HUD will take over control of Philly Housing Authority

The Philadelphia Housing Authority board - (from left) Patrick Eiding, Debra Brady, Nellie Reynolds, and Chairman John F. Street (Councilwoman Jannie Blackwell resigned this week) - votes to turn over the agency to the U.S. Department of Housing and Urban Development.
The Philadelphia Housing Authority board - (from left) Patrick Eiding, Debra Brady, Nellie Reynolds, and Chairman John F. Street (Councilwoman Jannie Blackwell resigned this week) - votes to turn over the agency to the U.S. Department of Housing and Urban Development. (Tom Gralish)
Posted: March 05, 2011

After months of turmoil, federal housing administrators took temporary control of the Philadelphia Housing Authority on Friday, putting a well-known former city official, Estelle Richman, in charge of an agency that has gained national notoriety for profligate spending.

The appointment of Richman, now the chief operating officer of the U.S. Department of Housing and Urban Development, persuaded defiant PHA board members to relinquish control of the nation's fourth-largest public-housing agency for at least a year.

Richman was managing director of the City of Philadelphia from 2001 to 2003, working with Mayor John F. Street, PHA's outgoing chairman. Before joining HUD a year ago, she was secretary of public welfare under Gov. Ed Rendell. She had served as Rendell's health commissioner when he was Philadelphia mayor.

Richman said she would spend a few half-days a month in Philadelphia while continuing her duties at HUD.

Street, who appointed himself to the board while he was mayor in 2004, said the board had done its job, but "it's really time for us to go."

With the HUD takeover, "we have the best opportunity to do the best good for this housing authority and this city," Street said.

The announcement was made after a special board meeting Friday afternoon attended by four PHA board members. Missing from the group was City Councilwoman Jannie L. Blackwell, who became the first commissioner to break ranks by resigning Wednesday.

The Philadelphia agency has been in a state of upheaval since the abrupt termination of Executive Director Carl R. Greene last September, and is under investigation by multiple agencies, from HUD to the Departments of Labor and Justice.

The board fired Greene after learning that PHA had secretly settled for $648,000 three sexual-harassment complaints against him.

Since then, there have been revelations of $38.3 million in legal expenditures since 2007; elaborate events with belly dancers; and lavish spending on pet projects, such as a $2.8 million pavilion with pillars and planters sheathed in a special red-speckled granite.

Interim Executive Director Michael P. Kelly, on loan from New York City's housing authority, will stay on for at least another year with the new title of administrative receiver, HUD said.

The agreement for the board to step aside in favor of HUD was signed by HUD Deputy Secretary Ron Sims, Mayor Nutter, City Controller Alan Butkovitz, and PHA board members Street; residents leader Nellie Reynolds; AFL-CIO leader Patrick Eiding; and Debra Brady, wife of local Democratic Party boss and U.S. Rep. Bob Brady.

The decision ends weeks of delicate negotiations among Sims, Street and, in the final talks Thursday night, Eiding.

As late as Wednesday afternoon, the board members had dug in their heels, refusing to leave their posts.

But Eiding, among the most adamant about staying, said Sims gave him assurances at a meeting in Washington that an orderly transfer of power could occur.

"It's still going to be the Philadelphia Housing Authority," Eiding told reporters.

He said he came around because of Richman's appointment, as well as HUD's pledge to honor all collective-bargaining agreements and its accommodation of longtime resident leader Reynolds. The 81-year-old Reynolds will be a special liaison to Kelly and the board.

Street added, "We worked through a lot of issues in the last 24 hours."

HUD provides most of PHA's funding, including $371 million this year. As such, it has the authority to assume control of PHA, which has 80,000 tenants.

This week, auditors for KPMG began a forensic audit of the Philadelphia agency. HUD Assistant Secretary Sandra Henriquez said that among the areas of PHA that auditors would examine were governance and finances.

Of the signatories to the agreement, only Butkovitz publicly acknowledged Greene, saying the deposed executive had "failed so spectacularly in respects to tenants and the city."

The HUD agreement will continue for a year and could be renewed in one-year increments after that. Among some of the specific actions, HUD will:

Develop a recovery plan.

Provide general management over operations.

Implement changes, where necessary, to existing management plans, systems, methods, and procedures.

Retain, train, or, if necessary, recruit staff, including but not limited to the executive management staff.

After the board vote, Sims commended board members for their commitment to residents, but said it was "time to move forward."

He added that once the agency was "on its own footing, we will work with the city to restore local control under a new board."

When that happens, as in the past, two appointments will be made by the mayor and two by the city controller. Those four members, in turn, will elect a fifth from the ranks of tenants.

Nutter said he had been having private discussions with both Sims and HUD Secretary Shaun Donovan since news broke in August that Greene was having financial difficulties, including falling behind on his mortgage and federal taxes.

Since that "explosive crisis," the mayor said, "I knew at some point we'd get to this day."


Trouble With the PHA Board

2010

Aug. 13: The Inquirer reports that Wells Fargo Bank has foreclosed on the $615,000 townhouse of Carl R. Greene, above, executive director of the Philadelphia Housing Authority. Greene goes into seclusion.

Aug. 19: A former PHA employee, Elizabeth Helm, 29, goes public with an accusation that Greene sexually harassed her.

Aug. 20: Greene takes a medical leave and checks into a private facility in Maryland for treatment of stress-related problems.

Aug. 25: The Inquirer reports that PHA has paid out more than $33 million in legal fees since 2007 to politically connected firms. The U.S. Department

of Housing and Urban Development's Office of Inspector General begins an audit.

Aug. 26: The PHA board suspends Greene after learning that PHA secretly settled three sexual- harassment complaints against him and was negotiating a fourth. The U.S. Attorney's Office subpoenas records at PHA, as HUD launches an audit of PHA's finances.

Sept. 12: The Inquirer reports that in 2009, Greene retained a team of retired FBI agents to stake out a Housing Authority aide to PHA Board Chairman John F. Street. Agents conclude that the aide's job attendance was "sporadic."

Sept. 17: The U.S. attorney issues a second subpoena for information from two PHA-related nonprofits.

Sept. 23: The PHA board votes, 4-1, to terminate Greene; City Council- woman Jannie L. Blackwell, right, is the only commissioner to vote against his firing.

Nov. 15: HUD deepens its audit by starting a forensic probe of PHA.

Nov. 18: The PHA board names Michael P. Kelly, right, general manager of the New York City Housing Authority, as an interim executive director, beginning Dec. 6.

Dec. 21: The Pennsylvania Human Relations Commission finds "probable cause" that Elizabeth Helm was sexually harassed by Greene.

2011

Jan. 11: U.S. Sen. Charles E. Grassley (R., Iowa), ranking Republican on the Senate Judiciary Committee, intensifies his investigation of PHA's misuse of federal funds.

Jan. 13: At his first board meeting, Kelly vows to create a "culture of respect," and to create greater accountability and transparency at PHA.

Feb. 1: HUD halts all spending on outside legal firms by PHA and signals that it wants the PHA board to step down.

Feb. 4: Kelly suspends with pay four senior aides to Greene amid ongoing federal and PHA investigations.

Feb. 14: The Inquirer reports that PHA board member Debra Brady, wife of U.S. Rep. Bob Brady (D., Pa.), missed almost half of all PHA meetings since joining in 2000.

Feb. 25: HUD Deputy Secretary Ron Sims calls on the five-member PHA board to resign "to restore confidence in the agency."

Feb. 27: The Inquirer reports that Street repeatedly voted for contracts for his son's law firm despite state ethics rules that bar such action.

March 1: HUD Secretary Shaun Donovan testifies at a House budget hearing that he wants to remove PHA's board.

March 2: Blackwell becomes the first PHA board member to break ranks and agree to resign.

March 4: The PHA board succumbs to pressure from HUD and resigns, allowing HUD to assume all board functions.

- Jennifer Lin


Contact staff writer Jennifer Lin at 215-854-5659 or jlin@phillynews.com.

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