One of the Senate’s most aggressive watchdogs has sent a stern five-page letter to the Department of Housing and Urban Development after a HUD undersecretary’s emails showed that she tried to avoid an investigation by Sen. Chuck Grassley, R-Iowa.
Undersecretary Sandra Henriquez wanted to hand federal dollars to local housing authorities without requiring them to follow rules designed to make sure the money was used as Congress intended.
She wanted more of the tax dollars intended to help people in need to go instead to salaries of up to $200,000 for bureaucrats, and for the government to no longer verify the financial and tax status of subsidized housing project applicants and whether they conducted required community service.
After a news report about how the Tampa Housing Authority was paying its executive director extravagantly, Henriquez wrote that “I am sure there’s more here, but Grassley et al. won’t look at that.”
She apparently was referring to clues that could lead from executive compensation to a policy she backed that allowed local housing authorities to designate millions of federal dollars as “profit” that didn’t have to be justified to HUD officials in any way. It was known as the Central Office Cost Center.
Discussion of HUD helping housing authorities free federal dollars from federal oversight “may bring increased scrutiny (i.e. legislation). This is precisely why I wanted to avoid any mention of the COCC when discussing the E.D. compensation.”
Days after the Washington Examiner reported Henriquez’s attempt to evade Grassley’s notice, however, the senator was on the case, firing off a letter to HUD secretary Julian Castro.
“After Congress capped the high [Public Housing Agency] salaries, the inspector general found that HUD staff members … worked with industry lobbying organizations to weaken the effects of the cap. One example of this effort was the July 31, 2013 email … which suggested the need to strategically hide the source of additional salary funding. Instead of ensuring that scarce federal dollars are used to provide safe, affordable housing for those in need, HUD continues to allow PHAs to give the executives excessive salaries,” Grassley wrote.
As the Examiner reported, Henriquez also hired Debra Gross, a lobbyist for big-city housing authorities, to implement her lobbying clients’ agenda as an official HUD employee. Gross failed to file multiple ethics disclosures to hide the conflict of interest. Henriquez manipulated the hiring process to pay her $200,000.
“Senior HUD leadership actively worked to prevent transparency and oversight,” the Iowa senator, chairman of the Senate Judiciary Committee, wrote.
Grassley had nine questions for HUD, including what steps are being taken to ensure that agencies are no longer exempted from verifying applicants’ income, when it will stop letting housing authorities divert federal funds as “profit,” and how Congress can be assured that HUD will no longer grant blanket waivers to rules as a way to circumvent the regulatory process.
The senator also asked for HUD to update old statistics about how much housing bureaucrats were paid, and for more Henriquez mails.
But there are indications that HUD still aligns itself with the local governments it’s supposed to regulate, and that both view accountants, auditors and investigators as the enemy.
Neither Gross nor Henriquez was fired, though both eventually moved on from HUD — Gross to resume lobbying full-time for local housing projects. (Grassley asked what HUD has done to ensure she doesn’t cash in on her newfound HUD connections to lobby even more successfully.)
In a comment on the Examiner web site, Robert Fetrow, an accountant for more than 200 local housing authorities, dismissed government auditors’ concerns, saying they should mind their own business.
“Fraud income and Rental Income are not taxpayers dollars. … The community service issue is a red herring. I can’t think of a more irrelevant thing to ask PHA officials to do,” he wrote.
“The level of accepting of what the OIG wrote on the fees issue is incredible. Just to educate the writer a bit, the fees in question are totally legitimate and allowable and no dollars of federal funds were lost. The OIG deciding to change the rules, rules in which they have no regulatory authority to do though they continually try to do, doesn’t make the fees unallowable or in question. Its just words on a page but since the writer didn’t bother to read the Federal Register that covers this issue he wouldn’t know.”
