Sens. Grassley, Bond ratchet up long-simmering dispute with HUD

Two senior Republicans are ratcheting up a long-simmering dispute with the federal Department of Housing and Urban Development over how officials are spending funds under the 2009 stimulus law.

Sen. Chuck Grassley of Iowa, the ranking member of the Finance Committee, and Sen. Kit Bond of Missouri, the ranking member of an Appropriations Committee subpanel on housing, sent HUD Secretary Shaun Donovan a letter last week detailing their complaints.

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In the letter — a follow-up to an exchange between Donovan and Grassley in March — Grassley and Bond accuse HUD of providing incomplete or unsatisfactory answers about stimulus funds distributed to public housing authorities (PHAs) that are considered at risk for financial abuse.

“We remain concerned about the waste, fraud and abuse of taxpayer dollars being given to PHAs with less than stellar track records,” Grassley and Bond wrote Donovan in the letter on Wednesday.

In Sanford, Fla., Grassley and Bond wrote, local news accounts stated that "thousands of tax dollars meant for Sanford's public housing were instead spent on cross country trips, hotels and restaurant lunches. While the executive director of the Sanford Housing Authority and two co-workers were charging on corporate credit cards, big bills weren't getting paid.

"This PHA received over $1 million in stimulus money, yet according to news reports, owes over $700,000 to its creditors."

The letter notes that the Fort Myers Florida Weekly reported that a PHA in the Sunshine State received a $2.2 million in stimulus money and "ditched plans to use it to repair existing public housing units."

The senators add, "The article then goes on to describe the cost of plush new furnishings including '$30,000 of sleek virgin furniture, including a regally chic Aeron-style executive chair ... and a $5,000 conference room table equipped with 14 chairs worth $450 each.'"

A HUD spokeswoman told The Hill the department plans to respond to the senators, but that officials believed denying funds to “troubled” housing authorities would have been unfair.

“A determination was made that it would have been wrong,” the spokeswoman said. “A lot of those authorities have needs that are just as great as the others, if not greater.”

Specifically, Grassley and Bond take aim at 13 particular housing authorities, including five in Michigan that received a combined $94 million in stimulus funds despite being considered “high risk” by an internal HUD rating system.

Earlier this year, Grassley won a pledge by HUD that those internal ratings would be publicly accessible through the HUD website. However, he and Bond had their office staffs conduct an independent inquiry of a separate HUD designation system and found errors and omissions.

The HUD spokeswoman said the department has taken steps to improve accountability and transparency in terms of the authorities’ finances even before Grassley’s suggestion. Federal officials increased the fiscal reporting requirements by authorities, for example, she said.

The senators ask for an extensive list of answers to various questions concerning the PHAs by June 30.

Grassley spokeswoman Jill Kozeny said Grassley and Bond believe there could be a severe lack of oversight.

“Taxpayers deserve an answer to why the federal agency gave tens of millions in stimulus dollars to housing authorities it found to be ‘high risk,’" Kozeny said. “Is there so much pressure to shovel stimulus dollars out the door that responsible stewardship has been abandoned?”

Grassley and Bond sent their letter to Donovan just two days before President Barack Obama went to Ohio to mark the 10,000th road project funded by the $787 billion stimulus program. Obama was in the capital city of Columbus to highlight a $25 million project near a children’s hospital, with about 300 jobs created.

"While the recovery starts with projects like this, it can't end here," he said. "Rebuilding our infrastructure is one of the keys to our future prosperity. If we want to rebuild America's economy, we're got to rebuild America, period."