NCPA - National Center for Policy Analysis

Department of Housing and Urban Development Ignores Problems

May 19, 2011

The federal government's largest housing construction program for the poor has squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them, reports the Washington Post.

  • Nationwide, nearly 700 projects awarded $400 million have been idling for years.
  • The actual number of stalled or terminated projects is likely to be much higher -- the Post identified an additional 2,800 projects worth $1billion that are in "final draw," meaning the projects drew all of their allotted U.S. Department of Housing and Urban Development (HUD) funding but are still listed as open and ongoing in HUD's records.
  • In some cases, the work was completed, but local agencies had failed to tell HUD; in other cases, however, projects were delayed or scrapped.

HUD, which oversees the nation's housing fund, has largely looked the other way: It does not track the pace of construction and often fails to spot defunct deals, instead trusting local agencies to police projects.

During a yearlong investigation, the Post found breakdowns at every level:

  • Local housing agencies have doled out millions to troubled developers, including novice builders, fledgling nonprofits and groups accused of fraud or delivering shoddy work.
  • Checks were cut even when projects were still on the drawing boards, without land, financing or permits to move forward; in at least 55 cases, developers drew HUD money but left behind only barren lots.
  • Overall, nearly one in seven projects shows signs of significant delay.
  • HUD has known about the problems for years but still imposes few requirements on local housing agencies and relies on a data system that makes it difficult to determine which developments are stalled.
  • Even when HUD learns of a botched deal, federal law does not give the agency the authority to demand repayment; HUD can ask local authorities to voluntarily repay, but the agency was unable to say how much money has been returned.

Source: Debbie Cenziper and Jonathan Mummolo, "A Trail of Stalled or Abandoned HUD Projects," Washington Post, May 14, 2011.

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