WASHINGTON — The calls started in mid-May, two weeks before a looming congressional hearing.
Staff members across the vast U.S. Department of Housing and Urban Development were racing to check in with hundreds of local agencies to determine the status of housing construction projects for the poor.
Within days, the massive scramble came to a conclusion: HUD told Congress that its $32 billion HOME Investment Partnerships Program was doing just fine.
Those findings followed reports by The Washington Post that HUD had routinely failed to track the progress of its affordable-housing projects and that hundreds of deals involving hundreds of millions of dollars showed signs of delay or appeared to be in limbo. HUD officials defended the program, saying most projects are successfully completed.
But HUD’s attempt to demonstrate that success to Congress resulted in reports to lawmakers that, to judge by federal records and interviews with dozens of local housing agencies in charge of the projects, contain discrepancies and contradictions that suggest continuing problems with the program.
Money spent, but nothing built
Indeed, the delays vexing the HOME program are larger than previously reported. In recent weeks, local housing agencies have confirmed that about 75 construction projects drew and spent $40 million in HOME funds with little or nothing built. That is in addition to the nearly 700 potentially delayed projects The Washington Post identified earlier this year.
“The data that HUD has provided to this committee is completely unreliable,” said Rep. Randy Neugebauer, R-Texas, chairman of the House Financial Services subcommittee on oversight and investigations, which has been probing the HOME program. “HUD has almost no way of knowing whether taxpayer dollars have been wasted or used for their intended purpose.”
In its recent accounts to Congress, HUD reported as complete at least 17 construction projects that did not deliver all of the units that had been promised. One was in Newark, N.J., where a developer received nearly $700,000 in HOME funding but completed only four of 11 units, leaving behind partially completed houses and barren lots, records and interviews show.
“We would not have characterized it as satisfactorily completed,” said Newark housing chief Michael Meyer.
HUD also reported that at least 16 projects were completed months or even years before low-income buyers purchased the units, local housing officials said. HUD’s regulations state that homeowner projects are complete only after the homes are sold.
Members of Congress have found similar inconsistencies. At a hearing last week, several Republican members of the House Financial Services Committee said they had tracked down reportedly completed projects in their districts and found, among other things, a vacant lot and a shuttered building.
“Where’s the money? Where are the units that were promised? Has HUD demanded repayments for units that were not built?” said Rep. Judy Biggert, R-Ill., who chairs the Financial Services subcommittee on insurance, housing and community opportunity.
In North Carolina, Republican Rep. Patrick McHenry found a duplex where he said six units had been promised.
“I’d like to know how this can happen,” he said.
Through a spokesman, HUD Secretary Shaun Donovan declined requests to comment on this story. In a written response to The Washington Post, HUD officials defended their reports, saying the agency’s data were based on information provided by local housing agencies.
HUD said local agencies are allowed to change the size of projects and count them as complete when financial or market conditions make it impossible to finish them as intended. As long as HOME dollars aren’t used on unbuilt units, HUD said, the practice is appropriate. Unspent HOME money is supposed to be moved to more viable projects, officials said.
HUD says program works overall
The agency acknowledged that for-sale homes must be sold before they are considered complete. Officials said they were not aware of any projects with unsold units that were counted as finished.
HUD has also said that the potentially delayed projects previously identified by The Post amount to a small fraction of the 28,000 open projects in the program, which officials say has produced 1 million units of housing over two decades.
“HOME is a fundamentally strong and successful program,” the agency said.
The Post study looked at only a subset of about 5,000 projects, those involving major construction or renovation. The lack of systematic monitoring by HUD makes it difficult for the public, Congress or HUD itself to track the pace of construction on a broad scale.
“Not knowing what’s out there is what troubles us,” John McCarty, HUD’s acting deputy inspector general, told Congress last week.
Even as HUD defends the program, the agency is taking significant steps to tighten the rules and better monitor idling projects. HUD is strengthening its underwriting standards for developers who receive HOME funding to make sure that they have the experience and financial capacity to do the work.
The agency also said it has made improvements to its in-house database to better track the progress of projects.
