[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                    HUD OFFICE OF INSPECTOR GENERAL
                     REPORT: HUD'S OVERSIGHT OF THE
                ALEXANDER COUNTY (IL) HOUSING AUTHORITY

=======================================================================

                                 HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         HOUSING AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 25, 2018

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 115-117
                           
                           
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                     Shannon McGahn, Staff Director
                 Subcommittee on Housing and Insurance

                   SEAN P. DUFFY, Wisconsin, Chairman

DENNIS A. ROSS, Florida, Vice        EMANUEL CLEAVER, Missouri, Ranking 
    Chairman                             Member
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
STEVAN PEARCE, New Mexico            MICHAEL E. CAPUANO, Massachusetts
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
STEVE STIVERS, Ohio                  STEPHEN F. LYNCH, Massachusetts
RANDY HULTGREN, Illinois             JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DANIEL T. KILDEE, Michigan
LEE M. ZELDIN, New York              JOHN K. DELANEY, Maryland
DAVID A. TROTT, Michigan             RUBEN KIHUEN, Nevada
THOMAS MacARTHUR, New Jersey
TED BUDD, North Carolina
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 25, 2018...........................................     1
Appendix:
    September 25, 2018...........................................    17

                               WITNESSES
                      Tuesday, September 25, 2018

 Bost, Hon. Mike, U.S. House of Representatives..................     4
 Duckworth, Hon. Tammy, U.S. Senate..............................     5
 Kirkland, Jeremy, Acting Deputy Inspector General, Office of 
  Inspector General, U.S. Department of Housing and Urban 
  Development....................................................     6

                                APPENDIX

Prepared statements:
    Bost, Hon. Mike..............................................    18
    Duckworth, Hon. Tammy........................................    20
    Kirkland, Jeremy.............................................    22

              Additional Material Submitted for the Record

Duckworth, Hon. Tammy:
    Letter to the Department of Housing and Urban Development....    50
    Letter from the Department of Housing and Urban Development..    51
    Letter to the Office of Inspector General....................    53

 
                        HUD OFFICE OF INSPECTOR
                         GENERAL REPORT: HUD'S
                       OVERSIGHT OF THE ALEXANDER
                     COUNTY (IL) HOUSING AUTHORITY

                              ----------                              


                      Tuesday, September 25, 2018

                     U.S. House of Representatives,
                                    Subcommittee on Housing
                                             and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 4:05 p.m., in 
room 2128, Rayburn House Office Building, Hon. Sean P. Duffy 
[chairman of the subcommittee] presiding.
    Present: Representatives Duffy, Ross, Rothfus, Zeldin, 
Cleaver, and Beatty.
    Also present: Representative Green.
    Chairman Duffy. The Subcommittee on Housing and Insurance 
will come to order.
    Today's hearing is entitled, ``HUD Office of Inspector 
General Report: HUD's Oversight of the Alexander County, 
Illinois, Housing Authority.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Without objection, all 
Members will have 5 legislative days within which to submit 
extraneous materials to the Chair for inclusion in the record. 
Without objection, Members of the full committee who are not 
Members of this subcommittee may participate in today's hearing 
for the purpose of making an opening statement and questioning 
our witnesses.
    The Chair now recognizes himself for 5 minutes for an 
opening statement.
    Now, I first want to thank our first panel of witnesses who 
are here today that are going to be introduced in just a 
moment, but Congressman Bost and Senator Duckworth, welcome 
back to the House side. It is good to have you. We appreciate 
your testimony and appreciate the testimony of our IG.
    Today we will be examining issues related to the Alexander 
County Housing Authority, ACHA, and their role in allowing 
living conditions in both the Elmwood and McBride housing 
developments deteriorate to such that HUD (U.S. Department of 
Housing and Urban Development) had to demolish both of them and 
has taken over possession of the ACHA.
    Due to the actions of the ACHA, nearly 200 families will 
have to uproot their lives and move from Cairo, Illinois, to 
another city, hopefully in Illinois, but somewhere else. In 
addition to Elmwood and McBride, now we have come to find out 
that two additional ACHA housing developments will be closed 
due to the cost of rehabilitation. And so more families might 
have to leave Cairo for another community.
    Having served as Chairman of this subcommittee for the 
115th Congress, the conclusion of the HUD IG's report on the 
ACHA is disgusting, at a minimum, and possibly criminal with 
those who were involved in the ACHA. What is even more 
frightening is this could just be the tip of the iceberg around 
the country.
    Fifty other PHAs, public housing authorities, have been 
designated as troubled, according to the HUD IG report. The 
ACHA's activities are a prime example of abuse of government 
funds by a PHA.
    Now, it is my understanding that the IG will be limited in 
his questions, that he will be answering to some of the 
specifics in regard to individuals involved in fraud and 
potential abuse at the ACHA. We are going to do our best to 
respect that as there is an ongoing investigation.
    I will try to be respectful, again, if the IG feels like he 
can't answer specific questions from me or the panel. We do 
support the rule of law and the presumption of innocence.
    To be candid, though, I think the recommendations made by 
the IG are what should be done, at a minimum. This is a floor 
of recommendation, and we very well may need to do more.
    I don't want to get into much of Mr. Kirkland's testimony 
for him. We want to hear from him himself, so I don't want to 
say too much about that. But the disarray of the ACHA, and 
these units in particular, were first discovered in 2010. 
Incredibly problematic, incredibly disturbing. And to think 
that these are the families that we are here to help who are 
living in these kinds of conditions, again, I think every 
American would be outraged that this is how we house people or 
help house people and how we spend the Federal taxpayers' 
money.
    Based on the IG's report and my assessment of it, maybe 
PHAs should be under more scrutiny, and provisions of funds 
should be conditional once a PHA has been identified as having 
negative findings. I believe HUD is working to address some of 
the issues identified by the IG report, but we might need to 
look further at HUD's recovery and sustainability protocols 
when it comes to PHA. We have to scratch and dig, I think, 
deeper.
    The fact that these families, again, lived in deplorable 
conditions for 6 years before HUD finally took over the ACHA is 
just fundamentally inexcusable. To add on top of that, the ACHA 
clearly misused Federal funds and violated the Civil Rights Act 
via racial segregation and employment discrimination. What? 
This is unbelievable that in 2018 this is actually happening.
    Right now, about 1.2 million reside in public housing 
developments that are operated by around 3,300 PHAs. HUD 
provides about $4 billion in operating subsidies and awards 
about another $2 billion to PHAs to maintain those public 
housing properties. I believe we have good PHAs out there, but 
come to find out that there is abuse in at least one and 
possibly more. We have an opportunity to make sure all 3,300 
PHAs comply with HUD's policies and address health and safety 
hazards before another situation like Cairo pops up.
    I just want to note that if you watch this committee, and I 
say this often, and it is a testament to Mr. Cleaver, we always 
don't agree. We always don't get along. But in this space you 
find bipartisan support. You don't see light between either 
side of the aisle and either party on these issues. This is 
about families. This is about dignity. And this is about 
America standing together to make sure people have a safe, 
livable home in which to reside.
    My time has expired. And now I will recognize the Ranking 
Member, the gentleman from Missouri, Mr. Cleaver, for 5 
minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    My opening comments will be brief primarily because you 
have stated very clearly and eloquently what I wish to express. 
I think that originally there was interest by Senator Durbin 
and Senator Duckworth, the Senators from Illinois. And the 
troublesome thing for me, and I will move on and wait until the 
questioning, I actually grew up in the projects, and we had the 
Black public housing developments, there were two, and then we 
had the White. There was no pretense of trying to say that they 
were the same, that it was everybody in town knew it, and there 
was nothing ever done about it.
    I thought that those days had ended a long time ago. And to 
imagine that, after all these years, we are still experiencing 
that same kind of stupid conduct on the part of people who are 
really being paid by the United States Federal Government, by 
the taxpayers. And that makes it even worse.
    And so, Mr. Chairman, I appreciate the hearing. I don't 
want anybody to come to the conclusion that other people are 
not interested. This is a fly-in day, as the Congressman knows, 
and so a lot of people are still trying to get to Washington 
for 6:30 votes. And then we have some other weather-related 
problems.
    But this is, nonetheless, an extremely important issue. And 
I worked on myself before I came in here so that I would not 
become emotional or loud, because this is very, very personal 
to me. And when I get off--when we get through with the 
committee, I am calling my dad to talk to him about this. At 
age 96, he will be stunned. He probably thought that 30 years 
ago this was over. So I want to talk with him about today's 
hearing. And then I know he will also calm me down.
    Right now, the calmtivity--there is no such word, but I 
feel like I can make up some words for this. The calmtivity is 
not as strong as I need. But I will restrain myself just to 
make sure. I am extremely angry, and it is personal.
    Thank you very kindly.
    Chairman Duffy. The gentleman yields back.
    I now want to welcome our witnesses. Our first witness, 
Congressman Mike Bost, from the 12th District of Illinois, 
approached me on the floor a year ago, wanted a hearing. I told 
him we can't. We wanted to wait for the IG report to come out. 
Pushed us to have a hearing, and we wanted to make sure we got 
it in as quickly as possible.
    Congressman Bost, welcome. And thank you for your advocacy 
on this issue.
    I want to thank Senator Duckworth for being here. We sprung 
this at her, and she has a busy schedule and was able to move 
her schedule around to be here as the Senator from Illinois. I 
know that Senator Durbin wanted to be here as well, and he was 
not able to move his schedule. But I thank the both of you as 
representatives of Illinois and of this location for being here 
and willing to testify.
    In a moment, both witnesses will be recognized for 5 
minutes for an oral presentation of their written testimony. 
Without objection, their written statements will be made part 
of the record following their oral remarks.
    Representative Bost, you are now recognized for 5 minutes.

                 STATEMENT OF THE HON. MIKE BOST

    Mr. Bost. Thank you, Chairman Duffy, and thank you, Ranking 
Member Cleaver. I appreciate the opportunity to appear before 
you and the subcommittee.
    Today's hearing is about government's failure to protect 
its most vulnerable of us. Most of you have never heard of 
Cairo, Illinois. Matter of fact, if you saw it, you would say 
Cairo. And unless you are from this district, you would 
actually--that is when you pronounce it as Cairo. But it is 
time that you have heard about it, time you should hear about 
it.
    Cairo is a small town in my district that was once a 
roaring city on the banks of the Mississippi and Ohio Rivers. 
It shares a story that is similar to many across the country, 
perhaps similar to those in your districts.
    As the 20th century rolled on, Cairo's population dwindled 
due to changes in transportation, community strife, a lack of 
service, and downright neglect. But many families stayed, proud 
of their city, honoring their heritage. Most of these families 
live in public housing units under the control of Alexander 
County Housing Authority.
    Many of us first learned the extent of the problems in 
Cairo through reports in The Southern Illinoisan newspaper. The 
paper exposed unsafe living conditions that included units 
infested with mold, insects, and other vermin. Many had no 
appliances, heating, or air conditioning. One mother was forced 
to spray insect killer around her young son's bed each night 
due to infestation in her unit.
    After my Illinois colleagues and I requested a Federal 
investigation, HUD placed the housing authority in 
receivership. The buildings were beyond repair. 185 families 
were forced to leave a city they called home for generations.
    The cause of this tragedy comes down to two words: Greed 
and neglect. Over many years, the local housing authority used 
Federal funds as their personal piggybank. Funding intended for 
maintenance was used for personal travel and other perks. The 
executive director at the time admitted to fraud. He said: We 
lived it up too good, and we didn't even see this coming, and 
we thought it would last forever.
    Then there is the issue of neglect, which I believe should 
be the main focus of this hearing. Issues with Cairo Housing 
Authority were known to HUD for years, but little was done. It 
is my belief that had HUD taken these issues more seriously, we 
may not be here today. The Federal Government must do a better 
job of conducting oversight, especially when it involves the 
health and safety of people in need.
    Where was the ball dropped on Cairo? How did things fall 
through the cracks? And where is it happening in other public 
housing around America? And how do we prevent this from 
happening again?
    While I may not be a Member of this committee, I want to 
work with you, Republicans and Democrats, to ensure that reform 
is implemented. I also want those who created this crisis to be 
held accountable. It is frustrating to me and the people of my 
district that these officials have not been charged for their 
alleged crimes.
    The people of Cairo and surrounding areas deserve justice. 
I hope today is a big step in making that happen. And, once 
again, I thank you for holding this hearing.
    With that, I yield back.
    [The prepared statement of Mr. Bost can be found on page 18 
of the Appendix.]
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the gentlelady, the Senator from 
Illinois, Senator Duckworth, for 5 minutes.
    And, again, welcome back, Senator. Nice of you to come over 
to our side of the Capitol.

              STATEMENT OF THE HON. TAMMY DUCKWORTH

    Senator Duckworth. Yes. Yes. And I used to be just down the 
hall in OIG, so not too far away.
    It is good to be back. And I do miss my colleague 
Representative Cleaver's daily affirmations and thoughts that 
he would give us every day as we proceeded to do the people's 
business here in the House of Representatives.
    Chairman Duffy, Ranking Member Cleaver, thank you for 
holding this important meeting.
    In February 2016, as the continued instances of 
mismanagement, willful neglect of resident safety, and both 
improper and illegal policies at the local level, I stress 
illegal policies at the local level, HUD took into receivership 
the Alexander County Housing Authority, ACHA.
    By this report's own conclusion, HUD was aware of these 
problems as early as 2010, but hesitated to exercise its 
authority to bring ACHA into compliance. In fact, the ACHA has 
failed HUD's physical assessment tool used to determine if a 
unit is habitable since 2012.
    Senator Durbin and I solely requested this HUD OIG report 
to get to the bottom of how HUD failed these residents. And 
following the reports released in July, we wrote to Secretary 
Carson urging quick implementation of the IG's recommendations. 
Yesterday, we finally received the response to our letter in 
which HUD agreed to implement these recommendations and provide 
timelines for that implementation.
    With the permission of the Chairman and Ranking Member, I 
would like to submit for the record the letter Senator Durbin 
and I sent, as well as the response we received from HUD. I am 
also submitting written testimony from both Senator Durbin and 
myself regarding today's hearing.
    Chairman Duffy. Without objection.
    Senator Duckworth. Thank you.
    I have seen firsthand the conditions these residents live 
in. I visited the facilities. I talked to the residents. And, 
in fact, I continue to speak with the residents, telephoning 
key community leaders from time to time.
    They face mismanagement, and they continue to have to 
recover from this mismanagement. Many families are now split 
apart, living in separate counties, without support of their 
loved ones. And so we must continue to listen to these 
residents and hold accountable the officials who failed them 
and created this crisis in Cairo.
    In addition, I hope we can all work together to provide 
these residents and similar communities with the resources they 
need to restore their public housing stock and guarantee safe, 
healthy, and affordable housing.
    I appreciate the opportunity to join this committee and 
raise awareness for the people of Cairo. I am here on behalf of 
both Senator Durbin and myself. He is on the Judiciary 
Committee on the Senate side, so he is a little bit busy this 
week.
    Thank you again, Chairman Duffy and Ranking Member Cleaver, 
for having this. And from both Senator Durbin and I, thank you 
for bringing this to your attention.
    Thank you. I yield back.
    [The prepared statement of Senator Duckworth can be found 
on page 20 of the Appendix.]
    Chairman Duffy. Thank you, Senator.
    And I just want to thank the both of you for your testimony 
and for your bipartisan effort to improve the conditions.
    And it is common practice, for Members of Congress and 
Senators, that the panel does not ask you questions. So at this 
point, you are excused. And I want to thank you for your 
testimony.
    If you all would just wait one moment as we do a transition 
to our second panel, we will switch out over the next minute or 
two.
    Chairman Duffy. And now for our second panel, a witness of 
one, I want to welcome Mr. Jeremy Kirkland, the Acting Deputy 
Inspector General for HUD. We appreciate you being here.
    Without objection, the witness' written statement will be 
made part of the record following his oral remarks. Once the 
witness has finished presenting his testimony, each Member of 
the subcommittee will have 5 minutes within which to ask him 
questions on the report and his statement.
    I would just note that on your table you have three lights. 
Green means go, yellow means you have 1 minute left, and red 
means that your time is up. It is pretty obvious. The 
microphone is sensitive, so please make sure you turn it on and 
speak directly into it.
    Mr. Kirkland, you are now recognized for 5 minutes.

                  STATEMENT OF JEREMY KIRKLAND

    Mr. Kirkland. Chairman Duffy, Ranking Member Cleaver, and 
Members of the subcommittee, I am Jeremy Kirkland, and I am the 
Acting Deputy Inspector General for HUD's Office of the 
Inspector General. Thank you for the opportunity to share with 
you today the results of our evaluation and HUD's oversight of 
the Alexander County Housing Authority, or ACHA.
    HUD OIG examined the allegations of misuse of Federal funds 
following a referral from HUD. My testimony will focus on the 
evaluation of HUD's oversight of ACHA following multiple 
congressional requests. The evaluation identified what could be 
systemic issues which plague many similarly situated public 
housing agencies. The Office of Public and Indian Housing (PIH) 
operates HUD's public housing program and is responsible for 
monitoring PHAs and ensuring effective controls are in place to 
prevent problems.
    HUD provides approximately $4 billion in operating 
subsidies to assist PHAs annually and approximately $2 billion 
to PHAs annually to develop, modernize, and maintain public 
housing properties. PHAs are entities authorized by the State 
to be caretakers of public housing funds and must ensure that 
the funds are properly managed.
    In the past, HUD OIG identified that a significant cause of 
the deficiencies included that executive directors and boards 
of commissioners at PHAs either ignored requirements or lacked 
sufficient knowledge to properly administer the program. ACHA 
is a moderate-sized PHA with nearly 500 units in its inventory.
    As part of our evaluation, we conducted 24 interviews with 
current and former HUD officials and collected documentation 
addressing HUD's actions to oversee ACHA. A combination of poor 
local management and ineffective oversight resulted in 
approximately 200 children, along with their families, living 
in units with pest infestations, including roaches, rodents, 
and bedbugs; inoperable appliances and electrical breakers; 
obstructed accessibility routes, among other health and safety 
issues.
    We found that HUD knew about the negative conditions at 
ACHA since at least 2010. We found that HUD identified 
weaknesses in ACHA's financial condition as early as Fiscal 
Year 2013. And we found that HUD identified issues with ACHA's 
governance, including misuse of funds, conflicts of interest, 
and failure to comply with HUD policies and Federal civil 
rights laws.
    While HUD has the authority to determine that financial, 
physical, management, and ethical problems cannot be remedied 
through the PHA recovery and sustainability, or the PHARS 
protocol and, therefore, HUD could rule the PHA and substantial 
default without requiring a 2-year cure period, our report 
identified that HUD officials did not understand that 
flexibility existed.
    On February 19, 2016, HUD finally did declare ACHA in 
substantial default of its contract with HUD, removed its 
board, and took possession of the housing authority in a 
process called receivership. We also found that HUD initially 
hesitated to exercise its authority to place ACHA into 
receivership.
    A key takeaway for me is HUD officials used policy 
infrequently and incorrect understanding or interpretation of 
policy to justify inaction. As such, it appears that PIH may 
have failed to use some tools available.
    Our recommendations to HUD were to look to identify early 
when cross-programmatic reviews and enforcement actions against 
PHAs are required; that HUD train PIH officials on the 
authorities and processes for identifying, declaring, and 
managing PHAs in substantial default; that PIH update and 
strengthen the training program for HUD receivers of PHAs; and 
that PIH update procedures for receiverships.
    HUD OIG remains concerned that without additional 
oversight, engagement, and outreach by PIH, there remains 
increased risk of fraud, waste, abuse, and gross mismanagement 
within these PHAs.
    At this time, I am open to any questions you might have 
about the report and the work on ACHA.
    [The prepared statement of Mr. Kirkland can be found on 
page 22 of the Appendix.]
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes himself for 5 minutes for 
questioning.
    I think anybody who hears about the conditions are 
outraged. And I want to thank you, Mr. Kirkland, for your 
report and your investigation in helping bring this to light in 
the Congress.
    It is fair to say that HUD knew there were problems in the 
ACHA. Fair enough?
    Mr. Kirkland. That is correct.
    Chairman Duffy. And they knew back in 2010, but that is--we 
only use 2010 because that is as far as we asked you to look 
back, But they probably knew before 2010. Is that a fair 
assessment?
    Mr. Kirkland. We did not look past 2010, but the conditions 
seem obvious that they didn't start overnight.
    Chairman Duffy. Right. So it is fair to say that 2010 was 
not a magic year that things started to deteriorate. It has 
probably been happening for some time.
    Mr. Kirkland. That is likely the case.
    Chairman Duffy. And where does the buck stop? How high do 
these things go? Who is responsible? Who do we look to say, you 
know what, there is mismanagement underneath you, but the buck 
stops with you? Who do we look to say whoa, whoa, whoa, whoa? 
It is--
    Mr. Kirkland. Ultimately, as has been pointed out, I think 
this has been an absolute failure at every level. But every 
level failed the residents in Alexander County miserably.
    Chairman Duffy. Does it go to the HUD Secretary?
    Mr. Kirkland. Ultimately--
    Chairman Duffy. Does it go that high?
    Mr. Kirkland. Ultimately, we all have a responsibility to 
ensure these residents have safe--
    Chairman Duffy. I am going to be--and I am not asking--I 
don't care about politics. I am not trying to--I am not trying 
to point fingers at anybody. This is a really bipartisan 
effort. I just want to know--and by the way, I would just note 
that there are a lot of problems in HUD, and there are hearings 
that we can throw barbs at both sides of the political aisle. I 
am not asking you for that reason. I want to know how high does 
it go? Should the HUD Secretary know about this and give 
demands or recommendations to fix it? Is that fair? Or is it 
someone below the Secretary?
    Mr. Kirkland. Ultimately, this should have gone to the HUD 
Secretary's attention, and ultimately the HUD Secretary should 
have acted.
    Chairman Duffy. Should have acted.
    And in 2010, HUD's PIH identified issues at the ACHA. You 
mentioned that during a review. But nothing was done, right?
    Mr. Kirkland. That is correct.
    Chairman Duffy. So what do we do? What does this committee 
do? Because, again, these are not partisan issues. We have 
bipartisan failures within HUD that affect people's lives. What 
does this committee do? What does this Congress do to makes 
things actually work and improve people's lives and make sure 
our taxpayers' money is spent well to improve people's lives 
and living conditions?
    Mr. Kirkland. I think the circumstances of beginning to 
address this problem start with the recommendations in our 
evaluation. I do believe those fundamental flaws that reared 
their head in Alexander County are not going to go away unless 
we begin to collectively figure out a path forward on these 
types of issues. And it is not going to take one individual 
stepping in. It is not going to take one group stepping in. It 
is ultimately going to take a fundamental change in the 
approach that we take to public housing.
    Chairman Duffy. Should we review the structure of the PIH 
in terms--should it be reorganized?
    Mr. Kirkland. While we have not looked at that issue, 
obviously, that is a question that I think HUD should answer 
and can answer.
    Chairman Duffy. OK. So quickly, this was not an issue of 
money, though. Did we not send enough money to make sure people 
don't live in these conditions? And if we did, what was--
    Mr. Kirkland. There was obviously a lot of money sent to 
Alexander County to--
    Chairman Duffy. And money didn't solve the problem, did it?
    Mr. Kirkland. And money didn't solve the problem.
    Chairman Duffy. It is mismanagement.
    And I don't want to ask you about specifics of liability. 
But if we look at this as a whole, and if this is not the only 
scenario that is out there in our PHAs, should there be other 
kind of liability for boards that run these PHAs?
    Mr. Kirkland. I absolutely believe--
    Chairman Duffy. Criminal?
    Mr. Kirkland. Boards should be held accountable. Executive 
directors should be held accountable.
    Chairman Duffy. Civilly and criminally?
    Mr. Kirkland. Civilly and criminally.
    Chairman Duffy. And I bet if we held people criminally 
liable for their work on these boards, one, you would get good 
people who know what they are doing, and they would make sure 
they do their job, because they don't want to go to jail or 
prison because of mismanagement. And, frankly--and I am not--I 
look at--people should be held accountable for the money that 
was spent and the conditions that people are living in. 
Unacceptable.
    I look forward to continuing to work with you on what this 
committee should do on how we should evaluate, do further 
hearings, potentially legislate changes to make sure this 
doesn't happen again.
    With that, my time is expired.
    I yield to the Ranking Member, Mr. Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Let me first of all say I have been on the committee for 14 
years, so I have been through a lot and heard a lot and 
participated in a lot. The only time I have been more upset is 
in the aftermath of the 2008 economic crisis. Greed brought the 
world to the very brink of an economic cataclysm. And as of 
today--I will check when I go back to the office, as of today, 
nobody has been indicted. And it was as clear as day. I think 
most of the people up here are attorneys except for me and Mrs. 
Beatty, but for even a layperson, it was as clear as day that 
some people broke laws and did just about everything 
conceivably possible, and nobody, as of today, went to jail.
    My son saw that movie they did, with my wife and me. We 
walked out of the movie theater. He wouldn't even speak to me. 
He is a young kid. He is just angry. He said, nobody's been 
charged with anything?
    And that is how I feel about this issue. If some of the 
kids who lived in public housing had broken into the PHA office 
and stolen a computer, they would be in jail. A $500 computer, 
they would be in jail. These greedy people--is your report 
going to be sent to the Justice Department?
    Mr. Kirkland. I can confirm that we have referred this 
matter to the U.S. Attorney in the southern district of 
Illinois. And that matter has been accepted for criminal and 
civil prosecution.
    Mr. Cleaver. OK. I feel better. Not a lot, because people 
are still hurting.
    But that brings me to the other point. I think you 
requested the emails in November and you received them in June, 
something like--I may have that turned around a little.
    In your report, you said that depending on what you find, 
you would have--might have additional information. I am 
wondering if you have any idea when the analysis of those 50 
gigabytes of emails you have received will be available?
    Mr. Kirkland. We have received almost 16,000 emails. So 
far, we have reviewed about 6,000 of those emails. We do have--
the team that completed this report is a fairly small but 
nimble team. They are working very, very hard to work through 
those emails, and we do intend to produce them as quickly as 
possible. We do recognize the importance of those issues.
    I will say, to date, the emails have confirmed and actually 
enhanced or bolstered our assessment of that.
    My bad. We got 600,000 emails, and only 16,000--
    Mr. Cleaver. Oh, jeez.
    Mr. Kirkland. --have been reviewed.
    And I will say that one of the concerns--and obviously 
there was a lot of time from our request for these emails and 
the actual production of those emails. And recognizing that we 
have raised concerns on the process in which HUD produces those 
emails, there is a fundamental concern that we at the OIG have 
with the fact that we don't have immediate access to this type 
of information.
    Mr. Cleaver. Yes, 7 months.
    Mr. Kirkland. IG should have immediate access to that type 
of information.
    Mr. Cleaver. Yes, I agree. Seven months. When I saw that, I 
thought, what in the world. What could they have possibly done 
in a 7-month period?
    My other question is whether or not there is some kind of 
interest being given to those individuals who were moved out of 
those housing units? Is there any follow up--do you know if 
there has been any follow up to make sure that all of the 
individuals who have been moved are, in fact, in a decent 
housing unit someplace in Cairo?
    Mr. Kirkland. I do not know the answer to that. That would 
be a question that I would think HUD should and could answer 
and should be able to answer.
    Mr. Cleaver. In 7 months.
    Mr. Kirkland. Yes.
    Mr. Cleaver. They should be able to answer in 7 months. OK. 
I will ask the question.
    Thank you, Mr. Chairman.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Rothfus, for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Mr. Kirkland, what should be the process to prevent the 
type of deplorable conditions that were witnessed by HUD 
officials out at the ACHA?
    Mr. Kirkland. I think it is a cascading effect. But I do 
think, when HUD finally engaged in a cross-programmatic review 
of what was going on at ACHA, you finally saw action by HUD. I 
think it took a collective effort on HUD's part to ensure that 
action could be taken. I think the recommendations within our 
report, specifically the one for HUD to view that more cross-
programmatically, allows it more tools in the toolbox.
    Mr. Rothfus. Can you tell me what ultimately caused HUD to 
place the ACHA in administrative receivership? What was the 
final straw?
    Mr. Kirkland. I think there were no alternatives. I do 
think, as the report revealed, when the FHEO forced the hand of 
PIH, that that ultimately caused the steps to be taken.
    Mr. Rothfus. Going back to 2010, when HUD's Public and 
Indian Housing identified issues at ACHA during a review but 
closed the findings, why did PIH close out its findings after 
identifying possible issues within the housing authority in its 
governance?
    Mr. Kirkland. They said that the responses were acceptable 
and--but we did not find any documentation or really any one 
that could support that they determined ACHA's responses in 
2013 were acceptable.
    Mr. Rothfus. Could several of the violations outlined in 
your July 2018 report have been avoided if HUD had followed 
through on its findings in 2010?
    Mr. Kirkland. We really didn't look specifically at the 
timeframe of that. But I will say, obviously, the earlier HUD 
would have engaged in a process, I do think these families 
would have been able to find a better situation sooner if HUD 
had engaged earlier.
    Mr. Rothfus. Let's see. The HUD OIG mentioned in its report 
that, although it may be too late to save the ACHA as of June 
2018, 50 other PHAs were designated as troubled.
    What procedures does PIH have in place to prevent housing 
authorities from becoming troubled?
    Mr. Kirkland. So PIH has identified that they go through 
this PHARS (Public Housing Authority Recovery and 
Sustainability) protocol, which is the protocol that we 
highlighted. We do think PIH has more flexibility than always 
sending a troubled housing authority through this PHARS 
protocol. I will say we have also, at HUD OIG, noted that we 
are willing to engage in a process where we are going to put 
boots on the ground at some of these troubled housing 
authorities. We are going to send resources to address some of 
these troubled housing authorities.
    Mr. Rothfus. Can you cite examples where HUD has been 
successful in pulling back an agency that has been troubled?
    Mr. Kirkland. I do not know any off the top of my head.
    Mr. Rothfus. But we currently have 50 that are out there 
right now.
    Mr. Kirkland. And there are currently four PHAs in 
administrative receivership. Obviously, three others on top of 
Alexander County.
    With the 50, I can say that there is one that has been 
troubled since 2003. As was indicated, many of these troubled 
housing authorities are supposed to only be allowed, even in 
the PHARS protocol, a 2-year cure period. And that is not even 
required under PIH requirements, but--
    Mr. Rothfus. With any of these troubled housing agencies, 
how confident are you that there are not facilities there that 
would be in the same condition as Elmwood and McBride?
    Mr. Kirkland. I am absolutely sure there are other 
facilities out there like Elmwood and McBride.
    Mr. Rothfus. And what is the Department doing about that?
    Mr. Kirkland. I do believe the recommendations that we made 
are a start. But, once again, it is only a start. It is going 
to take a more collective effort on the part of all of us. And 
as I indicated, HUD OIG is prepared to be an independent voice 
and I think a necessary independent voice in that process.
    Mr. Rothfus. I yield back.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the gentlelady from Ohio, Mrs. 
Beatty, for 5 minutes.
    Mrs. Beatty. Thank you to Chairman Duffy and to Ranking 
Member Cleaver and to you, Mr. Kirkland.
    I echo all the comments of my colleagues. And certainly the 
Chairman is correct; there is enough blame to go around. As I 
sat here and thought about going back beyond 2010 and 2000, we 
probably had an equal number of Democrat and Republican HUD 
directors, because we know this doesn't happen overnight.
    This is very troublesome for me. I spent 20 years of my 
life as a relocation consultant with PHAs. And I have been in 
facilities that look like that. So I am sure you are correct 
that there are more than the surface four or five that you 
mentioned, because as great as my State and my district is, I 
can remember walking in a facility and thinking, someone's 
mother and grandmother lives in this facility, and no one would 
want to have someone here with mold and rodents. And the story 
ends well. We moved all of those individuals out, tore down 
that public housing and rebuilt it, and moved many of them back 
into Jenkins Terrace, or 1100, in Columbus, Ohio.
    This is very disturbing to me as I sit here, and I--I think 
about, not the bricks and mortar, but the people. What was the 
process? Can you explain to the committee the level or mode of 
communication with the tenants through this process? Was HUD 
keeping them--updating or informing them what was occurring 
with their housing authority?
    Mr. Kirkland. I do think as far as looking back on the 
effort to address the tenants and the tenants' concerns, I do 
think that was a huge overlooked process in all of this. And I 
don't know what all contributed to it. Obviously, there was 
engagement with the tenants. There was an opportunity to hear 
the tenants. But, obviously, something didn't register, because 
the concerns that were being raised, the concerns that were 
brought forward by the tenants--to have tenants who are having 
to spray bug spray on their children so they can sleep at 
night, that is something that should register a problem.
    Mrs. Beatty. Sure. Let me ask you what you think about 
this. I have been on both sides. I started early in my 
professional career being a housing inspector in public 
housing, and that is what led me later to make it part of my 
company when I became a consultant.
    Earlier this year, Congress passed legislation that would 
reduce the frequency of public housing inspections at small 
rural agencies to every 3 years. I oppose that legislation. So 
I guess my question to you is, if these buildings are inspected 
less frequently, would that increase the risk that HUD would 
fail to identify some of these deteriorating conditions until 
it is too late?
    If I start having a leak in my kitchen, or any of our 
kitchens or in our basement and you catch it in the first year. 
But if we have now changed it--and that did not sit well with 
me because of the many years that I have spent working and 
involved in public housing authorities.
    So can you address that when we talk about that? That is 
something we did right here. And I just couldn't support it, 
because I think we needed to be in there more often doing this.
    Mr. Kirkland. I believe--
    Mrs. Beatty. Do you believe that we should go 3 years, or 
should we go back to inspecting it every year?
    Mr. Kirkland. I believe our report highlighted the 
importance of the inspection process. The inspection process is 
important to this overall process to ensure--
    Mrs. Beatty. But inspection 3 years or 1 year? Now seeing 
what you have seen and what you have written, we have heard 
Democrats and Republicans both talking about this just didn't 
start in 1 year, but would you think, if you are seeing 
something in the first year or you wait until the third year 
and you have these conditions--
    Mr. Kirkland. I will say our overall body of work has 
identified a concern overall with the inspection process. It is 
not consistently applied, to begin with. And that was 
indicated, even in Alexander County, just to have a score go 
from, I think, 42 to 82 and then back down to an even lower 
number than the 2012 number, I think the inspection process is 
a valuable process. We haven't looked at specifically what is 
the right amount of time. But it has got to be a necessary 
process to include.
    Mrs. Beatty. Thank you, Mr. Chairman. I yield back.
    Chairman Duffy. The gentlelady yields back.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the witness for 
appearing as well.
    Please allow me to ask a few questions about some of the 
circumstances that caused this condition to manifest itself.
    Is it true that between 2010 and 2016 the Budget Control 
Act caused cuts of about $1.6 billion in funding to housing?
    Mr. Kirkland. I would have to check those numbers, but I 
know there were substantial cuts.
    Mr. Green. Does substantial mean more than a billion 
dollars?
    Mr. Kirkland. Yes.
    Mr. Green. OK. Thank you.
    And is it true that, as a result of this, we are losing 
about 10,000 public housing units per year due to disrepair?
    Mr. Kirkland. I am not exactly sure of the number, but we 
are losing a good number of public housing units.
    Mr. Green. Is it fair to say that we are losing a good 
number because of disrepair?
    Mr. Kirkland. That would--we have not looked at what has 
been the cause of that, but I think that is a big cause.
    Mr. Green. That is a big cause?
    Mr. Kirkland. Yes.
    Mr. Green. I will accept that terminology.
    And is it true that, notwithstanding the lack of 
maintenance at these projects, that this level of disrepair, 
some of it associated with the big cuts, is something that we 
are seeing in many other housing projects across the country?
    Mr. Kirkland. I am not sure that we--we have looked at the 
connection there, but--
    Mr. Green. Is that a fair inference?
    Mr. Kirkland. That could certainly be a fair inference.
    Mr. Green. The reason I brought this up is because I agree 
with what was said earlier and I would even add more to it. And 
I am going to circle around and come back to where I am now.
    But I agree that based on what was said about the 
employment discrimination, civil rights violations, management 
was uncooperative, mismanagement, $400,000 in misuse of funds, 
misadministration of contracts, properties beyond 
rehabilitation, $720,000 in civil penalties, $188,000 in 
assessments based on false claims, and nepotism, all that is 
bad. So we have that now to put aside.
    But circling back to where I was, I mention this because my 
dear friend made the comment that money wasn't the problem. And 
money is a problem. Let's move this--all these issues aside. 
Money is still a problem, is it not?
    Mr. Kirkland. I would say there are many contributing 
factors. Obviously--
    Mr. Green. Wouldn't you say that money is one of the 
contributing factors?
    Mr. Kirkland. There are resource issues and--
    Mr. Green. Can we define resource as money?
    Mr. Kirkland. Money would be one of the resource issues, 
but there are many contributing problems to the problem.
    Mr. Green. There are many. But what we don't want to do is 
minimize the impact of over a billion dollars in cuts. We don't 
want to minimize the impact that that billion dollars can have 
as resources on these projects. Is that a fair statement?
    Mr. Kirkland. Money can definitely have an impact on the 
resources--on these projects.
    Mr. Green. OK. All right. Well, listen, I do appreciate 
your appearing today. And I just want us to think about, not 
only this laundry list that I have called to your attention, 
but also about what are we going to do to preserve housing for 
people who really need it in this country.
    And I see that you want to respond. I will yield to you to 
respond, and then I will take about 15 seconds to wrap up.
    Go ahead, sir.
    Mr. Kirkland. I will note as well that, in the process of 
all of this time that ACHA has been on this downward spiral, a 
substantial amount of money has been spent and wastefully 
spent, unfortunately, because the oversight was not there to 
do--
    Mr. Green. All right. I accept that, but before I lose my 
time, is it also true that there are other circumstances where 
properties are in disrepair due to a lack of funds?
    Mr. Kirkland. Absolutely.
    Mr. Green. OK. So we want to take care of this. And, by the 
way, I think somebody should go to jail as well. But I also 
think that we have to look at these problems in a sober fashion 
when we are talking about the remedy.
    And I thank you for your testimony.
    I yield back.
    Chairman Duffy. The gentleman yields back.
    I want to thank Mr. Kirkland for his testimony. And you may 
get some follow up questions. I would ask you to answer those 
in a prompt fashion, whether, in this situation, it is a money 
problem versus a waste of money problem, to be clear.
    I don't want to do a second round. We do have votes 
tonight; otherwise I would go into that. But, again, I want to 
thank you for your testimony.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Thank you for your testimony. And this hearing is 
adjourned.
    [Whereupon, at 4:57 p.m., the subcommittee was adjourned.]

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