FUNDS FORFEITED AS D.C.’S HOME­LESS LANGUISHED

The Washington Post Sunday - - FRONT PAGE - BY DEB­BIE CENZIPER, SARAH BOW­MAN, LILLIANNA BYINGTON AND ROBIN EBERHARDT

Just be­fore her 100th day in of­fice, D.C. Mayor Muriel E. Bowser stood be­fore a packed house at the city’s his­toric Lin­coln Theatre and called on tax­pay­ers to make an un­prece­dented in­vest­ment in the poor.

For the first time, she an­nounced, the District would de­vote $100 mil­lion in city funds each year to the Hous­ing Pro­duc­tion Trust Fund — a life­line for fam­i­lies strug­gling to find a place to live in one of the least af­ford­able cities in the coun­try. “If we’re go­ing to be a city where fam­i­lies can stay and grow, we must do more to cre­ate op­por­tu­nity for them,” Bowser (D) said dur­ing her State of the District ad­dress in March 2015.

But at the city agency en­trusted with pro­duc­ing homes for the poor, of­fi­cials were giv­ing up mil­lions of ad­di­tional dol­lars from an­other es­sen­tial source of af­ford­able hous­ing money: the fed- eral govern­ment.

The D.C. Depart­ment of Hous­ing and Com­mu­nity De­vel­op­ment was forced to for­feit $15.8 mil­lion in the past three years after re­peat­edly miss­ing key spend­ing dead­lines meant to en­sure that fed­eral hous­ing money is prop­erly man­aged at the lo­cal level, The Washington Post found.

The spend­ing prob­lems pre­date the Bowser ad­min­is­tra­tion, but most of the bills came due soon after the mayor took of­fice and launched her af­ford­able hous­ing plans.

No other hous­ing agency in the coun­try re­turned more af­ford­able-hous­ing money to the U.S. Depart­ment of Hous­ing and Ur­ban De­vel­op­ment be­tween 2014 and 2016 than the District’s — which forfeited 22 per­cent of all the money that was sent back to HUD in the three-year pe­riod, an anal­y­sis of fed­eral data shows.

The $15.8 mil­lion sent back

have pro­vided rent vouch­ers for a year to roughly 1,000 of the city’s poor­est fam­i­lies.

“This is in­sane,” said Will Mer­ri­field, a lawyer at the non­profit Washington Le­gal Clinic for the Home­less. “That they would al­low this money to go to waste is ab­surd.”

The fund­ing came from the HOME In­vest­ment Part­ner­ships Pro­gram, which for 25 years has pro­vided seed money to de­vel­op­ers will­ing to build or ren­o­vate low-in­come hous­ing. HUD, which over­sees the pro­gram, es­ti­mates that $1 in HOME funds can lever­age $4.28 from other fund­ing sources.

HOME money can also be used to pro­vide down-pay­ment as­sis­tance to buy­ers or to fund vouch­ers for fam­i­lies that can­not af­ford rent on the pri­vate mar­ket. The pro­gram — the largest fed­eral block grant for af­ford­able hous­ing — has pro­duced 1.2 mil­lion af­ford­able units across the coun­try in the past quar­ter-cen­tury.

The District’s hous­ing depart­ment was forced to re­turn mil­lions in HOME dol­lars even as the home­less pop­u­la­tion soared, more and more fam­i­lies moved into shel­ters, and the wait­ing list for rent vouch­ers re­mained closed to new house­holds. Nearly 40,000 fam­i­lies are wait­ing for vouch­ers — those near the top of the list signed up well over a decade ago.

“My kids say: ‘Mommy, what’s wrong? Are we go­ing to be home­less?’ ” said 31-year-old Car­olyn Har­ri­son, who took three buses to a $10.75-an-hour cashier’s job in Mary­land be­fore los­ing the po­si­tion. Though her hus­band works nights in a res­i­den­tial fa­cil­ity for vet­er­ans, the cou­ple can af­ford only a $300-a-month unit sub­si­dized by a home­less­nesspre­ven­tion non­profit group.

Now, the lease is up, and Har­ri­son doesn’t know where she and her hus­band will go with their three young chil­dren. She has been wait­ing for a voucher for nearly 10 years.

“I’m not look­ing for any­one to do it for me,” she said. “I’m just look­ing for guid­ance and as­sis­tance to get my life back on track for my kids.”

City of­fi­cials ac­knowl­edged the loss of HOME money and said they have taken steps since Bowser be­came mayor two years ago to strengthen the op­er­a­tions of the hous­ing depart­ment.

“We knew that we in­her­ited some­thing that wasn’t func­tional in the way that it needed to be, and the team has been very good at turn­ing that ship around,” said An­drew True­blood, chief of staff to the deputy mayor for plan­ning and eco­nomic de­vel­op­ment.

The hous­ing agency’s di­rec­tor, Polly Don­ald­son, said that when she took over in 2015 the depart­ment had 40 va­can­cies, man­age­ment is­sues and a short­age of hous­ing de­vel­op­ers will­ing to take on HOME-funded projects. Top staffers met weekly to dis­cuss HOME dead­lines, find ways to re­cruit non­profit de­vel­op­ers and com­mu­ni­cate with HUD, she said.

Send­ing money back to HUD, Don­ald­son said, “really in­cen­tivized and mo­bi­lized us even more to get this sys­tem fixed.”

“Fed­eral funds con­tinue to be a very im­por­tant source of fund­ing for us in the District,” she said. “We must use th­ese funds, and that is my man­date.”

De­spite the loss of fed­eral funds, Don­ald­son said, the hous­ing depart­ment in the past year al­lo­cated $20 mil­lion in new fed­eral dol­lars, in­clud­ing money from the HOME pro­gram, and $106 mil­lion in lo­cal dol­lars from the Hous­ing Pro­duc­tion Trust Fund.

All told, the District has spent $600 mil­lion of its own money since 2001 on hous­ing, pro­duc­ing more than 9,500 units, ac­cord­ing to the city.

But the hous­ing depart­ment’s man­age­ment of that money has drawn sharp crit­i­cism.

D.C. law re­quires the hous­ing depart­ment to spend 40 per­cent of trust-fund dol­lars on “ex­tremely low-in­come” fam­i­lies — those earn­ing no more than $32,580 for a house­hold of four — and an­other 40 per­cent on “very low in­come” house­holds — those earn­ing up to $54,300.

City au­di­tors re­ported in March that the depart­ment has spent far less: In 2014, only 32 per­cent of the trust-fund dol­lars were al­lo­cated to those two groups. In 2015, it was 49 per­cent.

“The ma­jor­ity of that money does not go to the peo­ple most in need,” said Am­ber Hard­ing, a lawyer with the Washington Le­gal Clinic for the Home­less.

Au­di­tors also found that the hous­ing depart­ment over the years did not ver­ify the in­come lev­els of res­i­dents who did re­ceive hous­ing. And al­though the city has re­ported that thou­sands of homes have been built or ren­o­vat- ed with trust-fund dol­lars since 2001, au­di­tors found the depart­ment’s records too “un­re­li­able” to know for sure.

Au­di­tors are now try­ing to build a data­base that tracks the trust fund’s spend­ing and pro­duc­tion lev­els.

“In­for­ma­tion (i.e. num­ber of units, num­ber of projects, and award amounts) from DHCD was con­stantly chang­ing,” au­di­tors wrote.

The hous­ing depart­ment is sup­posed to com­mis­sion an an­nual in­de­pen­dent au­dit of the fund, but no au­dit has been done, the District’s au­di­tors found.

“We were told . . . that they lack re­sources to over­see many as­pects of the [Hous­ing Pro­duc­tion Trust Fund] pro­gram be­cause they must de­vote re­sources to the fed­er­ally-funded hous­ing pro­grams . . . and they do not want to risk the loss of fed­eral funds,” au­di­tors wrote.

But the hous­ing depart­ment ended up los­ing fed­eral money any­way.

Hurt­ing the most vul­ner­a­ble

Hous­ing groups said the HOME money could have been used to ren­o­vate blighted, dan­ger­ous ren­tal apart­ments — in the District, 2,000 house­holds live in units with­out kitchens or plumb­ing.

In Fair­fax County, Va., and Mont­gomery County, Md., hous­ing of­fi­cials have used some HOME money to give out rent vouch­ers to cash-strapped fam­i­lies. Nei­ther county has re­turned money to HUD in the past three years.

“The HOME pro­gram is crit­i­cal to the work we do,” said Shauna Sor­rells, a for­mer HUD ad­min­is­tra­tor who is the di­rec­tor of leg­isla­tive and pub­lic af­fairs at Mont­gomery’s non­profit Hous­ing Op­por­tu­ni­ties Com­mis­sion, which has used HOME funds to pay for vouch­ers. “We don’t leave any money on the table.”

In the District, the hous­ing depart­ment con­sid­ered plans sim­i­lar to those in Fair­fax and Mont­gomery. In a 2014 depart­ment memo ob­tained by The Post, ad­min­is­tra­tors ac­knowl­edged that HOME money could be used to fund rent vouch­ers.

To do so, the depart­ment would have to mod­ify its poli­cies and a con­sol­i­dated hous­ing plan it sub­mits to HUD ev­ery five years. The money would then be turned over to the D.C. Hous­ing Au­thor­ity, a sep­a­rate agency that over­sees the city’s stock of 8,400 pub­lic hous­ing units.

The Hous­ing Au­thor­ity man­ag­could es the city’s wait­ing list for pub­lic hous­ing units and the city’s more than 11,000 rent vouch­ers. At cur­rent fund­ing lev­els, only about 100 vouch­ers be­come avail­able each year for new fam­i­lies. Al­though fam­i­lies’ needs can dif­fer, an av­er­age voucher cov­ers about $1,250 a month in rent, ac­cord­ing to hous­ing of­fi­cials.

“The Hous­ing Au­thor­ity had a ve­hi­cle in place,” said lawyer Michelle Christo­pher, a for­mer com­pli­ance man­ager at the hous­ing depart­ment who is a staff at­tor­ney at a health-care agency in Louisiana. “We didn’t have to do any­thing but give that money over to them. We would have helped peo­ple.”

Nathan Simms, for­mer deputy di­rec­tor of the hous­ing depart­ment, said of­fi­cials in 2014 were poised to trans­fer $3 mil­lion in HOME funds and had pro­posed an amend­ment to the city’s con­sol­i­dated plan.

But the plan was set aside in 2015 when Bowser be­came mayor and Don­ald­son took over the hous­ing depart­ment, he said.

“We were mov­ing in that di­rec­tion, and then the ad­min­is­tra­tion changed, and that was some­thing they didn’t want to move for­ward with,” said Simms, a for­mer U.S. HUD of­fi­cial who worked at the hous­ing depart­ment from 2011 to 2015. “They had dif­fer­ent thoughts. They wanted to put it into projects.”

Don­ald­son said the hous­ing depart­ment has since listed rent vouch­ers as an el­i­gi­ble use of HOME funds in the city’s new­est con­sol­i­dated plan, which has been ap­proved by HUD. But there are no plans to spend the money on vouch­ers this year, be­cause other projects are more press­ing, of­fi­cials said.

“I can only say that, go­ing for­ward and look­ing for­ward, we are mak­ing that pos­si­ble, and we are, again, in­creas­ing op­tions as best we can,” Don­ald­son said.

Hous­ing ad­vo­cates said the de­lays and strug­gles at the depart­ment over the years have hurt the city’s most vul­ner­a­ble res­i­dents.

Michael Wilk­er­son, a 55-yearold for­mer se­cu­rity of­fi­cer dis­abled by cer­vi­cal de­gen­er­a­tion, has been wait­ing seven years for a voucher.

He pays $300 a month to rent a base­ment room in North­east Washington with a crum­bling floor of dirt and con­crete, no run­ning wa­ter, and cracks in the ceil­ing that al­low urine from the dogs up­stairs to drip into his room. With no gas to warm the place, the win­ters are frigid.

Wilk­er­son is des­per­ate to move out, but so far, he has not re­ceived a rent voucher, and his only in­come is $1,415 a month in dis­abil­ity pay­ments from So­cial Se­cu­rity.

“I’m not asking for any­thing more than I need,” said Wilk­er­son, who washes with $1 jugs of wa­ter from Dol­lar Tree. “Just a com­fort­able place to lay my head.”

Los­ing un­spent money

HUD al­lo­cates about $950 mil­lion a year in HOME fund­ing, but it is up to hun­dreds of lo­cal hous­ing agen­cies to de­cide how to spend their share of the money.

In ex­change, hous­ing agen­cies must meet two ma­jor dead­lines: HOME funds must be placed un­der con­tract for a project within two years and be spent within five. In 2015, the rule changed, elim­i­nat­ing the five-year dead­line and re­quir­ing that all projects be com­pleted within four years.

President Trump’s 2018 bud­get pro­posal calls for elim­i­nat­ing the HOME pro­gram — part of $6 bil­lion in po­ten­tial cuts at the em­bat­tled fed­eral agency. Hous­ing ad­vo­cates in the District and across the coun­try said the loss of that money would dev­as­tate com­mu­ni­ties that for years have suc­cess­fully lev­er­aged HOME funds.

Na­tion­wide, 72 per­cent of about 640 hous­ing agen­cies did not have to re­turn any money to HUD from 2014 to 2016 — spend­ing a to­tal of $2.9 bil­lion, The Post’s anal­y­sis found. All told, about $72 mil­lion went un­spent.

The bulk of that money — $43 mil­lion — was con­cen­trated at 16 hous­ing agen­cies that each re­turned $1 mil­lion or more, in­clud­ing those in New Or­leans, Seat­tle and Colorado Springs. Prince Ge­orge’s County, Md., re­turned $1 mil­lion.

HUD of­fi­cials pro­vided his­tor­i­cal and fi­nan­cial data but de­clined to com­ment about the re­turned money.

In Ne­wark, which sent back $4.4 mil­lion be­cause of missed dead­lines in prior years, blighted houses with bro­ken win­dows and crum­bling front porches lan­guish in the shad­ows of the nearly cen­tury-old Cathe­dral Basil­ica of the Sa­cred Heart. About 20,000 peo­ple in the city are on a wait­ing list for af­ford­able hous­ing.

“It was really chal­leng­ing to come into of­fice and see we were about to lose funds, to be hon­est, so I fought HUD hard not to take that money,” said Baye Ad­ofo-Wil­son, who be­came Ne­wark’s deputy mayor for eco­nomic and hous­ing de­vel­op­ment in 2014. “But they have their rules and dead­lines to keep. Those funds should have been used and projects should have been started.”

In the District — which re­turned three times more than Ne­wark and 22 per­cent of all the money that was forfeited na­tion­wide in the past three years — spend­ing prob­lems date back years.

In April 2011, shortly after Vin­cent C. Gray (D) be­came mayor, for­mer HUD of­fi­cial John Hall took the helm of the hous­ing depart­ment, with a $144 mil­lion an­nual bud­get and about 140 em­ploy­ees charged with us­ing lo­cal and fed­eral money to pro­duce hous­ing and re­vi­tal­ize neigh­bor­hoods.

The depart­ment had long been trou­bled: It had had more than 20 di­rec­tors in 30 years and had been crit­i­cized by the HUD in­spec­tor gen­eral for im­prop­erly spend­ing mil­lions in HOME money on three stalled or sub­stan­dard de­vel­op­ment projects.

Hall took stock of up­com­ing con­struc­tion projects. “What do we have in our pipe­line?” he re­called asking the depart­ment.

The an­swer stunned him: Few new projects were lined up. One of the least-af­ford­able cities in the coun­try was at risk of los­ing $7 mil­lion in HOME funds be­cause of loom­ing spend­ing dead­lines.

“Projects weren’t ready,” said Christo­pher, the depart­ment’s com­pli­ance man­ager at the time. “The de­vel­op­ers didn’t have all their sources of fund­ing and so you couldn’t even really run num­bers to see if there was a fea­si­ble, vi­able project.”

Hall even­tu­ally read­ied eight projects just be­fore HUD’s spend­ing dead­line that Oc­to­ber, and then held ori­en­ta­tions for de­vel­op­ers to en­cour­age new con­struc­tion.

The loss of money, Hall said, “would have been cat­a­strophic to the com­mu­nity.”

“My ob­jec­tive was to use ev­ery avail­able re­source to pour into the com­mu­nity that needed the help and the up­lift,” he said. “I looked at it as a bless­ing that we had all th­ese re­sources . . . that I could lever­age.”

In June 2012, Gray moved Hall to the deputy mayor’s of­fice and ap­pointed hous­ing vet­eran Michael Kelly to head the depart­ment.

Kelly pro­moted for­mer HUD of­fi­cial Simms to deputy di­rec­tor. Simms said he found that HOME money from years ear­lier had been promised to de­vel­op­ers who had not yet ac­quired land or to projects that were go­ing to miss HUD’s dead­lines. So the depart­ment had to can­cel the projects, he said.

In Novem­ber 2013, HUD wrote to the District, records ob­tained by The Post show, warn­ing of a nearly $12 mil­lion loss in HOME money if the dead­lines were not met.

Simms said the hous­ing depart­ment con­tin­ued to make changes, en­gag­ing de­vel­op­ers and lenders and over­haul­ing un­der­writ­ing prac­tices.

In 2014, the hous­ing depart­ment re­turned $400,000 in HOME funds to HUD.

“We were get­ting a lot of lan­guish­ing projects out the door,” said Simms, who worked as a debt re­struc­tur­ing spe­cial­ist at HUD be­fore tak­ing the job at the hous­ing depart­ment. “There was just a lot of co­or­di­na­tion all the way around.”

But the dead­lines were still com­ing due.

Wait­ing for bet­ter

In March 2015, two months after be­com­ing mayor, Bowser ap­peared at the Lin­coln Theatre for her first State of the District ad­dress, flanked by the Bal­lou High School drum line. She pledged to make good on her cam­paign prom­ise by pump­ing $100 mil­lion into the Hous­ing Pro­duc­tion Trust Fund, up from $63 mil­lion the year be­fore.

Bowser had just ap­pointed hous­ing depart­ment di­rec­tor Don­ald­son, who had built a ca­reer work­ing with lo­cal non­profit groups.

“Dr. [Martin Luther] King chal­lenged us to de­velop ‘a kind of dan­ger­ous un­selfish­ness,’ ” Bowser told the crowd. “We will do that by giv­ing a lit­tle more to cre­ate and pre­serve af­ford­able hous­ing, to care for our home­less neigh­bors.”

That year, the hous­ing depart­ment was forced to re­turn $6.6 mil­lion to HUD for missed spend­ing dead­lines. In 2016, the hous­ing depart­ment re­turned $8.8 mil­lion.

Hous­ing depart­ment of­fi­cials said that spend­ing prob­lems from prior years came to a head just after Don­ald­son be­came di­rec­tor but that the agency is mov­ing swiftly to en­sure that no more money is re­turned.

“I feel like we’re in a far bet­ter po­si­tion to­day than we were a year ago or a year and a half ago, be­cause we have bet­ter sys­tems in place,” said Al­li­son Ladd, the depart­ment’s deputy di­rec­tor.

As the hous­ing depart­ment works to pre­vent fu­ture losses, 27-year-old Ma­ree­sha Branch waits for a bet­ter place to live.

Two years ago, a bul­let tore through the liv­ing room win­dow of her one-bed­room apart­ment in South­west Washington. It trav­eled through two walls be­fore drop­ping to the floor a few feet from where her 2-year-old daugh­ter was nap­ping in a room filled with Bar­bies and uni­corns.

Branch lives in the tiny apart­ment thanks to a pro­gram for the for­merly home­less run by an­other city agency, the Depart­ment of Hu­man Ser­vices, which over­sees the city’s home­less­ness ser­vices.

She’s grate­ful for the place — she and her daugh­ter once spent nights at a shel­ter when Branch could no longer af­ford to rent a base­ment room on a $9-an-hour cashier’s salary. But she cringes ev­ery time she hears gun­shots out­side or finds the street blocked off with crime-scene tape.

Inside the apart­ment, she has cov­ered white walls that have turned a dull shade of yel­low with her daugh­ter’s al­pha­bet draw­ings, but she is hop­ing to move some­place else. She can’t sign up for a rent voucher, which would give her more choice about where to live, be­cause the wait­ing list closed more than three years ago and has yet to re­open.

“I want to let my daugh­ter play out­side,” said Branch, who is plan­ning to take a nurs­ing aide course at the Univer­sity of the District of Columbia. “I want to know that I can go to work and she can go to school, and we can come home and be safe.” Nona Tep­per and Jingzhe (Kelly) Wang with North­west­ern Univer­sity’s Medill Jus­tice Project and Alice Crites of The Washington Post con­trib­uted to this re­port. Bow­man is with the Medill Jus­tice Project; Byington and Eberhardt are with Ge­orge Washington Univer­sity’s School of Media and Pub­lic Af­fairs.

JAHI CHIKWENDIU/THE WASHINGTON POST

Michael Wilk­er­son, who has no run­ning wa­ter in his $300-a-month base­ment room, has been on the D.C. rent-voucher list for seven years. His only in­come is $1,415 a month in fed­eral dis­abil­ity pay­ments.

PHOTOS BY JAHI CHIKWENDIU/THE WASHINGTON POST

JAHI CHIKWENDIU/THE WASHINGTON POST

Sam­son Har­ri­son plays with son Makhi, watched by his wife, Car­olyn, and their other chil­dren, Ma­lik and Madi­son. Car­olyn Har­ri­son has spent 10 years on the D.C. rent-voucher wait­ing list.

Michael Wilk­er­son’s rented room, top, has no run­ning wa­ter. Above, Wilk­er­son trav­els to Miriam’s Kitchen for din­ner. He and thou­sands of others have waited years for rent vouch­ers. Fed­eral money that the D.C. hous­ing agency forfeited for past is­sues could have funded 1,000 rent vouch­ers for a year.

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