Just before her 100th day in office, D.C. Mayor Muriel E. Bowser stood before a packed house at the city’s historic Lincoln Theatre and called on taxpayers to make an unprecedented investment in the poor.
But at the city agency entrusted with producing homes for the poor, officials were giving up millions of additional dollars from another essential source of affordable housing money: the federal government.
The D.C. Department of Housing and Community Development was forced to forfeit $15.8 million in the past three years after repeatedly missing key spending deadlines meant to ensure that federal housing money is properly managed at the local level, The Washington Post found.
The spending problems predate the Bowser administration, but most of the bills came due soon after the mayor took office and launched her affordable housing plans.
No other housing agency in the country returned more affordable-housing money to the U.S. Department of Housing and Urban Development between 2014 and 2016 than the District’s — which forfeited 22 percent of all the money that was sent back to HUD in the three-year period, an analysis of federal data shows.
The $15.8 million sent back could have provided rent vouchers for a year to roughly 1,000 of the city’s poorest families.
“This is insane,” said Will Merrifield, a lawyer at the nonprofit Washington Legal Clinic for the Homeless. “That they would allow this money to go to waste is absurd.”
The funding came from the HOME Investment Partnerships Program, which for 25 years has provided seed money to developers willing to build or renovate low-income housing. HUD, which oversees the program, estimates that $1 in HOME funds can leverage $4.28 from other funding sources.
HOME money can also be used to provide down-payment assistance to buyers or to fund vouchers for families that cannot afford rent on the private market. The program — the largest federal block grant for affordable housing — has produced 1.2 million affordable units across the country in the past quarter-century.
The District’s housing department was forced to return millions in HOME dollars even as the homeless population soared, more and more families moved into shelters, and the waiting list for rent vouchers remained closed to new households. Nearly 40,000 families are waiting for vouchers — those near the top of the list signed up well over a decade ago.
“My kids say: ‘Mommy, what’s wrong? Are we going to be homeless?’ ” said 31-year-old Carolyn Harrison, who took three buses to a $10.75-an-hour cashier’s job in Maryland before losing the position. Though her husband works nights in a residential facility for veterans, the couple can afford only a $300-a-month unit subsidized by a homelessness-prevention nonprofit group.
Now, the lease is up, and Harrison doesn’t know where she and her husband will go with their three young children. She has been waiting for a voucher for nearly 10 years.
“I’m not looking for anyone to do it for me,” she said. “I’m just looking for guidance and assistance to get my life back on track for my kids.”
City officials acknowledged the loss of HOME money and said they have taken steps since Bowser became mayor two years ago to strengthen the operations of the housing department.
“We knew that we inherited something that wasn’t functional in the way that it needed to be, and the team has been very good at turning that ship around,” said Andrew Trueblood, chief of staff to the deputy mayor for planning and economic development.
The housing agency’s director, Polly Donaldson, said that when she took over in 2015 the department had 40 vacancies, management issues and a shortage of housing developers willing to take on HOME-funded projects. Top staffers met weekly to discuss HOME deadlines, find ways to recruit nonprofit developers and communicate with HUD, she said.
Sending money back to HUD, Donaldson said, “really incentivized and mobilized us even more to get this system fixed.”
“Federal funds continue to be a very important source of funding for us in the District,” she said. “We must use these funds, and that is my mandate.”
Despite the loss of federal funds, Donaldson said, the housing department in the past year allocated $20 million in new federal dollars, including money from the HOME program, and $106 million in local dollars from the Housing Production Trust Fund.
All told, the District has spent $600 million of its own money since 2001 on housing, producing more than 9,500 units, according to the city.
But the housing department’s management of that money has drawn sharp criticism.
D.C. law requires the housing department to spend 40 percent of trust-fund dollars on “extremely low-income” families — those earning no more than $32,580 for a household of four — and another 40 percent on “very low income” households — those earning up to $54,300.
City auditors reported in March that the department has spent far less: In 2014, only 32 percent of the trust-fund dollars were allocated to those two groups. In 2015, it was 49 percent.
“The majority of that money does not go to the people most in need,” said Amber Harding, a lawyer with the Washington Legal Clinic for the Homeless.
Auditors also found that the housing department over the years did not verify the income levels of residents who did receive housing. And although the city has reported that thousands of homes have been built or renovated with trust-fund dollars since 2001, auditors found the department’s records too “unreliable” to know for sure.
Auditors are now trying to build a database that tracks the trust fund’s spending and production levels.
“Information (i.e. number of units, number of projects, and award amounts) from DHCD was constantly changing,” auditors wrote.
The housing department is supposed to commission an annual independent audit of the fund, but no audit has been done, the District’s auditors found.
“We were told . . . that they lack resources to oversee many aspects of the [Housing Production Trust Fund] program because they must devote resources to the federally-funded housing programs . . . and they do not want to risk the loss of federal funds,” auditors wrote.
But the housing department ended up losing federal money anyway.
Hurting the most vulnerable
Housing groups said the HOME money could have been used to renovate blighted, dangerous rental apartments — in the District, 2,000 households live in units without kitchens or plumbing.
In Fairfax County, Va., and Montgomery County, Md., housing officials have used some HOME money to give out rent vouchers to cash-strapped families. Neither county has returned money to HUD in the past three years.
“The HOME program is critical to the work we do,” said Shauna Sorrells, a former HUD administrator who is the director of legislative and public affairs at Montgomery’s nonprofit Housing Opportunities Commission, which has used HOME funds to pay for vouchers. “We don’t leave any money on the table.”
In the District, the housing department considered plans similar to those in Fairfax and Montgomery. In a 2014 department memo obtained by The Post, administrators acknowledged that HOME money could be used to fund rent vouchers.
To do so, the department would have to modify its policies and a consolidated housing plan it submits to HUD every five years. The money would then be turned over to the D.C. Housing Authority, a separate agency that oversees the city’s stock of 8,400 public housing units.
The Housing Authority manages the city’s waiting list for public housing units and the city’s more than 11,000 rent vouchers. At current funding levels, only about 100 vouchers become available each year for new families. Although families’ needs can differ, an average voucher covers about $1,250 a month in rent, according to housing officials.
“The Housing Authority had a vehicle in place,” said lawyer Michelle Christopher, a former compliance manager at the housing department who is a staff attorney at a health-care agency in Louisiana. “We didn’t have to do anything but give that money over to them. We would have helped people.”
Nathan Simms, former deputy director of the housing department, said officials in 2014 were poised to transfer $3 million in HOME funds and had proposed an amendment to the city’s consolidated plan.
But the plan was set aside in 2015 when Bowser became mayor and Donaldson took over the housing department, he said.
“We were moving in that direction, and then the administration changed, and that was something they didn’t want to move forward with,” said Simms, a former U.S. HUD official who worked at the housing department from 2011 to 2015. “They had different thoughts. They wanted to put it into projects.”
Donaldson said the housing department has since listed rent vouchers as an eligible use of HOME funds in the city’s newest consolidated plan, which has been approved by HUD. But there are no plans to spend the money on vouchers this year, because other projects are more pressing, officials said.
“I can only say that, going forward and looking forward, we are making that possible, and we are, again, increasing options as best we can,” Donaldson said.
Housing advocates said the delays and struggles at the department over the years have hurt the city’s most vulnerable residents.
Michael Wilkerson, a 55-year-old former security officer disabled by cervical degeneration, has been waiting seven years for a voucher.
He pays $300 a month to rent a basement room in Northeast Washington with a crumbling floor of dirt and concrete, no running water, and cracks in the ceiling that allow urine from the dogs upstairs to drip into his room. With no gas to warm the place, the winters are frigid.
Wilkerson is desperate to move out, but so far, he has not received a rent voucher, and his only income is $1,415 a month in disability payments from Social Security.
“I’m not asking for anything more than I need,” said Wilkerson, who washes with $1 jugs of water from Dollar Tree. “Just a comfortable place to lay my head.”
Losing unspent money
HUD allocates about $950 million a year in HOME funding, but it is up to hundreds of local housing agencies to decide how to spend their share of the money.
In exchange, housing agencies must meet two major deadlines: HOME funds must be placed under contract for a project within two years and be spent within five. In 2015, the rule changed, eliminating the five-year deadline and requiring that all projects be completed within four years.
President Trump’s 2018 budget proposal calls for eliminating the HOME program — part of $6 billion in potential cuts at the embattled federal agency. Housing advocates in the District and across the country said the loss of that money would devastate communities that for years have successfully leveraged HOME funds.
Nationwide, 72 percent of about 640 housing agencies did not have to return any money to HUD from 2014 to 2016 — spending a total of $2.9 billion, The Post’s analysis found. All told, about $72 million went unspent.
The bulk of that money — $43 million — was concentrated at 16 housing agencies that each returned $1 million or more, including those in New Orleans, Seattle and Colorado Springs. Prince George’s County, Md., returned $1 million.
HUD officials provided historical and financial data but declined to comment about the returned money.
In Newark, which sent back $4.4 million because of missed deadlines in prior years, blighted houses with broken windows and crumbling front porches languish in the shadows of the nearly century-old Cathedral Basilica of the Sacred Heart. About 20,000 people in the city are on a waiting list for affordable housing.
“It was really challenging to come into office and see we were about to lose funds, to be honest, so I fought HUD hard not to take that money,” said Baye Adofo-Wilson, who became Newark’s deputy mayor for economic and housing development in 2014. “But they have their rules and deadlines to keep. Those funds should have been used and projects should have been started.”
In the District — which returned three times more than Newark and 22 percent of all the money that was forfeited nationwide in the past three years — spending problems date back years.
In April 2011, shortly after Vincent C. Gray (D) became mayor, former HUD official John Hall took the helm of the housing department, with a $144 million annual budget and about 140 employees charged with using local and federal money to produce housing and revitalize neighborhoods.
The department had long been troubled: It had had more than 20 directors in 30 years and had been criticized by the HUD inspector general for improperly spending millions in HOME money on three stalled or substandard development projects.
Hall took stock of upcoming construction projects. “What do we have in our pipeline?” he recalled asking the department.
The answer stunned him: Few new projects were lined up. One of the least-affordable cities in the country was at risk of losing $7 million in HOME funds because of looming spending deadlines.
“Projects weren’t ready,” said Christopher, the department’s compliance manager at the time. “The developers didn’t have all their sources of funding and so you couldn’t even really run numbers to see if there was a feasible, viable project.”
Hall eventually readied eight projects just before HUD’s spending deadline that October, and then held orientations for developers to encourage new construction.
The loss of money, Hall said, “would have been catastrophic to the community.”
“My objective was to use every available resource to pour into the community that needed the help and the uplift,” he said. “I looked at it as a blessing that we had all these resources . . . that I could leverage.”
In June 2012, Gray moved Hall to the deputy mayor’s office and appointed housing veteran Michael Kelly to head the department.
Kelly promoted former HUD official Simms to deputy director. Simms said he found that HOME money from years earlier had been promised to developers who had not yet acquired land or to projects that were going to miss HUD’s deadlines. So the department had to cancel the projects, he said.
In November 2013, HUD wrote to the District, records obtained by The Post show, warning of a nearly $12 million loss in HOME money if the deadlines were not met.
Simms said the housing department continued to make changes, engaging developers and lenders and overhauling underwriting practices.
In 2014, the housing department returned $400,000 in HOME funds to HUD.
“We were getting a lot of languishing projects out the door,” said Simms, who worked as a debt restructuring specialist at HUD before taking the job at the housing department. “There was just a lot of coordination all the way around.”
But the deadlines were still coming due.
Waiting for better
In March 2015, two months after becoming mayor, Bowser appeared at the Lincoln Theatre for her first State of the District address, flanked by the Ballou High School drum line. She pledged to make good on her campaign promise by pumping $100 million into the Housing Production Trust Fund, up from $63 million the year before.
Bowser had just appointed housing department director Donaldson, who had built a career working with local nonprofit groups.
“Dr. [Martin Luther] King challenged us to develop ‘a kind of dangerous unselfishness,’ ”Bowser told the crowd. “We will do that by giving a little more to create and preserve affordable housing, to care for our homeless neighbors.”
That year, the housing department was forced to return $6.6 million to HUD for missed spending deadlines. In 2016, the housing department returned $8.8 million.
Housing department officials said that spending problems from prior years came to a head just after Donaldson became director but that the agency is moving swiftly to ensure that no more money is returned.
“I feel like we’re in a far better position today than we were a year ago or a year and a half ago, because we have better systems in place,” said Allison Ladd, the department’s deputy director.
As the housing department works to prevent future losses, 27-year-old Mareesha Branch waits for a better place to live.
Two years ago, a bullet tore through the living room window of her one-bedroom apartment in Southwest Washington. It traveled through two walls before dropping to the floor a few feet from where her 2-year-old daughter was napping in a room filled with Barbies and unicorns.
Branch lives in the tiny apartment thanks to a program for the formerly homeless run by another city agency, the Department of Human Services, which oversees the city’s homelessness services.
She’s grateful for the place — she and her daughter once spent nights at a shelter when Branch could no longer afford to rent a basement room on a $9-an-hour cashier’s salary. But she cringes every time she hears gunshots outside or finds the street blocked off with crime-scene tape.
Inside the apartment, she has covered white walls that have turned a dull shade of yellow with her daughter’s alphabet drawings, but she is hoping to move someplace else. She can’t sign up for a rent voucher, which would give her more choice about where to live, because the waiting list closed more than three years ago and has yet to reopen.
“I want to let my daughter play outside,” said Branch, who is planning to take a nursing aide course at the University of the District of Columbia. “I want to know that I can go to work and she can go to school, and we can come home and be safe.”
Nona Tepper and Jingzhe (Kelly) Wang with Northwestern University’s Medill Justice Project and Alice Crites of The Washington Post contributed to this report. Bowman is with the Medill Justice Project; Byington and Eberhardt are with George Washington University’s School of Media and Public Affairs.
