Things were supposed to be on the up-and-up at the Richmond Housing Authority.
For years, the San Francisco Bay Area public housing agency had been stuck on the federal government’s list of the worst agencies in the nation for financial mismanagement and other bad behavior.
Federal officials put the Richmond Housing Authority on a strict improvement plan. In 2014, Richmond was removed from the U.S. Department of Housing and Urban Development’s worst-of-the-worst list by promising to make a host of changes, including:
- Repaying the city of Richmond more than $6 million, using money that wasn’t meant to help public housing residents.
- Redirecting $2 million to its public housing program for previously misspending the money.
- Not accumulating any new debt.
Now federal authorities say housing officials lied when it came time to follow through on those promises.
In a new report, the U.S. Department of Housing and Urban Development’s inspector general said housing officials falsified documents to federal officials that made it look like the agency had repaid the $2 million it owed. The report said the agency also misused funds to repay the city and was racking up more debt.
The housing authority “mismanaged its financial operations,” the report concluded. It said the authority had a disregard for federal requirements and that the financial bungling “added to the already strained financial condition of the Authority.”
This is the latest in a steady stream of financial mismanagement at the Richmond Housing Authority.
An investigation by Reveal from The Center for Investigative Reporting in 2014 exposed how Richmond’s public housing residents lived in filth and fear at the hands of the mismanaged agency, which provides public housing to hundreds of poor and disabled people.
Richmond consistently received failing marks for poor management, ballooning debt and disastrous financial policies. Its management was so bad that the feds warned the agency that if there wasn’t significant improvement, the housing authority risked being taken over by the federal government.
The Richmond Housing Authority overspent its budget nearly every year since 2007. But rather than rein in spending, the agency increasingly relied on the city of Richmond. By the end of 2011, the housing authority owed the city of Richmond more than $6.8 million. HUD officials said there was no way that the Richmond Housing Authority could pay the city back.
Plus, past management mistakes and conflicts of interest kept costing the housing authority. Top officials illegally steered contracts to family members and disregarded federal bidding rules. After HUD’s Office of Inspector General investigated the agency in 2009, Richmond was ordered to repay its public housing program $2 million for misspending the money on improper contracts.
Residents banded together in protest after the stories published. In response, city officials launched a public relations campaign trying to discredit Reveal’s stories, saying whatever management problems the agency had were long in the past.
But the new inspector general report says the housing authority misled HUD about three promises it made to get out of trouble. It said Richmond didn’t truly repay its program $2 million for past mistakes, used money that was supposed to help poor people to instead pay back the city, and racked up new debt but lied about it.
The details get technical, but here’s the main gist: Richmond’s plan to wipe out its debt hinged on selling off a $40 million, 400-unit apartment complex called Westridge that the housing authority and city had jointly purchased in 2003. The housing authority told HUD that it would use the proceeds from that sale to repay its program $2 million and clear its debt with the city of Richmond.
In April 2014, the housing authority sold the building. The next month, it told the feds it had repaid its program the $2 million.
But what the housing authority didn’t tell HUD was that four days later, it also used that same $2 million to repay the city of Richmond.
Here was the problem. All the housing authority had done was some creative accounting. The $2 million the housing authority paid was supposed to help public housing residents long term, not disappear after just four days. Richmond hadn’t truly paid up. The inspector general said the housing authority cheated, and it still owed $2 million to its public housing program.
What’s more, the report said, the housing authority “continued to accumulate debt with the City and owed the City more than $4 million as of January 31, 2016.” The Richmond Housing Authority had explicitly told HUD that they weren’t accumulating new debt.
Tim Jones, the executive director of the Richmond Housing Authority, declined to comment, saying he had responded at length in a written report to HUD. In his written response, Jones said, “We believe that our actions were proper and agreed to in advance by HUD.”
Jones argued that HUD knew about the housing authority’s plan and said the way the agency paid off both debts was proper.
“There is no justification now to require repayment when this plan was not only approved in advance but then also verified by HUD,” Jones wrote.
The inspector general disagreed.
The report demanded that the Richmond Housing Authority repay more than $2 million. The government watchdog recommended that a federal lawyer determine whether the housing authority could be sued for falsifying documents and misrepresenting “material facts” to get the agency off of HUD’s failing list.
The inspector general also recommended that top agency officials face administrative penalties for misleading federal officials about the agency’s finances and even took the rare step of suggesting that the Richmond Housing Authority might be put into a receivership – a last resort that only a handful of failed housing agencies ever receive. As of 2013, there were only 10 public housing agencies in the U.S. under receiverships.