By Jeffrey Anderson
Is HUD an Overlord or an Enabler?
No District official ever wants the federal government poking around in D.C.’s back yard. Sometimes, however, as in the case of the D.C. Housing Authority, a public record and a culture of failure becomes so glaring that the feds are obliged to step in.
Yet an observer of the DCHA saga over the past several years might see signs that, in spite of a recent 72-page report citing 82 deficiencies across all aspects of public housing, The Department of Housing and Urban Development is toying with the idea of demanding local reform without coming in to clean house.
Lost in the coverage of a damning recent HUD report has been its management and manipulation of optics that hints at a willingness to spare Mayor Muriel Bowser the public humiliation of having a federal receiver rectify DCHA’s dereliction of mission–even after appointing and controlling its top officials for years.
The report is both damning and unequivocal: Substandard living conditions; a 20 percent vacancy rate with many units uninhabitable or in disrepair–worst in the nation; a revolving door of top agency officials; questionable procurement practices; and a modernization backlog that stretches as long as the backlog of housing vouchers and available units for thousands of seniors and low-income Washingtonians in need of a safe and clean place to lay their heads.
In issuing its report, HUD has laid conditions it has known about and tolerated at the feet of the mayor, but only to the extent that she dominates seven out of 13 members of DCHA’s Board of Commissioners, some of whom told HUD’s review team “vote as a group without individual review of the action requested,” according to the HUD report.
The real hot seat is occupied by Director Brenda Donald, a veteran D.C. government official with a reputation as a change agent–but no prior public housing experience. The HUD assessment arrives as she is in her second year of a two-year term that began on an interim basis in June 2021, when the District declined to renew the contract of her predecessor, Tyrone Garrett.
Garrett’s departure, as DCHA was in free fall, came after years of answering to a Bowser-controlled Board and her Deputy Mayor for Planning and Economic Development and Chief of Staff John Falcicchio, and her former Chairman of the Board Neil Albert.
Falcicchio, one of the District’s highest paid officials, also serves on the Board as an ex-officio member; Albert resigned in disgrace last October after District Dig exposed his approval of two contracts for his domestic partner without disclosing their relationship. (Though the Office of the U.S. Attorney convened a federal grand jury, Albert has not been charged with a crime.)
Despite the agency’s abject failures, however, and the taint of public corruption, HUD, for the moment, is sparing DCHA the federal intervention that it has imposed on other cities in the past. Instead, after taking seven months to issue a report from a five-day site visit, it is giving Donald 60 days to respond with a plan and another six months to implement it.
Meanwhile, residents of public housing in the District–and those in need of housing, period–will continue to languish, even as the words “federal receivership” linger on the tongues of informed observers and government officials who are not either up for re-election or otherwise ensconced in Bowser’s orbit.
At a press conference last week regarding an unrelated housing settlement, D.C. Attorney General Karl Racine spoke to the urgency of DCHA’s condition: “The truth of the matter is that [DCHA] has a specific mission and that is to help people who need the most help around housing. Well, as the HUD report recounted in a clear way, DCHA’s board votes in a block with mayor’s appointees,” Racine said, in response to questions from The Dig.
Referring to a HUD finding that Donald “has no experience in property development, property management or managing federal housing programs,” Racine echoed the frequent criticism that in the Bowser administration, “loyalty trumps expertise.”
“DCHA is a zero out of 10,” Racine said, when prompted by The Dig to rate the agency. “And the executive director and the board need to be removed immediately. In sports, when you win no games and don’t fulfill your mission, coaches get fired, not protected.” (DC News Now was the only local media outlet to immediately report Racine’s remarks.)
Contrast that assessment with the reactions from Bowser, Donald and Chair of the D.C. Council’s Housing and Executive Administration Committee Anita Bonds–and the radio silence from Falcicchio, the only DCHA Board member that HUD officials somehow failed to interview:
Bowser, at a recent press conference, after expressing her disappointment and dismay over the situation, stated:
“We are taking a serious look at what the city government can do to support the Housing Authority, and I take it on as my responsibility.” (Asked by a reporter about her level of responsibility for the DCHA crisis, she said she lacks full control of the agency. “When people want the mayor to be in control of something and be accountable, then there are ways that we can do that.”)
Donald, in an op-ed she submitted to the Washington Post, in which she said HUD’s findings were “not pretty, nor were [they] unexpected,” declared:
“This agency’s numerous problems didn’t materialize overnight. Now that I am here and inherited the responsibility, my team and I are laying the foundation, and we are going to fix them,” Donald said, claiming that she had, in short order, secured 95 percent of funds that were in jeopardy; “built a new leadership team with the muscle to manage,” negotiated outdated labor contracts, and developed a more accurate technology plan for data and management information; cleared more than 10,000 outstanding work orders while developing a preventive maintenance program; developed a strategic occupancy plan that is “starting to show results” by doubling housing unit offers; and “updated and scrubbed” the 40,000 person waitlist for housing choice vouchers.
(The Dig was unable to confirm these claims in time for this story. Donald also has refuted assertions in recent news reports that DCHA is overpaying rents for voucher recipients in neighborhoods to the west of Rock Creek Park. A recent news report showed that at least three top officials that Donald hired had left the agency in less than a year–one of whom had been fired from the New York Housing Authority in 2015. And Donald recently re-hired a top official who is at the center of a lawsuit alleging violations of the Americans With Disabilities Act.)
Bonds, in her public statement, acknowledged DCHA’s failures on maintenance, modernization and vacancies, then detailed her committee’s oversight efforts while claiming that “oversight hearings are not designed to reveal whether the agency is compliant with federal rules and associated regulatory standards.”
“Given that the recent assessment is the first HUD analysis on DCHA’s performance that I have ever seen, my commitment is to ensure that [DCHA] responds to every element referenced in the HUD report before the [Housing Committee] beginning in November 2022.”
Racine, who called out Falcicchio by name in last week’s press conference for also having no public housing experience, says DCHA has succumbed to “incompetence, neglect and corruption.” He wondered, in a call with The Dig, why HUD has given the agency such a long leash and a mandate to fix itself. “What is HUD doing? How can you turn something around that you have been systematically abusing?”
Other cities have faced harsher consequences.
By 2014, HUD had placed seven housing authorities in administrative receivership, assuming the role of their boards of directors. At the time, that included New Orleans, which went under HUD control because of chronic mismanagement in 2002; and Detroit, which had demonstrated “significant regulatory compliance deficiencies,” in 2005.
(In 2007, HUD also placed Miami’s housing authority in receivership for a short time after a single audit in which it found “serious and pervasive financial and management problems, including deficiencies in financial management, mismanagement of development funds, and several apparent conflicts of interest.”)
HUD seems to be treating D.C. differently, however, taking seven months to issue its devastating findings, only to give DCHA up to eight more months to reform itself. (DCHA already has been under a corrective action plan since FY2020, due to statutory violations of the HUD-approved Moving To Work Demonstration Plan, according to “Statutory Compliance Determinations” and government emails.)
Donald’s refrain is that, just as DCHA’s inexorable descent into failure and dysfunction has been years in the making, there is no reason to expect genuine reform on a short time schedule, either. Which raises the question of whether she can live up to her reputation as a turnaround artist in the time HUD has given her.
One reason for skepticism? In an email response to questions from The Dig, her office declined to say whether the robust progress Donald is claiming was communicated to HUD during the seven months it took to produce its scathing report.
By the time Donald arrived, The Dig’s reporting showed that the Bowser administration has tolerated mismanagement and the suffering and displacement of its public housing residents for years–while systematically taking over the agency’s public housing stock and converting it to mixed-use development by private companies that are being subsidized by D.C. agencies under her and and Falcicchio’s direct control.
A June 2019 story showed that while DCHA was in need of $2.2 billion over 17 years to ensure that its 8,000 units are in good shape, it also was sitting on valuable property at 1133 North Capitol Street NE–the site of its own headquarters–that it had awarded at below-market rate to developers who had allowed contract deadlines to expire, as property values in the neighborhood rose. (After being exposed, DCHA was forced to renegotiate the deal to recover $60 million for the purchase of the land.)
The following year, The Dig reported that the DCHA Board of Commissioners approved public subsidies to a Bowser crony who had won awards on two other projects, despite being the only bidder among 33 other qualified bidders that failed to exhaust other public financing options, as required by the bid solicitation.
That award followed an audit by D.C. Auditor Kathy Patterson, who found that the same developer had been among five out of nine bidders to receive project awards despite being ranked in the bottom half of applications by staff evaluators, leaving the city with 353 fewer affordable housing units.
It wasn’t until Neil Albert, a Bowser appointee, was forced to resign as chair of the Board of Commissioners in a conflict of interest scandal, that HUD sent in a recovery team to see how far DCHA had fallen.
In a letter to Donald on December 28, 2021, HUD’s Boston-based Regional Public Housing Director Marilyn B. O’Sullivan listed more than 40 document categories for review, 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.
Once the letter went public, a spokesperson for DCHA said in an email to The Dig, “This is a routine request from HUD and we will cooperate fully, as always.”
With a Democratic primary looming just six months away, HUD officials downplayed the visit as well, responding that it conducts such “routine” assessments as part of its “ongoing monitoring.” (The word “ongoing” is a relative term: According to HUD officials, the last such review took place in August 2017.)
The site visit took place in March, and lasted five days. Reports at the time were mixed; some sources said HUD officials were aghast at what they were discovering; others said they suspected the review was a dog-and-pony show. As the months dragged on, suspicions mounted that the HUD report was going to be a whitewash.
In June, Bowser and HUD Secretary Marcia Fudge, who was sworn in on March 10, 2021, just three months before Donald took over at DCHA, announced a $1.4 billion investment in the District’s Housing Production Trust Fund–one of the funding sources the mayor has tapped through in-line agencies to redevelop public housing projects into private, subsidized, mixed-use projects promising thousands of “affordable” homes.
“To address the housing supply gap, it’ll take the government at each level working together to find solutions. That’s why, today, I’m joining the Department of Housing and Urban Development Secretary Fudge to highlight actions we’ve taken to increase D.C.’s housing supply and lower housing costs,” Bowser tweeted, heralding her own administration’s efforts as “an example of what is possible when you use all the tools in your toolkit to create new housing.”
“Thank you @MayorBowser & D.C. housing leaders for joining HUD’s #OurWayHome launch, a new initiative to boost our nation’s housing supply and bring down housing costs for American families. The solution to our housing supply shortage is within reach,” Fudge tweeted in response.
A variety of scenarios are imaginable–some more realistic than others:
The least likely of them is Bowser swallows her pride and signals to HUD her willingness to enter into a voluntary administrative receivership over DCHA.
A plausible outlook says HUD is giving DCHA a chance to fail, expecting to take over the agency six months after it receives DCHA’s correction plan, which is due in December.
The dimmest view is that, in the face of entrenched and overwhelming deficiencies, HUD leaves the agency to its own devices, preserving the status quo.
Ever the optimist, rarely one to under-promise and over-deliver, Bowser signaled what she expects to happen, in a Friday afternoon readout from a meeting with HUD last week:
“Today, Mayor Bowser met with senior officials from [HUD] to be briefed on their monitoring visit and report of the [DCHA]. HUD stressed that the agency is not in substantial default and has been in communication with DCHA regarding pathways to address the significant concerns outlined in the report.
“In addition to building on the District’s capital commitment of $50 million dollars each year for the last three budget cycles and recognizing the District’s recent progress on the New Communities Initiative, Mayor Bowser expressed the full support of the District Government to assist DCHA in addressing their issues.”
