The federal government is withholding $22 million in housing aid from the District government because the city cannot adequately account for money it has loaned and for the unauthorized mingling of housing funds with general city revenues.
D.C. housing director Robert L. Moore told members of the City Council's Committee on Housing and Economic Development yesterday that while his department was working to correct the deficiencies cited by HUD, he believed the city was being held to tougher standards than suburban jurisdictions or other large cities.
"I think HUD has been unfair," Moore said. "We have appealed to the highest possible level the rather highhanded way in which HUD has dealt with us."
The federal Department of Housing and Urban Development is refusing to pass along to the city $12 million in Community Development Block Grant funds for a variety of housing programs and $10 million for modernization of the 267-unit James Creek Dwellings public housing project, one of the three public housing projects in Southwest clustered near the Washington Navy Yard.
The federal housing agency insists that the problems, which generally center on accounting and monitoring procedures, be resolved before the money is released.
The withholding of the money also creates a new problem for the cash starved city government, which has had to borrow $80 million from the U. S. Treasury since last October to keep its head above water.
Moore said he learned only this week that the $10 million targeted for the James Creek restoration would be held up. The reason, he said, is that the city has never followed a 1970 federal directive that such modernization monies be kept in a separate bank account, apart from the city's general fund.
Currently, the city keeps a separate account for these funds in its computerized Financial Management System, but mixes the actual money with other revenues in the city's general fund account with American Security Bank.
Moore said city financial officers are now working on setting up a new account, but he was uncertain how it would affect the city's financial position. The HUD directive means that the $10 million will not be available for temporary use to meet current government obligations -- as other of the District's federal funds, even those specifically earmarked, are routinely used.
Meanwhile, the bid that the city accepted for the rehabilitation work on the 40-year-old James Creek complex is good only for 30 days, Moore said, and if the federal money is not in hand by then, the cost of the work could escalate.
The $12 million in Community Development Block Grant funds represents half of the $24 million in grants the city is slated to receive this fiscal year. Normally, such grants are given in a lump sum at the beginning of the fiscal year, but the District was notified last October that would receive quarterly payments while it worked to correct numerous deficiencies in its procedures for awarding low-interest rehabilitation loans, which come out of the block grant funds.
No other city is having its community development money parceled out in this manner, Moore said.
At the beginning of the year, the city had a waiting list of more than 1,000 rehabilitation loan applicants, many of whom live in Northwest Washington and are above income requirements, Moore said yesterday. He said the city wanted to save time by ignoring those applicants and granting low-interest loans to less affluent people not on the list, but HUD officials demanded that people on the list be accepted or rejected on a first-come, first-served basis. Moore said the list is now down to 270 applications.