Embattled D.C. housing agency tightens HUD projects’ oversight

November 25, 2011

Concerned about the pace and price of construction projects for the poor, the new director of the D.C. Department of Housing and Community Development has shuffled staff, set strict building deadlines and made sweeping changes to how the embattled agency does business with developers.

Three managers have been removed in recent months and five new ones will be brought in to help overhaul the department, which oversees federally funded affordable-housing construction in the District. Developers will be required to have a documented track record, adequate financial backing and the ability to finish construction within two years.

“This is something that should be a no-brainer,” said John E. Hall, who was named agency director by Mayor Vincent Gray (D) earlier this year. “But it was all about, ‘OK — we have this money, let’s spend it.’ ”

When Hall took over, the agency was struggling to account for old projects and find new ones. A Washington Post investigation in May found that the D.C. agency had subsidized poor-performing developers with money from the U.S. Department of Housing and Urban Development’s construction fund, including a nonprofit group that promised to deliver dozens of units in Southeast but years later had built nothing.

The agency also used HUD money to bail out a developer who had purchased apartment complexes riddled with leaks, sewage backups and buckling stairwells; three of the sellers had been previously convicted in a sweeping housing-fraud scandal.

At the same time, the District faced losing $11 million in HUD funding because housing officials had failed to earmark the money to new projects.

Similar problems vex local housing agencies across the country.

Since 1992, HUD’s HOME Investment Partnerships Program has provided $32 billion in annual grants to local agencies, but The Post found that hundreds of HOME-funded construction projects showed signs of delay or were in limbo.

In recent months, Congress has held oversight hearings. In a spending bill passed earlier this month, it required a series of changes at HUD to more rigorously track federal money. This month, HUD proposed strengthening its rules for the first time since 1996 to better oversee thousands of projects nationwide.

The District, which received about $8 million this year in HOME funding, has long faced criticism about its projects.

On his first day on the job in April, Hall met with top HUD officials to discuss the HOME-funded deals identified by The Post. “Evidently, something had been broken,” he said. “I knew that I had my work cut out for me.”

Hall, 40, had helped run two nonprofit community development groups in Texas before joining HUD as a financial manager and field officer director in the District and Richmond.

At the helm of the D.C. housing agency, which has had more than 20 directors in the past 30 years, Hall said he immediately told staff workers that the agency would no longer simply cut checks and hold ribbon-cuttings. Instead, it would place an emphasis on tracking the pace of construction, reporting accurate information to HUD and requiring developers to justify expenses.

Since then, the District has repaid $4.5 million in HUD funding spent on three projects detailed in The Post’s investigation. Hall also launched eight new projects that are expected to create more than 400 units. With a total development cost of $112 million, the projects will receive $19 million in HOME funds.

A federal HUD official called the push “long overdue.”

“Since 2009, we’ve been working with the District to tackle these issues head on and it’s precisely why we’re proposing new rules to demand more accountability from local jurisdictions and the developers they work with,” HUD spokesman Brian Sullivan said in a statement. “We recognize that [the District] has long struggled with management problems and any effort to overcome these chronic deficiencies is both welcome and long overdue.”

Hall said that there is more work ahead: He wants his staff to routinely inspect completed affordable-housing units to make sure they are safe and well-maintained.

“We’re in the nation’s capital,” he said. “There’s no reason why we shouldn’t be the best.”

Local housing advocates have taken notice. Hall recently attended a celebration of District tenants who received loans from the agency to buy their apartment buildings. Hall “used every last dollar and made it work,” said Farah Fosse of the nonprofit Latino Economic Development Corp.

D.C. Council member Jim Graham (D-Ward 1) said that when Hall was still working at HUD, Hall stepped in to push for repairs on a distressed apartment building in Columbia Heights. “He was no-nonsense,” Graham said. “I think he’s in a perfect place to understand the issues and move them forward.”

Gray also said that Hall is moving in the right direction. “I have full confidence that he will continue to meet the challenges of improving the agency to better serve District of Columbia residents.”

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