SEATTLE -- Residents of a government backed Seattle housing development are about to learn their heating systems are malfunctioning and their drinking water may be exposed to lead.

The development is called NewHolly, which is a nationally recognized public housing project -- a blending of privately owned and subsidized homes living side by side.

A June 2006 report conducted for the Seattle Housing Authority found serious problems with the heating systems of 120 units of the NewHolly Development.

"And I'm just finding out about this today," says NewHolly Resident Brian Mack.

The report found several problems with the cutting edge hydronic heating system, which combines the homes' hot water and heating systems.  Piping inside the walls started to fail and the report found unacceptable levels of lead in drinking water pipes.

It's information residents didn't see for over a year.

"Well if the response weren't so late, we might be satisfied," said David von Beck, attorney for the residents.  He says the Housing Authority failed to live up to it's obligations to protect the residents of New Holly.

"These people are the ones drinking the water and living in the houses," said von Beck.

"I think it's one of those things where, we're a big organization and sometimes, somebody thought somebody else gave it to them, kind of situation," said Virginia Felton of the Seattle Housing Authority.

The Housing Authority admits it there may have been a mistake getting the report to the residents, but says they tested the water and it is safe. It rejects claims it intentionally misled residents but does not deny it has a bad situation in NewHolly.

"I think they should be cautious about the systems in their homes and we will work with them through that caution," said Felton.

Meetings are already being planned to inform all residents and answer questions.

If there is no easy fix, the Housing Authority expects it may have to replace some 120 units at a cost of $20,000 dollars each.