Watchdog: Accountability

HUD program, meant to help, actually hurts, IG reports

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Watchdog,California,Kelly Cohen,Accountability,Budgets and Deficits,Housing,HUD

A $353 million effort to help federal officials better manage public housing assistance instead "created further opportunity for fraud, waste, and abuse of taxpayer dollars," according to a government watchdog.

Created in 2007, the Department of Housing and Urban Development's Public Housing Operating Fund was meant to help public housing projects manage their assets more effectively, according to HUD's inspector general.

The program was also intended to reduce HUD's centralized monitoring by delegating more oversight responsibilities to regional housing authorities.

Yet, the approach "has been detrimental to HUD’s program and overall mission," the inspector general said.

In order to pay for the new management system, the public housing authorities began charging the housing projects they oversaw fees for the services, which included budgeting, accounting and basic bookkeeping.

Between January 2009 and December 2011, however, the Operating Fund improperly took $353 million from housing projects — a process called "defederalizing" — to pay for the new management system.

For example, the HUD's Operating Fund charged a bookkeeping fee rate of $7.50 for multifamily housing, but the average was usually $3.50.

HUD said the $4 difference was reasonable because of new technologies and higher human resources costs, but provided no actual evidence of this, the inspector general said.

The inspector general also found that housing officials were often overcharging for "asset management" fees.

Costs incurred by the Los Angeles and San Francisco housing authorities were traced to top management. Both cities overcharged by $714,000 and $900,000 for services, respectively.

Both also also suffered from poor leadership in their respective executive directors, the inspector general said.

The former executive director of the the Los Angeles office, for example, earned a six-figure salary, benefits and perks such as a bonus, housing allowance and a surveillance system at his house.

He was let go in the wake of reports of mismanagement in his office, but later negotiated a wrongful termination settlement for an undisclosed amount.

The San Francisco Housing Authority's former executive director led the agency "to the brink of a financial ruin," while being paid more than $165,000 per year, despite being on medical leave for two months.

It was later revealed that for those two months, he was busy setting up his new restaurant in Berkeley.

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