Pricey Section 8 Programs Suffer from Poor Oversight, Unqualified Leaders

WASHINGTON – Dysfunctional management of the U.S. Department of Housing and Urban Development’s (HUD) public housing and low-income rental assistance programs has been due to unqualified people in top managerial positions, a federal government watchdog told Congress at a recent hearing.

HUD spends about $6 billion a year in capital operating funds for about 1.2 million public housing units, which house about 2.7 million people.

In addition, HUD provides rental assistance to 2.2 million families through its Section 8 Housing Voucher Program – the main federal program providing affordable, private housing for low-income families. The program is administered at the city and county level by 2,300 public housing authorities (PHAs). Funding for the program consists of housing assistance payments made to private owners to cover the difference between a tenant’s rent contribution and the unit’s rental cost.

Speaking before the House Oversight subcommittee on government operations, HUD Inspector General David Montoya said the size of the Section 8 program overwhelms HUD’s ability to oversee it closely.

HUD largely relies on PHAs to monitor themselves and report accurate information. Montoya said many of the cases of mismanagement by local public housing agencies can be often traced to individuals who are unqualified for their management positions.

“What we consistently see in these PHAs is executive directors and boards of commissions who really don’t have the background and experience to run these PHAs. And some of them are running multi-hundred-million-dollar programs,” he said.

Montoya added that leaders with troubled backgrounds often manage to remain in prominent roles at housing agencies.

“We consistently see bad actors who either were under investigation or had questionable activity move from PHA to PHA, and it just exacerbates these problems that we continue to see,” he said.

Montoya described to the panel abuses at some of the major housing authorities across the country. Montoya’s office released a March 2011 report that found that the Philadelphia Housing Authority paid $30.5 million to 15 law firms from 2007 through 2010 and could not fully explain where the money went. The PHA also made payments totaling 1.1 million to outside attorneys to obstruct the progress of the Office of the Inspector General’s (OIG) audits.

The HUD OIG recently released two audits that criticized the New York City Housing Authority’s – the nation’s largest housing authority – administration of its Section 8 vouchers.

The first audit questioned $1.16 billion in dispersed housing assistance payments. The second audit determined that 99 of 119 units inspected at that housing authority did not meet HUD's housing quality standards.

Montoya revealed that since 2012 his office has issued 75 audits related to PHAs reporting about $225 million in questioned costs and about $24 million in funds “to be put to better use.”

Subcommittee Chairman John Mica (R-Fla.) said these cases are not limited to the major housing authorities. The Sanford Housing Authority, located in Mica’s congressional district, has faced several allegations of misused and mismanaged funds.