D.C. Housing Authority is about to get a federal checkup
By Jeffrey Anderson
An 11-member team led by a recovery specialist from the U.S. Department of Housing and Urban Development (“HUD”) will descend upon the beleaguered D.C. Housing Authority (“DCHA”) in March to conduct an “on-site assessment” that reads less like a routine physical and more like an endoscopy.
A letter on December 28, 2021, from HUD’s Boston-based Regional Public Housing Director Marilyn B. O’Sullivan to DCHA Executive Director Brenda Donald lists more than 40 document categories the team plans to examine, including a general ledger, bank and investment records, budget and financial information, capital and administrative plans, programming and operational documents, and a range of internal policies related to DCHA’s provision of “quality affordable housing” to 50,000 low-income residents.
The pending visit was first reported by Mitch Ryals of Washington City Paper.
On January 20, in an email response to questions posed by District Dig, DCHA spokesperson Christine Goodman said, “This is a routine request from HUD and we will cooperate fully, as always.”
A HUD official said in an email the following week that HUD conducts such assessments as part of its “ongoing monitoring.”
According to the official, HUD staff members from both the field office and the regional network last conducted such a review in August 2017, and issued a report to DCHA in June 2018. HUD conducts such reviews every three-to-five years “or as needed,” the official said, adding:
“For this particular review, we feel it is important to be on-site in an effort to get a clear picture of [its] operations and administration of our public housing and voucher programs.”
The official referred a request for a copy of the 2018 report to DCHA. The DCHA spokesperson declined to disclose the report and referred further questions to HUD.
Despite the nonchalance, HUD-approved exemptions, internal oversight measures and its own org chart show that federal officials must be considering whether to install a monitor or place the agency in receivership.
First, HUD plans to interview “key stakeholders, such as management staff, maintenance staff, Board members, local officials and residents.”
Two former and one DCHA official were unable to recall any such probe in recent memory. This inquiry is rare, but not unexpected, they say.
O’Sullivan is a regional director from the Office of Public and Indian Housing (“PIH”). In her letter she instructs Donald to direct questions to Patricia A. Knight, the Cleveland-based Director of the Recovery/Prevention Corps, according to HUD employee directories.
Knight’s unit, and the Office of Prevention, Recovery and Transformation (“PRT”), report to the Office of the Deputy Assistant Secretary for Field Operations (“OFO”).
These entities, according to HUD’s website, are tasked with overseeing Public Housing Agencies (“PHAs”) with “serious financial, physical, management or ethical problems [that] are sometimes determined to be in substantial default of their Annual Contributions Contract with HUD, and are temporarily taken over by the Department so their problems can be corrected.”
The PRT, the website says, develops recovery policies; directs and oversees HUD-appointed Executive Administrators, other HUD staff and the Board itself; and plans and monitors funds that are appropriated specifically to support receivership recovery, which HUD considers a “last resort option for assisting PHAs with the most severe problems.”
Second, DCHA has been under a corrective action plan since FY2020, due to statutory violations of the HUD-approved Moving To Work Demonstration Plan (“MTW”), according to “Statutory Compliance Determinations” and government emails,
The MTW is a HUD-approved designation that allows DCHA to “design and test” strategies to help low-income residents find jobs, become self-sufficient, and benefit from increased housing choices.
It comes with exemptions from the many public housing and voucher rules, affording funding flexibility that Mayor Muriel Bowser has increasingly relied upon to convert DCHA’s remaining properties into mixed-use development.
Along the way, Bowser has turned DCHA into an in-line agency that is accountable only to her and a board that she controls. Her takeover has consequences for D.C.’s lowest earning residents.
Under the FY2022 MTW plan, DCHA says it will remove up to 3,397 housing units and convert more than half of them to project-based vouchers.
Under the FY2021 plan, DCHA removed just 384 units.
In an ideal world, such a conversion would result in innovative and realistic housing options for D.C. residents who earn up to 30 percent of their annual household income for housing–about $39,000 for a family of four.
However, the waiting list for people in need of either an apartment or a housing voucher has grown to well more than 40,000–close to the number of residents DCHA actually houses–and is currently closed to new applicants, according to an annual DCHA filing with HUD. “There is no scheduled time to re-open the waitlist,” the filing states.
Such attrition has been years in the making. DCHA released no new vouchers in FY2020, despite approximately 762 units remaining offline at a handful of sites under the New Communities Initiative, a decade-long program that has failed to deliver replacement housing at fallow sites like Temple Courts, Northwest One, Barry Farm and Park Morton.
“These are units DCHA does not plan to reoccupy as the agency has plans to redevelop these sites,” reads the MTW Plan for FY2020.
A separate document, the MTW FY2020 Report, adds that, “Due to the agency’s 20 Year Transformation Plan to reposition the public housing portfolio, a number of the vacant units are not being backfilled and residents transferring from traditional public housing to the voucher program has increased significantly.
“Additionally, the absence of HUD approval to reclassify or exclude New Communities units that have been taken offline as part of the redevelopment process continued to negatively impact the agency’s vacancy rate.”
Third, as has been widely publicized, DCHA has a litany of problems HUD officials may no longer be able to ignore:
Late last year, after a pair of stories in The Dig exposed improper approval of DCHA contracts for his girlfriend, Neil Albert, former chairman of the Board of Commissioners (“Board”), was forced to resign, as federal agents served the couple (who live and own real estate together) with grand jury subpoenas.
Soon thereafter, the U.S. Attorney Office served a criminal subpoena on DCHA, and both D.C.’s Office of Inspector General (“OIG”) and HUD’s inspector general also launched investigations.
Also last year, D.C.’s Inspector General wrote to At-Large Councilmember Anita Bonds, who chairs the Council’s Housing Committee, about a confidential allegation that “DCHA leadership may have violated procurement regulations in awarding several contracts that may have constituted waste of DCHA resources,” and that former DCHA employees engaged in a conspiracy to steal money intended for rental subsidies.
In addition, a whistleblower has alleged a violation of procurement rules involving KN-95 masks; an audit showed DCHA misspent funds on a leading consulting firm for a “strategic plan” it never received; an internal auditor resigned and alleged that former executive director Tyrone Garrett and others retaliated against her for refusing to root out the auditor’s source; and DCHA police officers reported incidents of serial abuse and sexual harassment by a ranking sergeant.
Fourth, and perhaps most important, if not harder to quantify, current and former government officials and housing representatives say DCHA is broken; that it is ineffective in its mission to serve its customer base and unsustainable as an agency.
As is the case with its deteriorating housing stock, DCHA’s institutional demise did not occur overnight.
DCHA is the city’s largest landlord, managing 56 public housing properties throughout the District that provide reduced rents for very low-income families, seniors, and persons with disabilities. It also functions as a voucher administrator and real estate developer.
Tenants, who pay up to 30 percent of their income as rent, have attended regular Board hearings for years and complained about poor living conditions, with the nagging suspicion that they are destined to have the rug pulled out from under them, as the Bowser administration increasingly relies on housing vouchers and conversion of DCHA’s remaining properties into mixed-use development to compensate for its divestment of traditional public housing.
Critics, some who have worked in housing for decades, point to lack of financial ability to deliver a sufficient number of “deeply” affordable housing to replace its eroding properties, “brain drain” as a result of veteran housing specialists being driven out, an overall lack of development expertise at the very top level, and Bowser’s abuse of political control of the Board.
The DCHA Board consists of 11 community and business leaders: Three resident members, one member representing Housing Choice Voucher Program (“Voucher program”) participants, one appointee from the Metropolitan Central Labor Council, one appointee from the Consortium of Legal Services Providers, and five Bowser appointees, including her Deputy Mayor for Planning and Economic Development, John Falcicchio, who also is her chief of staff.
As The Dig has reported, Bowser’s housing strategy has been to corral DCHA’s real estate portfolio and funnel private development opportunities through the Department of Housing and Community Development (“DHCD”), which reports to Falcicchio, a political operative who came into his various roles with no previous real estate or development experience.
The primary vehicle for the Bowser policy is the Housing Production Trust Fund (“HPTF”), which the city uses to incentivize private development under the auspices of affordability, back-filling its extremely low income housing obligation through a voucher system.
The Voucher program–formerly Section 8–affords participants “tenant-based vouchers” that allow them to live in the community of their choice, once they find a unit in a privately owned property in the city that meets rental standards established by HUD.
The Moderate Rehabilitation Program includes apartment complexes owned by individual landlords or companies, and affords participants “project-based” vouchers that require them to remain on site.
Both programs allow tenants to pay 30 percent of their annual household income; DCHA pays the rest directly to the landlord–the developer, in the emerging system.
In 2021, Bowser heralded a $400 million investment in the HPTF, promising to build more than 2,500 units of subsidized housing units in the coming years, and 36,000 units by 2025, roughly a third of them “affordable” to a range of income groups.
That range can be anywhere up to 80 percent of the Area Median Income (“AMI”). HUD has calculated the AMI for the Washington Metropolitan Area to be $129,000 for a household of four.
The Bowser strategy is suspect: D.C.’s OIG last year found that the city misspent nearly $82 million of affordable-housing funds that were supposed to benefit extremely low-income residents. Instead, the OIG found, the majority of those units went to households earning 50-80 percent of the AMI– roughly anywhere between $64,000 or $103,200 for a family of four.
In 2018, the Office of the D.C. Auditor (“ODCA”) found that DHCD had tapped more than $600 million from the HPTF from 2001 to 2016 to build and preserve some 10,000 housing units, but that DHCD and the Office of the Chief Financial Officer (“OCFO”) could not provide loan or grant documentation for $13 million of that.
D.C. Auditor Kathy Patterson’s office found the city spent another $16.6 million from the HPTF to repay HUD grants due to ineffective management of federal funds, failing to reprogram the funds prior to repayment, and obscuring the use of such funds for the D.C. Council.
“DHCD has collected far less than it was owed and loan repayments have been and are projected to be a very small percentage of revenue,” Patterson wrote, noting that DHCD exceeded administrative expenditure caps for FYs 2009, 2012, and 2015, for a total of more than $10 million that should have gone for affordable housing.
Such abysmal performance might explain why former DHCD director Polly Donaldson abruptly retired last year, about a month before Patterson’s audit substantiated whistleblower concerns that she discarded staff recommendations in awarding funds to low-ranked developers with ties to Bowser.
And it might explain why DCHA declined to renew a contract for Garrett, who in 2019 testified before the Council that DCHA will need $2.2 billion over 17 years to ensure its 8,000 units are in good shape.
Garrett was hired in 2017. By the time he left, he had become a pawn of the Bowser administration, taking instructions from Falcicchio and Albert, who according to internal emails frequently involved himself in DCHA procurements and negotiations.
Letting Garrett go has made it easier to make him a scapegoat, and it has led to the hiring of Brenda Donald, a veteran D.C. government official, to run DCHA.
(DCHA has shedded decades of experience and institutional knowledge. The agency is on its fourth general counsel in as many years; during that time it has driven out a senior deputy director of capital programs; a president of its non-profit subsidiary that specializes in community development; a deputy general counsel; a chief development officer; a chief of planning, design and construction; and Garrett’s top deputy.)
Donald is widely respected as a capable manager, and inspires the confidence of Albert’s replacement, DCHA Board Chair Dionne Bussey-Reeder. Like Falcicchio, however, Donald has no previous development experience–nor does Reeder.
At Donald’s confirmation last year before the Council, which was questioning her lack of experience, Bussey-Reeder defended Bowser’s appointee and more or less confirmed what critics are saying about DCHA:
“I think we’re making it more political than it needs to be,” said Bussey-Reeder, according to a transcript. “Continuing with a search, we’ll identify a good candidate, like we did with Tyrone [Garrett], and hand them a broken agency with poor infrastructure and deals on the table that are prohibiting families from moving forward.”
Bussey-Reeder urged the Council to get on “with the agenda of the people.”
Last week, she spoke to The Dig, and she did not sugarcoat her own assessment, though her optimism could be tested in the coming weeks.
“As Chair I do think it makes sense for HUD to look into our work after what has come out in the last year,” she said. “I hope it’s not a witch hunt, but they would be remiss if they didn’t do their own due diligence.”
Yet she sees positive signs. “I do believe we’ve turned the tide, and that with checks and balances we have a better understanding of the needs of the residents and how the agency can meet those needs. I’m confident in our new commissioners, and some of our new hires that we’ve been able to attract to come here, and in [Donald], who has been an effective manager throughout D.C. government and a change agent.”
Bussey-Reeder did not bristle at questions about receivership, but she said she sees the glass as half-full. “I don’t see it,” she says. “I don’t think we are in that direction. If we were to do that we’d be doing a disservice. We have an opportunity to do better, and we believe we have the resources to be responsive to our residents. We can get this right.”
Housing experts and critics say DCHA cannot reconcile its dysfunction without outside intervention. HUD officials, who left DCHA to its own devices for the last 25 years (since coming out of receivership in the 1990s) appear to be entertaining the same notion.
Absent the resources and experience to return the agency to an operational condition, Bowser has turned to a model that has DCHA undervaluing its own land, allowing developers to lock into ground leases with favorable terms and no money down, and then incentivizing them with tax breaks, subsidies, and development and management fees that come from public funding sources.
It’s a sweet deal for developers, who prefer to build market rate housing but will settle for mixed-use development that features a range of affordability, sometimes up to 80 percent AMI.
“Market rate units were supposed to subsidize units for poor people,” a former DCHA official says. “But developers don’t want to do units for poor people.”
“They are ceding their housing obligations to private developers who have no responsibility to build deeply affordable housing,” says a well-seasoned real estate consultant. “Who is gonna be the champion for people with 30 percent or less AMI?”
Unhealthy, often unsafe living conditions are one thing; displacement is an even scarier prospect. For many, community is all they have ever known. “The real story is that no one has developed a formula to get the best value out of our land,” the former official says. “It’s a development-by-developer approach, and people have been pushed out of their homes. When do you expect to be putting people back into their communities?”
Officials don’t seem to be able to answer that question, and instead have become reliant on housing vouchers which may or may not allow residents to remain in their communities while they wait for demolition and redevelopment.
The voucher plan requires an understanding of the market value of DCHA’s land, and of how many vouchers will meet the needs of residents whose homes are destined for redevelopment–and whether the agency can afford to keep handing out vouchers.
A voice of dissent on the Board is Commissioner Bill Slover. Board hearings usually feature Slover grilling DCHA officials, voting against various initiatives, and losing by a wide margin. He says he’s making a public record–one that HUD has to be aware of.
During a hearing in December, he asked whether the agency had sufficiently appraised land value at Barry Farm in calculating the ground lease for the developer, which would own and manage the project once built. He was trying to determine whether the deal as reported to HUD could support the number of vouchers going into the project, more than a decade since conceived.
DCHA officials, including the chief financial officer, said they would be seeking HUD approval in phases, to coincide with the project’s phases, and they were confident that with money from DMPED to cover predevelopment costs, everything would pencil out.
“I think what’s critical, and what has always been unclear, and still remains unclear, is the value that the agency, since we are not participatory in the ownership of this entity of this project, our entire value, we put into the land, and it’s really going to be critical to understand what we’re getting because what I’m looking at is not an arms length transaction,” Slover said, according to a transcript.
“The land appears to be significantly discounted and so questions are going to become, as we continue to shovel more and more vouchers into this project, [we’ve] got to, at some point, just take a step back and make sure we’re doing the best here by everybody in using our resources as best we can. So I hope we can get some clarity on all that. I’ve been asking for years and it just seems to remain out of focus.”
Sources who spoke with The Dig on a confidential basis have observed an imbalance involving rent collection, cost of repairs, and delayed, over-budget projects with vouchers and debt piled on top of developer subsidies.
“The city is trying to take over DCHA but they don’t know what they are doing,” said one veteran former housing representative. “They just want to give everyone vouchers but they can’t afford to do that. There needs to be someone in place with oversight authority to see how the place is being managed. No one there understands housing and the money isn’t there. Residents are not getting services, there’s a lead paint debacle.
“Their core business is providing safe, decent and healthy housing. That’s not what they are providing. They have failed the residents. I don’t know what they are going to do.”
At the same time, citing the MTW designation, the representative wondered whether HUD is part of the problem: “MTW authority is for autonomy to move money into different categories. It insulates [DCHA] from HUD scrutiny. So how does HUD [justify] an MTW when the metrics are so horrible?”
In response to an email regarding more than 3,000 units being removed in FY2022 as a result of DCHA’s conversion-to-vouchers model, a DCHA official replied, “No residents will be displaced. Residents will be given an opportunity to relocate to another unit.”
She had no further comment.
Nor does Donald’s office have much to say about HUD’s upcoming “on-site assessment”–or anything else for that matter.
Last August, The Dig submitted a list of routine questions to DCHA including data on vacancy rates, unit turnover, modernization costs, and rent collection. For months, a spokesperson said answers were forthcoming.
Eventually, Donald instructed staff to ignore the request, sources at DCHA say. Donald did not respond to a request for comment directed to her communications office.
While DCHA has been non-responsive and in denial mode, HUD has attempted to soft-pedal the significance of the pending visit by Knight and her recovery team.
Asked in an email why Knight is leading the 11-member team, a HUD official replied, “Ms. Knight is an employee of the Northeast Network. HUD reserves the right to use any of our employees on our assessments and projects.”
When asked whether HUD is looking to determine whether DCHA is on the verge of being designated as “Troubled,” to see if there is cause for corrective measures or receivership, the HUD official replied, “Depending on workload, priorities and technical needs, the HUD [PRT] team is leveraged to perform assessments and reviews.”
HUD’s reference to the “PRT team” can only mean that, as its job description says, the mission is to identify “serious financial, physical, management or ethical problems,” and that Knight’s team will be determining whether DCHA is “in substantial default of their Annual Contributions Contract with HUD,” thus prompting a temporary takeover “so their problems can be corrected.”
The Dig could not find a working phone number for Knight, and she did not reply to multiple email requests. Though she appears in employee directories and personnel listings as a Cleveland-based recovery director–as well as on her LinkedIn page–a HUD “employee locator” lists her as “outstationed,” which explains her pending visit.
Should the HUD inquiry go in the direction it appears to be heading, a thorough examination and diagnosis could expose the Bowser administration’s actual commitment to affordable housing, and could come with real consequences.
