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.
A 2011 OIG audit found that $1.2 million in funds given to the Sanford Housing Authority starting in 2007 were abused. Angel Tua, the housing authority’s former executive director, was also accused of using agency credit cards for personal use, including the use of public funds for private trips to Israel, Puerto Rico, and Las Vegas.
Montoya said that though his office offered to the Department of Justice a criminal referral regarding the Sanford agency, the DOJ has declined to prosecute Tua.
The 2011 audit called for administrative or civil action against Tua and other people responsible for mismanagement. Tua was removed from his position in 2010 after a federal investigation found the authority’s housing units to be in poor condition and the agency to be ineptly managed.
“Misuse of taxpayer money by some of these housing authority executives is very common unfortunately. And housing authority executives are oftentimes unethically dispensing funds on initiatives unrelated to public housing,” Mica said.
Montoya told the panel that recent budget cuts have taken a toll on his office. He said he has lost around 100 people in the last two and a half years, leaving his office with 615 staff members. HUD currently has nearly 8,300 staff members.
Montoya’s office has found more than $200 million in questionable spending over the course of 75 audits of PHAs since fiscal year 2012.
In 1996, Congress authorized the “Moving to Work” program to provide public housing agencies and HUD flexibility in designing and testing new strategies that use federal dollars more efficiently to help residents find employment and increase housing choices for low-income families. Montoya said there is “limited evaluative support that [the program] has accomplished what HUD and Congress intended.”
“Until HUD is able to modernize its outdated systems and more effectively target its resources, it will continue to be constrained by inadequate oversight. This is further exacerbated by programs like ‘Moving to Work’ and policies designed to loosen oversight of funding and reporting which we believe are counter intuitive to the many problems we and GAO have reported on over the years,” he said.
At a press conference a day after the hearing, Mica said he is now looking into possibly filing civil charges, or even criminal charges, if laws were broken at the state level in the Sanford Housing Authority case.
“This is an outrage to public trust. I am disappointed that Attorney General Holder would not pursue criminal charges or bring to justice those responsible for ripping off taxpayers while in a position of public trust,” Mica said. “It’s a sad day for the taxpayer, it’s a sad day for holding people accountable who’ve misused public trust and funds.”
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