Million-Dollar Wasteland: A Washington Post Investigation

Dozens of delayed HUD projects found nationwide

One lot was a tangle of tumbleweed sprawling over seven acres. The other sat empty in a neighborhood besieged by crack dealers.

Seven years ago, the city of Turlock, Calif., promised to transform the properties into new homes for the poor, investing $400,000 in federal housing money to buy the land. But the lots are still barren and Turlock’s new housing chief is struggling to figure out what went wrong.

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“The projects just laid there — dead,” said Maryn Pitt, who became director of the housing agency in central California in 2009. “My predecessors were not really engaged in outputs. To tell you it was a mess would be an understatement.”

The Turlock projects are among dozens of federally funded construction deals that produced few or no homes despite drawing millions from the U.S. Department of Housing and Urban Development’s affordable-housing fund, according to federal records, interviews and visits to construction sites in dozens of cities.

The projects offer additional evidence of breakdowns within HUD’s HOME Investment Partnerships Program, which awards grants to local housing agencies for the construction and renovation of homes for the poor. All told, The Post identified about 75 delayed or abandoned construction projects nationwide, including more than 30 empty lots.

That is in addition to the nearly 700 projects cited by a Post investigation in May as showing signs of delay, either because they were launched years ago or had not drawn any federal funding in months or even years. In some cases, the projects were entrusted to inexperienced developers without the financial capacity, land or permits to get the work done.

The first set of 700 deals had drawn some but not all of their HUD funding. The newly identified projects drew all of it — about $40 million. Some of the projects were launched a decade ago or more.

HUD declined to comment specifically on the projects recently identified by The Post. The newspaper last month provided the agency with a list of 119 projects that had drawn all of their HUD funding but appeared to be delayed, defunct or built but not yet sold to low-income buyers.

In a written response, HUD provided summary data but declined to identify any of the projects in question. The agency said that 30 were delayed without justification” and that HUD will require local housing agencies to submit a plan for completion within 90 days. HUD said 22 others will be canceled, with local housing agencies repaying money or accepting a grant reduction.

HUD said that 36 of the projects have been completed, including 12 that are now occupied, and another 18 are proceeding “satisfactorily.” The agency said most of the other projects already had been or will be canceled.

HUD added that it is strengthening its database of open projects so that it can more easily identify those languishing and has asked its field offices to check their status. In a proposed overhaul of HOME regulations released Friday, HUD said it would require local housing agencies to report more frequently on projects so HUD can improve tracking.

The agency has known for years that projects can idle in such “final draw” status, records show. In 2005, HUD officials urged local housing agencies to close the projects if they were completed. HUD regulations require that final draw projects are closed out on the agency’s books within four months.

“It is common to find projects left open or in final draw status for many years,” the 2005 notice read. “ . . . Many [housing agencies] are not entering completion data timely or at all and, consequently, are in violation of the HOME regulations.”

The Post set out to identify and visually inspect as many final-draw projects as it could, engaging more than 50 student journalists and others to visit construction sites in 100 cities and 30 states, from Manatee County, Fla., to Quincy, Mass. The Post also contacted more than 100 local housing agencies that oversaw the deals.

Overall, The Post found about 75 projects that have produced few or no homes. In some cases, the projects were terminated but it is unclear whether the local housing agency repaid the HUD money as required.

The Post also identified an additional 21 projects that were built but now face delays as housing agencies search for low-income buyers.

Across the country, housing officials struggle to push projects along.

In El Monte, in southern California, local housing officials invested $1.3 million six years ago, in part to turn a shuttered church and union hall into homes for the poor. But the property languished for years without a developer.

“It just kind of sat there,” said Minh Thai, with El Monte’s economic development department. He said the city recently found a developer willing to take on the project.

In Charlotte, local housing officials spent $864,000 in HOME funds on a series of lots that are still empty 11 years later. The original developer dropped out of the deal, and housing officials are hoping a new developer can complete the project next year.

“It’s this whole economy. It’s just not a good time to make something happen,” said Joan Campbell, controller for neighborhood and business services in Charlotte.

In Manatee County, the local housing agency paid $200,000 in HOME funds six years ago to help purchase 16 acres of land. But the property on Florida’s Gulf Coast has been sitting empty; the developer opted out of the deal several years ago.

“He just kind of disappeared off the face of the earth,” said Suzie Dobbs, Manatee County community development division manager. “We have actively been seeking other affordable housing developers. We still have not gotten one to commit. It all comes down to the overall economic situation right now.”

In Turlock, new housing agency director Pitt has been trying to revive the two defunct construction projects. She found a developer for one of the projects, which will have 141 units in a development that will be named “Avena Bella,” which is Italian for “beautiful oats.”

“Just call me stubborn or insistent,” Pitt said. “But I’m going to build it.”

Staff researcher Jennifer Jenkins contributed to this report.

The following people contributed to this report:

Amanda Seitz, Robert Rogers, Javier Panzar, Jonathan Ortiz, Kenneth Ware Jr., Nicholas Frogameni, Megan Terilli, Cartrese Abrons, Crystal Baublit, Chelsea Boozer, Ashley Brandt, Joan Brannigan, Brandon Bristol, Caitlin Byrd, Amelia Carpenter, Michael Clinton, Paige Cornwell, Devon Edwards, Anne Elliott, Spencer Garn, Lisa Garza, Carly Gelsinger, Acton Gorton, Marciela Gutierrez, Carl Harrison, Lauren Healey, Nathaniel Herz, Kaellen Hessel, Emily Hoerner, Matthew Jacobs, Leo W. Jeffres, Elise Kaplan, Juan Lopez, Liza Mata, Daniel Mediate, Kate Mellnik, Daylina Miller, Monica Nagy, Adora Namigadde, Steven Norton, Jonathan Ortiz, Tessy Palowski, Casey Rackham, James Robinson, Matt Roche, Matt Rosenhoffer, Douglas Siegel, Emily Slack, Austin Smith, Jim Sojourner, Beth Spain, Jessica Stringfield, Andy Thomason, Erin Udell, Monique Valdes, Carolyn Vallejo, Stephen Ward, Tim Webber.

 
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