HUD wants $2 million back from Pr. George's

By Jonathan Mummolo
Washington Post Staff Writer
Sunday, January 17, 2010; C01

Federal housing officials say they will reclaim more than $2 million granted to Prince George's County for affordable housing projects because the county failed to spend the funds within the five-year deadline.

Once reclaimed, the funds will represent the largest amount the U.S. Department of Housing and Urban Development has ever taken back from a jurisdiction for missing a spending deadline for HOME Investment Partnerships Program funds. Since the 1992 birth of the program, known as HOME, money has been reclaimed only 14 times for that reason, HUD officials said.

The missed deadline, which one HUD official called an "indicator of extremely poor performance," comes just months after the county nearly lost more than $5 million in HOME funds because of a deadline.

John Erzen, spokesman for County Executive Jack B. Johnson (D), said that officials discovered unspent funds sometime in the past year and that the county immediately sought to use them. More than $1 million was spent, but efforts to disburse the rest were hampered by the housing slump and the need for County Council approval, which caused delays, Erzen said.

"Certainly, it's a disappointing thing," Erzen said.

At a time when the financially strapped county -- which includes several low-income communities -- has resorted to drastic budgetary measures, including layoffs and furloughs, the loss of millions of dollars because of an apparent administrative failing was met with outrage from some people.

"Failing to secure those dollars is like forgetting to dial 911 when your home is burning down," Rushern L. Baker III (D), a former delegate who is running for county executive, said in a statement to The Washington Post. "One in twenty-four homeowners face foreclosure in our county; it's an administrative tragedy when we fail to capture every dollar we can."

County Council member William A. Campos (D-Hyattsville) said, "It's absolutely ridiculous that this is happening because of incompetence in the county."

Erzen said that the same county employee responsible for the near loss of more than $5 million late last year was also responsible for the recent incident and that the employee has been reassigned. He declined to name the employee, citing personnel laws.

According to correspondence between Prince George's and HUD obtained by The Post, county officials had sought an exception to the Aug. 31 spending deadline. In an Aug. 31 letter to HUD, the county's then-acting director of housing and community development, James E. Johnson, said the economy had "severely impacted the financing of multifamily rental housing projects which has resulted in delays in funding projects."

In an internal memo dated Dec. 7, a HUD official initially recommended granting the county a deadline exception, noting its high foreclosure rate, a resulting increase in homelessness and "great strides" Prince George's has made on housing issues. The official, Frances W. Bush, said the county had hired an attorney, "permanently assigned to the community development division," and added housing staff.

"The loss of $2.1M in HOME resources would have a tremendous impact on the County's ability to provide affordable housing opportunities to low income County residents . . ." wrote Bush, director of Community Planning and Development in HUD's Washington field office.

In a response dated Jan. 5, Mercedes Márquez, HUD's assistant secretary for community planning and development, denied the exception, writing that, "Lack of proper program management does not constitute good cause for a waiver." The failure to meet the "generous" five-year deadline, "absent a major natural disaster, is an indicator of extremely poor performance," she said.

In letters dated Tuesday, HUD informed the county that the money would be reclaimed.

HUD allows HOME fund recipients two years to reach legally binding agreements with developers who will use the funds and five years to spend them. Once reclaimed, the $2,154,990 awarded to the county in fiscal 2004 will be given to other grant participants across the country.

"HUD's goal is not to punish Prince George's County for its failure to spend its HOME funding but we have an obligation to ensure federal tax dollars actually produce affordable housing, if not in Prince George's County, then in other jurisdictions across the country that can put the money to work quickly," Yolanda Chavez, deputy assistant secretary for grant programs, said in an e-mail Friday.

Jacqueline Lampell, spokeswoman for the Maryland Department of Housing and Community Development, said current estimates project a statewide need of more than 130,000 affordable rental housing units between 2010 and 2015, 18 percent of them in Prince George's.

The reclamation of funds will hardly leave the county without federal housing assistance.

In her Jan. 5 memo, Márquez noted that as of Dec. 11, the county had an unspent HOME fund balance of more than $17 million, "nearly 36% of the HOME funds it has received since 1992."

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