An audit released yesterday by the D.C. inspector general's office accuses the D.C. Housing Authority of failing to closely monitor its HOPE VI program, which has spent more than $110 million in federal funds since 1993 to demolish blighted public housing and create mixed-income communities.
Michael Kelly, executive director of the housing authority, disputed virtually every finding in the audit, calling it "uninformed" and saying it "borders on being irresponsible." He said the city's HOPE VI projects are closely monitored by the U.S. Department of Housing and Urban Development and have received numerous awards and accolades from that agency.
The city audit said the housing authority has not released money for an $878,000 operating fund that was supposed to be available to one of the newly built townhouse developments. It also said two of the seven projects tracked have taken significantly longer than projected and that pre-construction costs for one project, which is still underway, increased threefold from the amount originally budgeted.
The audit found a general sloppiness in HOPE VI oversight that auditors said made it easy for such problems to occur.
The housing authority "can reap important benefits from improvements in internal controls, not the least of which would be to ensure accountability of public expenditures," Inspector General Charles C. Maddox wrote in a cover letter to Kelly that accompanied the report.
In an interview yesterday, Kelly said "the District IG is not savvy or aware of the redevelopment process." He said the auditors used a preliminary time frame in saying the Wheeler Creek development was completed 21 months late, rather than the time frame specified in a "revitalization agreement" later negotiated between the District and HUD. Under the latter timetable, the project was completed ahead of schedule.
Although Maddox criticized the housing authority for failing to build 13 market-rate town homes included in the planned redevelopment of the former Ellen Wilson Homes, a project on Capitol Hill that began in 1993, housing officials said the townhouses had been built over the last year and would be completed and occupied by May.
Kelly said the residences were built after the rest of the development was completed so they could be sold at a top price, with some of the proceeds going to fund a community center, construction of which is expected to start in the fall.
Kelly also said the $878,000 operating fund cited in the report was for a reserve fund that would be established once the community center was complete. He said predevelopment costs for the Frederick Douglass/Stanton Dwellings project had not tripled, but were paid in two installments, the second twice as large as the first.
The audit is one of three Maddox will issue on the housing authority this year. The others will focus on the housing authority's financial management of HOPE VI funds, the contractor selection process and Section 8 housing, a federal program that subsidizes the rents of those with low incomes living in privately owned buildings.
Maddox's office is not probing how many public housing residents eventually return to communities transformed with HOPE VI funds -- a central question in the national debate over the program, which is up for reauthorization by Congress this year. Opponents of HOPE VI argue that it uses government dollars to drastically reduce housing available for the very poor, restoring neighborhoods in part by emptying them of most original residents.