The chairman of the House Committee on Veterans’ Affairs is calling for an end to a housing “scheme” used to incentivize VA officials to relocate to new jobs within the agency.
Jeff Miller, a Florida Republican, issued a statement on Tuesday after receiving a response letter from Allison Hickey, the VA’s Under Secretary of Benefits, about the agency’s Appraised Value Offer program.
Miller sent two letters to Hickey recently — one about AVO and the other about Diana Rubens, who was given a $288,000 “relocation payment” to move from job at the VA’s central office in Washington, D.C. to take the director position at the beleaguered Philadelphia VA Regional Benefits Office.
As Hickey revealed in her letter to Miller, the bulk of Rubens’ payment stems from the AVO program. Hickey’s letter further reveals that not only was Rubens rewarded handsomely to move the 140 miles from Washington D.C. to Philadelphia, but the contractor hired to sell her house profited nicely as well, to the tune of approximately $130,000. (RELATED: VA Officials’ $288K ‘Relocation Payment’ Tied To Little-Known House Buyout Program)
“The federal government’s Appraised Value Offer program is a scheme in which everyone but the taxpayer wins,” Miller said in his statement.
In the case of Rubens, the AVO program worked like this.
As Hickey explained in her letter, the VA requires employees accepted into its AVO program to put their house on the market for at least 60 days. A contractor — Brookfield GRS — helps the employee navigate the process. If the house does not sell within the 60 days, the contractor takes it into its inventory but is paid 28 percent of the appraised value of the house.
In Rubens’ case, Hickey said that the VA paid $211,750 to Brookfield GRS.
Real estate records show that Rubens put her house on the market last June. The initial asking price was $799,900, according to a real estate listing.
The house did not sell, and so Stone Financing LLC, a subsidiary of Brookfield GRS, purchased it in August for $770,000.
The company took a loss on the transaction for the home, but was more than compensated by the 28 percent stipend from the VA. Stone Financing LLC sold the house in February for $692,500, records show.
That means that Brooksfield GRS made a gross profit of approximately $134,000 on the transaction.
Besides the $211,750 included as part of Rubens’ relocation payment, she was also compensated $15,812 for “subsistence and temporary expenses”; $29,966 for “real estate expenses”; $15,291 for “relocation income tax allowance”; $11,678 for transporting household goods; and $12,706 for a VA Financial Services Center Service Charge.
The nearly $30,000 in real estate expenses was compensation for closing costs Rubens incurred on her new house in Haverford, Pa., The Daily Caller learned. Records show she purchased that house in September for $589,000.
Miller slammed the VA’s AVO arrangement, saying that it shows how inefficient the VA is, especially at a time when the agency claims it has no money.
“In the case of Diana Rubens’ relocation, VA spent more than $100,000 for each hour it took her to drive from Washington to Philadelphia,” Miller said.
As the VA faces a system-wide scandal over its failure to provide veterans with timely health care, the agency’s top brass has complained to Congress that it does not have enough money to implement the changes needed to fix the problem.
“For VA to pay such an outrageous amount in relocation expenses at a time when the department is continually telling Congress and taxpayers it needs more money raises questions about VA’s commitment to fiscal responsibility, transparency and true reform,” Miller said.
He also said that the VA’s rationale for the program — that it is needed to retain and attract competent employees — makes no sense.
“VA claims the program is a tool to incentivize qualified candidates to move to critical locations, but the fact that the department offers AVO to every single executive accepting reassignment as a regional office director negates that argument completely,” Miller asserted.
He also said that the AVO program has “become an entitlement” at the VA — one “in which taxpayers are forced to subsidize the real estate choices of already generously compensated VA executives.”
“As such, I am calling on VA leaders to put forth a plan to end the department’s use of the program. If no plan is forthcoming, we’ll explore legislative remedies to do the same.”
In her letter, Hickey said that since 2013, there have been 96 instances of properties taken into inventory, 16 of which involved homes valued over $500,000.
“The difference in housing markets across the country causes this cost to vary greatly from situation to situation,” Hickey wrote.
The VA did not respond to a request for comment.