HUD threatens to cut off D.C. AIDS funding next year
City told to improve oversight $12.2 million for housing at stake

By Debbie Cenziper
Washington Post Staff Writer
Thursday, November 12, 2009

The U.S. Department of Housing and Urban Development, worried about widespread lapses in oversight of the District's AIDS program, is threatening to cut off $12.2 million in federal funding next year if the problems are not fixed.

Assistant Secretary Mercedes M. Márquez said HUD will send a letter to the city this week stipulating that no new AIDS housing money will be awarded unless the D.C. Department of Health's HIV/AIDS Administration improves its tracking of services and spending.

Márquez also wrote last week to D.C. Mayor Adrian M. Fenty (D), saying she was "deeply concerned" about a recent Washington Post series that found the HIV/AIDS Administration had paid more than $25 million to nonprofit groups that delivered substandard care or failed to account for their work.

Many were housing groups funded with HUD money, including one that received more than $400,000 for a promised job-training center that never opened. Márquez, head of community planning and development, said the city possibly violated more than 60 HUD requirements.

"It is absolutely unacceptable that any single person suffers as a result of the District not being able to manage taxpayer dollars," Márquez said this week. "This is where they pushed it to: No new money until you fix this."

Mafara Hobson, spokeswoman for the mayor's office, said the city will work closely with HUD to ensure continued funding.

HUD officials said this is the first time in the AIDS housing program's 18-year history that money would be withheld from a city based on poor performance.

Márquez said the agency decided to take the step, first reported Wednesday on, because the District's AIDS program has consistently been among the most troubled in the nation.

Since at least 2003, HUD's monitoring reports have repeatedly found that the city, which has the highest rate of AIDS cases in the country, has failed to keep tabs on nonprofit groups that promised to provide housing for the sick. In some cases, the District did not provide financial records and other documents from HUD monitors.

Last year, the city had to return more than $600,000 in AIDS housing money for failing to fix problems chronicled by HUD monitors in 2003 and 2006. HUD has provided training to the city and has noted improvements in client care and housing standards, but accountability lags.

This year, as HUD prepared to do its 2009 monitoring, the agency sent two letters to HIV/AIDS Administration Director Shannon L. Hader. The letters urged the city to release records and arrange for a meeting between HUD and the city's financial management team.

"They were making it almost impossible to do the monitoring. . . . It's really like pulling teeth with the District," Márquez said.

When the 2009 report was complete, HUD again found the city had failed to ensure that nonprofit groups submitted basic documentation to account for their spending, such as payroll reports, time cards, consulting contracts, and invoices for supplies and other expenses.

In a September letter, HUD asked the HIV/AIDS Administration to provide the records and overhaul its practices. The city provided a partial response, which is under review, but HUD is waiting for more documentation. HUD officials said they expect the District to comply, which will enable the money to be released.

Until the issues are resolved, however, HUD intends to freeze next year's housing grant, worth $12.2 million, Márquez said. Much of the Washington region would be affected because the HIV/AIDS Administration shares the money with programs in parts of Maryland, Virginia and West Virginia, including Prince George's, Loudoun, Fairfax and Arlington counties. Combined, the region receives the third-largest grant from HUD's Housing Opportunities for Persons with AIDS program.

The HIV/AIDS Administration receives money from other federal agencies for medical care, drugs and HIV prevention. Along with money from city government, the agency oversees about $100 million a year. Much of the money goes to large medical clinics, but the District also funds a network of smaller nonprofit groups -- about 90 since 2004 -- that promise services from counseling to case management.

The Post identified a number of deficiencies among those groups. Some failed to file tax returns or secure a business license with the city. Others submitted employee résumés and consulting contracts with false information or had spent hundreds of thousands of dollars on travel and executive pay.

Fenty and D.C. Attorney General Peter Nickles announced an investigation in recent weeks, giving priority to groups receiving AIDS money. Two Republican congressmen are also pushing for an investigation.

An advisory group that helps oversee federal AIDS money in the District also stepped in, urging the city late last month to start providing more details about site inspections and grievances filed against local nonprofit groups. Hader has agreed to do so.

The advisory group continues to push the city to produce records to account for the spending of AIDS consultant Robin Beale, whose company drew more than $2 million in recent years. Beale, hired to provide logistical support for the advisory group, billed the city for unnamed employees and subcontractors, rent for a high-end office that was rarely used, and start-up costs for furniture and equipment that city officials later deemed improper, The Post found.

Wallace Corbett, who heads the advisory group, said the HIV/AIDS Administration has not provided the records.

"I think it's all about the money," Corbett said. "They don't know where it went."

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