Housing Complex

The Post’s HUD Investigation: How Damning?

Over the weekend, The Washington Post published a long expose of the federal department of Housing and Urban Development's HOME Investment Partnership program, which has distributed $32 billion to state and local organizations since 1992 to build or refurbush affordable housing. According to the Post's analysis, $400 million of that has gone towards 700 projects around the country that are way behind schedule, awarded to organizations with inadequate underwriting or experience to finish the jobs (you can see how many are in each state with this graphic, which unfortunately doesn't list each project). The story has already prompted investigations into several stalled projects and demands for money to be returned, and HUD officials sound contrite. “I’m appalled, just appalled,” said Mercedes Marquez, HUD’s assistant secretary for community planning and development. “We’re just not standing for it.”

But on its blog, HUD hit back against reporter Debbie Cenziper's overall conclusion, arguing that the HOME program has been largely successful and failures are a hard-to-avoid consequence of a down economy and the level of trust required in awarding block grants.

Sadly, the Post failed to recognize that, in spite of examples of incompetence and outright mismanagement by certain local governments, overall the HOME Program works. For more than a year, HUD provided data and context to Ms. Cenziper and for all this, she failed to recognize the obvious. Yes, there are problems when local communities pick bad developers and it’s no wonder that projects stall or even fail as a consequence. But to lead readers to believe the whole HOME Program is a failure and that HUD is “looking the other way” is just plain wrong.

Let’s put this into context; these delayed projects that the Post cites are a small fraction (approximately 2.5 percent) of 28,000 active developments. Many of these open projects are newly constructed single-family homes that remain on the market because we’re in the middle of a housing crisis in this country, a reality that is largely unrecognized in Ms. Cenziper’s reporting. Given complex financing, zoning and environmental requirements, it’s not uncommon for larger multi-family construction projects to take 3-4 years to fully complete. Large-scale rehab projects can easily take two years to finish.

Still, there’s more work to do and we’re doing it. We’ve cut the number of these ‘open activities’ by nearly 60 percent since 2005. In the past two months alone, we’ve cancelled nearly 2,000 stalled projects totaling $290 million! We’re providing technical assistance to local communities as never before. AND we’re forcing repayment of misspent money.

Ms. Cenziper was told time and again that despite the limitations of HUD’s legal authority, we always force repayment of HOME funds when a project isn’t completed. Always. Not sometimes but one hundred percent of the time.

In other words, when projects don't work out, it's the fault of local jurisdictions, not the federal overseers.

In the next installment, Cenziper does a deep dive on $3.5 million that HUD loaned to East of the River Community Development Corporation to rehab three apartment buildings. Enthusiastically backed by the Fenty administration, the non-profit bought them at absurdly inflated prices from speculators with criminal backgrounds, and then went bankrupt in 2009 when they couldn't secure enough private financing to finish the renovations. The CDC blames the economy for killing the deal, the District blames the non-profit for trusting an inflated appraisal, and HUD blames the District for picking an inadequate developer (and then allowing East of the River to pay off its debt with the HUD loan, which is a big no-no). Ultimately, big-time developer William C. Smith stepped in to finish the job.

It's a similar phenomenon to the one that I've discovered looking at the District's Home Again program, which disposed vacant properties to developers who cherry picked the best ones and let the rest languish, and the troubled renovation of Mayfair Mansions, which was too much for Marshall Heights Community Development Organization. Obviously, it's a case for going only with the most reputable developers with the greatest capacity and the longest track records—not the politically connected community organizations that the District just wants to help stay alive. Because at the end of the day, wasted money is everybody's fault.

As luck would have it, I'm interviewing new DHCD director and former HUD official John Hall this morning—if you've got questions for him, please send them my way! ldepillis@washingtoncitypaper.com.

  • http://urbanplacesandspaces.blogspot.com Richard Layman

    cf this NYT Magazine piece from 1994: http://www.nytimes.com/1994/01/09/magazine/the-myth-of-community-development.html

    In some respects, my involvement in local stuff is a kind of blowback to the H St. CDC and the urban renewal plan for H St. All this stuff was done, but the commercial district still sucked. And I tried to figure out why.

    And relatively speaking, the H St. CDC and the renewal plan were successful. Most of the projects were achieved, and of the city's CDCs, the H St. CDC built more projects successfully than any of the others (made $18MM off the sale of the two office buildings on the 600 block of H Street NE, etc.).

    But yep, the particularly unskilled CDCs are going to get their clocks cleaned, because the industry is full of people who will take advantage.

    So in 2002, when I went to a conference in Cleveland, I was shocked to discover that comparatively the city had good CDCs doing good work.

    It was because the local foundation community forced a rigorous accountability regimen in order for the groups to get $, and a bunch of the groups merged because there were too many.

    While we don't have too many CDCs here so to speak, we don't have the accountability mechanism, and CDCs haven't been forced to update their urban revitalization missions to today's realities and opportunities.

    The CDC mission for the most part is to build better housing for poor people. While that is important, it doesn't revitalize communities in terms of improving economies at the submarket level. More has to be done and that has typically been beyond the capability of CDCs as revitalization organizations.

    That being said, CDCs have a tough environment to work within, a lot of barriers, etc., as this paper by Randy Stoecker (now at U Wisc.) from the late 1990s illustrates:


    When I read it, it explained a lot.

  • Concerned

    Points taken, although, the bottom line is that even while this may be deemed a 'small' oversight in the bigger scheme of things, as a result, there's less affordable housing and millions wasted.

    Having studied other housing programs administered by HUD, lack of oversight, unfortunately, is often a common theme. I think the thing that irks me the most about the expose is the fact that HUD does not have an adequate, comprehensive system to track where HOME funding is being allocated to after its dispersed to states, how much is spent on what and when, and, ultimately, if the projects that are being funded are on target for completion. With this level of funding, I cannot grasp how a simple tracking system, or task force, wouldn't have been devised.

    Wasteful spending, HUD's request to have hundreds of thousands of dollars 'voluntarily' returned by local agencies post this expose, and conducting investigations into crooked developers after the fact, to me, is extremely worrisome and telltale--and, more importantly, had a proper system of checks and balances been in place, most of this, I would assume, could have been easily avoided.

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  • AnSara Swindler

    I appreciate HUD and the fact that they provide housing for low income families. I have live in HUD apartment buildings all my life. Recently my landlord sent out letter stating that all tenants will be charged twenty dollars if trash has to be removed by maintenence men. Somebody please tell me why all my life the maintenece men has picked up trash and all of a sudden when we get an employee who feels like they are too good to pick up trash, we are chraged twenty dollars. I thought their jobs were to maintain the community and the yards. I understand that we should also try to to keep the community clean. I live in a neighborhood where people constantly come and go. Neighbors leave there trash outside, people that don't live here constantly hang here all hours of the night, and children walk through here to get on the bus every morning.Workers are here bright and early every morning by 7:30 a.m. Noone should hace to try to get up in the middle of the night to clean up trash they are not responsible for. Noone should have to try to get up at 6 in the morning, get kids ready for school and try to clean the yards before the workers get here. Noone should have to go outside and pick up nasty pampers and used female products that come from their neighbors trash. I have complained and nothing has been done. I live in a low income apartment because I have low income. I cannot afford to pay twenty dollars everytime I missed a piece of trash or I didn't get a chance to get it up before the workers came. I just don't understand this situation at all. Can someone please help?

  • http://marketurbanism.com Stephen Smith

    I'm curious – has anyone ever done the math and figured out how much money, on average, is spent for these subsidized units? Given all the waste and corruption, is it really any more efficient than just handing out vouchers? (And I mean real vouchers – not that crap that has to be used in only approved buildings.)

    Of course, then all the housing authority and "community redevelopment" folks would be out of jobs, and obviously that won't fly, no matter how much money they're wasting...

  • Patricia Colby

    I live in a HOME-assisted unit in the Mission Gardens Apartments, in Santa Cruz, California. The owner and its agents, The John Stewart Company and its employees, are allowing resident smokers to try to kill me with their secondhand tobacco smoke (SHS) by smoking around my car and apartment. I have chronic asthma. This SHS is a death warrant for me. These smokers are committing hate crimes based upon my disabilities.

    I just asked the HOME program administrator for my unit, the City of Santa Cruz, to enforce their legal obligations under the HOME regulatory agreement and under federal nondiscrimination laws to require the owner and JSCO to accommodate the effects of this SHS on me, by taking more effective measures to enforce the smoking ban JSCO promised me when I first asked for an accommodation for exposure to SHS from my former neighbor. By presenting the smoking ban as an accommodation to me -- it wasn't the accommodation I requested -- JSCO turned a gang of angry smokers on me with harmful intent. Then JSCO didn't effectively enforce their smoking ban, making me an easy target for these smokers.

    If the City of Santa Cruz fails to fulfill their legal obligations to protect me from this discrimination, then I will have to appeal to HUD's Assistant Secretary for Community Planning and Development, Mercedes M. Marquez, to step in and force the City of Santa Cruz to comply with local, state and federal nondiscrimination laws, to protect me from being murdered by angry Mission Gardens smokers.

    I am desperate. I'm terrified that I will die in my HOME-assisted unit from smokers' SHS at the Mission Gardens Apartments.

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  • http://open.salon.com/blog/sb4justice/2011/07/11/11th_circuit_court_of_appeals_incorrect_affirmed_decision SB4JUSTICE

    A state of Georgia agency - Georgia DCA is abusing HUD federal funding and there is audio and document proof on this website to prove it.


  • Lakeshia

    Hi, My name is Lakeshia Howell and I am a section8 tennant not for long though because I just developed one hell of a story. And because I did I nor my three children are safe. Police officers are stalking me and I need my story out before we get hurt. If any of you are honestly concerned about HU money, where it goes, and who is stealing it then you may want to contact me asap 410-305-8228 or 410-689-5008

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