflict” with the annual contributions contract between HUD and HANO, Henriquez said. That agreement governs the payments HUD makes to HANO in exchange for HANO’s administering public housing programs. Henriquez characterized Haynes as a “direct contractor” of HANO.

Henriquez said she would consider issuing a waiver to allow Johnigan’s appointment if the city could show why she should be appointed over other qualified candidates. Henriquez did not make the same offer for Haynes’ appointment.

In an advisory opinion, the Louisiana Board of Ethics said the state code of ethics would not prohibit Johnigan’s appointment, noting that she would only need to recuse herself from votes involving the Cooper development. But the board said the code would prohibit Haynes from joining the board because she receives payments from HANO for activities at the Fischer site.

Landrieu has requested the waiver for Johnigan.

However, attorneys for the Tenants Association want both women named to the board. The association filed suit against the city in July, saying Landrieu’s decision not to appoint the women amounts to a “willful failure” on his part.

The city has filed a motion to dismiss the suit.

Reese has said he will rule on the lawsuit and the request to dismiss it by March 31 so that a “fully constituted” board can be in place by April 1.

Meanwhile, with only five of its seven members appointed, the board has had to cancel two meetings because of a lack of quorum. The start of another meeting was held up because one member was late and another was absent. Committee meetings also have had to be canceled.

At its most recent meeting in February, the board took the unusual step of naming all five seated members, instead of three, to each of the board’s committees so that they could more easily meet quorum requirements.

The five members are Dwayne Bernal, Alice Reiner, Toni Hackett Antrum, Vonda Rice and Glen Pilié.

“There’s a lot of things going on in public housing now that a full board needs to operate,” Johnigan told Reese during a hearing Thursday. “We have too much to lose.”

HANO operates nine housing developments containing more than 3,500 units. About half of the units — 1,812 — are public housing. The rest are either affordable or market-rate apartments. Those figures do not include public housing complexes now under construction, such as the Iberville development.

The authority also provides rental vouchers to about 17,700 families through its Section 8 rental-assistance program. The agency employs more than 250 people.

HANO has several development projects, including the Florida and B.W. Cooper housing developments and two senior centers, that are in various stages of construction.

The agency is also managing the multimillion-dollar redevelopment of the Iberville housing complex, a project that local, state and federal officials have billed as necessary to revitalize Canal Street, the Treme neighborhood and the Central Business District.