HUD wants documentation on how Dallas handled federal housing funds

^{Editor's note: This story has been updated with additional comment.}

A U.S. housing official wants to know more about how Dallas City Hall chose and oversaw scores of federally subsidized developments after an internal audit found the city lacks enough documentation to ensure the projects were properly monitored and their construction costs were reasonable.

And city auditor Craig Kinton this month told a Dallas grant administrator that her answers to some of Housing and Urban Development’s questions are “disturbing” and “disingenuous at best,” according to emails obtained by The Texas Tribune.

The lack of clarity over how and why the city steered federal housing program funds to projects over a three-year period comes as Dallas faces an affordable housing crisis on several fronts. City hall is embroiled in legal wrangling over a real estate company’s promised mass eviction of 305 families from rental houses in one of the city’s poorest neighborhoods, a still-unfolding controversy that stems from Dallas suing landlord HMK Ltd. over living conditions in the houses.

Meanwhile, a city report last year found that median wages in Dallas have fallen since 1980, one-fifth of the city’s families now live below the poverty line and the current housing stock is misaligned with residents’ incomes.

Dallas isn't alone. Housing costs in Texas have far outpaced median incomes for decades, making it more and more costly for people to live in the state’s biggest cities. A report last month from the Federal Reserve Bank of Dallas listed a litany of reasons that nonprofits and developers list as barriers to building affordable housing in the state. The report said a “complex” reality belies the state’s reputation for being a cheap place to live.

“Most Texans do not enjoy the same level of affordability available to them in prior decades,” the report said.  

Dallas City Council member and housing committee chair Scott Griggs said the situation in his city is prompting officials to put together a comprehensive housing policy. He said that’s something Dallas has never had, but needs so it can prevent fraud and waste.

“The money can’t be used for whatever we want,” he said.

Since at least September, HUD Fort Worth regional office director Shirley Henley has peppered Dallas officials with questions about how they choose, evaluate and monitor projects that receive funds from federal housing programs. Her emails to the city were first reported Monday by Jim Schutze of the Dallas Observer.

Hinley’s questions in the emails followed Kinton’s March 18 audit that found the city housing department lacked formal policies and procedures about how it steers federal housing program funds to projects and then monitors them.

Kinton’s audit also said that documentation on 54 projects that received $29.9 million was either “absent, limited, inconsistent, or incomplete.”

Assistant grants administration director Chan Williams provided several answers about the processes and criteria for underwriting projects after Henley asked. But when Henley questioned whether Dallas had “located, completed or corrected” documents related to the 54 projects, Williams said city officials disagreed with the audit’s conclusions about how well documentation was kept.

Williams said the audit concluded the projects were completed and did not question their costs. She also said that “given the number of files and project reviewed,” that city officials have no way to follow up on the audit’s concerns “in the absence of additional information.”

That drew almost immediate ire from Kinton, who criticized Williams’ statements after HUD forwarded them to him. Kinton told Williams that city housing officials never questioned or challenged the audit’s conclusions in public meetings, emails or a conference about the report.

“Furthermore, no one from management has requested any additional details about the files reviewed subsequent to the audit completion,” Kinton wrote last week. “To suggest that this office ‘has not provided specific details on their file review, only generalization of the concerns’ is disingenuous at best.”

Williams did not respond to requests for comment Monday. Kinton declined to comment. Hinley did not immediately respond to questions left with an agency spokeswoman.

Dallas City Manager A.C. Gonzalez late Monday said that answers to the questions could have been "better worded" and were not meant to construe that the city's housing department is now challenging a months-old audit about its practices.

Gonzalez said city staffers for months have agreed with Kinton's conclusion that uniform processes need to be developed, formalized and followed. He said HUD has reviewed housing files six times in about the past year in addition to the broader audit conducted from within City Hall.

"If you found one problem in one area, that doesn't mean the same problem exists in all $29 million of it," he said.

He said that city staffers will meet with federal authorities to determine what records HUD wants.

"We're trying to just find out what is meant by all this and what we need to do," he said.

 Read related Tribune coverage: 

• Housing and rent subsidy programs in Dallas — like many Texas cities — have long perpetuated segregation by funneling poor renters into poor neighborhoods. New federal rules are aimed at turning that around.
• Dallas City Hall is grappling with how to help hundreds of families who could lose their homes as landlord plans abrupt closures.