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Congress Calls for Probe of HUD's Home Affordable-Housing Program

Source: Washington Post

Posted on 18 May 2011

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Citing years-long delays and other breakdowns that have thwarted the production of hundreds of affordable-housing projects, a bipartisan group of federal lawmakers is calling on Congress to probe the nation’s housing-construction program for the poor.

Senate Banking Committee Chairman Tim Johnson (D-SD) and ranking member Richard C. Shelby (R-AL) said Monday that they will investigate the U.S. Department of Housing and Urban Development’s HOME program, which delivers $2 billion a year to local housing agencies to build and renovate homes around the country.

Rep. Elijah E. Cummings (D-MD), the ranking member of the House Committee on Oversight and Government Reform, also called for an investigation, sending a letter Tuesday to committee Chairman Darrell Issa (R-CA).

A committee examination, Cummings wrote, “presents an opportunity for bipartisan and constructive oversight into the HOME program, the actions of developers who received U.S. taxpayer funds, and potential flaws in the block grant process that allegedly led to fraud, waste, and delay.”

A year-long Washington Post investigation, published this week, found that nearly 700 construction projects awarded $400 million have been idling on

HUD’s books — some for a decade or longer — leaving a blighted trail of empty lots and abandoned buildings in neighborhoods across the country.

HUD cuts checks but doesn’t track the pace of construction and often fails to spot delayed or defunct projects. When the agency learns of a troubled deal, federal law does not give HUD the authority to compel local housing agencies to return money.

“We are deeply concerned by these reports, particularly at a time when so many Americans are in need of affordable housing,” Johnson and Shelby said in a joint statement.

“Many communities across the country have successfully used HUD programs to create vital housing opportunities for their citizens. However, the Department of Housing and Urban Development, like any government agency, has a duty to safeguard taxpayer funds. The Committee takes its oversight responsibilities very seriously, and we plan to get to the bottom of this issue.”

HUD officials defended the HOME program this week, posting a letter on the agency’s Web site with the headline, “The HOME program works!” HUD said the agency has long been aware of construction delays with reasons that range from “perfectly legitimate to absolutely outrageous.”

HUD noted that the 700 projects cited by The Post represent 2.5 percent of 28,000 active developments. Officials added that some of the projects are delayed because “we’re in the middle of a housing crisis in this country.”

“In spite of examples of incompetence and outright mismanagement by certain local governments, overall the HOME Program works,” HUD wrote.

The Post’s study was the first systemic examination of housing-production delays nationwide; HUD does not monitor construction, only how quickly its money is spent by local housing agencies. Because HUD’s data are limited, The Post used satellite images and verified the status of projects with 165 housing agencies nationwide.

The Post did not attempt to track delays in HUD’s 28,000 open projects. Instead, The Post analyzed 5,100 major construction and renovation deals worth more than $50,000, finding that one in seven face significant delays. Hundreds were launched before the housing crisis, taken on by developers who didn’t have the financial resources or experience to start or complete construction. Many of the projects are dead, but local housing agencies had failed to alert HUD.

In addition to the 700 projects, The Post identified an additional 600 development deals that have never drawn any money even though it has been available for a year or more, tying up $250 million. In January, HUD started canceling these projects.

The number of stalled or abandoned projects, however, is probably much higher. Not included in The Post’s study were projects in “final draw,” meaning all of the allotted HUD funding had been drawn but the projects are still listed as open and incomplete in HUD’s records. The Post identified an additional 2,800 such projects worth $1 billion. In some cases, the work had been completed, but local housing agencies failed to tell HUD. In other cases, however, projects were delayed or scrapped. The Post found abandoned projects in final draw in cities across the country.