59

the fact. It says to me that there is not a sense of how this program
should be implemented in an effective way.

For the IG to say that she looked at six resident councils and
only one of them was successful, and that one went down the tubes
for some reason, says to me that HUD has a philosophy of just giv-
ing money without direction and guidance.

Ms. GAFFNEY. May I?

Mr. Suays. Sure.

Ms. GaFFNEY. This isn’t a very technical way to put it, but the
way I see this program is, it is pretty much bread on the water.

Mr. Suays. OK. Well, if that’s your interpretation, I definitely
have a problem with it.

Mr. Towns.

Mr. JANIS. Mr. Chairman, if | might.

Mr. SHAys. Sure. Mr. Janis, you are welcome to jump in anytime.
I have the highest respect for your knowledge on so many issues.

Mr. JANIS. Thank you. If I can embellish a little bit. It certainly
is HUD’s primary responsibility to put the money out to the resi-
dent groups, but to say that is HUD’s only responsibility, I believe
that’s not accurate. HUD has a responsibility, when it puts the
money out to the resident groups, to monitor and assure that that
money is being spent in accordance with the legislation, the regula-
tions, and also, very importantly, with the grant agreement.

The grant agreement, under this program, under the TOP pro-
gram, is an exceptionally detailed grant agreement that includes a
number of requirements for procurement, for monitoring, for
drawdown of funds, for financial integrity of the resident organiza-
tion, for completion of work programs. The resident organization
has to go through a multiphase preparation of a work program.

Phases one and two are basically organizational phases, getting
proper assistance and guidance, assuring themselves that they
have a CPA who is establishing books of record and accounts.
There is a requirement that the resident organization cannot draw
down any more than $5,000 of this grant until they complete phase
one and phase two of the grant.

There is a requirement in the application that is followed up that
they have to have a work program with specific objectives in each
one of these phases that is measured and monitored by the Depart-
ment. They are required to submit a report twice a year to the De-
partment on achievement of those objectives. And they are re-
quired, when they close the program, to have an audit close-out.

The Department is required, through its field staff, to assure
that when moneys are drawn from this account that they are
drawn in accordance with the established budget. There are con-
trols within that accounting system that prohibit a resident organi-
zation from drawing, for example, more than 10 percent of any one
line item or exceeding its budgeted amount.

So there are definitely some very specific requirements under the
grant agreement. The Department, I think, takes seriously the ne-
cessity to provide—Mr. Chairman, I think, one of the points you
are getting at—I wouldn't call it hand-holding, but I would call it
the necessity of providing technical assistance and support to the
resident groups. The department takes it very seriously to provide
the kind of training, support, and guidance materials to help them.


123

Ms. GILKEY. And I will provide your staff with a copy of the writ-
ten—the housing authorities have the written practices. They know
the way it’s supposed to go. However, you have to understand—and
this goes back to the training, Mr. Chairman—if the tenant groups
don’t have the training, and those who do—1230 has the training,
but the funds are coming through the housing authority. It’s like
the mama, and the baby is connected to the mother. When the
mother dies, the baby dies.

Mr. SHays. Where do you think of these images? They are some-
thing else.

Ms. GILKEY. So, if you've got a bad housing authority, Mr. Chair-
man, no matter how healthy that baby is, the baby is going to die.
So you've got a good resident management group like 1230.

Mr. Suays. Well, but, with no disrespect, 1230 isn’t dying.

Ms. GILKEY. Yes, but let me use an example.

If you’ve got a good group like 1230, who's managing, collecting
the rents, doing everything right, but you’ve got a bad housing au-
thority who’s taking 60 percent of their money, how long—because
Congress votes on the subsidy, those numbers are calculated to the
penny. The only reason why 1230 survives is because they go out
and create economic development.

We've been able to encourage a private vendor to come in there
and set up a laundromat. With the profits from the vendor, they
put those profits back in their operating budget, which allows them
not to go belly up. But why, if we’re talking about America, if they
do the work and Congress is appropriating the money for the hous-
ing authorities or the resident management groups that do the
work, why are they doing the work and the housing authority is
keeping 60 percent of their money, Mr. Chairman, to hire a bunch
of staff, administrative staff that does absolutely nothing for this
site. It is wrong.

In this country, it is sad, if one does well—and they took over—
I’ve got 36 sites, Mr. Chairman, that are managing in this country.
We started off with two of us, in 1973. Every one of these sites
have a savings. My site, and we just got in control, I want you to
understand this, these sites were just given control. Even though
we were managing in 1972, we only got the management fee.

That means—let me use an example. Cochran Tenant Manage-
ment has a budget of $3.5 million. That’s what the housing author-
ity had been getting for years, for 884 units. When we took over
managing, in 1976, do you know how much money they gave us?

Mr. SHAys. How much?

Ms. GILKEY. $69,000. And they told us, if we didn’t like it, give
the keys back. So we went out and created economic development.
We own close to 2,000 units. We did joint partnerships with private
developers. We syndicated, took half a million dollars of our syn-
dication, put it back in the operation of Cochran. Only until 1988,
when CFR 964 was passed into law, and Kemp helped us do that,
gave us the right to manage, and not just manage, but to control
the dollars. We've only been in control of our dollars, in Cochran,
since 1991, and we've got a savings of almost $1 million, that we've
saved the taxpayers.

Let me just tell you.


25
with CHA taking into account CHA’s current financial condition.

The Department has been very mindful of the need to reduce
the potential for fraud, waste, and abuse in a grant program.
Since 1993, the Department has put in place or strengthened the
TOP grants management infrastructure and systems as well as HUD
support structure to help prevent misuse of federal funds and
properly administer the TOP program.

Following are highlights of the major TOP grants management
reforms:

*New fiscal controls were instigated.

Utilizing the LOCCS cash management system, all resident
grantees are now required to show how their expenditures relate
to the key elements of their work plan. To assure that there is
proper set-up of the program, no more than $5,000 can be expended
until grantees have a complete fiscal system in place, as well as
a partnership with the housing authority. The initial $5,000 is
provided so that the resident organizations can attend the
initial training workshops and set up their resident offices.
Most significant, all grantees are instructed to move steadily
toward their work plan goals or risk the HUD field offices
providing item-by-item control of their funds or, as a last
resort, recapturing the grants. Since the program’s inception in
1988, $711,000 in grant funds has been recaptured. Please be
assured that the Department’s review of the TOP program will
include scrutiny of the HUD field office's monitoring activities,
including whether additional TOP grants should be under tighter
fiscal controls or recaptured.

*Field monitoring of LOccs

The field office receives monthly LOCCs reports to review
funding and program progress. Several items are reviewed every
month, including the amount of money spent for each of the major
tasks in the grantee’s work plan. If the office staff finds a
problem, the field office can freeze the grant funds.

“Standards and controls have been placed on the use of trainer
consultants.

User-friendly program guidance was issued explaining how to
select a consultant and emphasizing the use of local consultants
to assure training is available on an ongoing basis. Beginning in
Fy 1995, restrictions were placed on the use of any one trainer
(including but not limited to consultants) from obtaining more
than 50% of the funding for each grant. Let me re-emphasize that


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jz., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, JR. South Carolina

WILLIAM H. ZELIFF, J

, New Hampshire § LOUISE McINTOSH SLAUGHTER, New
JOHN M. McHUGH, Ne

York York

STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARY A. CONDIT, California

PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota
THOMAS M. DAVIS, Virginia KAREN L. THURMAN, Florida
DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York
JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin
RANDY TATE, Washington GENE TAYLOR, Mississippi

DICK CHRYSLER, Michigan BARBARA-ROSE COLLINS, Michigan
GIL GUTKNECHT, Minnesota ELEANOR HOLMES NORTON, District of
MARK E. SOUDER, Indiana Columbia

WILLIAM J. MARTINI, New Jersey JAMES P. MORAN, Virginia

JOE SCARBOROUGH, Florida GENE GREEN, Texas

JOHN B. SHADEGG, Arizona CARRIE P. MEEK, Florida
MICHAEL PATRICK FLANAGAN, Illinois = CHAKA FATTAH, Pennsylvania
CHARLES F. BASS, New Hampshire BILL BREWSTER, Oklahoma
STEVEN C. LaTOURETTE, Ohio ‘TIM HOLDEN, Pennsylvania

MARSHALL “MARK" SANFORD, South
Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, Jr., Maryland (Independent)
James L. CLARKE, Staff Director
KEVIN SABO, General Counsel
JupitH McCoy, Chief Clerk
Bup Myers, Minority Staff Director

SUBCOMMITTEE ON HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS
CHRISTOPHER SHAYS, Connecticut, Chairman

MARK E. SOUDER, Indiana EDOLPHUS TOWNS, New York
STEVEN SCHIFF, New Mexico TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland BERNARD SANDERS, Vermont (ind.)
THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
DICK CHRYSLER, Michigan GENE GREEN, Texas
WILLIAM J. MARTINI, New Jersey CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida HENRY A. WAXMAN, California
MARSHALL “MARK” SANFORD, South

Carolina

Ex OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois
LawreENce J. HALLORAN, Staff Director and Counsel
DeMI GREATOREX, Professional Staff Member
Tuomas M. Costa, Clerk
CHERYL PHELPS, Minority Professional Staff Member

ap


119

Page 10

percentage of housing authorities will focus purely on hardware
rather than tenant initiatives.

The bill should require performance standards specifically
related to economic lift. Initiatives such as the university
earning initiatives should be fostered.

There is a need to continue the family investment center program
as an intitiative that was just started. It is noted the Senate
appropriations bill added $80 million for a resident
self-sufficiency program. This program is generally the same

as the FIC Program and should continue. There is a critical

need for residents to be on the advisory committee but also

on the board on commissioners. I recommend a policy of at

least one member or 25% of the board tenant commissioners,

whichever is greater.

Sincerely,

Bertha Gilkey
President Cochran Tenant Management


68

basically housing authority communities are isolated communities.
They receive little or no help from the locality. Basically, the only
way that they began to receive some moneys or some funds is that
HUD itself began to offer those services.

HUD has done that by expanding the Family Investment Center
Program. The Congress approved that. Congress also approved the
Drug Elimination Grant Program, and that was in direct response
because they were not getting adequate levels of services from the
local law departments.

So, basically, it has been a history where public housing resi-
dents and public housing have been seen as isolated communities
and have not had access to other types of assistance as other citi-
zens in a community.

Mr. Martini. Well, I think we could differ on that, because I
guess one of the concerns | have is the multitude of different types
of programs the Federal Government offers. And one of the efforts
we've had this year is to try to consolidate job training programs
and not have them designated under different divisions of the Fed-
eral Government, as is the case here.

Mr. MosEs. | can accept your opinion, sir, but I can tell you, from
my experience, that is the truth. As I said, I have done these pro-

‘ams.
oer. Martini. One question, if I may, to Ms. Gaffney, and it has
to do with TOP funds. I think I’m correct that TOP grant funds are
not supposed to be used for lobbying purposes or for entertainment;
is that correct?

Ms. GaFFNEY. That's correct.

Mr. MartINI. Have you had the benefit of reading what the Na-
tional Tenants Organization was promoting in some of their lit-
erature? I mean, it’s clear. 1 have a copy of it here. In the interest
of time, not to use all of our time in reading this, but it’s certainly
clear to me that this is advocating and lobbying. And yet have
there been any efforts by HUD to restrict this?

Ms. GAFFNEY. All I can tell you, Mr. Martini, is what we’re doing
now, and that is, we are looking into what happened, all cir-
cumstances surrounding that conference, and NTO’s overall role
with respect to HUD and resident initiatives. And we have just
started that review. We have had some difficulty getting access to
data, so we're a little behind the curve.

Mr. SHAyS. Would the gentleman yield a second on that?

Mr. Martini. Sure.

Mr. SHaAys. We have a hearing on December 12. We need that
report done by that date. You need to tell us who is not cooperating
with you. If anyone from the tenant associations is not cooperating,
then we need to know that, and we will subpoena any information
and any individuals to get that information. We are finding that
people are not being candid with us.

s. GAFFNEY. Yes, sir. Thank you.

Mr. MARTINI. Just one final question, I think, and that is, if it
hadn’t been for Councilman Shaer bringing that flyer to my atten-
tion, and then my bringing it forward to this subcommittee, what
oversight measures would there have been to have disclosed this
type of misuse, clearly, both misuse, in my opinion, of presenting
a convention which, the way it’s presented, clearly indicates it’s


19

LOUISE WATLEY
RITA RIVERA, PUERTO RICO.
RUBEN BIDDY

12:00M - 1:00PM
LUCH BREAK (ON YOUR OWN)

1:00PM - 4:00PM WORKSHOPS
TOP. WORK PLAN
PAT ARNALDO.
>* RUBEN BIDDY
* LINDA HAIGLER
© WILFRED GALSDEN, CHICAGO, ILLINOIS

EOMEOWNERSEIP.Sin)
PAT ARNAUDO. ~ >
NIVEA SANTIAGO, PUERTO RICO {

NANCY RODRIGUEZ, PRPHA

4:00PM * 5:00PM “Unee Mm Ss on
REGIONAL MEETINGS ~



15

Statement of Representative Gene Green
Subcommittee on Human Resources and Intergovernmental Relations
November 9, 1995

I would like to thank the Chairman for calling this
hearing on the allegations of mismanagment in the
HUD Tenant Managment and Empowerment Programs.
The particular details of the allegations are troubling
and will be examined in greater detail this morning.
These allegations also highlight the need for stronger
control and oversight of federal money that is disbursed
locally.

If the Congress is going to enact block grants--and
it appears that is what is going to happen is several
areas--Congress has to make sure that the funds are
used for the purposes intended.

In my experience with the "Careers bill" in the

Economic and Educational Opportunities Committee, I


128

October 26, 1995

Honorable Joseph R. Biden, Jr
Senator

United States Senate
Washington, DC 20510-0802

Subject: Resident Empowerment Technical Assistance Program (RETAP)

HUD APPROPRIATIONS INSERT
Summary:

The FY 1996 appropriations bill would state that $15 million is set-aside from the
modernization funding for the Resident Empowerment Technical Assistance Program
(RETAP) under Section 20 of the USHA, of which a 10% ($1.5 million) of the funds shall
be used to provide short-term technical assistance to inexperienced resident organizations
needing assistance in the development of an application for RETAP funding, and

assistance in properly procuring the services of a consultant/trainer. Attached is the
specific legislative insert.

Program Description:

The Department of Housing and Urban Development (HUD) will use the $15
million to provide RETAP grants to resident organizations through a competitive grant
Process.

In order to address problems identified with this important resident-based
program, HUD is required to reserve 10% ($1.5 million) of the RETAP funds to establish
a short-term technical assistance initiati similar to the Drug Elimination Technical
Assistance (TA) Program. Under this tive, inexperienced resident organizations
would seek technical assistance (up to $10,000) from HUD for two basic purposes:

8, For potential grantees, help in the preparation of a RETAP application, and


184

Congress of the United States
Doust of Representatives
£ CN GOVERNMENT REFORM ANO OVERSIGHT
2087 Ravauan Howse Ornice Buon
Wasnneron, OC 20515-6443
SUBCOMMITTEE ON HUMAN AESOURCES

‘AND INTERGOVERNMENTAL RELATIONS.
Sov. oB Shas. Conmecrc

SLA CONGRESS

coma

oom 8.372 Rerun Busing

Washngton. Dc. 20515
‘Ter 202 225.2548
Fax 202 2252302

October 20. 1995

‘The Honorable Henry Cisneros

Secrewary

Deparment of Housing and Urban Development
451 Seventh Street, S.W.

‘Washington, D.C. 20410

Dear Henry

‘The Subcommittee on Human Resources and Intergoveramental Relations is preparing @
hearing on the Department of Housing and Urban Development's (HUD) management and
oversight of funds targeted for tenant programs. Prior to the hearing, the subcommittee wishes to
provide the agency with the opportunity to provide any information that you may consider
relevant to our hearing

The subcommittee has concems regarding HUD's approval and participation in a tenant
‘convention sponsored by the National Tenant Organization (NTO) at a casino and resort hotel in
‘San Juan, Puerto Rico. The invitation and itinerary of the convention suggest that the event may
not have been an appropnate expenditure of funds. The subcomminee also has concerns
regarding the integrity of the process by which Public Housing Authorities (PHA) determine the
Performance Funding System for individual buildings when entering into an agreement with a
Resident Management Corporation (RMC). (The subcommittee directed a separate inquiry
regarding this matter on October 20, 1995.)

To assist the subcommittee in its oversight duties, please provide the following
information:

1) A tist of any major tenant organization conventions fundes in full, ot in part, directly
of indirectly, by HUD funds over the past five years. Please name the organization
hosting the convention, identify the location of the convention, and provide a copy of the
convention agenda.


74

Mr. MARCHMAN. I'm sorry. I’m unable to provide that at this
time. We are trying to put together the precise number of people
who were requesting to be reimbursed for the conference using the
TOP grant. And I’m sure we will have that figure to you by your
next hearing, if not sooner.

Mr. Towns. You know, I don’t want to push you on this too
much, but Would you say it is over 20 or under 50? Would you
have some round number, without actually holding you to the num-

r?

Mr. MARCHMAN. I would have to imagine, given the reimburse-
ment rates, not only for travel but for per diems, if you look at an
individual who probably could have paid a $500 round trip ticket,
a per diem rate of some $26 a day, and various other—I’m hearing
things in the back—I can’t imagine that it cost any more than
$1,000 per person. I simply don’t know, and I hesitate to guess. But
we hope to have those figures to you.

Again, part of the TOP grant means that you reimburse yourself
from the grants, and that has to be approved to make sure that
there is not use of the funds that would not be warranted.

Mr. Towns. This hearing might cost more, huh?

Anyway, I yield back.

Mr. SHays. Let me respond to that last comment. I fully expected
to have this hearing be over by 12:30. I fully expected this Depart-
ment to say, this was an event that should not have happened. I
fully expected the Department to know what was spent. I fully ex-
pected to say, “Hey, we blew it, and it’s not entirely our fault.” But
the attitude of the Department on this issue has made me realize
that we really need to sink our teeth into this. And I regret having
to say it, because I have a lot more important things.

The comment that we spent $25 million out of $5 billion is not
the issue that bugs me. What bugs me is, we spent $25 million,
and I want that $25 million spent on tenants in an effective way.
That’s what bugs the hell out of me. And when I went to Cabrini
Green and saw a tenant association that was doing their job well
and is shortchanged, that’s what gets me upset.

I feel I’m on the side of the tenants on this. I think a few select
people got to go on what I think was a combination convention/va-
cation/working activity. And so I am reacting to what is a gigantic
surprise on my part. And we have had a hard time getting the
NTO to give us numbers. Their reluctance in giving us numbers
raises gigantic concerns.

So, regretfully, we are going to spend more time on this hearing,
regretfully, and we are going to get to the bottom of it. And I have
never, ever, in this committee, blamed a Republican or Democrat.
I have gone after the Republican administrations as badly as
Democrats and never said it’s a Republican or Democrat thing.

So I don’t hold you responsible for what preceded; I hold you re-
sponsible for your attitude now about this. And it started off on a
bad foot when you said no HUD money was used. That was very—
it was just totally wrong. It is all HUD money. So, with all due re-
spect to my colleague, who I have endless respect for, we are going
to be in this real deep.

lL yield to my colleague for questions.


32

TESTIMONY FOR ED MOSES
BEFORE
CONGRESS OF THE UNITED STATES
HOUSE OF REPRESENTATIVES

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

Chairman Shays and Ranking Member Collins, thank you for the
opportunity to speak to your committee today on behalf of
resident programs administered by the Department of Housing and

Urban Development under the Assistant Secretary for Public and

Indian Housing.

While serving as Deputy Assistant Secretary for the Office
of Community Relations and Involvement (OCRI), I was responsible
for the administration and oversight of resident empowerment
initiatives that assist residents in achieving economic

independence.

I have great convictions that resident empowerment programs
help to break the cycle of poverty and have long-range tangible
results that reduce spending on both the Federal and local level,
because of the track record of ultimate financial independence of
residents. Studies have shown remarkable results from the aid
received through technical assistance and training grants that
assist residents in becoming wage earners and not welfare
recipients. I believe the single, most important step that any

resident or resident organization can take is to participate in


103

Mr. Moses, you give more than guidance. You say whether this
is acceptable or nct; is that true?

Mr. Moses. I do say so, and I did. I did it in writing.

Mr. Suays. OK. I’m just going to change the word guidance, be-
cause you wanted to use the word guidance. It is not guidance; it
is really whether you approve these funds or not approve these
funds.

Mr. Moses. The way in which this agency does business, it offers
guidance; that is the official term. We send cut guidance on our
rules and regulations. That is what we do; we send out guidance.

Mr. SHays. OK. We're going to finish up with this panel and
then come back with the next panel.

You wanted to just pursue a point.

Mr. MakrtTINI. Just in closing, 1 think part of the real problem
here is that I’ve attended conventions, both when I was in the pri-
vate sector, not yet in the public sector, but usually there would
be a detailed agenda about the substance of the convention, and ob-
viously this flyer doesn’t come anywhere close to that. So certainly
on the perception issue, we've all lost out on this. That’s No. 1. And
the taxpayers, if they see this, get rightfully disturbed with the
Federal Government spending and HUD and us and everybody. So
that’s clearly the case here.

Then I think the other issue is oversight by HUD and how you
set up some controls over that, both on this area—and I suspect,
Mr. Moses, quite candidly, that the need for your letter of June 27
was because there probably might have been some inquiry by some
tenant organizations about, is this OK to go to Puerto Rico?

Mr. MOSES. Yes.

Mr. MarrINI. So that should have alerted you, I think, No. 1, to
have exercised your judgment maybe more prudently, but at least
have better documented how they were going to be promoting this
meeting, so that you and us and all of the taxpayers would have
at least been assured that this was a substantive meeting and not,
as it was projected, a vacation.

Mr. Moss. Sir, I concur with you wholeheartedly. What we did
was, we looked at the substance of the training session, and we ap-
proved the substance of the training session. We do not get in-
volved in a flyer. We don’t deal with a flyer.

Mr. Martini. Well, I think, if there’s a lesson to be learned—I
don’t mean to—excuse me.

Mr. Mosss. If I might finish sir, we do not get involved with a
flyer. We had no knowledge of the flyer. As a matter of fact, as I
stated previously, the only way we knew about the flyer was when
your honorable councilman faxed it to me. So we had no idea of the

yer.

Mr, Marmini. And I accept that.

Mr. MosEs. There were some inquiries about whether or not—
and, again, the concerns that were coming out were whether or not
people could go to Puerto Rico. It had nothing to do with whether
or not the content of the conference was appropriate, but whether
or not they could spend moneys to go to Puerto Rico.

Mr. MarrTINI. To a certain extent, that should have sent a little
red flag that, in that situation, perhaps you would have been better
served, and HUD would have been better served, nad you made


39

reducing intergenerational poverty and can contribute to
ameliorating the problems housing authorities face throughout
this country. But few of these agencies have had the ability to
mobilize residents to reprioritize their lives and seek social
and economic change from welfare dependency as those resident
leaders funded through RMTAG/TOP have mobilized and effected a

change in the lives of residents in their communities.

The Department has put in place infrastructure and systems
to both monitor and measure performance of grantees in the TOP
Program to help prevent misuse of Federal funds. Two newly
created divisions within the Office of Community Relations and
Involvement, the Program Design Division that is responsible for
grants management, program policies and procedures and program
assessment, and the Field Coordination Division that provides
field liaison on grant monitoring, training and bi-annual review
of field office grant closeouts and reports serve to assist in

proper administration of the grants.

New fiscal controls have been instituted. Utilizing the
LOCCS cash management system, all resident grantees are now
required to show how their expenditures relate to the key
elements of their work plan. To assure that there is proper set-
up of the program, no more than $5,000 can be expended until

grantees have a complete fiscal system in place, as well as a


64

on this trip. And third, it doesn’t know how much it cost the tax-
payers.

And all that you mentioned to me, and Mr. Moses, you men-
tioned, means very little to me when we get a program that you
know we're having a hearing about and you don’t know a damn
thing about what it costs. And that means that we've got a gigantic
problem, because there is no oversight.

Mr. Towns. Would the chairman yield?

Mr. Suays. I would be happy to yield back, but I want to put
that on the record.

Mr. Towns. Mr. Chairman, I understand your concerns and your
anger, to a degree. But, you know, the grantees are really respon-
sible for that, as I understand it. That’s my understanding of it.

And let me also say this other thing to you, too, that we might
be going down this expressway again, when we talk in terms of
block granting, you know, here we go again. So we need to be very
careful about this, because I think those people who are supporting
block granting, I think we’re asking for a lot of things to happen
here. So I just want to sort of let the record reflect that as well.

Mr. Snays. A fair analysis.

Mr. MARCHMAN. Mr. Chairman.

Mr. SuHays. Yes, sir.

Mr. MARCHMAN. May I then go on record as saying that my com-
ments at the beginning of the testimony, I did not see and continue
to not see that this is a HUD-sponsored event. I do not know how
many people went to the conference. It wasn’t a conference which
we sponsored, as you know.

Mr. SHays. Mr. Marchman, you're going down the wrong trail.
You really are going down the wrong trail. If you are going to per-
sist and state, one, that it’s not HUD money, then you and I have
a big problem with your philosophy.

Let me just point out, Mr. Fattah has joined us and has been
here a while, and I’m sorry, sir, that I didn’t recognize your pres-
ence earlier. I’m giving every side 10 minutes, and then we're going
to come back for a second pass.

Mr. Towns. We have a vote.

Mr. Suays. Yes, we're going to have a vote. I guess what we will
do is, would you prefer just to recess and come right back?

Mr. Fartran. Yes.

Mr. SuHays. Yes, let’s do that.

{Recess.]

Mr. SHAyS. The hearing will come to order.

Mr. Martini, you have the floor.

Mr. MartInt. Thank you, Mr. Chairman.

Once again, let me just repeat that this was brought to my atten-
tion by a councilman in the city of Passaic where, some years ago,
we had some difficulties with a very major criminal scandal with
respect to HUD funds and misuse of funds and actually embezzle-
ment of funds. So there’s a great sensitivity in my district to HUD
funding, HUD programs, and a great amount of oversight.

And I might say, the Director of HUD there, rightfully, in my
opinion, denied this request by the tenants to attend this vacation/
convention. In that frame, let me read for the record what exactly


148

Should you or your staff require any additional information,
please feel free to contact John Comerford, Director, Office of
Public Housing Management or Karen Cato-Turner of his staff at
(202) 708-1872. I hope this information is helpful. Thank you
for your interest in the Department’s programs.

Sincerely,
yy.
ft WL

john C. Biechman
./Acting Assistant Secretary

Enclosures


35

The types of jobs created include general carpentry,
administrative, child care providers, security, computer/systems
operations, property management, business management/
entrepreneurship, community planning and outreach, and health
care providers. Of the grantees surveyed 50% have contracted
with public housing authorities; 18% have property management
contracts and successes too numerous to mention today. Other
survey results show that more than 1,900 residents have
benefitted from job training at about $3,200 per resident and

over 21,000 residents benefit from supportive services programs.

I am troubled by the implicit questionable assumptions that
the TOP/RMTAG program has not been successful. Contrary to some
popular assumptions, our surveys, show tangible economic results
for both residents and housing authorities. Even so, the

reasons for skepticism should be regarded carefully.

Measuring the impact of these grants on the lives of the
residents of public housing is quite easy.
For example:
- there have been partnerships for job creation between
local Private Industry Councils (PICs) and resident

associations;


67

Mr. Suays. You may keep going. We're giving everybody 10 min-
utes, and the gentleman there will get 10 minutes, as well. Then
we will go around.

Mr. MosEs. Yes, sir.

Mr. Martini. This is a relatively factual question. Am I correct
in saying that the TOP Program began in 1988 with a funding
level of about $2.5 million; then it went up, through 1992 and 1993,
to about $5 million; then, in fiscal year 1994, it went up five times
to $25 million, and it’s presently at $25 million today?

Mr. MosEs. Yes, sir.

Mr. MartinI. Is that accurate?

Mr. MosEs. That’s accurate.

Mr. Martini. OK. And is it also accurate—do you understand—
is this correct, that on the Senate version of the housing appropria-
tion bill right now, Senator Biden has recommended that it be zero
funded for the future?

Mr. Moss. On the appropriations side; yes, sir. However, on the
House side in the appropriation act, the original bill had $15 mil-
lion for TOP. In the Senate authorization bill, they are asking $25
million again.

Mr. MARTINI. No, the Senate authorization.

Mr. Moses. The Senate authorization.

Mr. Martini. But the Senate appropriations is recommending
zero.

1 Mr. Moses. Zero. But the Senate authorization is saying $25 mil-
ion.

Mr. Martini. And the scope of the TOP Program was signifi-
cantly expanded, as well.

Mr. Mosss. Yes, sir.

Mr. MarTINi. To include extending the scope of HUD’s existing
resident management program beyond training for property man-
agement.

Mr. MosEs. Yes, sir.

Mr. MarrInI. So, in 1994, I assume is when they included things
like—also included are training for employment, training develop-
ment, business ownership and operation, child care, youth pro-
grams, and then additional funding for tenant patrols and other ac-
tivities to prevent crime.

Mr. MosEs. Yes, sir.

Mr. MARTINI. Do you have an opinion as to the value of includ-
ing—I can understand the tenant patrols and crime enforcement,
et cetera, but do you have an opinion as to whether or not there
is value in including training development, and business ownershi
and operation, and child care and youth programs, directly throug!
HUD versus consolidating those and offering for the general com-
munity which we have, as well?

Mr. Moses. Yes, sir, I do have an opinion.

Mr. Martini. And if you could try to make it a little concise, I
would appreciate it.

Mr. Moses. I have worked in public housing for approximately
7 or 8 years. I spent 4 years at the New York City Housing Author-
ity doing these types of programs. I spent three years at the hous-
ing authority of the city of Los Angeles doing these types of pro-
grams. And I have to be quite frank with you, Mr. Congressman,


104

sure that the way in which this program was being presented was
more substantive than the flyer that we have on hand.

And then, finally—because I know there are other people here,
and we have a vote—finally, I’m also concerned with respect to the
other part of my opening comments or first line of questioning. Ob-
viously, you’ve answered my question about TOP not being per-
mitted to use funds for lobbying. And if you read the letter of June
20, which I would also like to make part of the record, it’s very
clear that they are priding themselves in their virtue of our history
of advocacy.

And I suspect your answer to me would be, on this, too, you have
no real oversight as to how often it occurs that these tenant organi-
zations are using funds for advocacy and lobbying. And under the
rules and the laws, they are not permitted to do that.

Mr. Moses. I want to state for the record, that is a National Ten-
ants Organization letter; it is not a letter from HUD. In all of our
letters, we basically say that you cannot use the funds for lobbying
purposes. The guidance was on whether or not they could attend
the training session.

We do not deal with freedom of speech. We do not deal with any-
thing else of an entity that does not have a contract with us. We
are not supporting this event. The only thing we said is that the
training sessions that they were offering are an eligible activity to
go to and to seek out information on. We do not sanction the letters
that they send out, neither do we sanction or are involved with the
flyers that they send out.

Mr. Martini. Arguably, you could extend it, though, that if we’re
funding people from TOP to attend a convention which has a lobby-
ing emphasis, there may be an area there worth looking into.

Mr. MosEs. We are very specific that you cannot use these funds
to lobby. We are extremely specific about that.

Mr. Suays. If I could, I would like to thank our four witnesses
for coming, and I yield to my colleague.

Mr. Towns. I would also like to join you, Mr. Chairman, in
thanking the witnesses for coming, and to say that I sort of look
at this a little different, I think, from some of my colleagues. I
think that the flyer was a marketing tool. I think that marketing
is something that we are all involved in from time to time.

And I think that we should also say, I think that it was good
judgment, because they went to the second largest housing author-
ity, and I think that’s very, very important. Being they couldn’t
come to New York; they went to Puerto Rico.

I yield back, Mr. Chairman.

Mr. Suays. The committee is in recess.

[Recess.]

Mr. Suays. This hearing will come to order.

I would like to invite Ms. Bertha Gilkey, chairperson, Cochran
Gardens Tenant Management Association, president of Urban
Women, Inc., and also president of the National Tenants Union.

That’s not the same as the Tenants Organization?

Ms. GILKEY. No. No, sir. ’'m not a member of that organization.

Mr. Suays. Ms. Gilkey, if you would not mind standing up:
please, we need to swear you in as a witness, and if you would
raise your right hand. Thank you very much.


126

tenant involvement has really paid off, and allow tenants that op-
portunity.

The way we are down here right now, I don’t know how we
would do it. But if we have the month of January free, or so on.

Ms. GILKEY. Mr. Chairman.

Mr. SHays. Yes.

Ms. GILKEY. I just want to say—because I want to just briefly ad-
dress the Biden issue, because we met with Senator Biden’s staff.

Mr. SHays. OK. Now, the Biden issue, would you describe the
Biden issue?

Ms. GILKEY. OK. Can I just share this with you first?

Mr. Suays. Yes. Sure.

Ms. GILKEY. J want to revisit the whole issue.

Mr. SHays. I’m going to try to be done in 5 minutes. So you have
5 minutes.

Ms. GILKEY. OK. I will. I promise. Let me revisit, real quickly,
the issue of training. Let me just tell you how powerful it is, Mr.
Chairman, when people finally get there.

Mr. Suays. I want to put this on the record. The Biden issue is,
six contracts, $100,000 each, consultant getting 60 percent of it.
And Mr. Biden, being so concerned that he shut that down and,
even tried to zero out funding for about the entire TOP Program.

Ms. GILKEY. Yes, sir. But we met with him for 3 hours, and you'll
be happy with what we worked out with him.

Mr. SHays. OK.

Ms. GILKEY. But let me revisit the whole issue of tenant
empowerment and training, so you can understand how powerful
poor people can be once they move from the breast feeding to eat-
ing meat. We've got tenant group leaders now that started off with
the leadership training who are now councilmen and councilwomen
in their cities, who are State representatives. That’s power.

Mr. Suays. That is power.

Ms. GILKEY. Who are now chairmen of the housing authority’s
board of commissioners, because now they have the skills. Because,
see, once people get information, Mr. Chairman, and they under-
stand it, and they can disseminate it, there is no stopping them.
There is no stopping, because the training is applicable in whatever
area they decide to pursue, be that the board of education, be that
the housing authority commission, be that a congressional seat.

Mr. SHays. How does that relate to the Biden issue?

Ms. GILKEY. OK. I just wanted to show you the power in train-

ing.

Mr. Suays. OK.

Ms. GILKEY. OK. Let me go back to the Biden issue. We met with
Senator Biden—and I have to say, I like Senator Biden and his
staff. I mean, they are good people, and they have done some good
things for resident participation. Senator Bidens staff told use very
clearly, and we met for 3 hours, that they are not opposed, Mr.
Chairman, as you said you're not, with residents being empowered.
He is 100 percent in support of that.

His concern is, how do we take a baby organization, who has no
skills, who can’t pick a TA, because they can’t even do an agenda,
so how do we keep them from getting screwed, where they can ulti-
mately get the TA that they need and yet come in with a number


45

cient. Obviously, HUD didn’t listen to us, and they expanded the
program into TOP. But they have also followed some of the rec-
ommendations we made as they proceeded with TOP.

In H.R. 2406, which is the proposed new public housing bill, we
are going to a system of block grants. So there would be no sepa-
rate TOE program; there would be no separate resident manage-
ment program; and there would be no requirement for such pro-
grams. It is simply, housing authorities may choose to undertake
resident management.

We support that approach a lot, because we believe that the peo-
ple who can do this, who can work with the residents and who
must work with the residents, are the people on the ground, not
the HUD people in Washington; that is, the housing authority peo-

ple.

The other thing I would like you to understand about the TOP
program is, HUD is dwindling very fast. This is a small program;
it is categorical grant. HUD doesn’t really have the expertise. The
people who have the expertise are out there.

The question that we are going to have to address is the question
I think Mr. Green raised: Block granting is very easy, but where
is the accountability, and how are we going to set up performance
measures for these block grants that assure that resident manage-
ment really works and housing authorities really work?

Thank you, Mr. Chairman.

[The prepared statement of Ms. Gaffney follows:]


87

Mr. SHaAys. Would you like to ask some questions?

Mr. Towns. Yes, I would, Mr. Chairman.

Let me just sort of deal with a couple things here. You know, if
there is one incident, or two incidents, or whatever, I mean, the
point is that I don’t even want to talk about those kinds of things.
I think, Mr. Marchman, what I would like to hear from you is some
of the success stories. And I know there must be many.

Mr. MARCHMAN. There are many. And I can point to recent ex-
amples that I saw in Chicago on my visit there, or my stay there
over the summer. Without getting into specifics, one of the reasons
why we expanded the program just from resident management is
because the residents asked us. The residents were not interested,
in all cases, just to do resident management. They were interested
in that there are economic activities also.

I think it has been pointed out, the creation of babysitting serv-
ices, janitorial services, services in which residents can begin to be
trained for employment. I think you have in front of you, at least
I handed out, the book from grantees which shows job creation and
training for job preparation as a result of the top grant.

I really strongly believe that the program has been successful,
understanding that it’s at its beginning stages, and we're working
with residents who don’t always have the resources to get under-
way. We have seen it—and I really don’t want to belabor my an-
swer here—but we have seen, in order for a housing authority to
move further, its residents have to be able to move forward.

The Congressman mentioned about working with troubled hous-
ing authorities, which we do. We have found a direct correlation be-
tween troubled housing authorities and lack of resident participa-
tion and preparedness. That's why we saw the expansion of this
program and believe it is deemed necessary.

Mr. Towns. The other thing that I would sort of be concerned
about, in terms of what transpired at the conference in terms of the
material. I mean, those are the questions that I think we should
deal with rather than a flyer. You know, this flyer thing, it really
bothers me, in terms of—and I think that I’m a little shocked be-
cause those of who are sitting up here and have been involved in
this political arena, I’m certain there have been some flyers out
there that we did not know anything about or want to be identified
with. I can even tell you some flyer stories with me, and that kind
of thing.

But the point is that I don’t want to get into that. But I just
think that a piece of paper that is made on somebody’s xerox ma-
chine and sent to somebody, I mean, you need to be careful with
that. You don’t kill a program that we know has had some success
because of the fact that somebody said there would be some snor-
keling after 5 o'clock.

Mr. MARCHMAN. Congressman, if I could just add on to that an-
swer, I was just handed by staff what I believe is a mark of the
success of the program, that 68 percent of them have acquired the
services of a certified CPA to begin the process of putting their fi-
nancial management systems together; 73 percent of the TOP
grants have been incorporated; 76 are fully trained and oper-
ational. There has been movement on a small amount of dollars,
and we hope to build upon that.


8

ter. It is very difficult for this Member of Congress to comprehend
how an event like this is an acceptable use of taxpayer funds.

As, unfortunately, has all too often been the case, in my experi-
ence in the last 10 months, what may have begun as a well-inten-
tioned Federal program has become a telling example of big Gov-
ernment that has grown out of control, largely due to waste, fraud,
and abuse.

In my opinion, if it is determined that these seminars are, in
fact, necessary, then I believe it would be more appropriate for resi-
dents to attend regional seminars instead of Caribbean excursions.
It is also my understanding that there are plenty of local and re-
gional conferences within the Northeast corridor. In fact, the direc-
tor of the Passaic Housing Authority, Eric Kolbe, who denied the
request, I might add, stated, “There are, in fact, enough workshops
that take place between Washington, Philadelphia, New Jersey,
and Baltimore that tenants do not have to travel further.”

Before I conclude my remarks, I want to touch on another issue
that members of the subcommittee should be cognizant of. It seems
to me that this convention represents another example of a tax-
payer-funded lobbying effort. NTO’s own invitation letter states,
“We must assure that this theme is understood by Congress. Hous-
ing and education program must not be cut to provide more money
for prisons. Only we, NTO, can do so by virtue of our history of ad-
vocacy.” The invitation packet distributed by NTO also included a
lobbying fact sheet which stated, “Congress is threatening to repeal
the Brooke amendment.”

So not only are the American people providing a free island vaca-
tion, but the taxpayers are picking up the tab for a public housing
lobbyist training seminar.

Mr. Chairman, this type of abuse must come to an end. I am
hopeful that today’s hearing will begin the process that will allow
us to put an end to this flagrant misuse of Federal funds. As we
move down the path toward fiscal responsibility and a balanced
budget, it is very disheartening to learn about such incidents. In
my opinion, this is the Federal Government at its worst.

Mr. Chairman, I am committed to working with you and other
members of this committee to ensure that this type of waste, fraud,
and abuse does not continue. Accordingly, I am looking forward to
the testimony we are about to hear and appreciate your assistance
in getting to the bottom of this important matter.

L yield back the balance of my time.

{The prepared statement of Hon. William J. Martini follows:]


WASTEFUL MANAGEMENT OF HUD FUNDS IN
PUBLIC HOUSING TENANT PROGRAMS

THURSDAY, NOVEMBER 9, 1995

House OF REPRESENTATIVES,
SUBCOMMITTEE ON HUMAN RESOURCES AND
INTERGOVERNMENTAL RELATIONS,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 9:35 a.m., in room
2247, Rayburn House Office Building, Hon. Christopher Shays
(chairman of the subcommittee) presiding.

Present: Representatives Shays, Morella, Martini, Towns,
Barrett, Green, and Fattah.

Staff present: Lawrence J. Halloran, staff director and counsel;
Demi Greatorex, professional staffmember; Thomas M. Costa,
clerk; and Cheryl Phelps, minority professional staff member.

Mr. Suays. I would like to call this hearing to order and welcome
our witnesses and also our guests. We are looking forward to this
hearing and learning about a number of issues that are on the
table.

This is the first of two hearings on the management of public
housing tenant technical assistance funds by the Department of
Housing and Urban Development [HUD]. Questions about the ap-
propriate use of limited tenant training funds were first brought to
the subcommittee’s attention by Representative Bill Martini. Un-
derstandably, he asked us to investigate whether and to what ex-
tent HUD funds were permitted to pay for travel and expenses for
an event billed by its sponsors as your family vacation that will be
unforgettable. That billing speaks volumes.

Let it be clear from the outset that these hearings will not chal-
lenge the goals of tenant empowerment initiatives. Resident man-
agement can improve public housing living conditions significantly
and enhance the lives of public housing residents. During my visit
to Chicago’s Cabrini Green public housing development, I saw first-
hand what trained, motivated resident leadership can do to reduce
crime and to stimulate economic development.

It is the management and effectiveness of current HUD technical
assistance programs about which I have serious concerns. In the
Tenant Opportunities Program [TOP], the potential for inappropri-
ate expenditures for travel and consulting services raises questions
about both the design of the program and about HUD’s monitoring
to ensure TOP grant funds are used effectively.

When HUD appears to sanction the use of travel funds for vaca-
tions, when consultants and other intermediaries dominate the

wD


42

adequate representation of the residents, to increase resident
participation, and promote strong working partnerships between

housing authorities and resident groups.

The Department has also instituted performance measures to
assure that all housing authorities and field staff and resident
groups are properly trained in the administration of Federal
grants. These performance measures assure that TOP grantees have
executed technical grants (TAGs), executed all work plans, assure
that TOP grantees are being monitored pursuant to HUD
regulations, and provisions are made for cost efficient training

and technical assistance for the grantees.

As members of this committee can conclude from my testimony

HUD resident empowerment programs work and work well. It is

something that should be strongly supported and continued.

Thank you.


73

on this conference site and what was the purpose of the conference,
rather than to ask questions of people who obviously can’t answer
them.

But I do want to see if we can get one specific answer.

Mr. Suays. Could I just state for the record, Mr. Fattah, just for
the record, they were invited, and they declined to come.

Mr. Fattau. OK. Thank you. You said that they were invited?

Mr. SHays. Yes. To be more precise, the individual in charge of
the NTO said she had high blood pressure and could not attend
and will be invited on the 12th. I just want the record to show that
she has been invited and that we will have a second hearing.
Thank you.

Mr. Fatrau. OK. Thank you.

Now, Mr. Marchman, I do want to see if we can get to one spe-
cific point, though, and that is—because the chairman has asked
a number of times about the number of people who have come and
not come. Do you know the number of residents that went to the
convention in Puerto Rico that used TOP funds for reimbursement,
and how did you arrive at that figure?

Mr. MARCHMAN. It looks to be just under 100 individuals used
the TOP grant to attend the conference. A couple of weeks ago,
when we knew that this was going to be among the focuses of this
hearing, we called our field offices and asked them to ascertain
how many people went to the conference using the TOP grant.

It’s difficult, in some cases, and I will just give you an example,
because it’s been the one that has been publicized. Detroit sent, it
looks like, 23 people to the conference on their TOP grant, and the
remaining number, up to, I think, 30 to 35, were allocated by the
housing authority itself.

Mr. FatraH. OK. So the way these conferences work, as I would
understand it, because there are conferences all the time, is that
the local housing authorities, these boards, usually decide that ten-
ants can go, or staff can go, or the like, and they pay for them out
of their HUD authorized funds.

So if we’re really concerned about taxpayers’ dollars being spent
to support people to go to this conference, there were a whole host
of people at this conference who were paid out of probably HUD
dollars, but dollars that were controlled by local housing authori-
ties, as part of the devolution, if you will, of the Federal Govern-
ment’s control, that would have sent people to this convention.

It’s not just that resident management associations made deci-
sions that this conference was worthwhile, but, in my case, in
Philadelphia, our mayor, our president of the city council sit on the
local housing authority, and others, made decisions, separate and
aside from the TOP funds, that this was a worthwhile endeavor,
and sent people.

So if the committee is truly concerned about the use of tax-sub-
sidized dollars for people to attend this conference, it’s not just the
TOP Program that would have supported them.

Mr. Towns. Will the gentleman yield?

Mr. Fatrau. Yes.

Mr. Towns. How much money are we really talking about, we’ve
got the numbers, in terms of TOP dollars, in terms of the con-
ference?


82

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WASTEFUL MANAGEMENT OF HUD FUNDS IN
PUBLIC HOUSING TENANT PROGRAMS

HEARING

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES
AND INTERGOVERNMENTAL RELATIONS

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

NOVEMBER 9, 1995

Printed for the use of the Committee on Government Reform and Oversight

a

U.S. GOVERNMENT PRINTING OFFICE
40-127 WASHINGTON : 1997

For sale by the U.S. Govemment Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-055037-8



108

all the other components that the taxpayers pay for in that $25-
billion budget a year that the housing authority has been getting.

Now, it is very important that we note the residents have not
been in control of the operating budget that the housing authority
has gotten or had any legal say-so until 1988. Public housing was
built in 1937. So from 1937 to 1988 residents had no legal author-
ity or role in the management, in making the housing authority a
responsible entity, and making sure the taxpayers dollars did what
they were supposed to do. They had no role in it at all.

In 1988, there was a bill passed, Mr. Chairman and committee
members, and it was a bill that called itself the “National Resident
Management Regulations,” that gave tenants not only the right to
own a public housing development that they had lived on for gen-
erations, three and four generations, but the right to manage it,
and the right to participate in all facets, which is Comp Mod funds,
the operating budget, maintenance, every facet of the housing au-
thority, this bill gave residents the right to sit at the table and to
ask legal questions on how these dollars are being spent back into
their development.

Prior to 1988, from 1937 to 1988, that law did not exist. When
that law went into effect, there were already, Mr. Chairman and
committee members, five groups managing their property in this
country. My site was one of the five. Cochran tenant manage-
ment—and history will know this—was one of the worst public
housing sites in the country, once all the systems were withdrawn
and the housing authority stopped managing the property. Cochran
was so bad, Mr. Chairman, we had 894 units, when we took over
managing in 1976, only 400 units were occupied.

Mr. SHAys. Let me do this, and I would note that have you talk-
about is what the tenant associations can do and what the housing
authority can do for the tenant associations, in the limited time we
have. What are we doing right for the tenant associations; what are
we doing wrong?

Ms. GILKEY. Yes, sir.

Mr. SHaAys. You are very eloquent, and you have given us a won-
derful perspective, but I would love it if you could just focus in on
that right now.

Ms. GILKEY. OK. Yes, sir.

The reason why I shared with you the history was so you would
understand what the residents took over, with no skills. In order
fer the residents—in order to sit at this table, Mr. Chairman, as
T’m doing today, they must have the skills. You cannot have the
skills if you don’t make available the resources.

My particular development was to be blown up in 1974. Puritt
Igo was blown up, which is six blocks from Cochran, in 1973. Puritt
Igo housed 13,000 residents. Had there been a TOP, a TAG to pro-
vide the technical assistance, 13,000 people would have never—
women and children—lost their homes. My Congressman, Lenore
Sullivan, came here and said, “Blow up Cochran.”

In 1976, Mr. Chairman, a group of 10 women, my site took over
managing our property, with no resources. We took it over in the
hole, 400 and some vacant units. The housing authority gave us no
up-front capital to take over managing this property. The local
business in our community, Mr. Chairman, would go 20 miles—be-


131

Proposed Legislative Insert

RESIDENT EMPOWERMENT TECHNICAL ASSISTANCE PROGRAM
(formerly Tenant Opportunity Program|

Invert to the HUD Housing Annual Contributions for Assisted
Housing paragraph, under of the total amounts earmarked under
this head for modernization of existing public housing:

“Provided further, That of the amounts earmarked under this head
for modernizstion of exiating public housing, $15 million shall
be used for Resident Empowerment Technical Assistance Program
grants under Section 20 of the U.5. Housing Act, to remain
available until expended, of which $1.5 million ehall be
available for or on behalf of reeident organizations for short
term technical assievance in application preparation, trainer-
conpultant galection and related tasks.”





109

cause this ties into where we are going—to avoid Cochran, because
it was such a hellhole. The businesses left our downtown area.

Today, Cochran Tenant Management stands there as an anchor.
Right next door to Cochran, which is where 3,700 residents live, we
have 2,000 new condos. My neighbors, Mr. Chairman—my neighbor
lives right—this is Cochran; this is my neighbor—they paid
$190,000 for their units. And they moved there knowing that 3,500
low-income were their neighbors, because we all sought the same
thing: a decent place to live.

Right next door to Cochran, Mr. Chairman and committee mem-
bers, is a $250-million Super Dome, who hires, now, residents from
our development. Right next door are 200 stores, brand new, cost
the city $175 million jointly with May Co. to build. We were able
to leverage—when I say “we,” the Cochran Tenant Management
tenants—through our training and our skills, the UDAG funds that
were specifically for cities to keep businesses in the cities. We were
able to leverage that because we refused to sign the application
until there were dollars put in there to make physical improve-
ments on Cochran.

The president of May Co. would never have sat at the table with
a Bertha Gilkey, but he needed the $16 million to build his mall,
so he had to sit at the table with me and the residents of our devel-
opment in order to build his mall. So the Federal dollars were le-
veraged to force him, and other business people who wanted to re-
develop in our neighborhood, to sit at the table now with residents,
to put something back into this community. As a result, many of
our residents now work at that mall.

We were also responsible for the building of the largest super-
market in the State of Missouri, sits right next door to Cochran.
We're now in the process, Mr. Chairman, of doing a joint economic
development venture with that store. When we took over, we now
own our own cable, Mr. Chairman. We install the cable. Thirty per-
cent of the cable bills that the residents pay go back into Cochran.
We employ some 175 residents in all of our businesses.

We are the Meals on Wheels. We have a direct contract with the
Department of Aging to feed 22 elderly buildings in Cochran. We
employ 75 residents in that company. The profits go back.

We provide the homemaker services for the residents in all the
public housing sites. Rather than the elderly now going into nurs-
ing homes that cost taxpayers more, we pay residents to go in,
through a contract with the State, to help that elderly person stay
there longer. Those profits go back into the community. Those resi-
dents, Mr. Chairman, were once all on welfare.

[The prepared statement of Ms. Gilkey follows:]


30

Mr. MARCHMAN. Exactly. They would apply to the particular pro-
gram for a particular program or activity, for training, for economic
development activities, that sort of thing. Under the guidelines,
$5,000 can be used for travel for training purposes. And, in this
particular case, this was used.

Mr. Suays. If the gentleman would allow me to claim back the
time and just say that we will discuss this further. However, I
don't want to go to the next witness with the impression that some-
how HUD did not pay for the trip.

Mr. MaRCHMAN. I understand.

Mr. Suays. HUD paid for it through a program that HUD has.

Mr. MARCHMAN. That is correct.

Mr. Suays. OK. Mr. Moses.

You will have to pull that mike a little closer to you.

Mr. Moses. Thank you very much, Mr. Chairman, for allowing
me to come before this committee to talk about the benefits of the
Tenant Opportunities programs.

The Tenant Opportunities Program, as you mentioned in your
opening statement, is a process whereby residents who live in pub-
lic housing can begin to organize themselves and begin to try to put
together the systems that they need to begin to play an active role
in their housing, the housing authority, their family lives, and in
their communities.

This is a community-building process. The moneys are won
through a competitive bid process, based on five different sets of
criteria. Those five different sets of criteria are determined based
on the need of the community, a work plan. It is based on the sup-
port of the community, the support of the housing authority, sup-
port of outside groups, and the financial capabilities of the resident
group to adequately administer the program.

This is a program, as you already have mentioned, that was
started back in the Kemp administration. From the very inception
of this program, it has been the practice of HUD to allow resident
groups to attend conferences such as those given by NTO. The first
conference that was sponsored by a national resident management
group was actually cosponsored by HUD, under the Kemp adminis-
tration. We had a direct commitment, not through a funded con-
tract, but a direct commitment and the cosponsorship of the Na-
tional Resident Management Corp.

So, basically, what we have done is continue the practices that
were started by the previous administration. In order to determine
which groups are eligible to be allowed to spend their moneys at
certain conferences, what we look at is basically whether or not the
group is offering training which would benefit and support the
grant that we gave to the individual resident council or resident or-
ganization.

All five of the national resident groups, and that is the National
Tenants Organization, which is the eldest, it is 27 years old; that
is the National Resident Management Corporation; the National
Tenant Education Fund; the National ACORN Tenant Union; and
the National Tenants Union; all of them are duly elected resident
membership organizations. All of them are not-for-profits. All of
them are advocates for resident programs. All of them provide
some training and support to resident groups.


89

Mr. SHays. Why would you give them guidance?

Mr. Moses. Because we needed to make sure that it was clear
what HUD’s position on these types of programs is.

Mr. Says. I thought HUD didn’t have a position. I thought—Mr.
Marchman, you're in charge, you don’t want to weigh in at all. You
don’t want to say yes or no. This is up to the tenants; they decide.

Mr. MARCHMAN. That’s true. We don’t want to weigh in to the
extent that we become a burden for the particular resident group.
We would like them to exercise their judgment.

Mr. SHays. Why wouldn’t you give them guidance, Mr.
Marchman?

Mr. MARCHMAN. I believe that Mr. Moses was.

Mr. Suays. I want to know you, because you are the person in
charge of this program, and you're the reason why we're going to
have more hearings on this, because of your attitude about this. I
think the flyer is obscene. I think this Department should have
said, “This flyer is not acceptable. We give them guidance, and we
will tell them next time not to do it.” But you don’t even seem to
be willing to do that.

Mr. MARCHMAN. I’m sorry. I was not asked about whether or not
I approved the flyer. And if my attitude is such, I apologize for
that. What I’m trying to do is to present the facts as I know them.
We did not see the flyer beforehand.

Mr. Suays. I understand that. And so I don’t blame you for this
trip; I just want to know your attitude about it. Is this the right
kind of flyer to have? Let’s start with basic stuff.

b Mr. MaRcHMAN. I appreciate that. No, it is not the right flyer to
ave.

Mr. Suays. If they had asked for your guidance, would you
have—if you had heard about it, would you have been willing to
weigh in and say, “I don’t think that’s the way you should present
this program”?

Mr. MARCHMAN. I would.

Mr. Suays. OK. I find that comforting, and I don’t mean that in
a sarcastic way. What I am troubled by is that, this flyer basically
didn’t promote work; it basically promoted a good time. And they
said, “By the way, we'll try to squeeze the work in,” and it was a
one-sentence phrase. I think that is misleading for the tenants. I
think that’s wrong. I think it makes tenants feel that basically they
are going to come for a vacation and, by the way, you're going to
get some work done. And I want to know that my Department, my
HUD, is going to weigh in on that.

Does HUD have the ability, Mr. Moses, to tell local housing au-
thorities what they think is appropriate or not appropriate?

Mr. MosgEs. Yes, sir.

Mr. SHays. OK. What’s the difference between giving guidance to
a housing authority and not giving guidance to the tenant associa-

on!

Mr. Moses. We do give guidance to both.

Mr. Suays. OK.

Mr. Mosss. As a matter of fact, sir, basically we run this pro-
gram in accordance with rules and regulations that are established
by the Department. And those rules and regulations outline eligible


PACE 2, TENTATIVE ACENDA

MONDA o 21ST
EARYBIRD WORKSHOP 7:00 A.M. = 9:00 A.M.
REV. JAMES ORANGE
ORGANIZING TECHNIQUES & COALITION BUILDING
RECISTRATION 9:00 A.M. - 2:00 P.M.
GENERAL SESSION 0:00 ALK. = 12:00 P.M.
ED MOSES AWD STAFF, R.U. o WASKINGTOR, D.C.
LUNCH BREAK 12:00 P.M. = 1:00 PLM.
CON YOUR OWN)
WORKSHOPS 1:00 PAM. = Ar 00 PAK.
REGIONAL HEETISCS 4:00 P.M. = 0 5:00 P.M,
RECESS
2 cust 20
REGISTRATION 9:00 A.K. = 2:00 P.M.
(OFFICIALLY CLOSES AT 2:00 P.M.)
TOWK HALL MERTING 10:00 A.M. - 12:00 P

mek ASST. SECRETARY FOR PUL
“THE FUTURE OF PUBLIC HOUSING”

WOMEN'S LUNCHEON 12:00 P.M. 2 | 2:30 P.M.
TOWN HALL MEETING
CONTINUES 3:00 P.M. = = 5:00 P.M.

RECESS

AnD

TWDIAK


12

In my opinion If it is determined that these seminars are
in fact necessary, then I believe it would be much more
appropriate for residents to attend regional seminars
instead of Caribbean excursions.

It is my understanding, that there are plenty of local
and regional conferences within the Northeast corridor.
In fact the Director of the Passaic Housing Authority,
Eric Kolbe stated, "Enough workshops take place
between Washington, Philadelphia, New Jersey, and
Baltimore that tenants do not have to travel further."

Before I conclude my remarks, I want to touch on
another issue that Members of the Subcommittee should
be cognizant of.

It seems to me that this convention represents another
example of a taxpayer funded lobbying effort.

NTO’s own invitation letter states, "...We must assure
that this theme is understood by Congress. Housing
and education programs must not be cut to provide
more money for prisons. Only we [N.T.O.] can do so
by virtue of our history of advocacy."


Appendix 1
Page 3 of 3

Funding of Resident tivities

HUD funding of resident management and other initiatives has
been through the Comprehensive Improvement Assistance Program
(CIAP), the Comprehensive Grant Program (CGP), and the Resident
Management Technical Assistance Grant (TAG) program. ‘The RMTAG
program was renamed the Tenant Opportunity Program (TOP) in
fiscal 1994, Whereas the prior RMTAG program was limited
primarily to resident management and technical assistance
funding, the TOP program expanded resident management funding to
such activities as: training residents for potential employment;
assisting resident-owned businesses; establishing social and
educational services for residents; developing youth-related
programs; hiring trainers to assist in implementing TOP
workplans; and establishing crime prevention strategies such as
tenant patrois


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75

Mr. Martini. Yes. In listening to Mr. Fattah’s line of questioning
just a moment ago and the answers that were elicited, clearly the
intent of the questions and the answers were that HUD had little,
if any, control or oversight over NTO. And yet the letter of June
27, 1995, by Mr. Moses to Ms. Green, certainly is a letter which
is stating—the bottom line to that letter—saying, this is an allow-
able expense.

What I'd like to know is, before writing this letter, how specific,
and was there a written proposal, an agenda submitted by the
NTO to you? How detailed was that, setting forth what, in fact,
was intended to be accomplished by this convention or vacation in
Puerto Rico, whatever? And, again, I give you the latitude as to
whether it was a—I agree with the Chairman, it probably was a
vacation/workshop—but I’m more concerned about the oversight
that HUD has over this before you gave the approval.

Now, if you just gave the approval based on the middle para-
graph of your letter, that would not be sufficient to satisfy me, and
that would not, in my opinion, be adequate oversight or supervision
of this use of funds. So if you can answer that, it might help us.

Mr. Moses. The answer is, basically, what we do when we begin
to say whether or not this is an eligible use of dollars, we look at
the content of the training session and see whether or not it sup-
ports the TOP Program and whether it’s an issue not to just make
money for the organization. And, basically, what Ms. Green had
done was presented to us a proposed agenda which talked about a
series of workshops.

Mr. Martini. Do you have that in writing? I mean, there was a
proposal beforehand submitted to you by Ms. Green?

Mr. Mosss. Yes.

Mr. Martini. OK. And are you aware if, in fact, after the fact,
there was an agenda at the convention?

Mr. Moss. Yes. I’m sorry. That is the final agenda, but she did
draft a proposal of an agenda that she would be discussing at the
conference. A lot of it had to do with issues that we directly sup-
port, issues that resident groups automatically try to accomplish
under the Tenant Opportunity Program. In addition to that, we
also basically participated in the program. Staff from my office
went there to offer training and assistance.

So, yes, we did have some idea of what was going to be offered
in the National Tenants Organization conference prior to sending
out the letter. We just do not give sort of a carte Blanche letter to
anyone coming in and asking.

Mr. Martini. Well, Mr. Chairman, I’ve just received some infor-
mation which I'd like a few moments just to read over. So I will
yield back the balance of my time for now in the interest of saving
time.

Mr. Moses. If I may, sir, as was mentioned earlier, we did not
see the flyer. As a matter of fact, the only time that we knew about
the flyer is when the honorable councilman called me about it and
faxed it to me. So we don’t get into that detail. What we do is, we
do look at the Proposed programs, and that’s what we based the

letter on.

Mr. MarTINI. Just to be sure, so the record is accurate, the docu-
ment which I have in my hand, which consists of six pages stapled


Most
are to be
bold plan

cuts deep

36

much success has been recorded in creation of jobs for

residents on site at public housing developments;

successful resident managed public housing developments
have demonstration a reduction in housing authority
expenditures for comprehensive modernization and
reduction of crime, violence and destruction to Federal

property;

technical assistance and job training has provided
economic lift to many upwardly mobile families in
public housing that now has at least one working family
member that serves as a role model, and ultimately

brings an income mix to the developments; and

significant management improvements in demographics of
public housing communities that are managed by
residents serve to stabilize the tax-base of that

community.

importantly, the Federal government’s efforts to date
commended. The Congress, however, recently passed a
to balance the budget by the year 2002. This balancing

into the heart of Americans. Nevertheless, I know that

some change is needed.


48

3

As a further indicator of a lack of progress towards goals,
Councils have generally not timely used their grant funds. We
surveyed 24 Councils which received 1991 grants and found that
they had drawn down only 41 percent of their grant funds after 3
years. The rate of drawdowns for all Councils which received
1992 grants was only 36 percent after 2 years.

In the case of our 6 test Councils, we attributed the
limited progress and accomplishments to:

itious aran! - The Councils had little or no
project management skills at the start of their grant, and
it was unreasonable to expect Councils to move to actual
project management activities in the scope of the grant.
Inade: i d_professional quidance - The six
tested Councils spent $246,768, or 57% of their
expenditures, for training and assistance consultants, but
advised OIG that much of it was ineffective or insufficient.
The Councils did not have the expertise to determine and
fulfill their training needs, and HUD did not effectively
serve to provide or coordinate standard training needs in a
more efficient manner.

Limited use of housing authority expertise - The Councils
did not take advantage of housing authority expertise in
designing financial controls and procuring services, and HUD
did not structure the program to encourage a stronger
PHA/RMC partnership for strengthening relations and reduce
reliance on consultants under the grant.

Turnover in Council leadership - A Council's progress
appeared to depend greatly on the leadership of a few key
Council members. When they left, progress stalled or
stopped while the Council trained new members. This
occurred in four of the six Councils we reviewed.

Lack of resident interest - There was a lack of resident
interest in many cases, as evidenced by poor resident
participation in Council sponsored training and activities.
We found poor resident interest at four of the six Councils

tested.
Competing Council interests - Many of the Councils and

their members were more interested in pursuing individual
self-improvement and social service activities, than project
management activities.

mcomplete grant work plans - In some cases, HUD did not
require the Councils’ work plans to include an element to
train for and proceed to project management.


wT

Page 8

2. Economic Development (1,824) new jobs have been created as
a result of the expenditure of RMTAG and TOP/TAG funds since
1988. Types of Jobs created: (General Carpentry,
Administrative, Child-care Providers, Security, Computer
Systems Operation, Management, Entrepreneurship, Community
Planning Outreach, and Health Care Providers.

3. Resident Owned Businesses (132) Resident Owned Businesses
have been created. Some include the following: (Landscaping,
Property Management, Child care services, Grocery Stores,
Laundromat facilities, food delivery, and catering services

The availability of funds to provide training to RMC/TMC's for

Economic Development, Empowerment Initiatives, and Resident

Management will determine how residents will meet the challenges

to their communities economic, and social survival. The RMTAG

and TOP/TAG funds are like an incubator system for Resident

Councils. with training, leadership, and empowerment these

grassroots organizations ran by public housing residents will

provide Congress with an alternative that is different than

the current system available.

Economic Development, Job Training, Child-care, along with

Regulation 963, and 964 allow Residents an opportunity to

empower themselves, employ themselves, and improve the quality

of life they live. However, I must address the House

Appropriations Committee Bill that suspended the Brooke Amendment

in public housing which has capped tenant rent contributions

since 1969, The Impact of the proposed Rent Increase Suspensions

(even for one year) will impact severely the low income families

residing in public housing.

The Bill forces PHAs to raise rents, reguires a minimum rent


Appendix 1
Page 2 of 3

established through this demonstration, only the A. Harry Moore
RMC in Jersey City is still operational today. in many respects,
the National Tenant Management Demonstration marked the beginning
of HUD’s involvement in public housing resident management .

ter fi ighbs Ente:

The Amoco Foundation, in 1985, provided a $1.9 million grant to
the National Center for Neighborhood Enterprise (NCNE) in support
of a three-year demonstration of the potential effectiveness of
resident management, The demonstration, which entailed providing
training, technical assistance and seed funding, encompassed
residents at 12 public housing developments covering 7 housing
authorities: Boston, St.Louis, Washington, D.C., Jersey City,
Chicago, Cleveland, and New Orleans. Six of the 12 developments
already had established RMCs, while another six new sites were
provided grants to establish RMCs. Of the 12 NCNE sites, 9 are
currently operational.

Legal Basis ce

A legal foundation for resident management by RMCs emerged in
1987 with the passage of the Housing and Community Development
Act of 1987. Sections 122 and 123 of this Act added Sections 20
and 21, respectively, to the United States Housing Act of 1937.

Section 20 established a legal basis for public housing resident
management by authorizing the formation of RMCs and their
operation pursuant to management contracts with PHAs. Section
20 also authorized RMCs to receive modernization funding and
required them to undergo an annual audit. Moreover, Section 20
authorized the Secretary to provide financial assistance to RMCs
or resident councils for the formation of such entities and the
development of their capacity.

Section 20 further required the Secretary to conduct an
evaluation of public housing resident management, particularly
with respect to its effect on living conditions in public
housing, and to report its results to Congress. This evaluation
was performed by ICF Inc. under contract with HUD, and the
underlying report was issued by HUD in December 1992.

On the other hand, Section 21 authorized RMCs with at least 3
years of experience in successfully managing public housing to
purchase one or more multifamily buildings from their housing
authorities. Under Section 21, the RMC may offer the units
involved for sale to lower income project residents and other
eligible low-income households. ‘This public housing
homeownership program was subsequently replaced by the
Homeownership and Opportunity for People Everywhere (HOPE 1)
program, authorized by the National Affordable Housing Act of
1990.


138

In addition, TCP aids ia the implementation of the
Comprenensive Gract Program and Section 3 of the Housiag and
Urban Development Act of 1968, as amerded, by croviding job and
partnership training and assisting residents in Susiness start-
up.

B. HOPS 1 for Public and Zadian Housing Homeownership Program
Fy 1992 FY 1954 FY 1995
$16,817,722 $2,117,949 $608,144

Under the HOPE 1 Program, funding is provided to RCs/RMCs,
HAS, non-profit community agencies, or a combination of any
of these groups to enable public and Irdian housing
residents to become homeowners by converting their public
housing units to homeownership. These srant funds are used
to carry-out the required counseling and training,
rehabilitation, financing, and other costs related co the
conversion. The above figures represent the expenditures
for resident counseling, training, and technical assistance
in the development of RCs/RMCs, as provided in the LOCCS
reports. The resident services funding above represents 32%
of grant funds in PY 1992, 4% in PY 1994 and 5¥ in PY 1995.
There were no HOPE I awards in FY 1993.

The following PIH programs provide funding for resident services
directly by the Housing Authorities (HAs):

AL Operating Subsidy

PY 1991 FY 1992. FY 1993 FY 1994 FY 1995
956 $59 $62 data data
million million million unavailable unavailable

HUD provides Operating Subsidy funds to FAs for operating
and maintenance expenses. HUD guidelines permit HAs to
uge these monies for resident services activities -- using
the benchmark of §3 per unit per year. The funding is
primarily for HA resident staff who coordinate resident
activities, as determined jointly by the HAs and their
resident population.

‘The above figures represent the actual amovnt spent for
resident services by HAs, as reflected in the HA‘s
Statement of Operating Receipts and Expenditures.

The Department estimates that the amount used for resident
services is approximately 1.4% of the total operating
expenditures ($4.3 million in FY 1993).


49

4

Lack of performance benchmarks and insufficient monitoring -
HUD had not established interim performance goals to measure
each Council's progress or develop an effective means to
track accomplishments and impediments program-wide. HUD
generally let the Councils work at their own pace, and
tracked only the Councils’ rate of expenditures. HUD
monitored the Councils using Community Relations and
Involvement Specialists, located in Field Offices, who
reviewed reports and made periodic site visits. While this
work may have been beneficial, the Councils needed far more
assistance than HUD could provide.

We concluded that the few Council successes did not
warrant continuing the program and recommended that HUD consider
terminating it. Our position was supported by similar prior
audit findings in our October 24, 1989 report on a "Review of the
Public Housing Management and Homeownership Programs." On
December 18, 1994, Secretary Cisneros issued his Reinvention
Blueprint that essentially called for the consolidation of
programs into block grant type funding mechanisms. Essentially,
the proposed consolidation would negate any changes to this
categorical program. Thus, the report made it clear that our
recommendations were appropriate only if HUD continued to
directly fund resident groups; we made the following suggestions:

® require the housing authority to participate as a partner in
the grant;
@ =~ require the Councils to use the expertise of the housing

authority for training and assistance in bookkeeping,
financial management, maintenance, procurement, and
occupancy procedures;

@ ‘establish realistic interim goals for Council performance
and base funding draws on achievement of those goals; and
. review and evaluate Council performance and accomplishments

individually and program-wide.

During the course of our audit, the Tenant Opportunity
Program (TOP) was emerging with final regulations issued on
August 15, 1994, This rule expanded eligible RMTAG Program
activities to include resident managed businesses and social
services support, extend the grant period, remove requirements to
seek help from housing management specialists, and increase the
grant limit to $250,000. HUD was also proposing legislative
changes at the time to significantly increase the level of
funding and move the program more in the direction of self
sufficiency type activities rather than resident management. The
authorizing legislation did not pass but Appropriations were
increased to $25 million for FY 1995.


18

4:00PM - §:00P! Zp
GRANNY’S GANG TOSAVE GENERATION WORKSHOP
MAXINE GREFN\ 77>

S:u0RM = - 6:80PM gm (some | onger)
STATE MEETINGS
RECESS -

: maxine ceren
MONDAY, AUGUST 21ST XTi ee H Av cHt
7:00AM - «9:00AM Dao RoFUS
EARLYBIRD WORKSHOP

ORGANIZING TECHNIQUES & COALITION BUILDING
REV. JAMES ORANGE, N.T.O RELATIONS OFFICER
THUNDERBOLT PATTERSON, N T O FIELD ORGANIZER
MYPRASLALAMEDA-

pA
MATE ALS ot ARON ZAM ON ‘ SPemees }
9:00AM -

2:00PM
REGISTRATION

10:00AM : 12:00M
GENERAL SESSION
THE FUTURE OF T O.P AN RESIDENT PROGRAMS
=D MOSES, DEPUTY ASSISTANT SECRETARY FOR,
COMMUNITY RELATIONS °
INVOLVEMENT STAFF H.U.D WASHINGTON. D.C

TENANT PARTICIPATION/ORGANIZING RESIDENT COUNCDS

PAT ARNAUDO, DEPUTY DIRECTOR FOR PROGRAM
DEVELOPMENT, H U.D CENTRAL

LOUISE WATLEY, N.T O BOARD MEMBER
NELLIE REYNOLDS. N T.O BOARD MEMBER
LINDA HAIGLER, HUD PUERTO RICO
RUBEN BIDDY, TOP STAFF, QCRI, HUD, CENTRAL
ANTONIO GARCIA, RESIDENT COUNCIL PRPHA

2CONOMIC DEVELOPMENT/SECTION 3
PAT ARNAUDO


88

Mr. Towns. hank you. TL yield back, Mr. Chairman.

Mr. Suays. I’m confused. You said 68 what?

Mr. MARCHMAN. I’m sorry. I think I have something that you
don’t have. Sixty-eight percent have acquired the services of a CPA.

Mr. Suays. Aren’t they all supposed to have acquired the services
of CPA’s?

Mr. MARCHMAN. Well, some of them are moving to the point of
establishing their financial management systems, a part of a grant
allows them to do that.

Mr. Suays. That’s not what I asked. Aren’t all, 100 percent, re-
quired to have CPA’s?

Mr. MARCHMAN. Yes, they are.

Mr. Suays. OK. Tell me where in the statute we allow for trips.

Mr. MARCHMAN. I don’t think I can point directly for trips. I
think it allows travel and travel costs associated with training. I
don’t have that in front of me.

Mr. SuHays. I’ve looked at it. I don’t see it.

Ms. Gaffney, where in the statute is that allowed?

Ms. GAFFNEY. I’m not aware that there’s a specific reference to
trips.

Mr. SHays. Where does HUD have the right to give money to
tenant associations for trips?

Mr. Moses. If I may, sir.

Mr. Suays. Mr. Moses.

Mr. Moses. Yes. In most legislation there isn’t any statute that
basically says that you can utilize moneys for trips.

Mr. Says. OK.

Mr. Moses. If you look at the Hope 6 legislation, which is a
$500-million program, nowhere is it mentioned that there should
be money set aside for travel. What it basically does in the legisla-
tion, you, the Congress, ask HUD to put out rules and regulations.

Mr. SHAYS. So you put out rules and regulations that allowed for
trips?

Mr. Moses. Yes, sir.

Mr. SHAyS. So you, HUD, have done that; right?

Mr. MOSES. Yes, sir.

Mr. MARCHMAN. Yes.

Mr. Says. OK. That’s something you have allowed and you have
decided. Why did they have to come to you to get your approval,
Mr. Moses, on this?

Mr. Moses. To get my approval on what?

Mr. Suays. On going to Puerto Rico?

Mr. Mosss. They didn’t come to me to get my approval.

Mr. Suays. What did they come to get, then?

Mr. MosEs. No one came to me to get my approval to go to Puer-
to Rico.

Mr. SHAYS. I’m sorry?

Mr. MosEs. No one came to me to get my approval to go to Puer-
to Rico. What had happened is, Ms. Maxine Green called me and
said that some housing groups had begun to ask their local field
offices from HUD whether or not they could go on this trip, and
they wanted some guidance.

Mr. Suays. So you gave them guidance?

Mr. Moses. Yes.


43

Mr. Suays. Thank you very much.

Mr. Martini. Mr. Chairman, if I may, just for a moment.

Mr. SHays. Sure.

Mr. MartINI. I have another hearing right upstairs. I will be
back in 10 minutes, if I may.

Mr. Suays. OK. Thank you.

Thank you, Mr. Moses.

Ms. Gaffney.

Excuse me. I just want to make sure. Mr. Janis, you are here to
provide backup information; you don’t have a statement?

Mr. JANIS. Right.

Ms. GAFFNEY. Mr. Chairman, members of the subcommittee, as
you know, I don’t know what happened in Puerto Rico. As you
know, we are looking into that matter for the subcommittee.

I would like to say, though, that I certainly agree with Mr. Mar-
tini. On its face, this does not do any of us any good, this kind of
hype, this kind of promotion. But I would say to you, Mr. Chair-
man, this is not the first time I have seen this type of promotion
for conferences involving Federal funding. And if you can get. across
a message that we are not well-served by this, I think that would
be important.

With respect to the general issue of resident management, we, as
Kevin said, issued a report last February that looked at six resi-
dent management councils. We found that, of those six councils,
only one performed significant project management work. Shortly
after we did the review, that council disbanded, which meant that,
of the six, no one was doing it.

Mr. SHays. What were the six? Do you have a list of the six?

Ms. GAFFNEY. Yes. Yes. They are here. Do you want me to go
through them?

Mr. Suays. Yes. I would just be curious to know what the six
were.

Ms. GaFFNEY. Sure. Mission Hill in Roxbury, MA; Ida Barbour
in Portsmouth, VA; Roberts Village, Norfolk; Rocky Mount, Rocky
Mount, NC; Laurel Homes, Cincinnati, OH; Grandview, Everett,
WA.

Mr. Suays. And which was the one that was working?

Ms. GaFFNEy. I think it was—let me just check.

Mr. Suays. Sure.

Ms. GAFFNEY. It was Grandview.

Mr. Suays. Grandview. OK. And you say that one was discon-
tinued?

Ms. GAFFNEY. Disbanded.

Mr. Suays. OK. Why don’t you continue.

Ms. GarFNey. Generally, when we looked overall at what had
happened, at the big picture, apart from these six specific councils,
we found that, through 1993, $22 million had been expended in
resident management technicai assistance grants, and that funding
had resulted in only 15 of the councils performing full management
duties. Only 22 other councils were performing partial manage-
ment duties. And of those 37, the 22 and the 15, 11 of them had
been in existence and operating prior to 1988, when the funding for
this program started.


129

b. For new grantees, assistance in “jump-starting” their training program before
the grantees obtain any funds, including, but not limited to identifying and
selecting a qualified and certified consultant/trainer through the competitive
procurement process.

The short-term RETAP technical assistance will be administered similar to the
Drug Elimination TA Program, e.g,, the resident organization applies to HUD for
assistance in the areas desired, HUD Headquarters negotiates the contract (up to $10,000)
with an independent consultant who undertakes the work requested by the applicant, and
HUD reimburses the consultant for the work completed. (See attached procedures on the
Drug Elimination short-term assistance grant which can be modified and used for this
important reform.)

This process will ensure that inexperienced resident groups will have an opportunity to
compete for program funds, and receive the help necessary to select a qualified and
certified consultant/trainer.

Proposed Legislative Insert

RESIDENT EMPOWERMENT TECHNICAL ASSISTANCE PROGRAM
(formerly Tenant Opportunity Program)

Insert to the HUD Housing Annual Contributions for Assisted Housing paragraph, under
of the total amounts earmarked under this head for modernization of existing public
housing:

“Provided further, That of the amounts earmarked under this head for modemization of
existing public housing, $15 million shall be used for Resident Empowerment Technical
Assistance Program grants under Section 20 of the U.S. Housing Act, to remain available
until expended, of which $1.5 million shall be available for or on behalf of resident
organizations for short term technical assistance in application preparation, trainer-
consultant selection and related tasks.”


118

Page 4

way things were from the filth to the deplorable conditions

of the interior and exterior of their building. They started
meeting among themselves to decide what to do. They began by
boarding up vacant apartments and cleaning up the building.

The children of 1230 participated and began to encourage their
parents to join in, The residents of 1230 North Burling
contacted different Foundations to bring in a Resident Management
Specialist. I was brought in to train them and after the initial
funds ran out 1230 North Burling convinced me that they wanted
to control their destiny and they had hopes, dreams, and
aspirations, and most importantly a vision of better things

to come they only needed someone to show them how to make their
dreams a reality. I trained the tenants on the lease and what
responsibility they had as residents and what responsibilities
the Chicago Housing Authority had to the residents of 1230 North
Burling Building. Once they understood that they did not have
to live the way they lived it was only a matter of enforcing

the lease. I taught them that the Chicago Housing Authority
received funds to correct the physical condition of 1230, the
frequently inoperative elevators, broken windows, no lights,
rats, roaches, trash, and graffiti-covered surfaces. 1230 had
just begun to change gradually by cleaning up the building,

but also they dealt with residents that did not understand the
process or what their mission was and the strong reaction the

Duly elected Board of Directors received from negative


122

them $400,000, and they keep the other $600,000. So, clearly, the
housing authority is not going to empower the tenants.

Mr. SHays. Let me just run through that a little bit. This is
building 1230?

Ms. GILKEY. Yes.

Mr. Says. Why would that building get $1 million? Is that the
income?

Ms. GILKEY. OK. That’s the income. That’s a combination—it’s
two sources of money that manage the public housing property: it’s
the rents that the tenants pay, and it’s the subsidies that are ap-
propriated by Congress.

Mr. Snays. Right. And that adds up to what?

Ms. GILKEY. That adds up to—based on the region, Mr. Chair-
man, if the cost of living is higher in certain regions.

Mr. Suays. What's the bottom line?

Ms. GILKEY. For 1230?

Mr. Suays. Yes.

Ms. GILKEY. I would say their money should be about $985,000,
but they only get $400,000.

Mr. Suays. OK. Between the rent and subsidy?

Ms. GILKEY. That’s their operating budget.

Mr. Suays. OK.

Ms. GILKEY. But for 4 years they have been operating off of
$400,000.

Mr. Suays. It seems pretty obvious to me that $400,000 is too lit-
tle. Although, I wouldn’t say they should receive close to $1 million.
This raises a lot of questions the resident management corporation
can do what you do with half of that. It makes you wonder what
you could do with more of it.

Ms. GILKEY. Now, you hit it right on the point, Mr. Chairman.

Mr. SHays. I want to get a sense of—and this would be some-
thing I would like to follow up on—some of that has to go for the
overall administrative costs of running it.

Ms. GILKEY. And that’s negotiated with the housing authority.

Mr. Suays. I hear you. But somehow I need to figure out what
that would be. I would love for you to sit down with my staff later.

Ms. GILKEY. OK.

Mr. SHays. And really think through—and there must be other
factors that we need to do.

Ms. GILKEY. But you need to know, in the regulations, it spells
it out. In the OMB circular, it spells it out under resident manage-
ment practices, and I will give your staff a copy of that.

Mr. Suays. I mean, even the law is clear that you should get
more than you get.

Ms. GILKEY. The law says that the money should come into—the
money comes from the Office of Management and Budget to the au-
thority. That money then is supposed to go back to the resident
management group. The housing authority then is supposed to bill
the resident management group for any services that they pro-
vided, with actual cost.

Mr. SHays. I would like Ms. Gilkey to make her arguments be-
fore us and HUD, meet with the staff of HUD or Chicago, and help
us all sort out and understand how this works.


127

that’s reasonable, and yet have money left to do the other things
they need to do?

And this is what we suggested, and they loved it. And this is a
copy of the letter that we sent Senator Biden, October 26, 1995. We
suggested—and we went back to the drug elimination, Mr. Chair-
man, that Congress has approved. In a drug elimination process,
HUD can allow up to $10,000 to be used to bring in an independent
TA, whose specific job is, one, to help that group develop the bid
specs that are going out, so you don’t have the TA that’s bidding
on the work is the same one doing the bid specs. See, that’s the
problem. They take the $10,000 and bring in an independent TA.

And the good thing about the drug elimination process, Mr.
Chairman, the group never gets the money. The $10,000 doesn’t
come to them; HUD controls it. They submit the person they want
to come in to do the training, and HUD gives them a specific scope
of work that they’ve got to do. And one would be to help the tenant
group develop the RFP, request for proposal, that has to go out to
at least three resident management specialists/consultants.

Then they develop the evaluation process; this is the TA helpin
the group. Then they sit with them and help them interview an
select a consultant. Then they negotiate the contract with them,
and with HUD, and with the consultant. And then the contract is
signed and they are gone. The baby tenant group never gets the
money; they never get the $10,000. HUD controls the money up
until that group brings that consultant on.

Once that consultant comes on board, that same consultant that
helped them develop the process cannot come back and bid to be
the resident management specialist. And Senator Biden, you need
to know—and I've got a copy of this for you, for the record—loved
it. And we then gave this to him. He told us to get it to Senator
Bond, who is my Senator. Senator Bond only didn’t support this be-
cause Biden didn’t support it.

Mr. Suays. Right.

Ms. GILKEY. We went to Senator Biden. He said he could live
with this. He asked us to give it a new name, and the new name
is Resident Empowerment Technical Assistance Program. It’s
called RETAP.

Mr. Suays. No, don’t get up. Don’t get up.

Ms. GILKEY. OK. I just want to give it to you.

Mr. Suays. We'll get it. Sorry.

Ms. GILKEY. OK. And that will eliminate any future problems
with the technical assistance funds.

[The information referred to follows:]


CONTENTS

Hearing held on November 9, 1995 .....
Statement of:

Gilkey, Bertha, chairperson, Cochran Gardens Tenant Management Asso-
ciation, and’ president, Urban Women, Inc., consultant, 1230 North
Burling, and president, National Tenants Union ...

Marchman, Kevin, Acting Assistant Secretary for Public and Indian
Housing, Department of Housing and Urban Development, accom-
panied By Michael Janis, General Beputy Assistant Secretary for Public
and Indian Housing; Ed’ Moses, Deputy Executive Director for Commu-
nity Relations and Involvement, Chicago Housing Authority, and
former Deputy Assistant Secretary for Community Relations and In-
volvement, Department of Housing and Urban Development; and Susan
Gaffney, Inspector General, Department of Housing and Urban Devel-
opment .. 7

Letters, statements, etc., submitted for the record by:

Fattah, Hon. Chaka, a Representative in Congress from the State of
Pennsylvania, information concerning a convention update

Gaffney, Susan, Inspector General, Department of Housin;
Development, prepared statement of .

Gilkey, Bertha, Srabrperson, Cochran Ga
ciation, and president, Urban Women, Inc., consultant, e230 North
Burling, and president, National Tenants Union:

Inforamtion concerning the Resident Empowerment Technical Assist-
ance Program .
Prepared statement of ..

Green, Hon. Gene, a Representative in Congress from the State of Texas,
prepared statement o

Marchman, Kevin, Acting Assistant Secretary for Public and Indian
Housing, Department of Housing and Urban Development, prepared
statement of

Martini, Hon. William J., a Representative in Congress from the State
of New Jersey, prepared statement of

Moses, Ed, Deputy Executive Director for Community Relations and In-
volvement, Chicago Housing Authority, and former Deputy Assistant
Secretary "for Community Relations and Involvement, Department of
Housing and Urban Development:

Information concerning proposed agenda ..
Prepared statement of

Towns, Hon. Edolphus, a Rep:

of New York, prepared statement of

«my

105

18

92

128
110

15

21

77
32


145

an wcsnoromenes
oes Congress of the United States
Bouse of Representatives

‘COMMITTEE ON GOVERNMENT REFORM ANDOVERSIGHT  Sasiwgturs ue

2157 RavBunn House Orrick BuiLpIc Shearer
Wasnnaron, DC 20815-6143 Pa
SUBCOMMITTEE ON HUMAN RESOURCES Siktewt ous
’AND INTERGOVERNMENTAL RELATIONS —
‘huintopher Shays. Connecteut squeges anor
osm 6-372 Rayburn Bu swage aoa
fashington. D.C. 20818 Sense

Fax: 202 225-2382
October 20, 1995

‘The Honorable Henry Cisneros

Secretary

Department of Housing and Urban Development
451 Seventh Street, S.W.

Washington, D.C. 20410

Dear Henry:

‘Allegations that the former Chicago Housing Authority (CHA) administration
inaccurately calculated the Performance Funding System (PFS) allocation for 1230 North
Burling were recently brought to my attention. if the PFS for 1230 North Burling was
inaccurately calculated, it is possible that the Resident Management Corporation (RMC)
contracted by CHA to perform certain management responsibilities at 1230 North Busling may
have received insufficient funds for their services. To assist the subcommittee with its ongoing
oversight duties regarding CHA, please submit the following for the subcommittee's review:

1) A copy of all contracts and/or agreements in place between CHA and the RMC of
1230 North Busting

2).A description of the means by which CHA derived the PPS budget for 1230 North
Burling. Please include any supporting documents that detail the PFS allocation and/or
budget for 1230 North Burling.

3) A copy of all CHA and HUD correspondence, notes, memorandum and other
dicuments relating to the grievances of the RMC of 1230 North Burling with respect to
the PFS allocation.

4) Any RMC monitoring reports by CHA on 1230 North Burling.


106

And my mother lived right next door to a large public housing
site which was called Cochran Gardens. Cochran Gardens was 894
units of high rise. Back in those days, Mr. Chairman, it was all
white, because public housing was segregated in this country.
There were no black families living there. We lived in the tenement
area.

Because the city wanted the land that my mother lived on and
the owner of the land was willing to sell it to the city, President
Kennedy, at that time, made a part of the urban renewal program,
he attached the relocation of the low-income families who lived in
the vicinity of that public housing site. So my mother got an oppor-
tunity to move into Cochran because of the land that the city want-
ed to redevelop into hotels, into convention centers, into malls. My
mother moved into Cochran.

Cochran Gardens was a beautiful place to live. I grew up in a
very integrated public housing site. I grew up in a public housing
site where 97 percent of the heads of household were men, not
women, as it is today. You see, I grew up in public housing when
you had to be somebody, and it didn’t have the negative connota-
tions that it has today.

The same buildings are still there, Mr. Chairman. The buildings
haven't changed, 47, 50 years later; the same windows are still
there. Basic characteristics of the development are still there. What
changed? I’m going to tell you what changed. That’s why I’m here
this morning.

What changed was the behavior, the management, the operation
of public housing. When public housing was initially managed by
the authority, it was managed as a business. The housing authority
managed public housing as a business. They had working families
living there as well as low-income families living there. And they
collected rents well. They did maintenance well. There was no
backup work orders. Preventive maintenance was done.

They would come to my mother’s house, as well as every other
resident, and they did an annual inspection. That means they
checked everything; your housekeeping had to be immaculate. My
mother had 15 children. We had concrete floors, but they were im-
maculate. You could eat off the floors. The hallways, we were re-
sponsible, the residents that lived there, we had a day that we had
to mop, wax, and clean that hallway. If you didn’t, you got a fine.

Mr. SHAYS. You got a fine?

Ms. GILKEY. You got a fine. You were fined if you didn’t do it.
After three fines, you were evicted.

The lawn was well maintained, all the time. Residents, we were
screened. My mother had to be screened to move into Cochran.
They did not just allow public housing to be a dumping ground for
people who nobody else wanted so they dumped them into public
housing because of the cuts that the Federal Government was tak-
ing. So we’re going to just put them all in public housing. They
didn’t do that, Mr. Chairman, back in the days when my mother
moved there or prior to blacks or Hispanics integrating public
housing in this country. There were real rules, and they were en-
forced.

As public housing—and this is my assessment—became more
and more black, female heads of household, Hispanic, the services


66

prior to me coming there, of supporting these types of events. That
is one of the things that we do.

Basically, the only thing that was HUD’s involvement with this
convention is basically saying, is it an eligible expense item? Will
they be offering training that supports the intent of the Tenant Op-
portunity Program? How it was promoted, we did not get involved
in it. What the conditions or arrangements were going to be in
Puerto Rico, we did not get involved in.

The only thing I personally did was three things: First of all, I
agreed to—they sent me a letter of invitation to speak at the con-
ference. I agreed to speak at the conference because that is what
I have done, at not only their conference, for the last 3 years. They
change the venue every year. The first conference that I went to
speak at was held in Washington, DC, here. I spoke at that con-
ference, and HUD supported it as an eligible expense item. The
second conference they held, which was last year, was in Atlanta,
GA. I also supported that conference and spoke at that conference.
Their third one was in Puerto Rico.

They are the ones who determine the venue; we don’t do that.
The only thing that we do is basically work with them by saying
that is an eligible expense item because the training that they offer
supports the intent of the program.

Mr. MartTINI. May I just interrupt. How extensive—when you say
the training that they offer, when you met with Ms. Green on June
26, because you did meet with her on June 26, how much depth
did you go into, what the agenda will be, et cetera? Because if you
read the flyer, about 80 percent of the flyer is devoted to promotion
of a family vacation, and very little is directed toward any agenda
or any training programs.

Mr. MosEs. That was the flyer. I do not get involved in the pro-
motion. As I said before, I did not even know about the flyer until
the honorable councilman called me and faxed it to me. I do not
get into that detail. HUD does not do that. This is not our con-
ference.

The meeting on June 26 that I had with Ms. Green was a meet-
ing between not only Ms. Green but the executive director of the
Puerto Rican Housing Authority who requested that I set up that
meeting. Generally, what happens is, whenever a group of this na-
ture goes to a venue of this type, they usually cosponsor the event
with the housing authority.

And what Mr. Miguel Rodriguez, who is the executive director of
the housing authority, requested of me was to put a meeting to-
gether between him and Ms. Maxine Green, because a large per-
centage of his residents were members of her organization and was
cosponsoring this event, and he wanted to be involved with her and
talk about what can the housing authority do to help promote the
event.

I was serving as a facilitator. As a matter of fact, before they left
that meeting, I had a letter written to both of them from myself
outlining exactly what was the terms of the agreement between
themselves.

Mr. Martini. I see that my time is—may I keep going?


52

Appendix 1
Page 1 of 3

PUBLIC HOUSING RESIDENT MANAGEMENT/INITIATIVES

Historical Perspective
I

1_RMC:

76

The resident management movement in public housing began in the
early 1970’s in Boston and St. Louis. The nation’s first public
housing resident management corporation (RMC) was formally
organized in 1971 at the Boston Housing Authority's Bromley-Heath
development, primarily in response to poor management and
maintenance by the Authority. (However, it should be noted that
Bromley-Heath’s resident council had allegedly formulated its
basic resident management concept as early as 1964.)

Also, at about the time the Bromley-Heath RMC was being
established, residents of the St. Louis Housing Authority were
engaged in a protracted rent strike brought about by poor
maintenance and rising rents. In conjunction with the settlement
of this strike, RMCs were established at five St. Louis Housing
Authority sites during the years 1973 through 1976. Reportedly,
by 1976, nearly one-half of the public housing units in St. Louis
were being managed by residents. However, only two of the St.
Louis Housing Authority's original five RMCs, Carr Square and
Cochran Gardens, are in operation today.

The responsibilities assumed by the Boston and St. Louis RMCs
differed in that the Boston Housing Authority delegated
essentially all its management functions to the RMC, while the
St. Louis Housing Authority delegated only certain management
functions to its RMCs, primarily routine maintenance supervision,
renting of units, and the provision of social services.

National Tenant Management Demonstration (1975-1979)

spurred by the pioneering efforts of the Boston and St. Louis
RMCs and the potential of resident management, the Ford
Foundation and HUD collaborated on the National Tenant Management
Demonstration in 1975. The objective of this demonstration was
to promote the establishment of additional RMCs and to evaluate
their potential effectiveness in managing public housing. The
Ford Foundation provided funding to manage the demonstration,
which was contracted to the Manpower Demonstration Research
Corporation (MDRC). Among other responsibilities, MDRC selected
the test sites, developed RMC training programs, provided
technical assistance to the RMCs, monitored their progress, and
evaluated the overall demonstration effort. This demonstration
was instrumental in establishing seven new RMCs at six different
housing authorities: Jersey City, Louisville, New Haven, New
Orleans, Oklahoma City, and Rochester. However, of the RMCs


101

Mr. FATTAH. So you've seen plenty of examples of professional or-
ganizations associated with the Government holding conferences
which you described to be at resort locations, over the years.

I would just hope, as the committee starts this serious inquiry
into this particular activity, that we would take as seriously—I
would assume a tax dollar given to a tenant group is just as impor-
tant as a tax dollar given to the Defense Department or to any
other Department. Therefore, it if was wasted on these kinds of
trips, we should be just as excited about—and “exercised,” to use
the chairman’s word—about getting at this and rooting this out, if
it is a problem.

Because, see, now the question becomes, is it really a problem?
And that’s really a judgment call, I guess, because the Congress it-
self has had a great deal of criticism over the years about what are
called “junkets,” in which Members of Congress who, I guess, on
our best days, are trying to better inform ourselves about a variety
of activities, but we do this at the Government’s expense.

In fact, given our family friendly nature these days, I would as-
sume we would want family members to travel and to participate.
I saw the Speaker take his wife to the Rabin funeral the other day.
Because it’s important to try to keep families together in these
stressful times. And all the time that we work here, it’s more dif-
ficult to spend time with one’s family.

So I want to thank you for your contribution, and I will yield
back the remainder of my time, Mr. Chairman.

Mr. Suays. Thank you. And in response to the gentleman, we
have oversight over HUD, Veterans Affairs, HHS, Education, and
Labor. I would be very happy to look at this and ask the staff to
look at, you know, how we utilize travel for all.

Ms. Gaffney, I would just say to you that I’m not troubled that
a spouse went on this trip, if they paid for it themselves. I truly
am not. And I believe that there should be times for tenant organi-
zations to get together. And I just want to weigh in on this. I have
no objection with your holding that view, and you may be right.

But I would be willing, if the gentleman is aware of any exam-
ples in agencies that we have oversight of, to have a hearing that
discusses the different trips allowed by the departments.

Mr. Janis. Mr. Chairman, if I might.

Mr. Suays. Yes, Mr. Janis.

Mr. JANIS. As a point of clarification, the TOP grantees, as well
as any of the other grantees, must comply with the OMB Circular
110 on travel requirements, which is applied to Federal Govern-
ment employees and Federal grantees. 8 it is the same circular
that covers all of the Federal Government and all of the grantees
of the Government. It’s systemwide, similar.

Mr. Fattau. Mr. Chairman.

Mr. Suays. Yes.

Mr. FattauH. I just got here, so this is a little bit new to me. I
spent a lot of time in State governments. My colleagues, particu-
larly on the other side, think that State governments are great en-
tities and they don’t waste any money. As part of the Council of
State Governments, as part of the National Conference of State
Legislators, a whole host of groups have held conventions in Puerto
Rico and in these other locations.


26

the majority of the TOP grant funds are specifically for training
and technical assistance. To assist resident grantees in
selecting qualified trainers, we are developing a system for
certifying and debarring trainer-consultants -- using the current
Drug Elimination Technical Assistance Program as the model.

*The TOP grant term has been made more realistic.

Clients indicated that the prior requirement of 18 months to
2 years was an unrealistic timeframe for resident groups to
accomplish TOP goals. Therefore, as a result of consultation
with resident leaders and their housing authority partners, the
grant term for all TOP grantees was extended to 3 to 5 years, at
the option of the grantee.

*The application and review process was strengthened.

Beginning in FY 1995 TOP grant applicants were required to
submit greater detail about the specifics of their proposed
application; additional points were given if the applicant
provided detailed performance measures. Since FY 1994, an
independent processing panel of HUD field staff has rated and
ranked grants utilizing an automated program to aggregate and
rank the applicants. Detailed processing/training instructions
provided uniform guidance to the reviewers.

*An aut ted

ion on xe a ni

In addition to requiring performance standards as a bonus in
the application process, grantees.will be required to use a new
format in reporting their progress and use of funds semi-
annually. This new reporting format will provide detail on
performance in an automated semi-annual system now being
implemented for the TOP program.

* workshops f: jeld
their housi ity to assure com an

During FY 1994 and 1995, there were as many as 325 training
sessions conducted largely by HUD resident initiatives field
staff for housing authority staff and resident leaders. We view
the HUD field staff as the front line in providing proactive
technical assistance and assuring that TOP and other PIH programs
accomplish their stated goals and comply with all outstanding
requirements. Just this month we are sponsoring two workshops in
Washington, DC to help accomplish our resident goals -- one to
provide economic development training for resident leaders and
the other to train HUD Headquarters field operations staff on
their role in facilitating progress in resident programs. We
plan to continue training for field staff and clients, unless


22

Chairman Shays and Members of the Committee:

Thank you for inviting me to testify before your Committee
to discuss HUD’s public housing resident empowerment initiatives.
The Secretary and I appreciate your concern that resident
programs are managed in a way to yield maximum performance. In
our reinventing initiatives we strive to administer programs in a
responsible business-like manner and to provide the public
housing communities with appropriate technical assistance and
oversight to produce the desired results.

I am aware that this hearing was called to principally review
the Department's oversight of public housing resident programs.
Concerns have been raised as to the effectiveness of HUD’s
controls and if we can properly protect against waste of federal
funds. I will address these concerns but first I would like to
review our Tenant Opportunity Program.

Currently there are a number of resident support programs
successfully in place: Youth Apprenticeships, Family Investment
Centers, Youth Development Initiative, Early Childhood
Development, Public Housing Drug Elimination, and a demonstration
program with the construction trades to provide job training.
However, the Tenant Opportunities Program (TOP) is the only HUD
program that provides funding to public and Indian housing
resident organizations. This resident management program
authorized in 1987 under Section 20 of the U.S. Housing Act as
“Public Housing Resident Management" (RM) was written and
promoted by resident leaders under the guidance of Secretary
Kemp. The key program goal was to provide training and technical
assistance for residents to organize their communities and
operate various resident-managed programs.

While RM has been in operation since 1988, Secretary
Cisneros has led the Department in shaping the program to be more
xesponsive to residents’ needs and, equally important, has
provided the grant infrastructure to successfully manage this
program which has doubled in size since 1993. The expansion of
RM occurred after a meeting convened which brought together a
broad representative group of national, regional, and state
tenant leaders. The group concluded that the RM training program
needed to be expanded from the narrow base of resident management
to a more flexible program to permit other resident management
activities -- such as tenant patrols and resident-run businesses.
The flexibility would allow the resident groups to decide which


105

[Witness sworn.]

Mr. SHays. Thank you very much.

For the record, the witness has responded in the affirmative.

We have only one witness, so it might not take us as long. But
you are more than welcome to give your statement. I would just re-
mind you that, if you have a written statement, that the written
statement will, in fact, be inserted in the record, if you want to
summarize it.

Ms. GILKEY. Yes, sir.

Mr. Suays. OK. Thank you.

STATEMENT OF BERTHA GILKEY, CHAIRPERSON, COCHRAN
GARDENS TENANT MANAGEMENT ASSOCIATION, PRESI-
DENT, URBAN WOMEN, INC., CONSULTANT, 1230 NORTH
BURLING, AND PRESIDENT, NATIONAL TENANTS UNION

Ms. GILKEY. Good morning.

Mr. SHAYS. Good afternoon.

Ms. GILKEY. Good afternoon. Indeed, it’s an honor to be before
this prestigious committee to give testimony. Let me first start off
by—I have submitted 100 copies of my testimony to your office, to
be distributed amongst all of the other committee members. I’m not
going to read my testimony; I want to summarize my testimony
today.

I come to you today, not only as a national public housing leader,
but also as a mother and a child who grew up in public housing,
and who has raised two children of my own in Cochran Gardens.
And my mother was the mother of 15 children who have grown up
in Cochran Gardens, which is in the city of St. Louis.

My mother, initially, Mr. Chairman and distinguished committee
members, came from the South, as many blacks did. My grand-
father was a sharecropper who truly believed that, if one worked
hard in this country, one would achieve the 40 acres and a mule.
Many blacks in this country realize that that was a myth, that no
matter how hard one worked, the 40 acres and a mule was not at-
tainable.

And much of it was because of the lack of skills, the inability to
count, just basically count the cotton that they picked, to determine
if they were making money or losing money. They didn’t have those
skills because they couldn’t read or write. So my grandfather, as
many blacks, left the South and went North.

My mother moved to St. Louis and moved into a very bad tene-
ment area, downtown St. Louis. The tenement area was so bad
there were dirt floors. There was no lighting at all. We would get
our water from the fire hydrant, because there was no water, not
even cold water, in the particular apartment my mother lived in.
However, the unit was immaculate.

During that time was when Dr. Martin Luther King was moving
for the equal rights and civil rights amendment that would give
equal access to housing and jobs and education throughout the Na-
tion, for all groups and genders in America. Because where my
mother lived was at that time a tenement area, yet it was prime
land, much as public housing is today. And the city was going
through what they called “urban renewal”; we called it “poor folks
removal.”


survey results from 387 resident organizations that were funded
through the Resident Management Technical Assistance Grant

Program (RMTAG), renamed in 1994, the Tenant Opportunity Program
(TOP).

These resident groups had a desire to pick themselves up by
the bootstraps and were empowered to move toward comprehensive
change in their lives and others around them. Most of them may
never have had an opportunity to acquire the job skills they
needed to become gainfully employed, had it not been for the

RMTAG/TOP Program.

Far more important, TOP was conceptualized to prepare
residents that have never experienced the dignity of meaningful
work, to become gainfully employed, to own and operate resident

businesses and to move toward financial independence.

Significant successes and measurable economic results have
been noted by our studies of the RMTAG/TOP grant program. For
example, our studies show that one thousand eight hundred twenty-
four (1,824) new jobs have been created as a result of the
expenditure of RMTAG and TOP/TAG funds since 1988. This figure

represents an average of approximately eight (8) jobs per grant.


115

Page 6

positions: Building Manager, Leasing Clerk, Financial Manager,
Social Service Director, Receptionist, Maintenance Mechanic,
Janitors, a Clean Up Crew, and a Laundry Attendant. Finally
they are also hiring 35 residents to renovate all of the
apartments at their building. They have managed to survive

and use the skills taught to them as a part of their Resident
Management Training which focuses on utilizing the skills within
and combining that with raising money from Foundations, Private
Grants, and Economic Development. Today these very same
African-American women of Cabrini Green effectively operate

a $400,000 Corporation but remember it did not happen over night
and they were successful because of training they received.
Resident Councils fail to achieve Resident Management of their
crime infested developments all across the country because bad
PHA's Limit, Intimidate, and Control the funds available to
Resident Organizations for Training, Technical Assistance,

Economic Development, and Empowerment.

Resident Councils who have their own autonomous economic base
become less afraid to speak out against injustice, poor
management, and the often squalid and dilapidated conditions
they are forced to live in. The potential to develop real
leadership in Public Housing is directly tied to and
organizations ability to:
1. Pay for the training of duly Elected Resident Councils that
RMC's will use to establish Resident committees and groups

whose function is to provide a system to residents and make
them accountable and responsible to maintain community


186

U. &, Department af Housing and Urban Development
‘Washington, D.C. 20410-8000

OFCE CF “HE ASSISTANT SECRETARY FOR,
CONGRESS(ONAL AND INTERGOVERNMENTAL FELATIONS.

onoreble Christopher Shays
U.S. House of Represertatives
Washington, DC 20515-6143

Dear Mx. Shays:

On behalf of Secretary Cisneros, thank you for your letter
of October 20, 1995, requesting the Department of Housing and
Urban Development (HUD) te provide information on the management
and oversight of funds targeted for tenant programs.

‘The Subcommittee was concerned about HUD‘s approval and
participation in a tenant technical assistance and training
Conference sponsored by the National Tenant Organization (NTO) in
San Juan, Puerto Rico. NTO is an independent non-profit
organization and does not require approval from HUD to conduct
euch training. While a number of Tenant Opportunities Program
(TOP) /Resident Management (RM) recipients attended, this is an
allowable but limited expenditure as part of the TOP/RM grant
guidelines. ‘TOP/RM grants are designed to give maximum
flexibility to educational and training activities that are
tailored to improve the communities where public and Indian
housing residents live. Although technical assistance and
training conferences are an important part of educating residents
to become self-sufficient, HUD does not approve of the
irresponsible way NTO promoted this conference nor of the large
number of participants who attended from the same community,
particularly in light of limited Federal resources. HUD‘s role
in the NTO training conference was to provide technical
assistance and training on HUD programs. HUD has already begun
an expeditious review of the guidelines governing this program
and intends to implement all warranted reforms.

Listed below are each of your questions and our responses

(2) A liet of any major tenant organization conventions funded
in full, or in part, directly or indirectly, by HUD funds over
the past five yeare, the name of the organization hosting the
convention, the location of the convention, and a copy of the
convention’ agenda.

Response: During the last five years, HUD has provided direct
funding to only one outside national organization to support its
technical assistance conference, Specifically, in April 1990,


58

Mr. Moses. What HUD does.

Mr. SHays. No, I don’t want to know what HUD does; I want to
know what HUD is supposed to do.

Mr. Moses. What HUD is supposed to do is to administer grant
agreements between the duly elected resident councils and HUD,
to carry out the functions that are outlined in section 20 of the U.S.
Housing Act and the rule on 24 CFR 964.

Mr. SHAYS. When you described to me tenant assistance, and so
on, you didn’t describe to me tenant residents, you didn’t describe
to me grants. What does the law require? I first want to under-
stand your understanding of what the law requires.

Mr. Moses. My understanding of what the law required was that
HUD would supply its resources to assist resident organizations to
begin to look at the possibility, the feasibility of taking on resident
management, to develop programs which will help resident groups
become organized, increase their organizational capacity, and to as-
sist resident groups in providing supportive services that they need
in order to improve the overall public housing community.

Mr. Snays. Is that your understanding of what HUD is supposed
to do, Ms. Gaffney?

Ms. GAFFNEY. My understanding is that HUD is to fund resident
councils for the purpose of ensuring that they move toward assum-
ing management functions in public housing, and HUD has a re-
sponsibility to more precisely define targets and oversee the ex-
penditure of funds in that direction.

Mr. Suays. If that’s what we’re supposed to do, I don’t support
the program. If that’s the proper description of what we’re sup-
posed to do.

What is your understanding of what we’re supposed to do, Mr.
Marchman?

Mr. MARCHMAN. At the risk of repeating the first two answers
to the question, it is to provide and administer funds for technical
assistance programs for resident management economic activities,
community-building activities, for the residents of public housing.
We had seen, not only in this administration but the previous ad-
ministration, that residents have to be an integral part of the pub-
lic housing community; that they weren't going to get there without
this type of technical assistance.

So it is HUD’s determination that we must provide funds to pro-
vide technical assistance, to assist the public housing residents to
participate in the decisions that affect their lives in public housing
developments.

Mr. Moses. Mr. Chairman, if I may.

Mr. Suays. Yes, Mr. Moses.

Mr. Mosgs. It was not HUD’s decision; it was the Congress’ deci-
sion.

Mr. SuHays. No, I understand that. But the sense I’m getting is,
HUD views its responsibility as taking money and giving it to ten-
ant organizations. And if that’s what it views its responsibility is,
then I understand why we have the kind of disconnect that I think
we have in a trip to Puerto Rico.

And that’s why I think we have a disconnect, when Mr. Biden
finds it outrageous that 60 percent of six $100,000 grants goes to
one consultant although obviously HUD felt that was wrong after


112

Page 3

of RMC's and TMC's that struggle to "reclaim their crime
infested Public Housing developments as Cochran Tenant management
did in 1976, A Resident Councils' ability to function and
communicate the problems that exist in their community are only
effective if the residents have an Autonomous Economic Base

to provide Training which is key, and if Public Housing
Authorities see them as partners in resolving long

standing issues in the complex.

Cochran Gardens, 1230 North Burling Building in Cabrinni

Green, and George Loving Tenant Management Corporation in Dallas
Texas, are all at different stages in Resident Management

which represents the birth of changes, choices, and altcr

from traditional PHA's which is Resident Participation:

Resident Management Corporations that resolve the prohlens

their particular public housing site and expose serve sansge ie

deficiencies while utilizing economic development ani emp

initiatives funded by HUD to further accomplish sv

vhiwe
managerial goals.

Again the TOP/TAG and RMTAG Grant funds provided  ~
necessary because they provides residents of public‘

who want to address the long standing issues of

housing authorities with an independent source of

is not at the discretion of bad Public Housing Aut

Ten Years ago Ten African American women at 1230 “>">

Building at Cabrini Green in Chicago Ill. were ti~


76

together, you would describe this as the proposed agenda that was
presented to you by Ms. Green prior to or on or about June 26?

Mr. MOsES. Yes, sir.

Mr. MaRTINI. OK. And then there’s another document of three
pages, so that they could be part of the record, but this is by the
National Tenants Organization, and it seems to set forth a ten-
tative agenda. Is this a document that was received by you after
the convention or just around the time of the convention?

Mr. Mosss. That also was received prior to the event, when the
initial conversation started.

Mr. Martini. All right. So this was around June 26?

Mr. Moses. No, sir. They start to plan their conference right
after the end of their previous conference. So, basically, what they
do is, they begin to outline to us what some of the topics are they
want to talk about. And then, working with staff, they begin to sort
of flesh out those details.

Mr. MarrINI. The reason I asked those questions is, there are no
dates. There is no date on either of these, but I’m assuming you
have helped us to give us the timeframe around which you received

ese.

Mr. MosES. Yes, sir.

Mr. MaRrTINI. But, once again, for the moment, at least, I'd like
to yield back the balance of my time to have a chance to read these.

(The information referred to follows:}


28

opportunity to all. HUD aims to sharpen resident involvement to
achieve inter-community cooperation and mixed-income populations
while embracing an ethic of self-responsibility.

So that HUD can best respond to these incoming realities, we
are taking immediate measures within our Community Relations and
Involvement Office to focus and integrate the administration of
our resident programs to achieve these priorities. As with
Department's successful shift to PHA risk management, it will be
necessary for us to clarify performance indicators for resident
services and resident management, set realistic but effective
targets, measure results achieved by resident groups and PHAs,
and act in to avert disaster and abuses. Because resources are
greatly diminished, we will be reassessing the effectiveness of
funds previously awarded under resident initiatives, as well as,
the egtent to which PHAs are providing residents with
opportunities under Section 3 in modernization, management,
maintenance and security. In light of our findings, the
Department will act quickly to make adjustments, and to obtain
the cooperation of PHAs, resident groups, and State and local
agencies in solving problems and promoting solutions.


94

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9

Statement and Questions for
Congressman Bill Martini
Subcommittee on Human Resources
Wasteful HUD Programs
November 9, 1995

Mr. Chairman, | would like to thank you for holding
today’s important hearing.

As you are aware, my office recently received
documents which seemed, at the least, to suggest a
highly questionable use of taxpayer dollars to find the
National Tenants Organization (NTO) annual
convention in San Juan, Puerto Rico.

I felt it was my obligation to share these materials with
the Subcommittee so that a full investigation could be
conducted. I want to commend the Chairman and the
Subcommittee staff for their swift and thorough action
on this matter.

In August, Gary Schaer, a Democratic City Councilman
from Passiac, New Jersey, notified my office that two
residents of the Alfred Speer Village Resident Council
had asked the Passaic Housing Authority for a loan of
$2,860.00 so they could attend the National Tenant
Organization’s (NTO) annual convention in San Juan,
Puerto Rico.


TT

€ SUNDAY, AUGUST 20TH

9:00AM - 4:00PM
REGISTRATION

9:00AM - 11:00AM
BREAKFAST BOARD MEETING
10:00AM - 11:00AM
DEVOTIONAL SERVICE

12:00M - 1:00PM
CHAIRWOMAN’S LUNCHEON
PAT ARNAUDO, DEPUTY DIRECTOR
FOR PROGRAM DEVELOPMENT HUD
ANITA OWEN HARKEY, BOARD MEMBER
TENANT AFFAIRS OF DETROIT

2:00PM - 4:00PM
OPENING SESSION- JOAQUINA CRUZ

INTRODUCTION OF \ TO CHAIRWOMAN- MAXINE GREEN
WELCOMING REMARKS -

MYRIAM ALAMEDA, LOCAL TENANT ZEADER
MIGUEL RODRIGUEZ, PRPHA EXECUTIVE DIRECTOR

HISTORY N.T O- MAE LANE, N.T.O. MEMBER-AT-LARGE

CONFERENCE OVERVIEW
ED MOSES, AND STAFF HUD WASHING7ON. DC
BLUEPRINT
TOP PROGRAM
SECTION 3/ ECONOMIC DEVELOPMENT
RESOURCES FOR HOME OWNERSHIP
SECTION 5(h) REGULATIONS
LEGISLATIVE UPDATE- JIM HAUGHTON, NT.O
LEGISLATIVE COMMITTEE CHAIR


83

NATIONAL TENANTS ORGANIZATION, ING

tponce
} ie =
Pe ra
saat

WOT. Bi 1995 NATIONAL CONVEKTION
YGUST 20TH ~ 26T8, 1995
eL San J0aW wore s saps norel tp CASINO BEACE RESORT

P.O. BOX 667:
SAK JUAK, POERTO RICO 00914-6676
800-443-2009

TENTATIVE sACEMDs

SUMD AT Us
RECISTRATION 9:00 4.M. - 4200 PLM.
BREAKFAST BOARD HEETING 9:00 ALN. © 11:00 a.m.
DEVOTIONAL SERVICE 10:00 a.M. = 11100 A.M,
CHALRNOMNAN'S LUNCHEON 12:00 P.M. - = 3:00 P.M.
THE HONORABLE ANDREW YOUNG
OPENLNG SESSION 2100 PK. = 100 PLM.
SELECTION
INVOCATION

INTRODUCTION OF N.7.0. CHALRVOMAN
WELCOMING REMARKS
GOVERROR, PUERTO RICO
MAYOR, SAM JUAR
LOCAL TENANT LEADER
HOUSING AUTHORITY EXECUTIVE DIRECTOR
RISTORY W.T.O.
CONFERENCE OVERVIEW
ED MOSES, AND STAFF B.U.D. WASRINGTON, D.C,
BLUEPRINT
T.0.P. PROGRAK
SECTION 3 / ECONOMIC DEVELOPMENT
RESOURCES FOR HOME OWNERSHIP
SECTION 5(h) REGULATIONS
LECISLATIVE UPDATE
ANNOUNCEMENTS

STATE MEETINGS 4:00 P.M. = = 5:00 P.M.
RECESS

ose
wetiermerersTM


MR. CHAIRMAN, THE WHOLE CONCEPT OF PROVIDING
DIRECT FEDERAL FUNDING OF RESIDENT MANAGEMENT
EFFORTS WAS FIRST ADVOCATED BY FORMER HUD
SECRETARY KEMP AND PASSED INTO LAW IN 1988. EVEN SO,
THE THEORY THAT PUBLIC HOUSING RESIDENTS COULD
SOMEHOW MANAGE THEIR OWN COMMUNITIES WAS NOT
MET WITH ENTHUSIASTIC CONGRESSIONAL SUPPORT -- $2.5
MILLION IN 1988, $5 MILLION IN 1991, THEN $25 MILLION IN
1995.

THIS $25 MILLION REPRESENTS THE TOTAL OF FEDERAL
HOUSING DOLLARS PROVIDING DIRECTLY TO RESIDENTS
LIVING IN FEDERAL HOUSING. BUT THIS MINUSCULE
PERCENTAGE OF THE HUD $7.5 BILLION BUDGET SOMEHOW
TAKES ON THE SIGNIFICANCE OF THE ENTIRE NATIONAL
DEBT IN THE HANDS OF THE TENANTS. AND IRONICALLY,
THE BROAD BASED INITIATIVES UNDERWAY IN THIS
CONGRESS TO RETURN CONTROL TO THE LOCAL LEVEL
SUFFER CRITICISM IN THIS PROGRAM.

1 AM NOT WILLING TO ACCEPT THAT PUBLIC HOUSING
RESIDENTS ARE INCAPABLE OF SELF-DETERMINATION, OR

2


lll

Page 2

Housing Authority Management. However, as a result of the
Resident Management, Economic Development, and Empowerment
Initiatives funded by HUD today Cochran Gardens is a part of
a Partnership of Economic Entities of the downtown area that

now encompass the following:

* A 250 Million dollar Superdome Stadium

* A 75 Million dollar Convention Center

* (10) Ten Newly built Hotels

* 125 Million dollar Saint Louis Center Mall With 200 stores

* 15 Million dollar Expansion of Kiel Auditorium

* 1000 Units of newly built Market Rate Housing

* 1000 units of newly built condo's selling at $90,00 to
$160,000 per unit

* Redevelopment of St. Louis RiverFront

* Newly Built Schnucks Supermarket

* Newly Built AT&T Building

I appreciate this opportunity by your committee to continue

to discuss and review public housing resident management,
economic development and empowerment initiatives funded by HUD
Cochran Gardens Tenant Management Corporation is a mature
Resident Management Corporation however to give your committee

a developmental description of the process of Resident Management
I shall also discuss two additional Tenant Management
Corporations at different stages in their development.

I cannot reiterate enough how important RMTAG TOP/TAG funds

are crucial to the birth of Resident Councils and the Survival


81

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Roses (umee - 50)
Vass 3-4 Vays)

Cacs


107

began to go; they began to disappear. And first it was very subtle,
like the housing authority stopped cutting grass. OK. They stopped
reseeding. They stopped trimming the trees.

Many things that many of us wouldn’t even think were impor-
tant, but white families who lived there, who had lived in the good
days in Cochran, saw this as a retreat from the housing authority's
initial management practices, because they had lived there where
every year the grounds were seeded. Every year the trees were
trimmed. All of these things were kept up. So when they saw those
things being taken away, they began to move, Mr. Chairman, in
huge numbers, huge numbers.

By 1966, around 1964, 1965, 1966, public housing was a jungle.
Even working black families refused to stay there. The services be-
came withdrawn. The maintenance was eliminated. The screening
was stopped, Mr. Chairman. The laundry facilities were closed.
Cochran was so safe when my mother moved there, we could sleep
on the porch, because we have little patios. I lived in a 12-story
high rise. You could sleep on the patios; it was just that safe. We
could leave our toys downstairs; it was just that safe.

And they had 884 units. So when we talk about the density, we
had a huge density, because every unit was occupied. My mother
had 15 children. The lady next door to us had 11. Because birth
control was not practiced rampantly, as it is today. The pill was not
there then. Yet the community was safe; it was well-managed.

So what’s the problem? The problem was the entity that man-
aged the property, which was the housing authority. They reduced
the quality of the management standards. For one group of people
the standards were one way. When the class of people changed, the
management practices changed. Even though, Mr. Chairman, by
now it was 1970, the housing authority was now getting subsidy.
So they were getting even money. Because back during my moth-
er’s days, there was no subsidy. The public housing site operated
off of rent only.

But as the cost of living went up, wages, materials, we fought
and lobbied to get subsidies for the authority. So you would as-
sume, if you're getting more money, the services are going to im-
prove; right? No, they didn’t. The only thing that improved was the
housing authority's operating budgets got bigger; they hired assist-
ants, assistants to the assistants, the director to the director. The
money did not go down on the level of providing more maintenance,
putting in more windows, putting in more doors, repairing plumb-
ing, lighting. All of the basic functions that the operating budget
is supposed to do, that didn’t happen.

The other things that happened, Mr. Chairman and committee
members, was the people who replaced the working families that
lived there did not have the kind of educational level or skills to
be able to assert and make the management responsible. These
were now majority women who lacked basic educational skills, who
were apathetic in many ways because they had been beaten down
by the welfare system. They had been beaten down by the system
totally. All they wanted was somewhere to live.

They did not know how to make the authority responsible, who
was responsible for their maintenance services, their security, and


we —— —

24 October 1995
Dear Chief of Staft/Adminiswrative Assistant,

‘The Secretary of the Navy cordially invites you on an onentation visit to the Navy's
premier bases in Hawaii. This unique trip will include a vanety of shor underway pericds,
briefings, and tours designed to give an intense overview of naval operations. Highlights will
include an underway embark on a fast atack submarine, a tour of the USS Paul Harailton (DDG-
60), one of the newest Aegis destroyers, briefings with Navy SEALS and Marine Corps units in
the area, and a tour of Pearl Harbor with a visit to the USS Arizona memorial.

‘The tip will depart on Friday, 17 November (approximately 0730 fom the Raybum
Horseshoe) and will retum on Wednesday, 22 November (mid moming return)

This should be both an informative and enjoyable tip. Due to personnel restrictions

regarding the submarine embark, there is only space for ten COS/AAs, so please let us know as
00m. as possible if you will be able to antend. Please contact LT Panrick Hueve to sign up for this,

trip at $.7124, ext 298.
Weal
MARTY
cart Vu


60

Mr. Suays. I think they should. I’m not sure they have in this
program. I’ve doubled my time here, and I’m going to make sure
the ranking member gets equal time on this. But where I’m having
trouble with, giving advances or funds to TOP recipients. It flies
in the face of this kind of strict review.

I’m wrestling with this whole concept that Mr. Green has about
block grants, because I like it. I'm willing to have people make mis-
takes. I'd rather give people more flexibility and have them screw
up than have it be so stringent that nobody grows. And I try to
make it a point in this committee not to, as soon as we find a mis-
take, to just go after someone and say, we've got you. I don’t follow
that approach, I think you know. But I am troubled if I think we
don’t have a handle on it after the fact. So I've got big questions
about this program.

Let me give Mr. Towns 10 minutes.

Mr. Towns. Thank you very much, Mr. Chairman.

Let me begin by just sort of getting clarification on something
that you said, Ms. Gaffney. You indicated that we are not well-
served by the type of advertisement, in terms of the flyer. What did
you mean by that?

Ms. GaFrFNEY. I think, when the taxpayers think that we are
spending their money to send Federal employees or residents for
expense-paid vacations in resorts, that they get angry. The tax-
payers need to believe that we are serving them, not using their
money frivolously.

And I think often the promotions are not correct, that things are
advertised as social events when, in fact, they are professional.
They advertise them as social events to get attendance, but it’s the
wrong message, in my view, to send to the taxpayer.

Mr. Towns. Right. But this has not been confirmed yet, I mean.

Ms. GAFFNEY. Oh, no. We are looking at this. I have no knowl-
edge, at this point, of what happened in Puerto Rico. That’s correct.

Mr. Towns. Well, let me just say this. Being involved in a life-
style that puts out a lot of material on people, and of course people
put out a lot of material on you, you know, that lifestyle that we
are in here, and I've seen some stuff out there that I didn’t even
know anything about. Sometimes you have eager people to put
things out. I mean, I don’t know the details here. I really don’t.

Ms. GAFFNEY. Nor do J, sir.

Mr. Towns. I would hope that eventually we will be able to find
out, but I just would not want to leave the impression that this has
already been investigated and the finding was—I mean, I just don’t
want—unless that’s the case.

Ms. GAFFNEY. That is not the case.

Mr. Towns. Right. And that’s what I understand. OK. I just
wanted to clarify.

And I agree with you that, when you are promoting things, some-
times people do go to the extreme to say this or say that. But I
looked at the flyer there, and they said, serious business from 9
a.m. to 5 p.m. You can’t ignore that. I mean, if you want to go snor-
keling after 5 p.m., you know, then fine, but the point is, from 9
a.m. to 5 p.m., make certain that we're talking about empowering
folks and things like that. So I think that we need to say some


Appendix 3
List of Resident Councils Tested

Tenant Council Location Funding

Resident Management

Mission Hill Roxbury, MA $100,000
Ida Barbour Portsmouth, VA $100,000
Roberts Village Norfolk, VA $100,000
Rocky Mount Rocky Mount, NC $100,000
Laurel Homes Cincinnati, O $100,000
Grandview Everett, WA $100,000
-Employment

Schnectady HA Schnectady, NY $100,000
Urban League Pittsburgh, PA $200,000
Corp. For

Enterprise Dev. Raleigh, NC $194,191

North Star Comm.
Dev. Corporation Duluth, MN $143,174

Southern Dallas
Dev. Corporation Dallas, TX $200,000


18

STATEMENT OF KEVIN MARCHMAN, ACTING ASSISTANT SEC-
RETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT, ACCOMPANIED BY
MICHAEL JANIS, GENERAL DEPUTY ASSISTANT SECRETARY
FOR PUBLIC AND INDIAN HOUSING; ED MOSES, DEPUTY EX-
ECUTIVE DIRECTOR FOR COMMUNITY RELATIONS AND IN-
VOLVEMENT, CHICAGO HOUSING AUTHORITY, AND FORMER.
DEPUTY ASSISTANT SECRETARY FOR COMMUNITY RELA-
TIONS AND INVOLVEMENT, DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT; AND SUSAN GAFFNEY, INSPECTOR
GENERAL, DEPARTMENT OF HOUSING AND URBAN DEVEL-
OPMENT

Mr. MARCHMAN. Thank you, Mr. Chairman.

Let me first say that I appreciate the opportunity to clear up the
allegations and accusations against the TOP program. As you
know, it has been the President’s and the Secretary’s concern that
any program out of the Department of Housing be run in such a
way that does not cause these types of questions. So I appreciate
the committee’s concern over the matters, and | intend to address
them in my remarks.

I have submitted my written testimony, and in the interest of
time I won’t read through that, but let me take a moment just to
hit some of the highlights of my testimony and address specifically
the three concerns that have been brought to us by the committee
and the committee staff.

First of all, you know the TOP program began as a resident man-
agement program authorized under Section 20 of the 1987 Housing
Act. It was written and promoted by the previous administration
as a way to begin to empower residents and make sure that they
had the necessary requirements and technical assistance to partici-
pate and become active in the decisions that affect their lives in the
public housing developments. The objective of the program is to
also provide training and technical assistance for residents to orga-
nize the communities and operate various resident management
programs,

The progress of the program has been such that it was recently
expanded after conversations and meetings with residents, public
housing authorities, and the communities. The TOP program ex-
panded based upon the requirements of the program but, more im-
portantly, what was already allowed. We have simply expanded it,
imasmuch as residents believed that they were interested in not
only resident management but the creation of businesses, the link-
ing back to the community, and that sort of thing.

Having now reviewed this program, the TOP program, I think I
can say that we have seen successes in the TOP program. I have
brought with me this morning a booklet that we put together some
time ago to highlight the successes of the TOP program. But I be-
lieve, like any program, there are always things that come up in
the creation of a program that people tend to look at and believe,
perhaps, question. I want to address the three issues which I have
been apprised of that are the concern of this hearing.

There has been much conversation with respect to the National
Tenants Organization’s conference in San Juan, PR, last year. I
want to point out very quickly, this was not a HUD-sponsored


47

subsidy for resident initiatives, with total actual annual PHA
operating expenditures for resident services running about $60
million, or roughly $4 per unit. HUD’s modernization program
funds can also be used for resident initiatives, as cen PHAs’
Section 8 administrative fees, and various categorical grant and
subsidy programs, such as Drug Elimination Grants, Youth Sports
Grants, etc.

OIG Audit Results

Our most recent program evaluation work is contained in an
audit report dated February 28, 1995 entitled, "Audit of
Technical Assistance Grants to Support Public Housing Resident
Management and Self-Employment Programs." The review's primary
objective was to determine whether the grantees achieved the
program's intended benefits of residents assuming project
management or other noteworthy progress towards that goal. We
reviewed six Councils that received resident management grants
and five Councils that implemented self-employment programs.
Appendix 3 lists the agencies reviewed during this evaluation.

Of the 6 resident management Councils, only 1 performed
significant project management work. They managed a 28 unit
project but they stopped managing the project after our review
was completed because the key Council members had left. The
Council was planning to disband. The others made little or no
progress towards management, although they reported
accomplishments outside the stated program objective. Two groups
had no accomplishments. The five grantees that implemented self
employment programs fared better and substantially accomplished
their objectives by providing business training to over 210
individuals; about 50 of which started new businesses.

The limited progress of the test resident management
Councils was consistent with the overall performance of the
entire program. That conclusion is supported by previous OIG
reviews, the Department’s monitoring records, and more recent
program evaluation surveys conducted for the Department. Through
1993, $22 million in RMTAG funding to 328 Resident Management
Councils (RMCs) resulted in only 15 RMCs performing full project
management and only 22 others performing limited management or
other special activities. Eleven of these 37 RMCs were active in
the management of their developments before 1988, when this
program was first funded. In terms of achieving the primary
objective of fostering greater resident participation in project
management, results of the RMTAG Program have been limited.
Furthermore, HUD has not evaluated whether its more recent
limited successes have addressed the ultimate objective of
improving the overall public housing living environment through
greater resident participation.


51

programs on the books of HUD and suggested that most of those
programs were candidates for elimination or consolidation for the
following reasons:

® the programs are small dollar categorical grant programs
with high administrative burdens, are poorly targeted, and
each only a small portion of the eligible universe of
potential participants;

© the programs are social service programs that overlap the
core mission of other agencies and are generally beyond
HUD’s capacity to administer;

© the programs are heavily regulated, difficult to administer,
and lack flexibility to tailor local decisions cn the best
use of limited program resources; and

© the programs are duplicative of many programs with similar
objectives that promote separate Federal and local
bureaucracies and detract form overall program performance
and results.

All the resident initiative programs that HUD is attempting
to administer fall within each of the above categories and are
prime candidates for elimination or consolidation. That is not
to say that the pursuit of greater resident responsibility and
participation is not desirable as a means of improving public
housing communities. On the contrary, I can think of little else
that is more important than providing opportunities for low
income individuals to improve themselves. However, the current
HUD programs and current HUD practices have fallen short under
any reasonable measure of accomplishment .

We are encouraged that pending Congressional legisiative
proposals -- such as the United States Housing Act of 1995 (H.R.
2406) -- will block grant HUD funding for public housing to allow
greater local flexibility in addressing local needs, including
resident initiatives. Such proposed changes will put the onus on
PHAs and local leaders to work in partnership with residents to
improve their public housing communities. HUD’s role should be
limited to supporting and assisting such efforts, and to measure
the extent of progress made.

Mr Chairman, that concludes my written statement and I would
be pleased to answer any questions.


- Tim Waves

TUESDAY. AUGUST 22ND We CHAR
(te m1)

9:00AM - 2:00PM

REGISTRATION 1OFFICIALLY CLOSES AT 2 00PM) a: 30

10:00AM —- 12:00M meenne

TOWN HALL ME2TING Beem

“THE FUTURE OF PUBLIC HOUSING”

MICUEL RODRIGUEZ, PRPHA

MIKE JANIS, HUD:

HECTOR MERCADO HUD fet Reo
RESIDENT MANAGEMENT.

RECINO COLON, DEPUTY PRPHA

i200M == 2:30PM (Sronne0 wre)
WOMEN'S LUNCHEON ~ -
LENA BIVENS, N.T 0. MID WESTERN REGION
VICE CHAIRWOMAN
WANDA RODRIGUEZ, PRPEA

00PM - OPM Gu ee
TOWN HALL MEETING CONTINUES ~ BLvefi.w 7] s
. - DRoe GamAani
RECESS a i004 = CRyne
MUA SANTAG © NATL GUANO
Vente (RICO
1c —

Den TE Rode ever



142

Grant Applicat er

A comprehensive application process with specific
selection criteria for applicants in order to compete
for grant funds. A Notice of Funding Availability
(NOFA) and a structured application kit is publisned in
the Fedexal Register. (Your Committee has a copy of

-+ Grant application preparation by the prospective
awardee requires a description of the need for the
project, project objectives, TOP/RM work plan and
budget, support by project residents, the housing
authority, and public/private agencies, as well as
financial capability of the resident grantee;

-- Review and evaluation of grant applications are
carried out by an independent evaluation panel
made up of staff from various HUD field offices;

-+ Computerized ranking of applications to ensure
accuracy in the final selections.

Bi :

-+ Computerized Cash Management and Disbursement
System through the Line of Credit Control system
(LOCCS) that limits funding access te amounte
specified and approved by HUD in the grantee’s
work plan/budget ;

7 Requirement for an Independent Public Accountant
to set up and certify the grantee’s financial
management and accounting system;

-- Cost requirements to ensure that TOP/RM activities
are reasonable;

++ Audit by a certified public accountant when the
‘TOP/RM program is completed;

-- Requirement for financial management controls
Pursuant to OMB Circulars A-110/24 CPR Part 84 to
ensure accountability of TOP/RM dollars;


185

214 lis of all funding sources available to HUD. PHAs and tenant organizations fe he
purposs of tenant training. wavel, organizational ot economic development program.

31 An iimization of all HUD and PHA monies expended in FY9S for the purpose
tenant vaining. tavel, organization or economic development provrams

4) A copy of any TOP grants awarded to residents in Chi:
and Detroit.

. New York City, Pasizic

5) Any cther information or material you believe to be relevant to our discussion of
HUD’s management and oversight of funds targeted for tenant programs.

Please submit your response to the subcommittee by November 3, 1995. Should you
have any questions, please contact Demi Greatorex at (202) 225-2548.

Your immediate attention to this matter is appreciated,

Sincerely,

Ga oe ys

ce: Susan Gaffney. Inspector General, Department of Housing and Urban Development


13

The invitation packet distributed by NTO also included
a lobbying fact sheet which stated, "Congress is
threatening to repeal the Brooke amendment!" So
not only are the American people providing a free
island vacation, but the taxpayers are picking up the tab
for a public housing lobbyist training seminar.

Mr. Chairman, this type of abuse must come to an end.
I am hopeful that today’s hearing will begin the process
that will allow us to put an end to this flagrant misuse
of federal funds.

As we move down the path towards fiscal responsibility
and a balanced budget, it is very disheartening to learn
about such incidents. In my opinion, this is the federal
government at its worst.

Mr. Chairman, I am committed to working with you to
ensure that this type of waste, fraud and abuse does not
continue.

Accordingly, I am looking forward to the testimony we
are about hear, and appreciate your assistance in
getting to the bottom of this important matter.

I yield back the balance of my time!


137

the National Association of Resident Management Corporations
(NARMC; received a HUD grant in the amount of $25,000 for theiz
first Annual Conference in Dallas, Texas. The purpese of the
conference was to provide technical assistance and training to
public housing residents, leaders from State and local
governments, and private sector individuals on developing loca~
partnerships in order to carry out successful public housing
resident and homeownership programs.

NARMC and other tenant organizations, including the National
Tenant Bducation Foundation (NTEF) and NTO, conduct national
training conferences. Please note that HUD has not provided
direct funding to these subsequent conferences.

(2) A list of all funding sources available co HUD, HAs and
tenant organizations for the purpose of tenant training, travel,
organizational or economic development programs.

Response: Listed below are the Public and Indian Housing (PIH)
low-rent conventional public housing resources for resident
training, travel, organizational or economic development
programs. Please note that some of this information was
previously provided in response to your memorandum dated
October 18, 1995.

The following PIE programs provide direct HUD funding to resident
entities:

A, TOP/RM

FY 1991 PY 1992 PY 1993 1994 FY 1995
$5 million, $5 million, $4.75 million, 325 million, $25 million

Under the TOP program, funding is provided to Resident
Councils/Resident Management Corporations (RCs/RMCs). TOP
represents a broader approach than the former Resident
Management (RM) Program and addresses a wider range of
resident émpowerment initiatives in a more flexible manner.
Resident empowerment initiatives have been expanded to
permit resident groups, in cooperation with local housing
authorities, to extend the scope of HUD’s exieting RM
Program beyond training for property management. Also
included is training for business ownership, child care,
youth programs, tenant patrols and other activities that
help prevent crime. These resident self-help initiatives
have proven to be effective in developments, especially in
improving security and reducing maintenance needs.



Appendix 2
HUD RMTAG/TOP Funding Activity
; RMTAG/TOP Awards
Fiscal Year Number of RCs a/ Amount_b/
1988 27 $2.5
1989 35 2.5
1990 37 2.4
i991 95 4.9
1992 94 4.8
1993 94 4.8
1994 258 24.2
1995 265 25.0
TOTAL 905 $71.1 i

a/ The total number of Resident Councils (RCs) funded would be
less than 905, since some RCs received funding in more than
one year, and 20 awards in 1994 and 1995 went to National,
Regional and State Resident Organizations.

b/ In millions; rounded to nearest $100,000

SOURCE: Unaudited program records.


2

grant process, or when technical assistance grants are used to du-
plicate other social service programs, scarce resources are wasted
and tenant aspirations to self-sufficiency are thwarted. And when
a resident management corporation is not adequately compensated
for its services, as currently was the case in Cabrini Green, HUD
and the Public Housing Authority undermine the statutory direc-
tive to encourage resident management of public housing projects.

In this hearing, representatives from HUD have been asked to
explain how they manage tenant empowerment, particularly the
expanded $24-million TOP program. The HUD Inspector General
has been asked to offer her observations on the operation and effec-
tiveness of technical assistance grant programs, and a tenant man-
agement advocate has been asked to describe the role of HUD, the
PHA, and consultants in successful tenant initiatives.

Representatives from the National Tenants Organization [NTO],
which sponsored the meeting in Puerto Rico, declined to testify
today, as did the consultant who prepared and sought to be paid
$60,000 from each of six TOP grants awarded, but subsequently re-
scinded, by HUD. They will be invited and, if necessary, compelled
to provide testify at our hearing on December 12. We will also in-
vite a representative of the Detroit tenants who attended the NTO
meeting in Puerto Rico, as well as representatives from other pub-
lic housing tenant organizations.

Our oversight responsibilities require us to pursue allegations of
waste and abuse in Federal human service programs. In this in-
stance, we will do so until we are satisfied that the statutory man-
date to encourage public housing tenant management is being im-
plemented effectively and efficiently.

At this time I would like to call on the ranking member of this
committee, Mr. Towns.

Mr. Towns. Thank you very much, Mr. Chairman, for having
this hearing.

First and foremost, I want to point out that the allegations of
mismanagement and abuse that we will consider as evidence of
HUD’s poor administration of the TOP program are simply that, al-
legations, and nothing more and nothing less. I am pleased that we
have scheduled a second day of hearings to provide the direct
intermediary recipients of TOP funds the chance to respond to the
subcommittee’s concerns.

Mr. Chairman, the whole concept of providing direct Federal
funding of resident management efforts was first advocated by the
former Secretary of HUD, my good friend Jack Kemp, and passed
into law in 1988. Even so, the theory that public housing residents
could somehow manage their own communities was not met with
enthusiastic congressional support. In the beginning, it was only
$2.5 million, in 1988. Then, of course, in 1991, we increased it to
$5 million, and now it is up to $25 million, in 1995.

This $25 million represents the total of Federal housing dollars
provided directly to residents living in Federal housing. But this
minuscule percentage of the HUD $7.5-billion budget somehow
takes on the significance of the entire national debt in the hands
of the tenants. And ironically, the broad-based initiatives underway
in this Congress to return control to the local level suffer criticism
in this program.


72

make judgments and decisions on their own. Yet we do have the
responsibility and the accountability to make sure that Federal
funds are being spent wisely. But we would not seek to, in this par-
ticular case, tell the residents of Detroit or Atlanta exactly what
conference they would have to go to, how to get there, or anything
like that.

Mr. SHAYS. Would you weigh in on saying whether it’s appro-
priate to advertise it as a vacation?

Mr. MARCHMAN. My personal judgment?

Mr. Suays. I don’t want your personal judgment; I want your
judgment as the acting person in charge.

Mr. MARCHMAN. No.

Mr. Suays. OK. I thank the gentleman.

Mr. FaTrau. Let me continue.

Mr. Suavs. Please start over his time.

Mr. Fatrau. There has been a lot of concern about the local
housing authorities, what are called troubled housing authorities,
housing authorities that have had control of billions and billions of
dollars, much of which has been misspent or incorrectly dealt with.
In the normal processes, audit exceptions, you go through, you go
back, you audit, and you find what is acceptable and what is unac-
ceptable.

I would assume that’s really the same process you go through in
terms of the resident management groups; right?

Mr. MARCHMAN. You're right; yes, sir.

Mr. Fatrau. OK. And if we were going to look at changes, it
would seem to me that it would be appropriate for us to look at
changes for the whole aggregation of agencies that receive dollars
from HUD and, again, not to single out resident management.
groups to be treated differently than any other entity that would
be eligible for funding through HUD. Because I think that really
sends a different message than perhaps Secretary Kemp and others
have had in terms of this initiative.

The last thing that I really want to deal with is this conference
itself, because I don’t want to skip the point. The National Tenants
Organization, this organization, is this a HUD-created entity?

Mr. MaRCHMAN. No, it is not.

Mr. Fattan. Did you create this organization? Do you run it?

Mr. MaRcHMAN. No, sir.

Mr. Fatrau. Do you have anything to do with deciding where
they meet at?

Mr. MARCHMAN. No, we do not.

Mr. FatraH. OK. Now, in terms of the planning for this con-
ference, did anyone in your control in your agency, that you know
of, create this flyer?

Mr. MARCHMAN. No, sir.

Mr. Fatrau. Cause it to be distributed?

Mr. MARCHMAN. No, sir.

Mr. FATTAH. Approve it, authorize it in any way?

Mr. MARCHMAN. No, sir.

Mr. Fattau. OK. So it is difficult for me to understand how we
would then burden you with justifying it. And I would invite the
committee—at some point maybe we should consider bringing in of-
ficials from this organization to explain why it is that they decided


27

budget cuts curtail HUD’s capability to provide adequate
technical assistance and oversight.

I am providing for the record specific background on the
grant structure of the TOP program to further show the
improvements in the Department's grants management system since
1993. As a part of our continual striving toward excellence, we
will review all current guidelines and controls in the program
and expeditiously implement reforms where warranted.

Priorities for Redirection

I want to take the opportunity to share with you my plans
for improving the administration of Resident programs in the
Office of Public and Indian Housing. The maintenance, care and
viability of Public Housing depends on strengthening resident
self-responsibility. The priorities I have established are an
outgrowth of three critical realities: first, that all public
housing programs, including resident initiatives will be funded
differently into the future, HUD won't be dispensing grants
directly to resident groups, since Congress is largely
eliminating separate funding for such programs. I want to also
point out that the greater sources of funding for resident
programs - PHA operating subsidies, modernization under the
Comprehensive Grant program, and the Drug Elimination program are
also being significantly cut or altogether reduced. Unless
mitigated, these outcomes represent an immense potential for
wasteful disputes and competition over limited resources at the
local level. To prevent and reduce such negative fallout, HUD
will redirect and tie the objectives of public housing resident
services to helping address current and ongoing needs of PHAs to
manage, maintain and transform public housing. If PHAs are to
arrest rising costs and eliminate waste, it will be in the
industry’s best interest to aggressively implement Section 3 for
construction, management and maintenance, and to enlist the help
of residents in establishing house rules and lease policies on
resident maintenance responsibilities.

The second critical reality is the prospect of National
Welfare Reform legislation. The Welfare Bill is under
consideration would impose work requirements and time limits on
welfare recipients, many of whom live in public housing.
will endeavor to creatively and constructively help PHAs respond
to the impacts of welfare reform to help avert a new crisis for
public housing and poor.

The third critical reality has to do with finally
xecognizing that effects of de jure and de facto segregation of
minorities coupled with the isolation of the poorest of the poor
in public housing must be transformed as we move into the twenty-
first century. These urban zones of sacrifice weaken the heart of
our nation’s cities, jeopardizing the strength of our social
fabric and our commitment as a democracy to extend equal


70

purpose. There are plenty of sons of Puerto Rico who have given
their lives in defense of this country.

Let me now deal with the sum and substance of this issue. HUD,
through its $7 billion or more in appropriations, I would assume—
and I’m really focusing on the Inspector General—that most of
these dollars go to local public housing authorities. Some of it goes
to State governments and city governments directly. Some of it
goes to social service agencies like Catholic Charities or the Jewish
Employment Services to do housing development, or other devel-
opers who do specific duties as authorized by the Congress and as
implemented by HUD. Is that correct?

Ms. GAFFNEY. But I think that the $7 billion we’re talking about
here essentially is going to public housing authorities.

Mr. FatTaH. OK. In terms of the totality of HUD funds, then,
how many dollars are yearly spent by HUD?

Ms. GAFFNEY. About $25 billion.

Mr. FaTTAH. How many of those dollars are under the control of
public housing tenant groups, these resident management associa-
tions?

Ms. GAFFNEY. I can’t answer that question, because the resident
groups are eligible for funding from public housing apart from the

P program.

Mr. Fattan. Right.

Ms. GAFFNEY. They are also eligible for funding through the
modernization programs and operating subsidy. Perhaps Kevin can
correct me—but, to my knowledge, HUD does not have data that
specify those amounts. But I would have to assume, that it’s very
small in relation to the overall amount.

Mr. FaTTaH. A very small amount.

Ms. GaFFNEY. That is my assumption also.

Mr. FATTAH. I am aware that, at the beginning of this adminis-
tration, you had a great deal of work to do in reference to scandals
at HUD, because in the previous administrations there had been
serious problems, as I recall it, and they didn’t involve tenant asso-
ciations; mismanaging, wasting, acting in corrupt ways, utilizing
dollars that were in great excess of the annual appropriate for this
program. So I want to compliment this new administration at HUD
for helping to clean this agency up.

As relates to the TOP program, in particular, I want to know
that you basically provide money to these organizations, and tech-
nical assistance is one of the allowable expenses, Mr. Marchman.

Mr. MARCHMAN. Yes, sir.

Mr. Fatrau. Is that correct?

Mr. MARCHMAN. Yes, sir.

Mr. FATTAH. Now, does HUD provide technical assistance dollars
to local housing authorities, too?

Mr. MARCHMAN. Yes, it does.

Mr. Fatran. And for other types of nonprofits that receive assist-
ance?

Mr. MARCHMAN. Yes, it does.

Mr. Fatrau. So, in terms of the normal process of technical as-
sistance dollars, do you restrict what conferences, what workshops,
what types of expenditures can be used in terms of technical assist-
ance, as a general course, at HUD?


146

5) The RMC incorporation letter for 1230 North Burling. alist of the 1230 North Burling
board members, a list of the tenant council members for the building. the Independent
Public Accountant (IPA) report for 1230 North Burling RMC and all financial statements
for the 1230 North Burling RMC.

Please submitt your response to the subcommittee by November 3. 1995. Should you
have any questions. please feel free to contact Demi Greatores at (202) 225-2548

I appreciate your assistance in this matter.

Sincerely.

Christopher
‘Chairman

‘co: Susan Gaffiey, Inspector General, Department of Housing and Urban Development


63

The first thing that they have to accomplish is to enter into a
memorandum of understanding with the housing authority to say
what is the responsibility of the housing authority and what is the
responsibility of the group in accomplishing the goals and objec-
tives as outlined by the residents, and second, that they have to
put in place a technical assistance strategy, how would they pro-
vide technical assistance to help them in the areas where they
needed some support. So we began to go through that process.

The second NOFA that we put out, in order, again, to enhance
the accountability and make sure that the funds were not misused,
we put into our NOFA that no one consultant could receive any
more than 50 percent of the grant funds, that no consultant should
receive more than that.

Basically, one of the problems with the programs, as the IG has
mentioned, one of the ways we operated the programs, we had ba-
sically, previous to this administration, we had basically allowed
resident groups to begin to perform these functions without having
any technical support whatsoever. What we tried to do is, we tried
to put in place systems that would allow them to receive this tech-
nical support and develop programs that would actually help them
to collaborate with one another.

One of the things that we did is, we put something together, a
pilot demonstration in this program called the technical assistance
organization, or the TAO, if you will, which would put together a
number of different grantees in a particular city, or in a particular
housing authority, and let them coalesce their funds to put in place
a professional staff that would offer them assistance.

‘he growth of the tenant organization movement is quite similar
to the growth of the community based organization movement.
When community based organizations started out, they were
scrambling along. You had change in the officers, because it’s a
democratic process, and therefore you had instability. One of the
things that strengthened the community based organization move-
ment is, they began to put in place a highly efficient technical staff.

Mr. Towns. I have to cut you off. I was having great difficulty
doing that because you were saying the kinds of things I was hop-
ing that I would hear. I want you to know that. That’s the reason
why I allowed you to just go on and on and on.

Mr. Mosgs. There’s a lot more, sir.

Mr. Towns. If I would have been the church, I would have prob-
ably said Amen.

Mr. Chairman, I yield back.

Mr. Suays. Thank you.

Just to put on the record, Mr. Marchman, how many people went
on this trip?

Mr. MARCHMAN. The NTO trip?

Mr. Suays. Yes.

Mr. MaRcumaN. I’m not sure how many people went on the trip.

Mr. SHays. How much did it cost the taxpayers?

Mr. MARCHMAN. I am not sure how much it cost the taxpayers.

Mr. Suays. OK. I want to be on record on three things: First, I
want to be on record as objecting to your comments at the start
that this wasn’t HUD money. Second, I want to express, as pro-
foundly as I can, that HUD does not know how many people went


20

share of subsidy that they would be able to manage and maintain
their own building. The issue seems to be whether or not the Chi-
cago Housing Authority allocated a fair representation of that sub-
sidy for the RMC.

I think you will hear in testimony today that that issue has been
cleared up. Again, it was brought to the attention of the field office
in Chicago and subsequently acted upon. The new management of
the Chicago Housing Authority, as I mentioned, has addressed the
issue, and I am sure that you will hear from the residents of 1230
about the resolution of that.

That being said, I can tell you that, in working at the Chicago
Housing Authority over the summer, issues such as this came up
frequently, that a resident group might ask of the housing author-
ity a particular request and it was not acted upon in months on
the CHA side. At least on the HUD side, it is my understanding
that the local office asked the Chicago Housing Authority to deal
with this particular issue, yet it came to the committee and we are
speaking about it today. I am comfortable that it has been taken
care of.

With respect to management reforms, I should like to highlight
that we have looked at TOP. Based upon the IG’s review of the of-
fice a couple of years ago, we have made changes that have tight-
ened up the office, probably more for more strict administrative
measures than for any allegation of abuse of the funds.

Let me conclude by saying that anytime that we see any poten-
tial abuse of any HUD program, particularly programs that are de-
signed for residents use, we have a deep concern. I think we are
moving away from the time at which the residents of public hous-
ing were passive participants in HUD programs to a point at which
they are fully involved in what happens. I know it is not the focus
of this committee to question such a program. | think we all believe
that the programs are sound and they are designed to meet their
specific objectives.

So, finally, let me say that we are concerned. If there are abuses,
we want to know. I have not been able to detect any fraud. We are
reviewing every program, including resident management pro-
grams and the programs, at HUD for these types of allegations. I
think I will stop there and wait for your questions.

[The prepared statement of Mr. Marchman follows:]


37

It is very clear that there is a very serious problem faced
by residents of public and Indian housing across the land.
Economic self-sufficiency still remains a “goal” rather than a
reality". The inner-city poor are isolated in areas where not
working is the norm, crime is commonplace, and welfare is a way

of life.

The Federal government’s new role and involvement in
combating poverty is largely peripheral because of a perception
by some that PHAs should have an expanded role and lessen

government intervention.

Technical assistance is provided and supports state and
local efforts to conduct comprehensive activities to reduce
generations of poverty and welfare dependency. Nevertheless,
there is still a growing perception that many government programs

have not worked.

Many communities around the country are operating anti-
poverty and economic self-sufficiency programs, but soon will
feel the real impact of lack of resources and reduced funding
levels from previous funding levels. If government is shrunk, and
programs such as TOP is not funded, then state and local
officials attempting to take up the slack will find it difficult

to accomplish priority resident activities.


57

Mr. Suays. Thank you.

We're spending $24 million on this program each year. I’m not
clear as to whether HUD is clear about this program. First off, who
has oversight over this program?

Mr. Marchman.

Mr. MARCHMAN. The department has oversight for this.

Mr. Suays. OK. The department. Who in the department?

Mr. MARCHMAN. Specifically, my office, the Office of Public and
Indian Housing.

Mr. Suays. OK. Within your department, who has responsibility?

Mr. MARCHMAN. Within that is the Office of Resident Initiatives.

Mr. Suays. OK. And who is that individual?

Mr. MARCHMAN. Currently, Mr. Moses has left, and we are in the
process of naming a new head for the office.

Mr. SHays. So, Mr. Moses, you have been in charge of this pro-
gram?

Mr. MOsEs. Yes, sir.

Mr. SHays. OK. I’m going to say again that I think that one of
the most important things we can do is empower tenants who live
in these properties to think of them as their homes and to learn
how to manage them and care for them. Given that we have less
resources, it’s even more important, because, candidly, there’s no
reason why the people who live there can’t make sure that it’s
clean and kept nice, and that the children are being dealt with and
cared for. That’s where I come down.

I think it’s highly unfair to provide resources to individuals who
may not know how to use the resources. But, ultimately, someone
has to be accountable. So, Mr. Moses, you're accountable.

Mr. MOSES. Yes, sir.

Mr. SuHays. No longer.

Mr. Moses. No longer, but was accountable.

Mr. Suays. So for how long were you accountable for this pro-
gram?

Mr. Moses. Approximately 2 years.

Mr. SHays. OK. When you started out, it was a $4-million pro-
gram, and then it grew to a $24-million program.

Mr. Moses. When I started out, it was a $25-million program.

Mr. SHays. OK. Now, describe to me again the purpose of this
program.

Mr. Moszs. The purpose of this program—section 20 of the 1987
Housing Act basically says that this program is basically to look at
the feasibility of undertaking resident management and. to provide
technical support to resident organizations and to assist in support-
ive services to the residents of public housing.

Mr. Suays. OK. Who controls that? Does HUD control that, or
do the tenants control it?

Mr. Moses. HUD controls it.

Mr. Suays. So HUD is in charge of providing assistance to ten-
ants.

Mr. Moses. HUD is in charge of making moneys available to
residents.

Mr. SHAys. No, no, no, no, no, no, no, no. That’s not what it’s in
charge of doing. You just described to me, it’s supposed to do what?
You described to me in the beginning.


23

resident-managed initiatives would be best suited to their
community's needs. To reflect this new and more flexible
approach, the name of this resident technical assistance program
was changed from Resident Management to TOP and new regulations
were issued to reflect these changes.

Since 1988, the Department has provided $72 million in
grants to over 900 resident councils/resident management
corporations. A recent survey conducted by HUD shows that of 383
resident ‘entities funded between 1988 to 1993, 38 or about 18%
are property management contractors and 191 or 50% have
contracted with public housing authorities to further their
resident management options. Another survey by Aspen Systems
Corporation shows that of the 235 FY 1986-1993 resident grantees
that responded to the survey, more than 1,824 jobs have been
created at about a program cost of $3,500 per job. The survey
also shows that more than 1,900 residents have benefitted from
job training at about $3,200 per resident and over 21,000
residents have benefitted from supportive services programs for
less than $300 per individual. Another study completed in 1993
by COX and Associates shows positive results from resident
managed programs -- including crime reduction, fewer vacancies,
and improved project maintenance, as well as the creation of jobs
and businesses.

There are also success stories in communities all across the
country. The Yazoo City Housing Resident Council has 15
residents who graduated from a community action agency-sponsored
micro-enterprise and as a result have their own businesses in
child care, trucking, and other areas. In Buffalo, the Resident
Council, in partnership with the Vista Program, has trained 400
residents and many are now gainfully employed.’ In Cleveland,
lead-based paint abatement training was sponsored by the Valley-
View Tenant Management Corporation (TMC) -- thirty-two residents
are gainfully employed and two other courses are offered by the
TMC. I will provide for the record several publications with
recent success stories on the TOP Program.

Now let me address your concerns:
and the ein

The Subcommittee was concerned about HUD’s approval and
participation in a tenant technical assistance and training
conference sponsored by the National Tenants Organization (NTO)
in cooperation with PRPHA in San Juan, Puerto, Rico. As the
initiator for this event, NTO is an independent, non-profit
organization and does not require approval from HUD to conduct
such trainings. While a number of Tenant Opportunities program
(TOP) /Resident Management (RM) recipients attended, this is an
allowable but limited expenditure as part of the TOP/RM grant
guidelines. TOP/RM grants are designed with maximum flexibility
to allow tailoring of educational and training activities to fit
with communities where public and Indian housing residents live.


144

Consultants provide training ané technical aseiszance tc increase
residents’ capacicy for job development, business davelopment and
economic lift. The remaining dollars are used for various other
purposes to support the organization’s goals and objectives, such.
as organizational development, establishment of a financial
management system, hiring a grants management coordinator,
travel, etc.

Thank you for providing HUD with the opportunity to address
your concerns.

Sincerely,

[sn

John C. Biechman
Acting Assistant Secretary

Enclosures


90

activities, eligible expense items. Those are guidances that we pro-
vide.

Mr. SHays. OK. And you tell them that certain things are al-
lowed and certain things are not allowed.

Mr. MOSES. Yes, sir.

Mr. Suays. I mean, it would make sense. These are, in many
cases, people who may not have advanced degrees, who may not
have gone on organized trips like this. There could be a whole host
of reasons why you would want to weigh in and give guidance.

Mr. Moses. But we did, sir.

Mr. Suays. I’m getting the impression from Mr. Marchman that
this is hands-off, it’s up to them, and we don’t want to weigh in.
I'm getting conflicting messages.

Mr. Moses. I ran the program, sir. Let me basically say what.

Mr. Suays. OK.

Mr. MosEs. No, sir, we did give guidance. As I spoke to Mr. Mar-
tini, what we basically do is, we look at the type of programs that
they are proposing to do, and then we weigh in on whether it is
an eligible expense item or not. And what we do then is, we send
out guidance to the housing authorities, to the resident groups, to
anybody else, and say, “This is an eligible expense item,” because
they are going to be doing certain things. That’s basically the way
we cover it.

Mr. SHays. Let me just ask you this. I’m looking at the Federal
Register, Volume 60, No. 9, on Wednesday, March 1, and it talks
about ineligible activities. “Ineligible items or activities include but.
are not limited to the following: entertainment, including associ-
ated costs such as food and beverages, except normal per diem for
meals related to travel.” How do you interpret that?

Mr. Moses. Basically, what it means is that you cannot use these
moneys for entertainment purposes; it has to be something that is
directly associated with either training or doing a program or un-
dertaking some type of activity that supports and promotes the ef-
fort of the Tenant Opportunity Program.

Mr. Suays. I don’t see it in the law. I see it in the regulation.
I want to know, are you enforcing this?

Mr. MOsES. Yes, sir.

Mr. SHAyYS. OK. So the individuals who went down totally paid
separately for any entertainment?

Mr. MOSES. Yes, sir.

Mr. Suays. None of HUD money was used for entertainment?

Mr. Mosss. None that we know of, sir. What we basically give
moneys for, we allow moneys for lodging. The lodging per diem for
this event was up to a maximum of $130 a day. And we allow mon-
eys for food, which is $26 a day. At $26 a day, you can’t even eat
at McDonald’s, sir, to try to take care of yourself. There was no
money for partying. There was no money for entertainment.

Mr. Suays. OK. And it’s your testimony that no money was used?

Mr. Moses. To my knowledge. No, sir, to my knowledge, no HUD
moneys were used for entertainment.

Mr. Suays. OK.

Ms. Gaffney, I'm just going to ask you that question, and then
I’m going to yield.

Ms. GAFFNEY. I don’t know the answer at this point.


44

We, in looking at these six resident councils, found—although
they had successes in some areas; they just were not in terms of
project management, which is what they were intended to do. We
attributed their problems to the following conditions: overambitious

‘ant goals, inadequate training and professional guidance, and
limited use of housing authority expertise. This is, keep in mind,
a program that operates directly from HUD to the resident coun-
cils; it is not going through the housing authorities.

Also, turnover in council leadership. Specific individuals seem to
be critically important to the councils, and when they left things
tended to fall apart. In some cases, we had a lack of resident inter-
est. We had councils that were more interested in social issues
than the housing authority management issues, which was what
these councils were set up, or the grants were specifically set up
to do. We had inadequate grant plans. And perhaps most signifi-
cant, we had a lack of performance benchmarks and monitoring by

There are two excellent documents that I would commend to your
reading. They were commissioned by HUD; they were done by an
outfit called ICF. The first one is a 1992 document called, Evalua-
tion of Resident Management in Public Housing.

Mr. Towns, what you will find here is the story of 11 councils
that have done an outstanding job.

Then, in 1993, ICF did a review of 80 emerging councils, resident
management councils, and they came to some conclusions that I
think track very precisely what we found when we looked at the
six resident councils. Let me just run through their summary find-
ings for you.

First, they said the councils generally didn’t understand what
HUD was expecting from them. They didn’t understand what the
requirements of the program were, and they were well-intentioned,
but they couldn’t quite get it.

Second, ICF found that there was little correlation between the
amount of grant expenditures and the progress that these councils
were making. Now, that’s quite extraordinary on its face, but what
they found was that the organizational impetus had to be there,
apart from the availability of HUD funding; that HUD funding
alone wasn’t doing it.

The third finding, the same as ours, was that there was a lack
of HUD performance targets.

The fourth finding is very significant. It is that these councils
can work, but they really require an excellent relationship with the
public housing authority. If they are at odds, it is very difficult for
any progress to be made.

Training has been a problem; and consultants have been a prob-
lem. There has been a lack of consistency in consulting and train-
ing to these councils. And then, perhaps the most significant issue
is, setting up these councils and getting them to perform significant
management functions just takes a lot of time and a lot of invest-
ment and a lot of oversight, and no one should expect quick results.
And, obviously, we’re not getting quick results.

When we did our review, we urged HUD not to expand the pro-
gram into areas other than resident management. We also ques-
tioned whether the statutory base for that expansion was suffi-


85

TACE 3, TERTATIVE AGENDA

WEDNESDAY ADCUST 23RD:

roUTR MORKTEC
YOUTH BREAKFAST 8:00 A.M. = 10:00 ALK.
YOUTH GENERAL SESSION 10:00 A.M. = 12:00 P.M.
DAVID ROFUS, H.T.0. EASTERM REGION VICE CHAIRMAR
AWARDS LUNCHEON 12100 P.M. = 2200 PAM.
N.7.0. BLECTIONS 2:00 PLR. = 5:00 7K.
INSTALLATION OF REW :
OFFICERS AND BOARD RECEPTION 6:00 P.M. - 8:00 P.M.
RrCcEss
TRoRSpDAY ADGUST 24re: .
BOARD MEETING BREAKFAST 6:00 A.M. = 10:00 A.H.
BUSINESS SESSION AND
ADJOURENENT 10:00 A.W. = 12:00 P.M.

ADIGQURENEET

Teawk roo FoR coxtac

Get BOKE § FELY

ui


62

When I say customers, I identify HUD’s customers in public
housing as three groups. The first group, our ultimate customers,
are the residents. The second group is the housing authority. And
the third group is our field staff. Each one of those three entities
was trained separately.

The first thing we did is, we began to set up a training mecha-
nism to train them together on our programs so they all fully un-
derstood exactly what we hoped to accomplish. The second thing is
something that the Secretary himself did to make sure that the As-
sistant Secretary of Public and Indian Housing had more control
over the programs directly that he was responsible for.

As you are aware, in our reinvention process, the Secretary got
rid of the regional administration and made the assistant secretar-
ies for programs have direct responsibility, for the first time in the
history of the agency, direct responsibility for those programs that
reported directly to them.

In that capacity, then Assistant Secretary Shuldiner did several
things to make sure that there was a functioning process out there
that would allow flexibility and accountability. The first thing he
did is, he devolved responsibility to the public housing directors so
they could begin to make decisions on a local basis about things
that would impact on their programs.

The other thing that he did, he allowed his program directors di-
rect responsibility for administration and oversight of their pro-
grams that fall under their jurisdiction. What I did in my field is,
I said we did the training together. The second thing that we did
is, we changed the ways in which we made these funds available.

If you look at the notice of funding availability that went out in
1993, fiscal year 1993, in comparison to 1994, you will notice some
distinct differences that we wanted to begin to try to get some con-
trol over these programs. Prior to that time, under the Kemp ad-
ministration, basically there was a relationship between the resi-
dent groups and HUD. There was no interface or a demand for
interface between the housing authority, which is the only group
that has some professional technical expertise that would be of
some benefit to this program.

We demanded that resident groups have a partnership with the
housing authority, that they have a partnership with the housing
authority, and in addition to that, that, at their discretion, they
could even joint venture with the housing authority.

The other thing that we basically focused on, in accordance with
the law, we could not say you could hire only a locally based con-
sultant, because that is against the law, but we did put in place
that they should try, as effectively as possible, to use local organiz-
ers.

The other thing that we did is, we basically began to put in some
performance funding measures. The way we put in the performance
funding measures, we basically allowed some extra points for resi-
dent groups who would basically give us some baseline measures
which they would say we should measure their contract against.

Again, before we got there, the resident group could have access
to the dollars at will. We basically put in place a $5,000 limit. That
$5,000 limit could not be accessed unless they have accomplished
two things.


86

NATIONAL TENANTS ORGANIZATION, INC.

June 1995

SAVE THE BROOKE AMENDXENT!

for almost twenty five years the Brooke Amendment has ensured
fair rents in public housing by guaranteeing that no one pays
more than 30% of their adjusted income;

° the Brooke Amendment was enacted in 1969 through the
efforts of the National Tenants Organization because
public heueing rents were too high fer the poorest
tenants to afford:

° if the Brooke Amendment is repealed, the people who villi
be hurt thé most by rent increases are those most in
need:

° replacing the Br: oke Amenduent with flat rents or minisun
vents will mean that public housing will be
too expensive fo: the people with the lowest incomes;

° raising rents means more evictions and homelessness!!!

THIS COUNTRY BROULD MOT SOLVE ITS BUDGET FROBLENS
BY ASKING THE POOREST PEOPLE TO PAY MORE!

Please Reproduce and Distribute+**Please Reproduce and Distribute

ora os ne Qeammeioee usm9e ce
Pode oak hen Pees Se a
rt.)
nicemeneas


121

no government, but they’ve got the will to take the country and do
the right thing.

Mr. Shays. 1 love that description.

Ms. GILKEY. OK. In order to do that, you cannot go into the small
country—because they also have their own conflicts—and think
that we can take—and I can use another version, taking a baby
and trying to feed a baby meat. You cannot feed a baby meat, be-
cause they have to go through stages to be able to eat the meat.

You cannot take a baby tenant group who has never, Mr. Chair-
man and committee members, attended a meeting, not even a so-
cial—never been on a social board, have no idea of Robert’s Rules
of Order, can’t even read an agenda or even understand it, and say
to them that “We are now going to let you manage.” There’s a proc-
ess they have to go through.

Mr. Suays. Let you what?

Ms. GILKEY. “We are now going to allow you to manage, to do
resident management in your property.”

Mr. Suays. Right.

Ms. GILKEY. Now, the regs say—the regs are very explicit in,
“You can manage,” and the steps, but there is a process that has
to happen first. And the first process is that the tenant group has
to, Mr. Chairman, get basic leadership training, just basic leader-
ship training. They have to have bylaws, and they have to under-
stand it; not just write them, but understand what they mean, be-
cause that’s their code, their guide, that will govern the organiza-
tion.

They have to create a democracy, a process of democracy, where
they become legitimate leaders. Other than that, we're talking
about a small country. The people will oust them out if it’s done
through a democracy process. That democracy process, Mr. Chair-
man, has to be developed by them and the people who they serve.
It has to be done, Mr. Chairman, in laymen’s terms, where they
can understand it.

Because understand we're not dealing with people that don’t
have a high school diploma, many of them, who don’t have a college
degree, but yet they have been elected as the leaders in their com-
munity because they have shown the will to change the conditions.

All they need is the skills, and those skills have to be given to
them in leadership skills, in how to develop an agenda, how to de-
velop bylaws, how to develop an election process, how to read the
lease and interpret the lease to their residents so they can hold
those residents responsible. Because many people are being evicted
because they signed the lease and don’t understand it. And the
leaders can’t help them because they don’t have information on it.

Mr. Towns. So, in order to do that, you might need consultants.

Ms. GILKEY. The leader has to be trained. The leaders have got
to be trained. There’s no other way. The housing authority, Mr.
Chairman and committee members, is not going to train.tenants to
put them out of business. They know the ultimate end. The ulti-
mate end, when this baby begins to move from breast feeding to
the rice, the baby rice, to finally eating at the table, they will no
longer be managing that property, very much like 1230.

Building 1230 now controls a budget, should be controlling a
budget of $1 million. However, the housing authority only gives


124

Mr. Chairman, in Philadelphia, Abbottsford has a savings of $1.2
million. In Chicago, LeClair has a savings of $1.7 million.

Mr. Suays. OK. Here’s what I’m going to do.

Ms. GILKEY. And we've only been in control of our money 4 years.

Mr. SHays. OK. You are almost describing to me a competitive
model of allowing tenant organizations, and even maybe allowing
consultants who organize tenant organizations, to compete, to run
different ones. And maybe this is happening somewhere. But I’m
going to give you the opportunity to get together a few key tenant
organizations that you think are good, around the country, because
I think you have a sense of this. You’re not just focused in on De-
troit.

And we're going to have another hearing.

Ms. GILKEY. Can I address the concerns you have with Biden?

Mr. Suays. I’m going to have you do that.

Ms. GILKEY. OK.

Mr. Suays. I’m going to put this on the record.

Ms. GILKEY. OK.

Mr. Suays. I’m going to invite you to come back for a hearing,
with your concurrence, Mr. Towns.

Mr. Towns. Sure. Be delighted.

Mr. Suays. And we're going to get a few RMC’s to come in, where
you think they’ve been successful. We’re going to get HUD to come
in and make the argument one way or the other, whether you’re
getting your money or not. We're going to get the public housing
authorities in those areas and have them defend whether you get
the money or not.

Because I think there’s another part of the story. There are over-
head costs that have to be taken. But if the law is clear on what
you should get, that’s one thing. And we don’t have the other side
responding to that. I suspect that there is more to the story, but
my own sense is that you're probably very right about this. I
haven't studied this issue to know, technically, how much you
should be getting.

h Ms. GILKEY. Mr. Chairman, let me just make a point on the over-
ead.

Mr. Suays. Sure.

Ms. GILKEY. Every one of these 36 sites that we are managing,
we pay our overhead. Philadelphia, Abbottsford, pays the housing
authority $280,000 a year for overhead, but yet they have a savings
of $1,600,000. So even with paying them overhead that we don’t
think they deserve, because they haven’t done the actual work, we
give it to them anyway. We still are able to have a savings where
we don’t have to come back to this Congress or to the taxpayers,
of $1,700,000, and we’ve only been managing 4 years.

Mr. SHays. How many units are you involved in?

Ms. GILKEY. This is a mall that is being done in my city by a
resident management corporation. This is where a tenant group
can go, Mr. Chairman, once they take over a troubled site.

Mr. Suays. Then let me ask you this: We do have tenant organi-
zations and consultants going around looking to manage public
housing. They manage Section 8 housing, and so on, and they are
going into public housing and managing it; correct?

Ms. GILKEY. Yes.


31

Basically, these groups have been working with the Department
from their inception and have been an eligible expense item to do
training at their program. So what we, in effect, have done is con-
tinue that process, because we believe that it is important not only
for resident groups to basically have training at their disposal at
learn things, at the general level, but they should also begin to net-
work with other groups so there can be an exchange of information,
an exchange of ideas, and an exchange of ways to do things, on a
national level.

Again, this has occurred from the inception of the program in
1988. Again, this is common practice that has been the practice of
the U.S. Department of Housing and Urban Development since the
inception of the program. What we basically did is move forward
and do the things that exactly were mandated by those practices.

Thank you very much.

[The prepared statement of Mr. Moses follows:]


7

Mr. Suays. I thank the gentleman and would like to acknowledge
that I have not formed an opinion as to whether this program
should be discontinued. Obviously, if the program continues, it
needs to be improved. However, I have an open mind and look for-
ward to hearing from our witnesses to get a better sense of the pro-

‘am.

I would also reiterate that we might not have needed the second
hearing had the witnesses mentioned earlier been willing to come
to this hearing. But we will have that second hearing. It is nec-
essary to get a full view of the issue.

At this time, I would like to ask Mr. Martini if he has a state-
ment.

Mr. Martini. Yes, thank you, Mr. Chairman, and I would like to
begin by thanking you, Mr. Chairman, for holding today’s impor-
tant hearing.

As you are aware, my office recently received documents which
seemed, at the very least, to suggest a highly questionable use of
taxpayer dollars to fund the National Tenants Organization’s an-
nual convention in San Juan, Puerto Rico. I felt, upon receipt of
those documents, that it was my obligation to share these mate-
rials with the subcommittee so that a full and complete investiga-
tion could be conducted. And I want to commend you, Mr. Chair-
man, and the subcommittee staff for their swift and thorough ac-
tion on this matter in bringing this hearing forward today.

Let me begin by saying this came to my attention in August
when Gary Shaer, a Democratic city councilman in the city of Pas-
saic, NJ, in my district, notified my office that two residents of the
Alfred Spear Resident Council had asked the Passaic Housing Au-
thority for a loan of $2,860 so they could attend the National Ten-
ants Organization’s annual convention in San Juan, PR. The hous-
ing authority of the city of Passaic astutely denied this request,
and I commend them for that decision.

In fact, Councilman Shaer was absolutely dismayed that HUD
funds could be used for what the National Tenants Organization
promoted as an unforgettable vacation for public housing residents
across the country. With a public housing waiting list of over 4,000
residents, Councilman Shaer could not comprehend sending two
Passaic residents to the Caribbean.

I am very troubled myself by the egregious promotion of the
NTO’s August 20 convention. The event was billed as, “a vacation
that will be unforgettable.” Taxpayer dollars provided attendees of
the convention with, “casinos for dads; exotic shopping, beauty sa-
lons for complete pampering for moms; and appetizing, savory, deli-
cious foods for the family meals.”

Despite this promotion, Ed Moses, HUD Deputy Assistant Sec-
retary for Community Relations Involvement, in a June 17, 1995,
letter, stated, “The NTO Convention is an allowable training activ-
ity for reimbursement under public housing funds, including but
not limited to operating subsidy, comprehensive grant program,
TOP, or other HUD funds.”

This is exactly the type of waste, fraud, and abuse that sickens
the American people, and I do not believe that the average Amer-
ican feels that their tax dollars should be funding an unforgettable
vacation for public housing recipients, or for anyone, for that mat-


139

<4
Comprehensive Grant Progzam,

HUD provides funding to HAs for modernization and the
program requirements permit HAs to use a portion of the
Comprehensive Grant Management Improven: funds for
resident programs (see 24 CFR Part 968. fe) and 310(g) and
HUD Handbook 7485.3), Resident services {including but net
Limited to support for RCs/RMCs) is one of many eligible
items under the management imprevement funds; however, the
primary use of management improvement funding is to improve
the HA’s operations. The Comprehensive Grant information
system provides data on the HA’s Management Improvement.
expenditures, which includes funding for resident training
ang other activities.

Hope VI/Urban Revitalizarion Demonstration

HUD funde some of the nation’s largest EAs to develop and
implement revitalization plans for their most severely
distressed developments. The program's emphasis is to
develop demonstrable and transferable examples that will
change both public houging’s physical presence and their
residents’ role in the community. Grantees may use up to 20%
of their HOPE VI Grant to create resident programs, and
improve supportive services with an emphasis on residents’
commnity service and participation. Typical components of
commmnity and ‘supportive service programs included: job
training, family self-sufficiency, economic and
entrepreneurial development, child care, drug and crime
prevention, health and educational services, and prograns
designed for the positive, constructive involvement of youth
and elderly in the greater community.

Youth Apprenticeship Program $10,000,000 (PY 94)

This one-year program funded eight HAs for training,
apprenticeship and assured employment of youth in
public/assisted housing through cooperative efforts of Youth
Corps and Joint Labor-Management Organizations. $250,000

of the total funding is being used for an evaluation of the
program.

Apprenticeship in the Construction Trades and Public
Housing Operations $9,000,000 (FY 94)

This one-year program provides funding to 30 HOPE VI eligible
HAs to link their residente with the following organizations:
the Laborers International Union of North America (LIUNA),
the United Brotherhood of Carpenters and International
Brotherhood of Painters (UBCIBP), and/or the American
Federation of State, County and Municipal Employees (AFSCME).


147

U.S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

NOY 7 1985
‘OFFICE OF THE ASSISTANT SECRETARY FOR
CONGRESSIONAL AND INTERGOVERNMENTAL RELATIONS

Honorable Christopher Shays

Chairman, Subcommittee on Buman Resources
and Intergovernmental Relations

Committee on Government Reform and Oversight

U.S. House of Representatives

Washington, DC 20515

Dear Mr. Chairman:

On behalf of Secretary Cisneros, thank you for your letter
of October 20, 1995, which requested various documents relating
to the Chicago Housing Authority’s (CHA) calculation of the
Performance Funding System (PFS) operating subsidy eligibility
for the 1230 North Burling Resident Management Corporation (RMC).
As requested, to further assist your subcommittee with its
oversight responsibilities, enclosed is the following
information: ~

1) A copy of the current Management Agreement between the
CHA and the RMC.

2)  Adescription, submitted by the CHA, of the method by
which it calculates the RMC’s PFS calculation of
operating subsidy eligibility. Subsidy calculations
for 1994 and 1995.

3) A copy of the Articles of Incorporation for the RMC,
datad May 10, 1988.

4) Audit report for the period December 31, 1993, through
May 31, 1994.

5) Operating Receipts and Expenditures and payment
schedules.

6) Listing of Board of Directors.

Your letter also requested copies of CHA and Department of
Housing and Urban Development (HUD) documents relating to the
subject RMC’s grievances and CHA monitoring reports of the RNC.
Please be advised that this Department is not aware of any
grievances submitted by the RNC. Also, information was requested
from the CHA relating to RMC grievances and CHA monitoring
reports of the RMC, however, no such documents have been
submitted.


46

STATEMENT OF
SUSAN GAFFNEY, INSPECTOR GENERAL

BEFORE THE
SUBCOMMITTEE ON HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
UNITED STATES HOUSE OF REPRESENTATIVES

"PUBLIC HOUSING RESIDENT INITIATIVES"

NUVEMDER 9, 1995

Chairman Shays, and members of the Subcommittee, I am
pleased to be here today to discuss HUD funded public housing
resident initiatives. I will provide a brief summary of the
history of HUD's resident initiatives, the results of the Office
of Inspector General's (O1G) limited audit and investigative work
in this area, and my perspectives on resident initiatives in the
context of the on-going reinvention of HUD.

OIG Perapectives on HUD Resident Initiatives
Background Data

Mr. Chairman, the funding levels for resident initiative
programs are relatively small in comparison with other HUD
programs, consequently OIG has not devoted a good deal of its
resources to these programs. Nonetheless, OIG audits and
investigations through the years have generally found that HUD
funded resident initiatives suffer from inadequate mission
objectives, management controls, program coordination,
performance measures, program oversight, and substantive results.
Much of the funding has been inefficiently and ineffectively
utilized. The programs are good candidates for elimination and/or
consolidation

Appendix 1 of this statement provides a synopsis of the
history of public housing resident management and other resident
initiatives. HUD‘’s most recent emphasis on resident initiatives
began in 1988, with the Resident Management Technical Assistance
Grant (RMTAG) Program. Early program objectives were to organize
new, or prepare existing resident organizations for project
management functions and possible public housing homeownership.
The program evolved in the last few years to include resident job
training, business development and other activities related to
PHA project management.

Appendix 2 shows the funding for these related programs for
the 8 year period 1988 to 1995. HUD provided over $71

million in funding to 905 resident organizations and various
national, regional or state resident organization associations.
In addition to this direct categorical type HUD funding for
resident initiatives, PHAs can also use their HUD operating


THAT THE TOP PROGRAM MUST BE DISMANTLED OR
DOWNSIZED BECAUSE IT IS INEFFECTIVE. HOWEVER, THE
PROGRAM MUST DEMONSTRATE IMPROVED RESIDENT
PERFORMANCE AND ACCOUNTABILITY IF IT IS TO THRIVE. I
WELCOME THE STRONGEST CRITICISMS OF THIS PROGRAM,
BUT ASK THAT EACH CRITICISM BE COUNTERBALANCED
WITH RECOMMENDATIONS FOR IMPROVEMENT.

FINALLY, FOR EACH EXAMPLE OF MISUSE OF FUNDS
AND DEFICIENCIES IN HUD MANAGEMENT THAT WE WILL
CONSIDER TODAY AS EVIDENCE THAT THE TOP PROGRAM
DOESN’T WORK, I AM WILLING TO BET THAT THERE ARE AN
EQUAL OR GREATER NUMBER OF SUCCESS STORIES. | INVITE
OUR WITNESSES TO SHARE THE POSITIVE ACHIEVEMENTS
RESULTING FROM TOP GRANTS.


40

partnership with the housing authority. The initial $5,000 is
provided so that the resident organizations can attend the
initial training workshops and set up their resident offices.
Most significant, all grantees are instructed to move steadily
toward their work plan goals or risk the HUD field offices
providing item-by-item control of their funds, or as a last
resort, recapturing the grants. Since the program’s inception in
1988, $711,000 in grant funds have been recaptured. Please be
assured that the Department’s review of the TOP program will
include scrutiny of the HUD field office’s monitoring activities,
including whether additional TOP grants should be under tighter

fiscal controls or recaptured.

Standards and controls have been placed on the use of
trainer-consultants. User-friendly program guidance was issued
explaining how to select a consultant and emphasizing the use of
local consultants to assure training is available on an on-going
basis. Beginning in FY 1995, restrictions were placed on the use
of any one trainer (including but not limited to consultants)
from obtaining more than 50% of the funding for each grant. Let
re-emphasize that the majority of the TOP grant funds are
specifically for training and technical assistance. To assist
resident grantees in selecting qualified trainers, we are
developing a system for certifying and debarring trainer-

consultants -- using the current Drug Elimination Technical


120

Mr. Suays. OK. Let’s talk about that, because that’s the key. I
mean, why are you doing so well? What is HUD doing to help you?
What could they do to be more helpful? Let’s talk about that.

Ms. GILKEY. OK.

Mr. Suays. Let's just get into that issue.

Ms. GILKEY. OK.

Mr. Suays. And I will just throw out a few other things. How
much should we allow consultants to take out of programs? I mean,
we have the Delaware program. We had six grants for $100,000,
and the consultant was going to take $60,000 out of each grant. I
just don’t know how to deal with that.

Ms. GILKEY. OK. I will respond to all three of those areas. First
of all, when we took over managing Cochran, 94 percent of our resi-
dents were on welfare. Today, 68 percent of our people are em-
ployed, even in these worst times.

Mr. Suays. Is that because you brought new people in?

Ms. GILKEY. The same people. What we did was, we created em-
ployment opportunities.

Mr. SHays. And you did that—how did HUD help or hurt that
process?

Ms. GILKEY. Well, first of all, you need to know we did it without
any regulations, which was extremely difficult. I heard one of the
witnesses say today, particularly from the IG, that the housing au-
thorities ought to be the entities. Mr. Chairman, the housing au-
thority is the problem.

You cannot—how can you—when a tenant group—if any of you
all think I’m lying, just go to these sites. You've been to Cabrini.

Mr. Suays. Yes, I have.

Ms. GILKEY. 1230 is one of the buildings I’ve worked with.

Mr. SHays. What a wonderful job you've done with that.

Ms. GILKEY. Ten women took the building from the gang mem-
bers 2 years ago. Today we have 160 people employed, including
ex-gang members, who we were paying $36,000 a year to keep
them incarcerated. They are now employed, on the lease, paying
their rent, being responsible taxpayers.

Because what we did, Mr. Chairman, we took the $9 million of
Comp Mod funds, which is the same theory we used in Cochran,
and we said to contractors who were going to put roofs in, elevators
in, tiling in, whatever contract they had, “You've got to hire a resi-
dent. We’re not going to tell you who to hire. We’re going to give
you 10 people to interview.”

Now, what we had done earlier, Mr. Chairman, through the TOP/
TAG funds, we used those funds to train those residents for the
prospective jobs that we knew were going to come available, so the
contractor could not come back, when it’s time to hire them, and
say, “I’m not going to hire them because they’re not qualified.”

Mr. Suays. You're doing great things; other tenant associations
are. I want to know what accounts for the differences between a
good tenant association and one that’s not good? Is it the leader-
ship? Is it, “Show me a good school; I’ll show you a good principal”?
What is it?

Ms. GILKEY. OK. Let me tell you. The first problem, imagine this,
is that we are now getting ready to give power to a small country,
a small country that is inhibited, that has no structure, that has


19

event. We did not pay for the conference. The way in which it was
promoted or billed is a matter of the National Tenants Organiza-
tion, not the Department of Housing.

At such national conferences held by either this tenant organiza-
tion or others, we provide the opportunity for the organizers of the
conferences to get training from the Department of Housing, and
we had training seminars for residents at the San Juan conference,
but we were merely participants in the conference; we weren’t
sponsors or organizers of the conference.

I believe, perhaps in your next panel, you will be able to ask the
National Tenants Organization about the way in which they pro-
mote the conference. We, too, were concerned when we saw the ad-
vertisement of the conference billed as vacation, knowing that it
would cause some concern, some alarm, because it doesn’t fit the
type of technical assistance that residents need. But, again, HUD
did not underwrite the conference, nor HUD did not sponsor the
conference; we were participants in it.

That being said, there is an issue that we are concerned about
with respect to the conference, and that is, in a particular city, De-
troit, I believe, there were a large number of residents that at-
tended the conference. I think the number reached some 34. I am
not quite sure how the residents of Detroit, whether they were TOP
applicants or merely housing authority residents, could justify such
a large number.

But, again, that is an issue that I believe we would want to talk
to those TOP applicants about, but, more importantly, the housing
authority of the city of Detroit, which paid for a number beyond
what was mandated or at least alloted by HUD. Each TOP appli-
cant was eligible to send up to two people to such a conference for
travel or training. I am not quite sure why we got to the number
34, but I am sure, in today’s hearing and the next hearing, we will
see why that happened.

Again, we try to give the TOP applicants as much flexibility as
possible and let them exercise their own judgment with respect to
which training they would like to attend, whether it is down the
street, around the block, or at a national conference.

The second issue that I am aware of had to do with a particular
consultant working with the Wilmington Housing Authority resi-
dents, in which this particular consultant appeared to have been
the consultant for six TOP applications. If we would have known
it at the time, it would have been deemed unallowable, and it
would not have gone forward. It was brought to our attention sub-
sequently by Senator Biden and, in conversations with the consult-
ant and with those TOP applicants, it was subsequently denied.

I think it is important to underline, if we would have known be-
fore being apprised of it from the Senator’s office, we would have
not allowed such an expense. We believe, in this particular case,
that the residents were not aware of what they were getting into
and perhaps were taken advantage of.

The third issue which I am aware of is the issue with respect to
the PFS contract between residents of 1230 Burling in Chicago and
the city’s housing authority. In this particular case, it is a situation
in which these residents have a resident management corporation.
They were requesting from the Chicago Housing Authority their


14

Mr. Suays. I thank the gentleman.

At this time I would call on Mr. Green, if he has a statement.

Mr. GREEN. Thank you, Mr. Chairman. I have a statement.

Just briefly, in response to my colleague from New Jersey, I am
glad we are having the hearing today, because I was concerned
when I saw the information about the seminar in Puerto Rico. And
if it was paid for by tax dollars, I would like to, if we could, zero
in on that, because the HUD tenant management empowerment
programs have some really good proposals that I have seen and
worked well in some areas. But, again, this may be a case of the
money being used for purposes not intended.

I serve on another committee that comes up fairly often in our
committee, Mr. Chairman, the Economic and Educational Opportu-
nities Committee, and I see the effort in our committee and all
through this Congress in block granting, as we have problems in
the Federal Government in seeing that our funding is utilized as
we expect it to be. I would expect, if we block grant, particularly
the careers bill, that I see in my other committee and lots of other
things, we will see just more and more examples of funding being
abused that is not the intention of the Members of Congress who
appropriated it.

But as much as I disagree with my colleague from New Jersey
on the lobbying at taxpayer’s expense, I would hope none of that
money was used, but we don’t limit people’s freedom of speech
when they go to seminars, hopefully.

With that, Mr. Chairman, I look forward to the hearing today.

{The prepared statement of Hon. Gene Green follows:]


3

I am not willing to accept that public housing residents are in-
capable of self-determination or that the TOP program must be dis-
mantled or downsized because of its ineffectiveness, as is some-
times said. However, the program must demonstrate improved resi-
dent performance and accountability if it is to thrive.

I welcome the strongest criticism of this program but ask that
each criticism be counterbalanced with recommendations for im-
provement. And just in case we find that something is wrong, if we
were examining the problems of a university, and if we found one
student cheating, we wouldn’t close down the university;.we would
try to correct the problem.

Finally, for each example of misuse of funds and deficiencies in
HUD management that we will consider today as evidence that the
TOP program does not work, I am willing to bet that there are an
equal or greater number of success stories to point out that it does
WOTK.

So, Mr. Chairman, I am hoping that we will look at the informa-
tion today, and may I also add that I am delighted that you have
agreed to have a second round of hearings where we can sort of get
the other side of the story, as well. So thank you very, very much
for this hearing.

T yield back.

[The prepared statement of Hon. Edolphus Towns follows:]


132

Mr. Suays. OK. Mr. Towns.

Mr. Towns. I just have one question, Mr. Chairman.

First of all, let me begin by saying thank you for your very elo-
quent testimony. I think there were a lot of unanswered questions
here that you were able to answer for us, without us even raising
the questions.

Ms. GILKEY. Thank you so much for inviting me.

Mr. Towns. So thank you for that. The only question I have for
you, did you attend the conference in Puerto Rico?

Ms. GILKEY. No, I didn’t.

Mr. Towns. If you had, I would have said it would have been
worth going.

Ms. GILKEY. But let me say, I did review the agenda, Mr. Chair-
man, and the agenda was excellent, the workshop. The problem—
Mr. Chairman, I have to say this to you, because I just want you
to know the other side of it. Public housing is changing. The public
housing we knew in 1937, the whole Housing Act is being rewrit-
ten.

Mr. Towns. As we speak, it’s being rewritten, yes.

Ms. GILKEY. As we speak. The 4 million people we've got living
in public and assisted housing don’t understand what’s getting
ready to happen to them, Mr. Chairman. Somebody has to go down
and explain to them. That’s HUD’s responsibility to do that with
national groups.

So tenants—not lobbying, not campaigning, but letting people
know what’s getting ready to happen, that we're not just reducing
the budget; we’re rewriting the whole law on public housing. And
the poor people have got to be responsible for complying with that
law. Unless they are allowed to come and get the information, then
we're doing a disservice to them. And that, exactly, was the intent
of the conference.

Mr. SuHays. I represent the city of Bridgeport, and we’ve torn
down a lot of public housing. And we figured out that we could
have paid for three times the number of units, and they would all
have been luxury units.

Ms. GILKEY. With the demolition.

Mr. SHays. Yes. With all the money that we put into public hous-
ing.

Ms. GILKEY. You're right.

Mr. SHays. What raises a gigantic question for me, think of how
much money has gone into Chicago.

Ms. GILKEY. It’s sad.

Mr. Suays. I have to say, on the face of it, it’s almost astounding.
You're using basically 40 percent of the full funding to operate
1230, and the implication, in broad terms, is that if we had more
1230 buildings, we could do it for half the dollars, or, to put it dif-
ferently, we could give RMC’s 60 percent on the dollar instead of
40, and think of what more you could do.

Ms. GILKEY. That’s right.

Mr. SHAys. And you're not only providing safe housing; you're
empowering residents, as well.

Ms. GILKEY. Mr. Chairman, you raise a good point, because not
only is 1230 and the other 36 groups managing, they also take out


110

Date: November 9, 1995

Sub-Committee: On Human Resources and Intergovernmental Relations
Chistopher Shays, Connecticut Chairman
Room B-372 Rayburn Building, Washington D.C.
20515
Speaker: Mrs. Bertha Gilkey, President Cochran Tenant Management.
Corporation, Saint Louis Missouri 63101
Dear Congressman,
Chairman Shays, and committee members. My name is Bertha Gilkey.
I am President of Cochran Tenant Management Corporation (RMC/TMC)
a high rise public housing complex located downtown in the
City of St. Louis, Missouri six (6) blocks from the "infamous
Puritt Igo" that was blown up in 1972. Cochran was scheduled
to be blown up in 1973 due to the high vacancy, drug dealing,
deplorable physical conditions of the buildings and open shooting
and gang activities. The Saint Louis Housing Authority
did not know who was living in Cochran legally they only
controlled the federal dollars given to administer the management
of the site. It was the gangs who were really in charge of
Cochran.
Cochran Tenant Management (CTMC) residents have managed the
site since 1976 under the guidance of a Duly Elected Resident
Board of Directors who contract with (SLHA) Saint Louis Housing
Authority. Today, Cochran Gardens provides the newly revitalized
downtown economic entities with a hard working low and moderate
income work-force that (19) years ago was non-existent due to
the lack of job opportunities for unskilled workers, an the

criminal activities that existed in Cochran under the St. Louis


69

more of a family oriented convention than a real workshop, but
also, what oversight measures were in place to prevent this type
of inappropriate use of TOP funds, which is using their funds,
which you said are not supposed to be used for lobbying?

So, if it wasn’t for Gary Shaer, how many other instances are
there out there, throughout the Nation, where you don’t know
about conventions being held at inappropriate sites or being pro-
moted in an inappropriate way or lobbying efforts being done with
TOP funds?

Ms. GAFFNEY. Well, you are correct. Obviously, Public and Indian
Housing knew about this. Were it not for your bringing it forward,
I assume we would never have known about it; “we,” meaning the
Office of Inspector General.

Mr. MarTINI. And what steps have been taken since this has
come to your attention to begin the process of changing that? Be-
cause that gives me a great concern. And I’m glad we had this
hearing, because if it weren't for one individual who was conscien-
tious on this, we would still be having large sums of money being
used in an inappropriate way that is not going to serve the people
that need it the most, the people that need housing and the fund-
ing for the real uses of these moneys.

Ms. GAFFNEY. Mr. Martini, I wanted to say something to you,
and I don’t remember if you were in the room when I said it before.

Mr. Martini. I don’t think I was.

Ms. GAFFNEY. That is, that flyer is a terrible thing. It does us
a great disservice, all of us in the Federal Government. It makes
the taxpayers believe even more that we are not serving their in-
terests, that we are abusing their tax dollars. But I just want you
to know that I am aware, within the Government, of other in-
stances like this. And I don’t want you to think that’s isolated. If
this subcommittee could take a stand on that issue, broadly, it
would be, I think, a major step.

Mr. Martini. Thank you very much.

Mr. Suays. Mr. Fattah, you have a generous 10 minutes.

Mr. FATTAH. Thank you, Mr. Chairman.

Let me, first of all, separate myself from previous comments by
members of the committee that, I think uncharacteristic of our
committee, we bordered on being rude to the people who are testi-
fying here today. And I do want to separate myself from those com-
ments.

Mr. Says. Would the gentleman be specific as to what com-
ments he would like to separate himself from?

Mr. Farrau. I really don’t want to use my time to do that.

Mr. SHAYS. We won't count your time.

Mr. Fattan. I think that the tone of the questioning prior to the
vote break was uncharacteristic of the committee and does a dis-
service to us.

Mr. Suays. Well, the gentleman might want to stay for the whole
hearing, because it’s going to continue.

Mr. Fatrau. Thank you, Mr. Chairman.

Let me say that, as far as I can tell, San Juan, PR, is part of
the United States of America. And I would also like to separate
myself from the suggestion that somehow it’s an inappropriate lo-
cation for conferences or for American citizens to travel to for any


24

Although technical assistance and training conferences are an
important part of educating residents to become self-sufficient,
HUD does not approve of the way NTO subsequently promoted this
conference nor the large number of participants who attended from
one same community, particularly in light of limited Federal
resources. HUD’s role in the NTO training conference was to
provide technical assistance and training on HUD programs. HUD
has already begun an expeditious review of the guidelines
governing this program and intends to implement all warranted
reforms.

Wilmington’s TOP Gra: icati

We understand the concerns raised regarding the 6 TOP grants
awarded in Wilmington, DE and agree that the awarding these
contracts to a source which was not procured in accordance with
the Federal guidelines and HUD’s subsequent approval of these
grants was a serious error. Subsequently, HUD investigated the
situation and, as a result, cancelled the grants. 1 would like
to assure the Committee that the Department has put into place
new controls to prevent this from occurring again. Starting in
FY 1995, the Department limits any one trainer/consultant from
obtaining more than 50% of the funding for each grant. Although
this may appear to be a large percentage, please keep in mind
that the majority of the TOP grant funds are specifically for
training and technical assistance. In addition, user-friendly
program guidance was issued explaining how to select a consultant
and emphasizing the use of local consultants to assure training
is available locally on an ongoing basis. This has been
reemphasized at various training sessions held during FY 1995.
As a refinement to the Department’s current debarment procedures,
we are in the process of developing a system for certifying and
debarring trainers/consultants in connection with resident -
programs.

In addition to the aforementioned restriction on
trainers/consultants, greater specificity is being required in
the TOP applicant’s description of proposed use of funds the
proposal including emphasis on specific performance measures.
Before an approved funding agreement is executed, each new
grantee is required to provide a detailed plan and line item
budget that can be used as a basis for financial tracking in.

RMC/PI 230 Ne

The Chicago Housing Authority is actively involved in
resolving this issue of an acceptable budget for this
development’s RMC. The Chicago Housing Authority originally
calculated the performance funding system eligibility based on
one rate for occupied units and a lessor rate for vacant units
undergoing modernization work. The RMC requested a higher rate
for all units. Last week, the RMC met with CHA’s new Executive
Director. The result of this meeting was that the RMC and CHA
will jointly prepare rules, revisions to the existing contract


143

© -+ Procurement policy pursuanz to OMB Circulars A-122
and Part 64 to ensure proper and competitive
execution of procurement transactions, including
standards of conduct for TOP/RM grantees to avoid
any conflict of interest.

co Administrative and Program Requirements;
++ Performance standards and timeframes that reflect

the outcome and products/deliverables in the
TOP/RM work plan;

++ Automated semi-annual progress reports submitted
to the field office to ensuze timely progress.

° Work Plan/Budget Requirements;

-- Requirement for established Goals, Objectives and
Budget line items broken out into specific work
plan tasks;

-- Review and approval by HUD FO prior to
implementing TOP/RM activities;

++ Utilize the LOCCe cash management system to
control how expenditures relate to the key
elements of their work plan/budget.

° Technical Assistance/Training

++ Bxtensive training provided to newly funded
grantees along with PHAs/HUD staff on procedures
on OMB 24 Part 84; financial management and
procurement procedures, TOP Work Plan/Budget
implementation, partnership building, conflict
resolution;

++ Follow-up training provided to grantees on new
policies and procedures to ensure compliance with
Pederal regulations and to facilitate
accomplishment of program goals.

Again, the primary intent of the TOP/RM program is to
provide technical assistance and training to resident
organizations. Residents are allowed to hire consultants/
trainers in order to receive technical assistance as long as the
cost for one consultant does not exceed 50% of the grant.


10

The Housing Authority astutely denied this request and
1 commend them for that decision.

In fact, Councilman Schaer, was absolutely dismayed
that HUD funds could be used for what the National
Tenants Organization promoted as an unforgettable
vacation for public housing residents across the country.

With a public housing waiting list of over 4,000
residents, Councilman Shaer could not comprehend
sending two Passaic residents to the Caribbean.

T am very troubled by the egregious promotion of the
NTO’s August 20th convention. The event was billed
as, and I quote, "a vacation that will be
unforgettable!!" Taxpayer dollars provided attendees
of the convention with and, J again quote, "Casinos for
Dads," “Exotic Shopping, Beauty Salons for
complete pampering for Moms," and "Appetizing,
Savory, Delicious foods for the family meals.”

Despite this, Ed Moses, HUD Deputy Assistant
Secretary for Community Relations Involvement, in a
June 17, 1995 letter, stated, the "NTO Convention is
an allowable training activity...for reimbursement
under public housing funds, including but not
limited to operating subsidy, Comprehensive Grant
Program, TOP, or other HUD funds.”


141

Dezroit, MI TOTAL: $1,400,000
1994

Sheridan I Resident Council $100,000
Warrer. West Resident Council $100,000
Parkside Homes Resident Council $100,000
Sheridan II Resident Council $100,000
Conner-Waveney Resident Council $100,000
Woodland Resident Council $100,000
Forest Park Place Resident Council $100,000
Herman Gardens Resident Council $100,000
smith Homes Resident Council $100,000
Brewster-Douglas Resident Council $100,000
Réward J. Jeffries Homes Resident Council $100,000
State Fair Resident Council $100,000
Sojourner Truth Homes Resident Council $100,000
Diggs Homes Resident Council $100,000
New_York, NY TOTAL: $400,000
1995

Gowanus Housing Tenant Association $100,000
Ralph J. Rangel Tenant Association ~ $100,000
1994

WSURA Brownstones Tenant Association $100,000
Dewitt Clinton Houses Tenant Assn $200,000
Passaic, NJ TOTAL: $100,000
1995

Alfred Speer Village Resident Council $200,000

(5) Any other information or material you believe to be relevant
to our discussion of HUD’s management and oversight of funds
targeted for tenant programs.

Response: HUD has an institutionalized system for managing and
monitoring TOP/RM funds. TOP/RM is managed by HUD field offices
who axe responsible for monitoring the program, including the
provision of TA and training to grantees. Ongoing efforts are
being made at HUD Headquarters to assesa, revise and strengthen
procedures to promote program efficiency and effectiveness. The
preparation and monitoring of TOP/RM grants include:


29

Mr. Suays. Mr. Marchman, we're going to have Mr. Moses go
next and then Ms. Gaffney. But I just want to ask you, who paid
for this vacation and seminar, and so on, in Puerto Rico?

Mr. MARCHMAN. The TOP applicant paid for—it is an allowable
expense for training. Under the guidelines, there is $5,000.

Mr. Suays. Mr. Marchman, no, this is going to be a little dis-
ingenuous. Who paid for the trip, the travel, and the convention,
and so on?

Mr. MARCHMAN. The TOP applicant, as funded by HUD.

Mr. Suays. So HUD paid for it.

Mr. MARCHMAN. HUD allocated the dollars to the winning appli-
cants.

Mr. Suays. No, no. Mr. Marchman, we are going to have, hope-
fully, a long relationship.

Hopefully not too long. Two years?

Mr. Towns. That’s right. I’ll be back. [Laughter.]

Mr. Suays. No. I meant it on our side.

Mr. Marciiman. I understand.

Mr. Suays. We can laugh in this committee, but we will have a
very uncomfortable relationship if we can’t speak plainly here. It’s
very disingenuous for you to say that HUD didn’t pay for it.

f Mr. MARCHMAN. I’m sorry. I did not say that HUD did not pay
for it.

Mr. SHAYS. You said “we.” We is HUD to me.

Mr. MARCHMAN. I’m sorry.

Mr. Suays. Let me just say.

Mr. Towns. Mr. Chairman.

Mr. Suays. Yes.

Mr. Towns. I think that the thing he might be having some prob-
Jems with, in terms of feeling uncomfortable with, which I’m hav-
ing some problems with, you referred to it as a vacation. That has
not been confirmed. So if you use a different word.

Mr. SHays. OK. We won't talk about a vacation. I think that’s
a fair comment.

Mr. Towns. OK. Good. Thank you.

Mr. Suays. Even though it was promoted as a vacation, so I
didn’t invent that word. I looked at the promotional. But we'll get
into that issue later.

I just want to establish, before we go to the next witness, how
was this paid for? What money was used? Whose money?

Mr. MARCHMAN. HUD funds paid for the expenses of the TOP ap-
plicants to travel for the training.
onTM Suays. So this is HUD money that was used for this trip.

Mr. BarrevTT. Mr. Chairman, if I may.

When you refer to the TOP applicants, I’m confused as to what
youre saying there.

Mr. MARCHMAN. In each of the—some 900 applicants who—I’m
sorry. Applicants apply for the program funds.

Mr. BARRETT. So these are people who live in the housing.

Mr. MARCHMAN. In public housing; yes, sir.

Mr, BARRETT. OK. So you would have people from the different
housing compléxes around the country, and they would apply, and
then HUD would pay for their trip.


98

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140

5

This demonstration brings together the skills needed to
provide public housing youth job training to eneure
bonafide apprenticeship and employment opporcunities in the
construction trades and public housing operazicns trat will
lead to self-sufficiency.

In addition to the above programs, the Department provides
limited funding to HAs for social services programs.

(3) An itemization of all HUD and PHA monies expended in PY 95
for the purpose of tenant training, travel, organization or
economic development programs.

Response: Current Depar=mental systems provide categorical line
item information but not an itemization of all HUD and PHA monies
expended in FY 95 for purpose of tenant training, travel,
organization or economic development programs except for the
information contained ip Item #2 above. In addition, PIH
utilized administrative funds in the amount of $14,308 to bring
in the Interim Ad Hoc Resident Advisory Committee. This
Committee consists of resident leaders across the country and
representatives from resident advocacy groupe for consultation on
HUD's policies and procedures.

(4) A copy of any TOP grants awarded to residents in Chicago,
New York City, Passaic, and Detroit.

Response: The following is a list of FY 94 and 95 TOP grants in
the requested cities. Please note that the tem for the grant is
up to five years; at $100,00 per grant, the resident funding is
$20,000 per year. Copies of the grant applications and evaluation
sheets on these grants will be provided under separate cover as
soon as possible. Please note that these TOP grantees represent
a small number of the resident groups in the requested cities.

Chicago, Ib TOTAL: $340,000
1995
Randolph Towers Resident Organization $100,000
Lowden Romes Resident Council $100,000
2994
Northeast Scattered Sites RMC $200,000

It’s Time for a Change Resident Management $ 40,000


91

Mr. Suays. OK. Would it be illegal for this money to be used for
entertainment?

Ms, GAFFNEY. Yes.

Mr. Moss. Yes, it would.

Mr. Suays. OK. And if you paid for a hotel that gave entertain-
ment, then how is that viewed? In other words, when you buy a
package, would it have been cheaper—and this is the question I’m
going to ask you to report on. I want to know that HUD is looking
into this.

Mr. Moses. If I may, sir, it was cheaper—the per diem rate for
Puerto Rico is $130 a day for lodging. The amount that NTO nego-
tiated with the hotel to do this event was $119.50. The government.
actually saved money on this trip.

Mr. Suays. Now, don’t get carried away, Mr. Moses.

Mr. Mosss. The eligible expense item was up to $130; they only
spent $119.

Mr. Suays. Now, let me just ask this one other question.

Mr. Moses. And they used it to sleep, sir, not to party.

Mr. Suays. OK. Where do the housing authorities get the author-
ity to send tenants?

Mr. Moses. Basically, the housing authority has moneys at its
disposal to support tenant services activities.

Mr. SHAys. Trips?

Mr. Mosss. Training, conferences, trips. It is one of their budg-
etary line items. Every housing authority has it.

Mr. SHays. So, in addition to this money under the TOP Pro-
gram, we also have other money that goes into TOP.

Mr. Moses. Yes, we have other moneys to go into resident
empowerment programs, not just to go into TOP.

Mr. Suays. Thank you.

Gentlemen, do you have any comments or questions?

Mr. Fattah.

Mr. Fatrau. Thank you, Mr. Chairman. I would ask the Chair’s
permission to submit into the record a document that my staff is
having sent over.

Mr. Says. Sure.

[The information referred to follows:]


ll

This is exactly the type of waste, fraud, and abuse that
sickens the American people. I do not believe the
average American feels that their tax dollars should be
funding an "unforgettable vacation" for public housing
recipients or anyone for that matter.

It is very difficult for this Member of Congress to
comprehend how an event like this is an acceptable use
of taxpayer funds.

Somewhere along the way, we seem to have lost sight
of the fact that public housing was designed to be a
transitional program to help economically distressed
people get through difficult periods of time in their
lives.

It would appear that public housing conventions and
seminars that have been promoted in a manner similar
to the one in question here today have somehow shifted
the emphasis towards reinforcing or promoting public
housing as a way of life rather than a transitional or
short term solution as they are intended to be.

As is all to often the case, what may have begun as a
well intentioned Federal program has become a telling
example of big government that has grown out of
control.


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102

So it’s amazing to me that we would find it somehow problematic
that tenants would meet. And it’s not abnormal, given conference
planning, if you want people to attend your conference, to try to
pick locations which people—people come to Philadelphia because
of our historic sites. People travel to a variety of different locations.
I remember being in Hartford for the National Conference of Black
State Legislators. We had a wonderful time, Mr. Chairman, years
ago.

So we travel to a variety of different places for a variety of dif-
ferent reasons, and all of the time we're using taxpayer paid for
dollars, I mean, to travel, to pay for our lodging. The regulation
against entertainment is a clear one that’s used in State govern-
ments, used in city government. It’s not an abnormal requirement.
But the lodging and the meal reimbursement basically is so small
that J don’t think you could squeeze out of it a lot of dollars for
casino gambling or anything like that.

I just don’t want us, first of all, to create a practice and a pattern
where we're saying that attractive locations in our own country, be
they Florida, or Hawaii, or Puerto Rico, or the Virgin Islands, or
Philadelphia, or any of these other places, are not reasonable loca-
tions for meetings or New Jersey, for that matter. I see that Gov-
ernor Whitman is doing a lot in terms of trying to attract conven-
tions there, built a new convention center in Atlantic City. There
are casinos right down the street. And they want people to come
and meet there because it’s good for the economy.

I would not want us to create the wrong impression on this, in
terms of trying to filter out the waste that may be there.

Thank you, Mr. Chairman.

Mr. SHays. The gentleman makes some very good points. Let me
just clarify one point with you, Mr. Janis. All different departments
have to basically respond to the same rules and regulations; is that
correct?

Mr. JANIS. Sure.

Mr. Suays. Now, if you have a housing authority or a tenant or-
ganization using Federal dollars, you’re going to give more than
guidance, aren’t you? You're going to say yes or no, these are ap-
proved funds or not approved—I mean, approved use or not. I
mean, the kind of laissez-faire attitude that I was hearing from Mr.
Marchman is not really acceptable. You have to decide whether or
not these are approved funds.

Let me ask you this, Mr. Moses.

Mr, JANis. The OMB Circular A-110, the guidelines, as well as
in the Code of Federal Regulations, on the section of Tenant Oppor-
tunity Program, it talks about resident training. So there are re-
quirements that set out what is approved and acceptable training.

Mr. Suays. Right.

Mr. JANIS. But, as has been said before, Mr. Chairman, what is
not in the guidelines or regulations is the selection of where an-
other organization holds a convention, that’s not part of the guide-
lines.

Mr. SHays. I hear what you’re saying. Whether it’s in Puerto
Rico or somewhere else, all I am saying to you is that the use of
Federal dollars has got to be approved by HUD, and it is not that
we don’t have a role in this decision.


118

Page 9

charge, an allows PHAs the option of setting it in three ways:

1. 32% of a particular state's AFDC benefit (for families)
or SSI Benefit (for individuals);

2. A $50 plus utilities minimum rent;

3. An amount based upon a presumed 30 hour work week at the
Federal Minimum Wage Rate.

Recently, at a residents' advisory meeting, residents were asked
to complete a survey form to see how the proposed changes would
affect their rent. The results are listed below as case studies.
By supporting the suspension of the Brook Amendment you are
forever trapping public housing residents and senior citizens
who also live in public housing and will be trapped on fixed
incomes and who have paid their dues in the past, but now will
also be trapped in an ever ending cycle of entrapment,
isolation, and impoverishment.

In conclusion, this Bill wipes out all regulations as obsolete
documents without considering their merit. Part 964 offers the
structure for the activities, resident management etc. Part

963 offers opportunities for resident business growth by
permitting competition solely among resident businesses. Current
regulations should be reviewed by an the advisory committee
before being elminated.

There is a need to designate an appropriate percentage of

both capital and operating funding to

empowerment self-sufficiency activities. This is particularly

critical in times when funding is being reduced. The large


65

is in the flyer that was promoting this whatever we want to refer
to it as, and I will read the whole thing.

It says,

National Tenants Organization 1995 Convention, San Juan, Puerto Rico, E! San
Juan Hotel and Sands Beach Resort. Come join us in the capital of Puerto Rico, San
Juan, at two of the most fabulous casino hotels, the El San Juan Casino Hotel and
Sands Beach Resort. This year is the first NTO resort convention planned for enjoy-
ment for the entire family on this very beautiful island.

Make NTO Convention 1995 your family vacation. This will be exciting for all. We
promise you a vacation that will be unforgettable. Casinos for dads; beaches, swim-
ming, snorkeling, dancing, and touring, et cetera, for youths; exotic shopping, beauty
salons for complete pampering for moms; appetizing. savory, delicious foods for the
family meals, babysitting arrangements, and more. Surprises for all NTO members;
I promise that.

And then,

I promise that all NTO workshops and convention business will be conducted be-
tween 9 and 5 p.m. Promise, promise, promise. But you must help by being prompt
for all sessions.

Now, obviously, the commonsense of Councilman Gary Shaer was
to bring this to our attention, and rightfully, I think.

Personally, I find this type of notice greatly offensive, but I
think, more importantly, we have to get into a letter that was writ-
ten by Mr. Moses to Mr. Green, on June 27, 1995, because I agree
with the chairman, there is almost a suggestion here by some, in
their testimony, to distance HUD from this. And yet the fair read-
ing of this letter by Mr. Moses to Ms. Green certainly would lead
us to believe that there was involvement by you, directly, Mr.
Moses, with Ms. Green as early as June, way before the conven-
tion, where, at that time, you knew that the convention was, at the
very least, going to be held in San Juan, PR.

I would think, in that meeting with Ms. Green, there would have
been some understanding of whether this was necessary, whether
this was appropriate funding, and you, in that letter, say it is ap-
propriate funding. And I guess that’s the question I have today.
There was clearly involvement by you and Hub, you on behalf of
HUD, with the approval of this convention in San Juan, PR. So,
at the very minimum, there was that much involvement, and we
would like to know more about the extent of involvement before the
convention occurred.

And I also find it very disturbing, to be honest with you, since
this was a hearing whieh I called for, that we still don’t know the
cost to HUD, and we still don’t know how many people attended.
Because, whether you say it’s directly or indirectly, it was HUD’s
funds that were used. And you're sitting here, knowing you were
coming before a hearing today, and I would have thought, at the
very least, you would have had those numbers by today.

The question then becomes, you approved this as an allowable,
appropriate expense, and yet you knew it was being held in San
Juan, PR, and why couldn’t these types of conventions, if they are
so important, be held regionally, which would be far less expensive
and eliminate that message that goes out to the taxpayers about
the obvious or potential misuse of taxpayer funds?

Mr. Mosss. Mr. Martini, I did know that this group was going
to hold its annual convention in Puerto Rico. As I said before on
the record, this is the type of event that has been a HUD practice,


71

Mr. MARCHMAN. What we do is define what is an eligible use of
the funds.

Mr. Fatrau. OK. You don’t discriminate between resident groups
and local housing authorities or other groups about what is an ap-
propriate use of technical assistance dollars?

Mr. MARCHMAN. No, we do not.

Mr. Fatran. Now, the thrust of the comments here seem to sug-
gest that, even though the TOP program is a resident management
empowerment program, that somehow HUD should, in fact, dictate
to these resident management groups what would be appropriate,
what would be inappropriate, and to offer more than, I guess, guid-
ance on this.

How does this process actually work? Do they come to you and
ask permission to go to the conference, or do they go to the con-
ference and then request reimbursement? Which way is this han-

led?

Mr. MARCHMAN. In this case, they have a line item under their
grant for training and for travel. They decide, in the period in
which the grant is in effect, in this case it’s 5 years, to which train-
ing and which travel they would like to go. They don’t ask us for
permission for a particular conference. What they do do is request
reimbursement after the conference.

Mr. FaTTAn. Now, this whole resident management initiative
was a Republican initiative, as I recall it, under a former member
of this body, Jack Kemp, who was the HUD Secretary, as part of
Bob Woodson’s whole discussion about how to move toward self-suf-
ficiency, how to empower people to have control of their own des-
tiny. Do you think that it’s contrary to the philosophy that devel-
oped the program to handicap these entities from making decisions
about what kinds of training they themselves think would be ap-
propriate?

Mr. MARCHMAN. I think it would be contrary if we chose to over-
burden them with regulations different than we would anyone else.

Mr. Fatrau. I really want to thank you.

Mr. SHays. What does the gentleman mean? Could I just ask
him? Not off of your time, sir. Could he just elaborate what he
means by that comment?

Mr. MARCHMAN. Sure.

Mr. Suays. Let me make a point. Mr. Fattah, I’m exercised and
youre exercised. But one thing I want to assure you, you will never

e denied an opportunity to go to the full extent of your questions.
It’s a practice that we had with Mr. Lantos.

Mr. FatTTAH. I’m not exercised at all, Mr. Chairman.

Mr. Suays. OK. Well, you seem surprised that I would want to
just inject myself. And I just want you to know I always will extend
the same.

Mr. Fatrau. I have total respect for the chairman, and your pre-
rogatives are clear.

Mr. Suays. I would never want to abuse them; that’s my point.

I'm sorry. If you would just elaborate on that point.

Would you stop the clock and start over again for the gentleman.

Mr. MARCHMAN. My point is that we would not want to regulate
a group, whether it’s a resident group, whether it’s a housing au-
thority group, or any other group, to the extent which they can’t


16

believe we are creating future problems when we
believe that giving money directly to governors assures
us that money won’t be misused or spent on foolish
things. When we are talking about spending federal
money we need to assure that there is accountability

and oversight in the way the money is spent.


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21

STATEMENT BEFORE THE HOUSE GOVERNMENT
REFORM AND OVERSIGHT
SUBCOMMITTEE ON HUMAN RESOURCES
AND INTERGOVERNMENTAL RELATIONS

WASHINGTON, DC
NOVEMBER 9, 1995

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BY

KEVIN MARCHMAN


We evaluated the proposed program changes as part of our
audit work, in view of the RMTAG program's performance history to
date. The new TOP proposed improvements to the grant process,
especially with respect to improving HUD’s oversight, giving more
and better technical assistance, and encouraging partnership with
the public housing authorities. It did not address the slow rate
of expenditures, continuity of council operations, resident
apathy or inability to participate, lack of HUD performance
benchmarks and realistic work plans, and need for improved
monitoring. Once again the proposed consolidation plans would
make these issues moot.

On December 30, 1994, the Assistant Secretary for Public and
Indian Housing responded to our draft audit report. He generally
agreed with the recommendations we made for improving the Program
and spelled out the steps taken already to begin the
improvements. However, the Assistant Secretary also explained
that he thought the report lacked needed balance in that it did
not adequately recognize that resident management of their
developments was not the only objective or possible
accomplishment of the program.

Current OIG Survey Work

In September 1995, upon information received from this
Subcommittee, our staff commenced some limited audit survey work
of specific allegations of waste and abuse associated with the
TOP program. The survey is assessing the role of national, state
and regional resident council associations in HUD's resident
initiatives program delivery, and HUD’s continued placement of
heavy reliance on consultants under TOP grants. That survey is
on-going and results to date are not conclusive enough to comment
on at today’s hearing. We hope to complete the work within the
next two months. :

OIG Investigation Results

Our Office of Investigation has received relatively few
allegations of improprieties in resident initiative activities.
In a few isolated cases, problems occurred because the resident
Councils did not have sound financial systems and certain
individuals were allowed too much control over the cash accounts.

Summary

Mr Chairman, we believe that HUD‘s track record in directly
administering resident initiative type programs has not been
good. Our Office has been an active participant in HUD’s
reinvention efforts over the past three years, highlighted by a
report to the Secretary on December 30, 1994 entitled
“Opportunities for Terminating, Consolidating and Restructuring
HUD Programs." We analyzed 240 active, inactive and custodial


95

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educational and job training programs, and self-help initiatives

that lead residents away from dependency on welfare.

We now know that in order for residents of public and
assisted housing to become financially independent, many of them
will need social services and opportunities extended by
organizations such as Resident Corporations or Resident
Managements Corporations (RCs/RMCs), to help prepare them for the

world of work.

I am pleased to report that between 1988 and 1993, the
Department has provided $72 million in grants to over 900
resident councils/resident management corporations and there are
success stories all across this nation. The resident management
program authorized in 1987 under Section 20 of the U.S. Housing
Act as "Public Housing Resident Management" was developed by
resident leaders. Duly-elected resident organizations now have
the flexibility to implement program activities that best meet
the needs of their communities. Grantees may use funds to train
residents for potential employment, provide financial assistance
to resident-owned businesses, establish social and educational
services for residents, develop youth programs, hire trainers to
help organizations implement workplans and goals, and establish
crime prevention strategies such as tenant patrols making public

housing developments a safer place to live. The Department has


133

the same money that the housing authority has been getting for 60
years, and they are funding child care centers.

Mr. SHays. Let me just say, we’re going to document that. I’m
interrupting you.

Ms. CiuKey. They are funding schools.

Mr. Suays. We're going to document that. And I’m going to have
HUD Chicago, HUD Washington sit by your side on this, and I’m
going to have them say “Yes, but” or “No, but.” And if the answer
is “Yes, but,” then I’m going to say, “Why aren’t we doing more of
this?” and then “How?”

Are you asking me to take a different look at the Delaware
project?

Ms. GILKEY. I’m asking you to, Mr. Chairman.

Mr. Suays. Let me just ask you this.

Ms. GILKEY. I’m asking you to look at what we submitted to Sen-
ator Biden.

Mr. SHays. We're going to have the consultant, at the next meet-
ing, come and testify.

Ms. GILKEY. Yes, sir.

Mr. Suays. What is your testimony, that she didn’t get the
$60,000 per unit?

Ms. GILKEY. No. My testimony is this: My testimony is that I’m
pleading with you not to wipe out all the work that has been done,
positively.

Mr. Says. I’m going to show you. The attitude of the depart-
ment on how this program operates makes a difference to me.

Ms. GILKEY. And second, I’m pleading with you to look at what
we negotiated with Senator's Biden, and they loved this, as an al-
ternative, so this could never, ever happen again, Mr. Chairman.

Mr. Suays. Thank you. Mr. Towns.

Mr. Towns. No further questions.

Ms. GILKEY. Thank you so much. And thank you, Mr. Chairman,
for coming to 1230.

Mr. SHaAys. Well, there really are two cochairmen here.

Ms. GILKEY. Thank you, Chairman Towns.

Mr. Suays. Thank you very much. I look forward to our paths
crossing often.

Ms. GILKEY. Yes, sir.

Mr. Suays. This hearing is adjourned.

[Whereupon, at 1:20 p.m., the subcommittee was adjourned.]

[Additional information submitted by the hearing record follows:]


17

Mr. Suays. I thank the gentleman.

Mr. Barrett.

Mr. BARRETT. Thank you, Mr. Chairman. I appreciate the fact
that you are holding this hearing, and Mr. Towns has been in-
volved in setting it up, as well.

Unfortunately, I have a banking markup that is now in its third
day. It is dealing with public housing, ironically, and I think that
the markup is going to last so long that everyone who is currently
living in public housing will be out of it by the time we are finished
with this bill.

I do think that the hearing raises some important questions, in
particular with respect to the Puerto Rican incident. I have not
seen the brochure. I don’t know if staff has the brochure, but I
would be very interested in seeing the brochure. I think it certainly
raises some very troubling questions, and I think it is imperative
that we address that.

Thank you very much.

Mr. Suays. I thank the gentleman.

At this time, I would like to call our witnesses. If they would re-
main standing, because they will be sworn in.

Mr. Kevin Marchman, who is Acting Assistant Secretary for Pub-
lic and Indian Housing, Department of Housing and Urban Devel-
opment; also, Ms. Susan Gaffney, Inspector General from HUD;
Mr. Ed Moses, deputy executive director for community relations
and involvement, Chicago Housing Authority, the former Deputy
Assistant Secretary for Community Relations and Involvement at
HUD; and also, Michael Janis, who has appeared before this com-
mittee on many occasions, the General Deputy Assistant Secretary
of Public and Indian Housing.

If you would all raise your right hands.

(Witnesses sworn.]

Mr. SuAys. For the record, I would note that our witnesses all
answered in the affirmative.

Just to take care of two housekeeping matters, I ask unanimous
consent that all members of the subcommittee be permitted to
place any opening statements in the record and that the record re-
main, open for 3 days for that purpose. Without objection, so or-

ered.

I would also ask unanimous consent that our witnesses be per-
mitted to include their written statements in the record. Without
objection, so ordered.

Mr. Marchman, we will start with you. We sincerely thank all of
our four witnesses for coming today.


61

things here that are not being said that are actually on the flyer.
I think that, here again, we will find out more about the flyer.

Let me also talk about—and I must admit that, for some reason,
I’m not as upset as probably some of my colleagues, because I’m
looking at the fact that HUD spends $7.5 billion—that’s “B,” as in
boy—that’s their total budget. And we're talking about this pro-
gram spending $25 million to empower folks. Now, if we were not
spending that to empower folks, am I correct in assuming that that
$25 million would go back to making that $7.5 billion a little big-
ger? Am I correct in that assumption?

Ms. GAFFNEY. | think that’s a correct assumption you could
make, yes.

Mr. Towns. Well, I’m trying to make certain | really understand
the problem, because if you're training people toward self-suffi-
ciency, there are always going to be a few problems along the way.
I mean, I think that we understand that.

I think my interest and my concern would be, I guess to you, Mr.
Marchman, and to Mr. Moses, what have you done to correct some
of the things that you have heard?

Mr. MARCHMAN. There are two things that we have done to cor-
rect some of the things that we have heard. And I must say, one
comes from the IG’s review of our program, in which we have tight-
ened up the administrative procedures that she highlighted. I think
those items have been closed out, and I think we have a stronger
program now.

No. 2 is probably the most important. A growing sensitivity to
the issue of resident empowerment and these programs. I think
Chairman Shays said it best, there is a tension between the
amount of oversight that HUD must exercise and the desire to
make sure that the residents have as much empowerment as pos-
sible, that you want to give flexibility through your programs, and
that means that you cannot dictate every step of the way. And
there is tension, and it won't only just be in this program but in
other programs of the department as we go through block granting.

So I believe, in these two areas, that we have tightened up the
program. It’s also important to understand that, as we begin to de-
volve, the flexibility and the accountability are the main things
which we have to look at.

Mr. Moses. Mr. Congressman, if I may.

Prior to us coming into office, there were no set systems of con-
trol to try to make sure that there was some type of locally based
technical assistance provided. I come from housing authorities, two,
as a matter of fact, New York City Housing Authority and the city
of Los Angeles, where I have run resident initiative programs
which have received approximately 11 national award grants for
excellence.

Basically, the housing authorities that I come from embraced
resident initiatives because we knew we could not be successful in
providing housing for low-income residents without their intimate
involvement in that process. When we got there, the first thing
that happened is that HUD had a policy of interfacing with its cus-
tomers separately. It never, ever trained them together or talked
to them together. We changed that rule.


130

(218) 879-8921 Bertha Gilkey, Presidont.
National Tenant Union
2471 North Fifty-Fourth Street, Suite 276

Philadelphia. PA 19151
pyate
10/18/95

HUD Appropriations Insert

Summary:

The FY 1996 appropriations bil} would state that $15 million
ig set-aside from the modernizatior. funding for the Resident
Bmpowerment Technical Asmistance Program (RBTAP) under Section 20
of the USHA, of which a 10% ($1.5 million) of the furnde shall be
used to provide short-term technical aagistance to inexperienced
resident Ceganizations needing assistance in the development of
an application for RETAP funding, and assistance in properly

procuring the @ervices of a consultant/trainer. Attached i# the
specific legislative ineert

Program Description

The Department of Housing and Ucban Development (KUD) will
use the $15 million to provide RSTAP grants to resident
organizations through a competitive grant process

In order to addrese problems identified with this important
resident-baved program, HUD is required to reserve 10% ($1.5
million) of the RETAP funds to establish a short-Cerm technical
agaistance initiative -- wimilar to the Drug gliminacion
Technical Assistance (TA) Program. Under this initiative,
inexperienced repident organizations would peex technical
assistance (up to $10,000] from HUD for two basic purposes

a. For potential grantees, help in the preparation of a RETAP
application, ana

b. For now grantee: sistance in *jump-starting’ their training
program before the granteeg obtain any funds, including but not
limited to identifying and selecting a qualified and cereitied
consultant/trainer through the competitive procurement process.

The short-term REBTAP technical aeeistarce will be
adminietered similar to the Drug Blimination TA Program, e.g.,
the resident organisation applies to HUD tor assistance in the
areas desired, HUD Headquarters negotiates the contract (up to
$10,000) with an independant consultant who undertakes tne work

ted by the applicant, and HUD reimburses the coneultant
work completed. (See attached procedures on the Drug

Elimination short-term agaistance grant which can be modified and
used for this important reform.)

Thie process vill ensure that inexperienced resident groups
will have an opportunity to compete for program funda, and
recelve the help necessary to walect a qualified and certified
conevltant/trainer


114

Page 5

(criminal) factions in the complex both physical and emotional
was challenging but they were determined to change their lives
and to control their destiny. Resident Training made them aware
of not only their rights according to their lease but also their
right to manage their building. 1230 North Burling Resident
Management Corporation currently operates off of only 40%

of the budget officially allocated to them because the Chicago
Housing Authority chooses to keep 60% of their budget to
effectively offset their wasteful spending. 1230 North Burling
(RMC) has set up a Security Program, which currently provides
training to 200 residents certifying them as official Security
Guards which has resulted in a 60% decrease in crime in their
community. The residents also have set up a 900 member Tenant
Patrol Committee which patrols the entire site, and has decreased
vandalism by 50% on site. The Resident Management Corporation
has established a on-site Laundry Room Facility which generates
Economic Development and a reserve for future programs at 1230
North Burling. Also the RMC has established a two year joint
agreement with Children Hospital working with Dr. Karen Sheehan
to provide much needed Health Services to the Residents of 1230
North Burling. They also have established an After-school
Tutoring Program with Harlem Hospital Entry Preventative Program
which has donated a $65,000 dollar playground to the residents.
1230 has developed a strategy to rent the apartments, 95% which

are occupied. They currently employ residents in the following


116

Page 7

standards which are decent safe and sanitary housing for
low and moderate income people.

2. Use these newly developed systems paid for by RMTAG and
TOP/TAG or HUD to identify problems in their site.

3. Develop real solutions and systems with PHA's after addressing
their existing Management Deficiencies without fear of
reprisals from the PHA's.

4. Finally to incorporate, negotiate and enter into a property
and management contract themselves and become and Alternative
to the Public Housing Authorities and manage their own e

Public Housing Residents want to improve their quality of life,
become independent, and self reliant. However in order’to become
independent Resident Councils eventually are forced to expose
what their PHA's are not doing, which ultimately puts them at
odds with the very agency that controls their funds. If you
truly believe that Residents are a part of the problem and the
current system in place is not effective they I say to you please
consider including residents in any solution that requires their
direct participation. Resident Management provides tenants with
a vehicle to go from being managed to becoming managers. Finally
and most importantly the current system in place across the
country punishes residents that expose PHA's inability to manage.
RMTAG and TOP/TAG are responsible for the following
opportunities:
1. Job Training (1,971) residents have been hired since 1988

first awarded RMTAG/ and TOP/TAG have been awarded.

(Building Maintenance and Repair, Computer Programming/Word

Processing, GED, Job Interview Skills, Brick Laying,
and Child Care Training, and finally Micro-Enterprise.


OPENING STATEMENT OF REP, ED TOWNS
SUBCOMMITTEE ON HUMAN RESOURCES
AND INTERGOVERNMENTAL RELATIONS

“Management of HUD Funds in Public Housing Tenant
Training and Leadership Programs”

November 9, 1995

CHAIRMAN SHAYS, THIS HEARING PROVIDES US THE
OPPORTUNITY TO TAKE A CRITICAL LOOK AT MERIT AND
INTEGRITY OF HUD’S TENANT OPPORTUNITIES PROGRAM
(TOP). 1 AM CONFIDENT THAT YOU HAVE PLANNED THIS
HEARING AS A CAREFUL AND BALANCED EXAMINATION OF
THE ISSUES, AND I LOOK FORWARD TO PARTICIPATING IN
THE SUBCOMMITTEE’S REVIEW.

FIRST AND FOREMOST, I WANT TO POINT OUT THAT THE
ALLEGATIONS OF MISMANAGEMENT AND ABUSE THAT WE
WILL CONSIDER AS EVIDENCE OF HUD’S POOR °*
ADMINISTRATION OF THE TOP PROGRAM ARE SIMPLY
THAT...ALLEGATIONS. I AM PLEASED THAT WE HAVE
SCHEDULED A SECOND DAY OF HEARINGS TO PROVIDE THE
DIRECT AND INTERMEDIARY RECIPIENTS OF TOP FUNDS THE
CHANCE TO RESPOND TO SUBCOMMITTEE CONCERNS.

1


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38

The major emphasis within HUD has been on the development of
community-based consortia to conduct innovative, comprehensive
approaches to current and emerging problems of intergeneraticnal

poverty amcng low-income public housing residents.

Each corsorcia is a broad based partnership as is advocated
in the TOP program, that draws upon the resources, expertise,
energies, and commitments of the housing authorities and many
different groups within the community. The presence of large
supportive institutions such as schools, churches and local
civic/nonprofit organizations together with the housing

authorities have emerged and become positive forces in these

communities.

A holistic approach includes the kinds of priorities that
have been funded through the TOP Program for supportive services
to families, job training programs and the development of
intervention strategies to combat intergenerational poverty,
promotion of cooperative ventures and entrepreneurial training
and assistance and resources to build the lives and families in

low- income public housing.

Other Federal Agencies administer programs and conduct or
support research that is used for relieving problems associated

with poverty. Ail these efforts are aimed at understanding and


125

Mr. SHays. OK. When do you know that the tenants are capable
to run them? Is it turnover; is it apathy? And what are the chal-
lenges? Is it turnover, apathy, bad training, just starting with low
skills?

Ms. GILKEY. Good point. It’s all of them. And you say I use exam-
ples. This is a good example: dry bones. That’s what we're dealing
with, Mr. Chairman, dry bones.

Mr. SHays. You’re reaching this guy. He feels like he’s in a Bap-
tist church. He’s going, “Amen.”

Ms. GILKEY. And the consultant, a good consultant TA, has to go
in and put meat back on those bones, to make people want to take
on the drug dealers. Because the housing authorities are not in
control of those buildings, Mr. Chairman, you know that. The gang
members are. So not only do they have to meet the work plan that
they submit to HUD for approval, they’ve got to go in and take on
gangbangers who they help raised, who they grew up with their
mothers. They have to say, “You're not going to gangbang in this
development.” That’s before they can even do anything else.

They’ve got to take back control of the site. And they’ve got to
be motivated to believe that they can do that.

Mr. SHAYs. You've got two umphs from this guy now.

Let me do this. Mr. Towns maybe wants to weigh in on this. But
what I’m going to also suggest—and my staff is going to want me
to adjourn this hearing soon, because I’m getting carried away—
you tell me what cities you want us to go and visit.

Ms. GILKEY. OK.

Mr. Suays. We will try to have maybe a hearing here, and then
to spend 2 or 3 or 4 days and go to some different urban areas
where tenants are doing a great job.

Ms. GILKEY. Yes, sir. I’d love to do that.

Mr. Suays. You might give me one or two.

Ms. GILKEY. Now?

Mr. SuHays. No, you don’t have to give them to me now.

Ms. GILKEY. I can give them to you.

Mr. Says. OK. Give me an example now.

Ms. GILKEY. OK. Cochran, in St. Louis; we’d love to host you.

Mr. Suays. St. Louis. OK. Give me another one.

Ms. GILKEY. Philadelphia is another one, Abbottsford. Dallas, TX,
is another site. That’s a baby OMC that just got started. I’ve got
a whole list of them here. LeClair in Chicago, and 1230.

Mr. SHAYS. My staff said, could you invite me to San Juan?

Ms. GILKEY. No, no. I don’t have one in San Juan. But I have
a list.

Mr. Suays. OK. I’m going to have you get together with some
others.

Ms. GILKEY. Bromley-Heath, which is an old site that started at
the same time we did.

Mr. SHAys. One of the temptations is to go to—I’ve been speak-
ing with Secretary Cisneros about some of the public housing
around the country that he potentially would suggest could be
taken over by HUD, just as we’ve taken over Chicago. And I’m
thinking that’s one kind of hearing. But another kind of hearing
would be to just focus in on some great, real-life stories of where


100

Mr. Fatrau. It outlines, right on this point about tax-supported
trips, a trip that is now being organized by the Department of De-
fense, the Navy, for our chiefs of staff from the Hill to go on a trip
to Hawaii, which is also part of the United States of America, to
look at a number of naval installations.

I think the document will help us, as we search through, to try
to, you know, root out this type of problem. Because we have a
number of tax-supported entities in the Federal Government, not
just HUD, that pay for travel for purposes of training, observation.

The thrust of this trip is that it will be helpful for my chief of
staff and for others, especially new members, I guess, in order to
more fully appreciate our national defense capabilities, to be able
to see these things and to enjoy themselves in such a way, in terms
of traveling to Hawaii. It seems like a very exciting trip to me.

I would not want us to be selective in our criticism of this type
of practice. If we find it unacceptable to use moneys for people to
travel for purposes of better informing themselves so that they can
carry out what we think is important public interest work—and I
think tenant empowerment has been and continues to be part of
what the Congress wants HUD to focus on.

I want to go, on that point, to the Inspector General. You said
that—and you stated it twice, I think, to the chairman—that there
are other examples of this type of activity that are prevalent, and
you think that the committee’s work, not to singularly focus on
this, but to deal with this as a general matter, would, in fact, be
helpful, because you think that the public’s perceptions of the Gov-
ernment would improve by it.

I want you to expound on these other examples, if you will, be-
cause I’ve heard you say it twice, even though no one else has re-
sponded to it at this point. I would like to invite you to have a
chance to do that.

Ms. GAFFNEY. I’m not aware of any current examples, but | am
aware of examples over the years—I’ve worked for the Federal Gov-
ernment for quite a long time. Professional organizations, for in-
stance, within the Federal Government often have conferences at
attractive locations, resort hotels. They have brochures that invite
the participants to bring their spouses. They have activities for the
spouses.

It conveys a message of, “Let’s have fun with Federal funds.” It’s
a very, very negative thing for anyone to be doing, certainly in
these times of distrust about the Federal Government and how
we're using money.

Mr. FATTAH. You don’t think, if someone is traveling on a busi-
ness trip, that encouraging them to bring their spouse or family
members along is a good thing; is that your point? If they pay for
it privately, do you have a problem with that?

Ms. GaFFNeyY. Yes. I think that our focus in the Federal Govern-
ment should be on getting business done.

Mr. Fatran. Getting business done. OK.

Ms. GaFFNEY. And that is the tone, that serious kind of tone is
what the taxpayers expect from us. I think perception is as impor-
tant as substance. And I think—we have to just shine with integ-
rity.


41

10

assistance Program as the model.

The TOP grant term has been made more realistic. Clients
indicated that the prior requirement of 18 months to 2 years was
an unrealistic timeframe for resident groups to accomplish TOP
goals. Therefore, as a result of consultation with resident
leaders and their housing authority partners, the grant term for

all TOP grantees was extended to 3 to 5 years.

During Fiscal Year 1994, the Department recognized a need
for change. It established an Interim Resident Advisory Board
consisting of representatives of regional and state resident
public housing organizations who developed a Policy Paper on
resident involvement in public housing and consulted with Public
Housing Advocacy Groups (Public Housing Authorities Directors
Association (PHADA), Council of Large Public Housing Authorities
(CLPHA) and National Association of Housing and Redevelopment
Officials (NAHRO) that were extended the opportunity to review
and comment on the Policy Paper. This Policy Paper was later
incorporated in the Final Rule on Tenant Participation and Tenant
Opportunities Program to institute tighter controls and more

accountability in the TOP Program.

The Final Rule specified a clear-cut policy of

accountability through the elected resident leaders to assure