Department of Housing and Urban Development officials will award $509 million to public housing agencies that could skip out on government work, a federal watchdog reported.
The department requires federally-funded public housing agencies to sign declarations of trusts, which are legal tools similar to contracts that allows HUD to seize properties in the case of a default.
But 69 – or 60 percent – of the 115 federally-funded public housing projects HUD’s inspector reviewed “lacked evidence of valid and sufficient declarations of trust,” a report by the watchdog released Thursday said.
“HUD did not always ensure that public housing agencies maintained valid and sufficient declarations of trust for HUD-assisted properties,” the report said. “As a result, HUD’s interests and investments were not always protected to prevent potential conveyances or encumbrances of public housing property without HUD approval.”
In other words, HUD could be unable to ensure its funds go to public housing if the agencies back out of their duties.
Those projects raked in nearly $170 million from HUD from 2013 to 2014, the report said. “Further, we estimate that HUD will provide more than $509 million in operating subsidy funding over the next year for projects in which its interests are not protected, and there is a risk of loss of a significant amount of public housing assets.”
Twenty of the reviewed projects’ declarations of trust had “deficiencies that impaired their validity,” the report said. The IG couldn’t evaluate 47 other declarations, while two others didn’t have a declarations with HUD at all.
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