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Charles G.
Republican IA

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  • Transparency at Hud

    by Senator Chuck Grassley

    Posted on 2013-01-29

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    GRASSLEY. Mr. President, my fellow Members know the issue of transparency is a very favorite topic of mine, and I come to the floor to speak about transparency as it relates to a very specific problem within the Department of Housing and Urban Development. It is no secret I have worked to bring greater transparency and accountability to all parts of the Federal Government because with transparency I think we get more accountability.



    The voters of Iowa have entrusted me to continue my oversight responsibilities no matter who occupies the White House, and since I am a Republican, people might think I am doing it because we have a Democratic President. I think I have a reputation for being an equal opportunity overseer of the executive branch of government.

    For several years I have been conducting oversight of the U.S. Department of Housing and Urban Development; everybody knows this is commonly referred to as HUD, H-U-D. HUD's core mission, according to its Web site, is to ``create strong, sustainable, inclusive communities and quality, affordable homes for all.'' These responsibilities have grown larger and more complex over the last few years. The mortgage crisis continues to affect the housing market.

    Secretary Donovan was recently tapped to oversee the Hurricane Sandy recovery in the Northeast. HUD's yearly budget is nearly $38 billion. Secretary Donovan should understand the importance of oversight and transparency to combat waste, fraud, and abuse. I have my doubts, though, because while I have sent dozens of letters to HUD, the Secretary has not signed a single reply. The responses I do receive are often months late and don't answer some of my most pressing concerns.

    For instance, last August I sent a letter requesting information on conference spending and employee bonuses. HUD provided no conference spending documents but instead urged me to review a list of inspector general audit reports. My staff has reviewed these audit reports, but none of the audit reports provide a comprehensive review of conference spending. What is even more frustrating is that the response never referenced bonus spending at all. It seems oversight and transparency are not high priorities at the Department of Housing and Urban Development.

    Every year HUD provides at least $4 billion to public housing authorities across the country--along with nearly $19 billion of section 8 vouchers. In 2009, the Obama administration provided yet another $4 billion in stimulus funding for the housing authorities--all with little or no oversight. Public housing authorities operate in a gray area. HUD argues that they are State and local government entities, and it is thus--according to HUD--State and local governments that bear the primary responsibility for the housing authority actions. Up to 90 percent of their total funding comes from the Federal Government, thus making it HUD's responsibility to ensure the money is spent as intended.

    My office went to work to determine the compensation packages for a handful of housing authorities spread around the country--mostly in the larger cities. Some authorities would not provide responses, but others responded with some troubling answers. It became apparent many executive directors were living very high on the hog. The fact is executive salaries, and other compensation at some public housing authorities, were a major problem and the amounts were then hidden from the taxpayers.

    Some housing authority executive directors were earning high six- figure salaries and benefits that sometimes included a vehicle, housing allowance, and lucrative bonuses. Many of the executive directors were making more than even the Governor of the State they were located in. From Los Angeles, CA, to Boston, MA, they were raking in huge salaries. Unfortunately, no one at the HUD Headquarters in Washington, DC, was watching or even showed any concern.

    In Philadelphia, the executive director's salary was $300,000, plus a $45,000 bonus. He had a housing authority car and driver, and the housing authority actually paid his mortgage. This money is supposed to help people with very low incomes afford safe and decent housing, but instead they were concerned about their own salary and their own housing. The taxpayers' money was meant to go to the lower income people for safe and decent housing and all the money was not being used for that. It is not supposed to subsidize the housing costs of a government bureaucrat in Philadelphia who already makes $345,000 a year. In Chelsea, MA, the executive director's salary was $360,000. He cashed out weeks of unused leave and sick time while only spending about 15 full days per year in the office.

    These executive directors used taxpayers' money to build and protect their own fiefdoms, usually at the expense of the poor. In Philadelphia, this included spending millions of dollars on an army of well-connected lawyers. Ironically, these lawyers were paid with taxpayers' money to thwart investigations that were aimed at safeguarding taxpayer money. The HUD Office of Inspector General had done battle with these armies of lawyers over and over around the entire country, and the taxpayers are funding both sides of the fight.

    In addition, no-bid contracts and contracts steered toward friends seemed to be common at many housing authorities.

    As early as October 2010, I asked HUD to provide salary and compensation information for executive directors at [[Page S353]] the 25 largest housing authorities. Instead of numbers, I received the following statement: In response to your questions related to Executive Directors' salaries, currently HUD does not regulate compensation for Housing Authority executive directors. However, in light of what has taken place with the Philadelphia Housing Authority, HUD is working closely with our Office of General Counsel to assess this policy.

    It is pretty obvious that is not an answer to anything I asked. HUD needs to take this issue far more seriously.

    Last Wednesday, the director of the Chelsea Housing Authority was charged with four felony counts. According to the Boston Globe, he was indicted for deliberately concealing his salary from State and Federal entities. I hope this is a warning to other housing authorities that abuse of taxpayers' dollars is totally unacceptable. I commend HUD Inspector General David Montoya, the U.S. Attorney's Office in Massachusetts, and, of course, the FBI for vigorously investigating the problems in Chelsea. Others around the country need to take note of what happened in Chelsea. I understand this investigation continues, so stay tuned.

    The No. 1 priority for HUD and these directors should be to provide what the law intends with the taxpayers' money--to provide safe, decent, and sanitary housing for people in need instead of lining the pockets of directors. Feathering their own nests seems to have been the focus of some for far too long. Unfortunately, instead of getting straight answers from HUD, I must rely on courageous whistleblowers and newspaper accounts to actually get these facts.

    Due to mounting pressure, HUD requested the compensation data for the top five highest compensated employees at housing authorities across the country. The results must be really embarrassing because the Obama administration would make only aggregate data available to the public. That way, the administration has made it impossible to tell which authorities are the worst offenders.

    I asked that HUD make all salary data public in a June 2000 letter I wrote to Secretary Donovan. It is one of many letters the Secretary has failed to answer. In fact, no one at HUD responded to the letter at all. I have also sent letters to HUD requesting information about conference and travel spending, as well as the number and the cost of take-home vehicles for HUD and all public housing authorities. Letters were also sent about problems at New York City, Houston, and Port Arthur, TX, housing authorities in those cities. I am still waiting for responses from Secretary Donovan.

    Most recently, I sent letters in October of 2012 to Senate appropriators and the Senate Banking Committee with jurisdiction over these issues. There needs to be public hearings into the massive waste of taxpayers' money at HUD. My colleagues need to know the extent of the problems and that I am ready to work with Members of this body to address these issues.

    Mr. President, before I finish, I ask unanimous consent to have the referenced letters printed in the Record.

    There being no objection, the material was ordered to be printed in the Record, as follows: U.S. Senate, Committee on the Judiciary, Washington, DC, October 17, 2012.

    Hon. Robert Menendez, Chairman, Subcommittee on Housing, Transportation, and Community Development, Committee on Banking, Housing and Urban Affairs, U.S. Senate, Washington, DC.

    Hon. Jim W. DeMint, Ranking Member, Subcommittee on Housing, Transportation, and Community Development, Committee on Banking, Housing and Urban Affairs, U.S. Senate, Washington, DC.

    Dear Chairman Menendez and Ranking Member DeMint: Since March 15, 2010, I have been investigating the Department of Housing and Urban Development (HUD). During those two years I have been writing to HUD Secretary Shaun Donovan regarding concerns about waste, fraud, and abuse of taxpayer money by Public Housing Authorities (PHAs). Many of those letters have gone unanswered, and I ask for your help to receive responses from HUD. I have attached copies of the most recent correspondence for your review.

    Many PHAs continue to receive funding despite having a long track record of such problems. Over the weekend the Boston Globe reported on numerous issues that plague PHAs in Massachusetts, and I have attached the article for your review. These problems have been found at PHAs large and small across the country. Most recently, I have raised concerns about HUD conference spending, PHA take-home vehicle abuses and the need for greater transparency of PHA executive director compensation packages.

    Given your responsibilities as Chairman and Ranking Member of the Housing, Transportation, and Community Development Subcommittee with jurisdiction over HUD programs, I'm seeking your help. These issues need to be investigated thoroughly, and it is your subcommittee's responsibility to ensure that tax dollars meant to provide housing to the poor are not further wasted or diverted to other purposes. Ultimately, it is the residents of public housing who are being cheated and abused as a result of this mismanagement.

    Thank you for your prompt attention to these important issues.

    Sincerely, Charles E. Grassley, Ranking Member.

    ____ U.S. Senate, Committee on the Judiciary, Washington, DC, October 17, 2012.

    Hon. Patty Murray, Chairman, Subcommittee on Transportation, Housing, and Urban Development, and Related Agencies, Committee on Appropriations, U. S. Senate, Washington, DC.

    Hon. Susan M. Collins, Ranking Member, Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, Committee on Appropriations, U.S. Senate, Washington, DC.

    Dear Chairman Murray and Ranking Member Collins: Since March 15, 2010, I have been investigating the Department of Housing and Urban Development (HUD). During those two years I have been writing to HUD Secretary Shaun Donovan regarding concerns about waste, fraud, and abuse of taxpayer money by Public Housing Authorities (PHAs). Many of those letters have gone unanswered, and I ask for your help to receive responses from HUD. I have attached copies of the most recent correspondence for your review.

    Many PHAs continue to receive funding despite having a long track record of such problems. Over the weekend the Boston Globe reported on numerous issues that plague PHAs in Massachusetts, and I have attached the article for your review. These problems have been found at PHAs large and small across the country. Most recently, I have raised concerns about HUD conference spending, PHA take-home vehicle abuses and the need for greater transparency of PHA executive director compensation packages.

    Given your responsibilities as Chairman and Ranking Member of the Appropriations Subcommittee with jurisdiction over HUD funding, I'm seeking your help. These issues need to be investigated thoroughly, and it is your subcommittee's responsibility to ensure that tax dollars meant to provide housing to the poor are not further wasted or diverted to other purposes. Ultimately, it is the residents of public housing who are being cheated and abused as a result of this mismanagement.

    Thank you for your prompt attention to these important issues.

    Sincerely, Charles E. Grassley, Ranking Member.

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