US: Philly housing agency overpaid for shoddy work

May 17, 2011 12:01:30 PM PDT
The latest examination of the troubled Philadelphia Housing Authority suggests the agency overpaid for shoddy work, which federal auditors said raises questions about the city agency's use of $127 million in federal economic stimulus funds.

The federal audit released Tuesday looked at renovation work done on 10 houses. Philadelphia managers produced virtually no receipts to show how nearly $1 million was spent on the scattered sites, said the Department of Housing and Urban Development's Office of Inspector General.

That raises question about how the agency spent its 2009 Recovery Act money, said John Buck, the HUD's regional inspector general.

HUD recently assumed control of the city agency amid the firing of former executive director Carl Greene and the resignation of the five-member board, which was led by former Mayor John F. Street. Greene, long praised as a visionary housing leader, went into hiding last year after news broke the agency was using $900,000 in public funds to secretly settle four sexual-harassment lawsuits filed against him.

The Justice Department is investigating the agency's spending.

Another recent HUD audit showed the Philadelphia Housing Authority spent more than $10 million on outside law firms last year, more than any other housing agency in the country. And a third audit involving alleged conflict of interest in the awarding of contracts is under way, HUD spokesman Michael Zerega told The Associated Press on Tuesday.

Tuesday's audit shows the authority spent an average $112,000 on each unit in the scattered site program.

The HUD auditors re-inspected five of the 10 homes they closely examined and found some of the work had been done without proper city permits or inspections. The repairs cost $102,000 to $105,000 per unit when a HUD consultant estimated the cost of gutting the homes at $85,000 to $95,000, the audit said.

"These conditions occurred because the authority's leadership, board of commissioners and executive management chose to operate the authority in this manner," the audit said.

In a response included in the report, the agency said it believes it has properly accounted for the federal grant money it received.

"This audit presented challenges in that scattered site homes are not uniform so the rehabilitation work varied widely from home to home," the response said.

PHA spokeswoman Nichole Tillman said the agency did not plan to comment further.

The agency is due to receive $371 million from HUD this year.