[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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__________
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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.]
A P P E N D I X
September 25, 2018
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