Millions In Outside Legal Spending Not Big Enough To Monitor, HUD Decides

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U.S Department of Housing and Urban (HUD) officials aren’t monitoring the millions of federal tax dollars local housing authorities spend on outside law firms because they claim it isn’t enough money to worry about, according to a new HUD Office of Inspector General (IG) report.

“HUD officials stated that they did not monitor or review housing authorities’ legal costs for reasonableness because the amount spent on legal costs is small in comparison to HUD’s overall budget,” the IG said.

The IG analyzed three local housing authorities — the District of Columbia Housing Authority, the Chicago Housing Authority and the Housing Authority of the City of Pittsburgh — and found at least $9.2 million of the $16.5 million they paid outside lawyers between 2007 and 2012 was unsupported and possibly unreasonable.

Taxpayers could be wasting much more on outside legal aid without any oversight, as local housing authorities spent more than half a billion dollars on outside legal aid between 2010 and 2015. (RELATED: HUD Has $43 Billion Worth Of Indecipherable Records)

The report isn’t the first time the IG has criticized HUD for ignoring local housing authorities’ outside legal spending. A 2011 IG report found the Philadelphia Housing Authority paid $30.5 million for outside legal services from 15 law firms between 2007 and 2010, which HUD failed to catch.

The Philadelphia, D.C., Pittsburgh and Chicago housing authorities are all in HUD’s Moving to Work program, which grants them more flexibility in how they spend their federal money. The IG found Moving to Work authorities account for only 35 of the nation’s nearly 3,000 housing authorities but 22 percent of all outside legal spending ($131 million of $591 million total between 2010 and 2015).

“Moving to Work agencies have a greater risk for problems because Congress exempted them from much of the Housing Act of 1937 and associated regulations as outlined in their Moving to Work agreements and they have considerable flexibility in determining how to use federal funds,” the IG said.

HUD officials said they relied on independent public accountants to review legal spending, but the IG said public accountants aren’t doing that.

“HUD needs to improve its oversight to ensure that the costs are reasonable and necessary because Moving to Work agencies have a greater risk for problems,” the IG said. “If HUD required Moving to Work agencies to provide a breakdown of anticipated and actual costs for legal services in its annual plans and reports, it could provide better transparency over legal costs.”

The IG told HUD’s deputy assistant secretary for public housing investments to require all Moving to Work agencies to break down their anticipated and actual legal costs in all annual plans and reports.

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