Here in the South’s second-largest city, homeless shelters are packed and housing experts say that thousands of affordable rental units are needed just to meet current demand.

To help build homes for the poor, the city turned to the federal government, drawing $3.5 million for four projects that promised 202 units. Years later, all the money from the U.S. Department of Housing and Urban Development’s HOME fund has been spent, but 83 houses have not been delivered. One project failed to produce a single home.

“You always hear, ‘Okay, we got this money to redo the area,’ but once the money gets here, what happens?” said Hattie Huey, a Charlotte mother of three. She wants to buy a house but can’t afford one on a $1,200-a-month salary from a local church.

Charlotte is a case study of a city facing the fallout of delayed affordable-housing projects promised to neighborhoods badly in need of new homes. Dozens of cities are in similar straits, trying to right troubled construction deals that failed to produce housing despite millions in HUD funding.

Local housing officials will have to do it with less to spend: Congress last month cut the HOME program’s budget by $600 million — nearly 38 percent — citing mismanagement. Housing advocates criticized the move, estimating that the program will produce 31,000 fewer homes this fiscal year than in 2010.

“When Congress cuts block grants, everyone gets cut,” said Sheila Crowley, president of the National Low Income Housing Coalition. “Both the agencies that are doing a good job and those that are not are hurt equally.”

HUD officials declined to comment for this report. In the past, the agency has repeatedly defended the HOME program, saying that it has produced more than 1 million units of housing over two decades and that most projects are successful.

Some critics in Congress, however, maintain that HUD cannot account for the money it spends or the projects it has underway. A Washington Post investigation in May found that the department had routinely failed to track the progress of construction and that hundreds of HOME-funded projects nationwide appeared to be delayed or in limbo. In recent weeks, The Post identified an additional 75 projects that had drawn and spent $40 million with little or nothing built.

“HUD is expending tax dollars without proper oversight or convincing data to show the money has been put to good use,” Rep. Judy Biggert (R-Ill.), chairman of the House Financial Services subcommittee on insurance, housing and community opportunity, said in a statement. “That’s not an acceptable situation, especially in today’s budget environment.”

A ‘frustrating’ mission

In Charlotte, housing director Pamela Wideman cited six successful HOME-funded projects in recent years that yielded 348 units, including an overhaul of a troubled public housing complex and the completion of a development for seniors. She said she worries that anticipated losses to the city’s $2.5-million-a-year HOME budget will mean less money for new construction and down-payment assistance for low-income families hoping to buy a house. The need is great: Local housing experts say the supply of affordable rental units is expected to decline in Charlotte-Mecklenburg County over the next 20 years.

Even as Wideman tries to cope with potential budget cuts, she is trying to clean up the older projects. In the past, she said, local housing officials sometimes partnered with smaller, nonprofit developers, a HUD requirement, and cut checks before construction started. Wideman said she has made a series of changes to strengthen oversight of developers.

“It’s been frustrating,” Wideman said. “But I totally believe in the mission of what we’re doing.”

When Wideman took over as housing chief in late 2009, she found that $160,000 in HOME funding had been paid to a developer who promised 25 units. A decade later, there was only an empty lot. Wideman said the city is repaying the money to HUD. In another case, the city gave $515,000 to a developer that in five years delivered 26 of 46 promised units. Wideman said there were delays because roadwork needed to be done.

A third project, launched in 2000, received $1.9 million in HOME funding, with 115 units planned. Eleven years later, 90 multi-family rental units have been built. But none of the promised 25 single-family houses have been started. Wideman said construction is expected to begin in the next several months.

She called for more-aggressive HUD involvement in projects. “In my mind, it’s been reactive from HUD when pressure is coming,” Wideman said. “It should not be in this reactive or crisis mode.”

A neighborhood’s plight

One of the oldest delayed projects in Charlotte is in Reid Park, a west-side neighborhood once filled with African American families who built homes along a winding gravel road lined with oak trees and churches. By 1998, drugs and street violence had overwhelmed the neighborhood, and squatters had set up camp in abandoned houses.

A local nonprofit developer stepped in, promising to rebuild eight rotting duplexes. Wideman said the developer had received a loan under HUD’s Federal Housing Administration renovation and repair program. But the group struggled with financial problems, and, two years later, city officials decided to use HOME money to pay off the lender.

HUD officials have previously told The Post that federal policy prohibits the use of HOME money to pay off old debt. Wideman said HUD officials knew about the payment. “They’ve known about this since Day One,” she said. “We’ve talked about this over and over.”

Of the $970,000 in HOME funding invested in the project, $670,000 went to repay the loan on behalf of the ailing nonprofit organization, which later went out of business. The city partnered with a new developer, which built three single-family houses, including one sold to Jose Bonilla, a security guard, who had been bunking with family members in a mobile home.

“My goal was to have my kids living in a house,” Bonilla said. “My kids have a back yard where they can play.”

The new developer, the nonprofit Charlotte-Mecklenburg Housing Partnership, also renovated the remaining duplexes, lined up potential buyers and turned the houses back over to the city in about 2002. But the units sat empty for years, and the city eventually agreed to tear them down.

“All we’ve been doing since then is taking care of the lots,” said Pat Garrett, president of the Charlotte-Mecklenburg Housing Partnership.

Garrett said she isn’t sure why the homes were never occupied. Wideman said the sale of the units fell through, and, over time, the duplexes deteriorated.

No houses were built to replace them.

‘So much potential here’

Just past the barbershop where haircuts are $9, past the red brick sign that says “Welcome to Reid Park. Founded 1935,” four large lots sit empty.

In recent weeks, Habitat for Humanity of Charlotte signed on to the project, with plans to build four single-family houses by next year using money from private donations. Habitat has already built 26 houses in the neighborhood. For its part, the city has made improvements to west-side streets, sidewalks, shopping centers and small businesses.

“There’s so much potential here,” said Bert Green, Habitat’s executive director.

Some residents say they are still waiting for signs of progress.
One of the empty lots is next to a house that 85-year-old Lillian McGee and her husband built nearly five decades ago, when she said the street was still unpaved and rutted by wagon wheels.

“A lot of money went into that property,” said McGee’s brother, 91-year-old Alex Jones, who lives with his sister. “They could have built up this neighborhood with young families.”

Staff researcher Jennifer Jenkins and database editor Ted Mellnik contributed to this report.