10/6/09 The Times-Picayune – HUD sending in turnaround team to tackle problems at HANO
October 6, 2009
HUD sending in turnaround team to tackle problems at HANO
By Katy Reckdahl, The Times-Picayune
Although the Housing Authority of New Orleans will remain under the receivership of the U.S. Dept. of Housing and Urban Development as it has been since 2002, federal officials took an unprecedented step today to “re-establish a baseline of operating control” at the long-troubled agency, HUD Secretary Shaun Donovan said.
In an unprecedented step, HUD announced Tuesday that a team of a dozen seasoned HUD officials “steeped in public-housing operation” will be in place at HANO, which has been battered by the news of several employee embezzlement scams in recent months.
HANO, like other administrative receiverships, is run by two HUD career officials who are formally assigned to other jobs but detailed to the agency: Diane Johnson has been its one-woman board, responsible for policies, procedures and contracts since May 2008, and Karen Cato-Turner has since November 2007 served as its administrative receiver, overseeing day-to-day operations.
Donovan said the changes have nothing to do with what Johnson and Cato-Turner “did or did not do” but rather the acknowledgment that the traditional receivership model would not be effective at HANO.
“The model wasn’t going to be up to the challenge of rebuilding an agency that has historically been, and frankly continues to be, troubled,” Donovan said.
Johnson and Cato-Turner will return to their positions in New Jersey and Florida, respectively, after helping the new team with the transition.
U.S. Sen. Mary Landrieu, D-La., who had called for a change in leadership at the agency lauded Donovan’s decision “a decisive and dramatic step” and said, “It’s clear that a Band-Aid will not work and major surgery is required. I think that’s what the secretary is saying today.”
Although U.S. Rep. Joseph Cao, R-New Orleans, was not part of the decision-making team, he had joined Landrieu’s chorus for change in recent weeks and applauded HUD’s “new leadership, ” and said he hoped to see the team address the city’s “housing crisis” as well as the fraud and bureaucratic delays that have plagued HANO.
HUD took over the housing authority seven years ago after a series of critical audits found that the agency could not account for money it spent, awarded contracts based on favoritism, paid contractors for work that wasn’t performed, and didn’t maintain or upgrade its buildings despite a significant amount of HUD money earmarked for those tasks.
After Hurricane Katrina, HUD made plans to demolish four large brick, traditional public-housing complexes — B.W. Cooper, C.J. Peete, Lafitte and St. Bernard — and replace them with much smaller, mixed-income communities. Because of the credit-market crash, only two of the flattened sites have begun to transform.
But HANO’s numbers of “portable” housing vouchers has grown rapidly, bolstered by displaced residents of the four complexes and households transitioning out of FEMA trailers and the Disaster Housing Assistance Program. The housing authority has an allocation of more than 16,000 vouchers, nearly doubling its pre-storm totals, when about 9,000 low-income households used them to pay rent on the private market.
The new team — a general manager, two deputies, a chief financial officer and seven senior administrators — will be led by a new receiver who will be appointed on Friday and will report directly to HUD Assistant Secretary Sandra Henriquez, who was tasked during her first months in office to assess HANO and determine what should be done there, Donovan said.
The HUD inspector general is in the middle of several investigations at HANO, but HUD has opted not to wait for the results before taking action, Donovan said.
The result of that assessment was today’s announcement, Donovan said, acknowledging that, while the HUD inspector general is in the middle of several investigations at HANO, HUD had opted not to wait for the results before taking action.
Later this month, the team will immediately dive into work and will release a detailed “forensic review” within 90 days about the current situation at HANO, Henriquez said. A recovery plan based on that review will then lay out how each of HANO’s deficiencies will be fixed and when.
After a year spent stabilizing the agency back to “basic functioning,” HUD estimates that it may take an additional three to five years of work before HANO can be returned to local control, Henriquez said.