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EVALUATING PUBLIC HOUSING IN THE U.S.: REINING IN WASTE, FRAUD, ABUSE AND MISMANAGEMENT AT PUBLIC HOUSING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 22, 2014 

Serial No. 113–113 

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

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS

JOHN L. MICA, Florida, Chairman 

TIM WALBERG, Michigan 

MICHAEL R. TURNER, Ohio 

JUSTIN AMASH, Michigan 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

GERALD E. CONNOLLY, Virginia Ranking 

Minority Member 

JIM COOPER, Tennessee 

MARK POCAN, Wisconsin 

(III) 

C O N T E N T S 

Page 

Hearing held on May 22, 2014 ............................................................................... 1 

WITNESSES 

Mr. David Montoya, Inspector General, U.S. Department of Housing and 

Urban Development 

Oral Statement ................................................................................................. 8 

Written Statement ............................................................................................ 10 

Mr. Cecil House, General Manager, New York City Housing Authority 

Oral Statement ................................................................................................. 25 

Written Statement ............................................................................................ 27 

Mr. Kelvin Jeremiah, President and CEO, Philadelphia Housing Authority 

Oral Statement ................................................................................................. 31 

Written Statement ............................................................................................ 34 

APPENDIX 

Sanford Housing Authority Timeline and Pictures, submitted by Chairman 

Mica ....................................................................................................................... 62 

(1) 

EVALUATING PUBLIC HOUSING IN THE U.S.: 

REINING IN WASTE, FRAUD, ABUSE AND 

MISMANAGEMENT AT PUBLIC HOUSING AUTHORITIES 

Thursday, May 22, 2014, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:04 a.m. in room 

2154, Rayburn House Office Building, the Honorable John L. Mica 

[chairman of the subcommittee], presiding. 

Present: Representatives Mica, Connolly and Issa. 

Also present: Representative Maloney. 

Staff Present: Melissa Beaumont, Majority Assistant Clerk; 

Molly Boyl, Majority Deputy General Counsel and Parliamentarian; Katelyn E. Christ, Majority Professional Staff Member; 

John Cuaderes, Majority Deputy Staff Director; Mark D. Marin, 

Majority Deputy Staff Director for Oversight; Matt Mulder; Majority Counsel; Laura Rush, Majority Deputy Chief Clerk; Andrew 

Shult, Majority Deputy Digital Director; Aryele Bradford, Minority 

Press Secretary; Adam Koshkin, Minority Research Assistant; and 

Lucinda Lessley, Minority Policy Director. 

Mr. MICA. Good morning. 

I would like to call to order the Subcommittee on Government 

Operations, a subcommittee of the Government Oversight and Reform Committee. I welcome you to today’s hearing. 

The title of today’s hearing is Evaluating Public Housing in the 

U.S.: Reining in Waste, Fraud, Abuse and Mismanagement at Public Housing Authorities. Let me explain the order of business. 

First, members of the panel will be recognized for opening statements and then we will go to our witnesses. We have three witnesses this morning. We will hear their testimony and then get 

into questions. 

I see we are joined by our colleague from the full committee, Mrs. 

Maloney. Mr. Connolly is recognized for a motion. 

Mr. CONNOLLY. Mr. Chairman, I would ask unanimous consent 

that our colleague, Mrs. Maloney, be allowed to participate as a 

member of the subcommittee. 

Mr. MICA. Without objection, so ordered. She, of course, is most 

welcome this morning. 

I will begin with my opening statement. 

2 

Last night, I spent some time reviewing some of the material 

that been prepared for the hearing. Sometimes it makes it difficult 

to sleep at night when you read accounts of public funds and public 

endeavors to try and assist people that aren’t working well. 

We have all been shocked by what have seen at the Veterans Administration. Last night, I was shocked by what I saw in regard 

to waste, fraud and abuse. Mr. Issa always starts the hearing with 

a little statement that the purpose of our committee is oversight 

and making certain the taxpayers’ money is properly spent. This is 

what we are going to do with this hearing today. It is an important 

function. 

I will begin with an opening statement and yield to other members as we move forward this morning. 

Today, we are going to look at how we can best improve the administration of public housing and low cost rental assistance programs, particularly with the U.S. Department of Housing and 

Urban Development, commonly known as HUD. 

We will do so by examining some of the expenditures of taxpayer 

funds made by public housing authorities, also using the acronym 

PHAs. 

Unfortunately, all too often these housing authority executives 

seem to be taking advantage of the system by paying themselves 

expensive and excessive salaries and benefits, by not distributing 

funds properly, and at times, we have documented cases of defrauding taxpayer money. 

Today’s hearing will examine how to best put a stop to some of these problems in mismanagement. HUD spends about $6 to $7 billion a year in capital operating funds for about 1.2 million public 

housing units which house about 2.7 million people. 

Through its largest rental assistance program, the Section 8 program, a voucher program that HUD uses private sector market 

rentals for some 2.2 million low income households at a cost of 

about $20 billion a year. 

According to HUD, the average annual cost per unit for the HUD 

voucher program in 2013 was $7,800, not an enormous amount of 

money but significant. Together, HUD’s provision of all public 

housing and rental assistance programs accounted for nearly 60 

percent of its total budget in 2013. In testimony last month, Secretary Donovan stated this figure increased over 84 percent in 

HUD’s 2015 budget request. 

Strengthening the integrity and soundness of the Nation’s public 

housing system is absolutely critical to safeguarding public funds. 

Unfortunately, the public housing system in the United States also 

suffers from a large capital backlog, high vacancy rates in some 

places and many units are in desperate need of reconstruction. 

HUD released a study in mid-2011 finding the backlog of capital 

needs in public housing at that point stood at $2.7 billion and annual needs are accruing at a rate of some $3.4 billion a year. 

According to HUD, 478 total developments are currently considered failing. As of March 31, 2014, there were 10,258 public housing units that had been approved for and awaiting demolition and 

23,524 currently under review for removal by HUD. 

Nationwide, a system of approximately 4,000 quasi-governmental 

housing authorities exist and have administered public housing 

3 

and rental assistance on behalf of HUD for the past 80 years. Unfortunately, problems with some of the housing authority finances 

are all too common. 

As of the second quarter of fiscal year 2014, 49 housing authorities were designated as very high risk, 38 housing authorities were 

also designated as troubled and assigned additional monitoring 

through HUD’s public housing assessment system. Eight housing 

authorities are also under some type of receivership or falling into 

default in their contracts with HUD. 

Unfortunately, misuse of taxpayer money by some of these housing authority executives is very common. Taxpayer money is being 

spent with little oversight and housing authority executives are oftentimes unethically dispensing funds on initiatives unrelated to 

public housing. 

Since the start of fiscal 2012, the Office of Inspector General of 

HUD has issued 75 audits related to housing authorities reporting 

about $225 million in questionable costs and about $24 million in 

funds to be put to better use, according to his report. 

Today, the Inspector General is here to discuss these audits and 

the substantial work that has been conducted to date on these 

issues. We will also hear testimony from officials from some of the 

Country’s largest housing authorities. 

Mr. Kelvin Jeremiah has been President and CEO of the Philadelphia Housing Authority for little over a year, since March 14, 

2013. The HUD IG has found some serious problems with the 

Philadelphia Housing Authority which is the fourth largest housing 

authority in the United States. 

Notably, Senator Chuck Grassley said, one of the strongest audits he had ever seen was released by HUD in March of 2011. That 

report found that the Philadelphia housing authority paid $30 million to 15 law firms from 2007 to 2010 and could not fully explain 

what the money went for. 

The Philadelphia Housing Authority also made unreasonable and unnecessary payments of $1.1 million to outside attorneys to obstruct the progress of HUD OIG audits. 

Mr. Cecil House, General Manager of the New York City Housing 

Authority, is also here to testify today. That Housing Authority is 

the largest in the Country. 

The HUD OIG recently released two audits criticizing that 

authority’s administration of its Section 8 vouchers. The first audit 

questioned $1.16 billion in disbursed housing assistance payments. 

The second audit determined that 99 of the 119 units inspected at 

that housing authority did not meet HUD’s housing quality standards; and 24 of these 99 units were in material noncompliance with 

HUD standards which could cost the New York Housing Authority 

$148 million next year alone. 

Mismanaging public housing funds is not relegated to the largest 

housing authorities. Let me tell you a quick story about my experience. I represent central Florida’s small community to the north, 

Sanford, Florida. Ever since almost the day I took office, I have had 

nothing but problems with that particular housing authority. 

It actually has never been in my district. It is adjacent and has 

been very close to my district. The first experience I had was the 

housing authority director coming to my office with a list of charges 

4 

by the State’s attorney of offenses she had committed and asking 

me to help her. I tried to help her out the door of my office after 

I read what was going on. 

I have been working on that issue, that project, this is a very 

small housing authority, not like the big ones we have here. My 

goal has been to ensure that taxpayer money is being expended in 

a transparent and efficient manner and also provide public housing 

or affordable housing to people who need it. 

Unfortunately, the Sanford Housing Authority mismanagement, 

fraud and other problems go on and on like a nightmare. In October 2011, an OIG audit found that $1.2 million in funds given to 

the Sanford Housing Authority starting in 2007 were ‘‘abusive or 

ineligible, not reasonable or not properly supported.’’ Specifically, the OIG uncovered over $50,000 in credit card and leave abuses, including $16,000 in unofficial travel by the former 

housing authority executive, I will put his name in the record; 

‘‘$481,000 in public assistance funds was not budgeted or eligible. 

Mr. Toot also spent $1.1 million for services provided by three 

firms without support that he acquired services in compliance with 

HUD and SHA’s procurement requirements.’’ 

As a result of this and prior mismanagement, HUD was obli- gated to spend more than $9 million to relocate tenants and are 

going to demolish 374 of 480 public housing units owned and managed in six developments in Sanford that might otherwise have 

been preserved. 

Unfortunately, today the mayor of Sanford was not able to be 

here so I am taking a couple minutes to go into what he would 

have told you. 

Earlier this year, the Orlando Sentinel reported that the Sanford Housing Authority expects to spend $1 million on operating expenses even though only six families are living in the public housing run by the authority. They had an over $100,000 water bill for 

six families probably because nobody turned off the water and the 

public is paying for it. It is just outrageous. 

I was quoted after I did a review saying we could put people up 

in the Ritz Carlton cheaper than the money we spent in this mess. 

In the past, I have actually written and had that authority taken 

over by HUD which you can do. I didn’t know you could do that 

but they informed me after. 

Tenants brought rats they captured in a cage to my office and 

no one would do anything about it. We took over, they spent millions of dollars getting it back and they put this guy in who ran 

away with taxpayer supported money, money that was supposed to 

be for people who need it for low cost housing. 

HUD may argue that because public housing authorities are 

State and local government entities, there is no reason to conduct 

meaningful oversight of them at the congressional level. However, 

expenditure of all taxpayer money deserves our full attention and 

we will provide that proper oversight with this and other hearings 

as necessary. 

At this hearing, we will start the conversation into how we can 

improve public housing, reining in the corruption, fraud and abuse 

that undermine the ability of scarce public housing funds to reach 

individuals and families most in need of that help. 

5 

Mr. MICA. That was a long opening statement. I want to thank 

the staff; they have done a great job in researching some of this. 

I had to make up a history of my housing authority. I calculated 

the millions of dollars that have been wasted, abused and stolen. 

This is the story and I want that a part of the record. Without objection, Mr. Connolly asked it be made a part of the record. 

Mr. MICA. It is just a nightmare. I apologize for taking more 

time. I have taken the time the mayor would have had. 

I recognize Mr. Connolly for his opening remarks. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

The story you described is very sobering. Housing is a complex 

subject. The experiences vary obviously region to region. I am very 

interested in hearing more about the troubles and experiences in 

this hearing today. 

I do want to talk about my own experience, however. Until I 

came to Congress, I was the Chairman of Fairfax County, one of 

the largest counties in the United States in suburban Washington. 

I was chairman for five years. I started as one of my major priorities an affordable housing initiative, working with our Redevelopment and Housing Authority. The goal was to try to preserve, 

among other goals, 1,000 units for four years because we were rapidly losing affordable housing in our community. 

We, in fact, preserved outright, that we purchased, 2,400 units. 

It is a very successful program. In fact, for 15 consecutive years, 

HUD has designated us as a high performer, the highest designation a housing authority can get. We have also been designated as 

a moving to work agency by HUD, one of only 39 in the United 

States. There are successful models. 

Also, as part of that affordable housing initiative, we focused on 

workforce housing because our police, firefighters and teachers 

couldn’t afford to live in the communities they served. We also focused on homeless in ten years because transitional housing is the 

key to achieving that kind of goal. 

Since I started that initiative, we are the only major jurisdiction 

in metropolitan Washington that has seen any decrease in its 

homeless population. We have consistently seen a decrease every 

year such that we have reduced our homeless population by over 

one-third. I think that is a pretty good accomplishment. 

We dedicated a penny in our tax rate to affordable housing. We 

had public support for it. A penny was about $22-$24 million a 

year. It was the first time in our history we had ever dedicated a 

penny on the tax rate for any purpose. We did it for affordable 

housing. 

We were trying to deal with a crisis where housing prices were 

going through the roof before the bubble burst and the people that 

served our economy could not afford to live in our community and 

created enormous congestion. 

It has actually been a kind of success story. We have had some 

bumps along the way. We have a single residency occupancy facility that is very successful in helping single folks in transitional 

housing get back on their feet. 

We have a very vibrant partnership with the non-profit and faith 

communities, everything from a hyperthermia program in the winter that actually successfully allowed us to reduce the number of 

6 

hyperthermia deaths in the winter to zero for the first time in our 

history and get people back on their feet. 

We opened some family shelters to make sure we could keep families together and not disperse kids into government foster care 

that broke them up and had a discontinuous impact on their education. 

There are other models but you have to have a clean government, people committed to the mission, there had to be real clarity 

about what we wanted to accomplish, you have to have metrics and 

you have to have rigorous examination and zero tolerance for people who cheat. If people are gaming the system, they are going to 

be booted out of affordable housing. 

The goal here is to use those taxpayer dollars in a wise fashion. 

So there are models of success. I humbly submit my community as 

one of them, but there are also, unfortunately, as the Chairman 

pointed out, a myriad of examples where we fall far short. 

I think today’s hearing is designed to try to better understand 

what the elements for success are, what elements have led to less 

than success and how can we, working together at the federal and 

local levels, overcome those obstacles so we can have more success 

stories. 

Thank you, Mr. Chairman, for holding this hearing. 

Mr. MICA. Thank you. 

I might also say I have in my locale, a few miles away, a county 

housing authority that operates in an exemplary way. We changed 

out in my previous district pre-World War II housing in Daytona 

Beach, in Palatka and West Augustine. 

I have always said the Federal Government should not be a slum 

lord and that we should be responsible. Unfortunately, today we 

will hear some of the examples of problems that need to be addressed but there are some authorities that do incredible work. I 

am glad to hear your story. 

I will yield for five minutes to the gentlelady from New York, 

Mrs. Maloney. Welcome, and you are recognized. 

Mrs. MALONEY. Thank you so much for including me in this 

hearing. 

Public housing is critically important in our Nation. Mr. 

Connolly, the Ranking Member, and I share your concerns over 

waste, fraud and abuse that undermines the support of public 

housing and affordable housing that is so desperately needed in our 

Country. 

I want to compliment Mr. Connolly on your innovative story on 

housing. I guess it is Arlington, right? 

Mr. CONNOLLY. Fairfax County. 

Mrs. MALONEY. Fairfax County. To have raised the money for affordable housing with the penny tax code is a very innovative and 

great idea. 

I thank you for including me in today’s hearing. 

I want to welcome the New York City Housing Authority general 

manager, Cecil House, who will be testifying. NYCHA provides 

vital services to my constituents and so many others throughout 

New York City. It is the largest public housing authority in North 

America. NYCHA houses so many people that if it were a city, it 

would rank 23rd in population size in the United States. 

7 

More than 400,000 New Yorkers reside in NYCHA’s 334 public 

housing developments around our five boroughs. It is hugely important to housing needs in New York City. 

Another 235,000 receive subsidized rental assistance in private 

homes through the NYCHA-administered Section 8 leased housing 

program and NYCHA public housing represents 8.2 percent of the 

city’s rental apartments and is home to over 4 million or 4.8 percent of the city’s population. 

More 76,000, roughly 20 percent, of residents are seniors and I 

thank the more than 11,000 NYCHA employees who work to support New York City’s housing needs. 

Public housing provides a real service to our communities which 

is why it is so important that they are well run and uses taxpayer 

dollars effectively. It is in huge demand in New York. When I was 

a city council member, the waiting list was over 900,000 people. 

I join many of my New York federal and local colleagues in calling for a top to bottom forensic audit of how NYCHA is using its 

dollars. I look forward to seeing that report later this year so that 

we know best how to streamline NYCHA and preserve our public 

housing lifeline. 

Affordable housing in New York is very hard to come by. Our 

new mayor has announced his plan to build and preserve 200,000 

safe and affordable housing units in New York City. I look forward 

to working with Mayor de Blasio and NYCHA to achieve this goal 

to see the city’s housing needs met. 

We all know this requires critical investment. I am deeply committed to maintaining the quality of public housing in New York 

City and around the Country. I look forward to today’s testimony 

and the way to best preserve it, in my opinion, is to make sure 

there is no waste, fraud and abuse so that the public support in 

tax dollars is there. 

I thank all of you testifying today and especially my colleagues. 

Thank you and I yield back. 

Mr. MICA. Thank you, Mrs. Maloney, and thank you for participating. 

I had some pictures of my housing authority in Sanford put up. 

I guess I should make these pictures a part of the record. 

Mr. MICA. This is where people should live and have public housing. You see where we have vacant lots where we have torn down 

the units. This is boarded-up public housing, and that is some we 

had rehabbed and now they are being demolished. This picture is 

where they demolished some of the units. 

Now we are having a debate as to whether to have the housing 

authority continue. I would like to see them consolidate with the 

other housing authority in town or in our community. The administration costs of two housing authorities closely aligned geographically makes no sense. 

Let me mention to the witnesses this is an investigative hearing. 

I will swear you in in a minute. There are other members not here 

today. Members may have seven days to submit opening statements for the record. 

I will recognize our panel composed of: David Montoya, Inspector 

General, U.S. Department of Housing and Urban Development; 

Cecil House, General Manager, New York City Housing Authority; 

8 

and Kelvin Jeremiah, President and CEO, Philadelphia Housing 

Authority. 

I want to welcome our witnesses. As I said, this is an investigative hearing and we do swear in our witnesses. Please stand and 

raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Mr. MICA. Thank you. 

Let the record reflect that the witnesses answered in the affirmative. 

Welcome to each of you. I don’t know if you have testified before 

us before. We would like for you to summarize your testimony in 

five minutes so we can have questioning and exchange of information. If you have additional information, testimony or data you 

would like submitted to the record, just make that request and we 

will comply. 

First, let me welcome Mr. David Montoya, the Inspector General 

of the U.S. Department of Housing and Urban Development. You 

are recognized. Welcome, sir. 

WITNESS STATEMENTS 

STATEMENT OF DAVID MONTOYA 

Mr. MONTOYA. Chairman Mica, Ranking Member Connolly and 

members of the subcommittee, I am David Montoya, Inspector General for the Department of Housing and Urban Development. 

I thank you for the opportunity to highlight our perspective on 

waste, fraud, abuse and mismanagement in public housing authorities or PHAs and our work over the years. 

Public housing was established to provide decent and safe rental 

housing eligible for low income families, the elderly and persons 

with disabilities. It is the role of HUD’s Office of Public and Indian 

Housing to not only safeguard is but to create opportunities for 

residents’ self sufficiency, economic independence and to assure integrity by all program participants. 

There are approximately 1.1 million households living in public 

housing units which are managed by over 3,000 PHAs. Approximately 2,300 PHAs also locally administer HUD’s Section 8 Housing Choice Voucher Program which is the department’s principal 

program for assisting eligible families obtain housing in the private 

market. This program provides rental assistance to approximately 

2.2 million families. 

Oversight of HUD’s public housing programs continues to be a 

priority for my office. Since the beginning of 2012, we have issued 

75 audits related to PHAs, recording roughly $225 million in questioned costs and approximately $24 million in funds to be put to 

better use. Our investigative activity also continues to be significant as we have completed a total of 216 administrative and civil 

actions and 121 criminal actions. 

In order to better synthesize and highlight the continuing problems we have identified in this area, we are assessing our lengthy 

9 

history of work for continuing patterns of practice that negatively 

affect PHAs. 

This effort is intended to focus the department’s attention on 

problem areas that we and others have reported on over many 

years and to set about to develop and recommend an array of strategies for consideration by the department and Congress on ways to 

address and correct longstanding problems. 

We have found that PHAs often operate with little oversight and 

too often we see executive directors and PHA boards or commissions exercising little or no oversight of their own. Too often these 

officials have few or no qualifications to effectively discharge their 

responsibilities. Certification and accreditation of key personnel associated with running of a PHA are missing links in mitigating opportunities for mismanagement and poor governance. 

These vulnerabilities are magnified when one considers that 

HUD relies a great deal on electronic recording through PHAs for 

self assessments and through other self reported information collected in HUD’s information systems as its primary form of oversight. 

Until HUD is able to modernize its outdated systems and more 

effectively target its resources, it will continue to be constrained in 

inadequate oversight. 

This is further exacerbated by programs designed to loosen oversight of funding and reporting which we believe are 

counterintuitive to the many problems we and GAO have reported 

on over the years. It is my contention that cities, counties and 

States should do more to share in the burden and responsibility for 

the management, operation and oversight of their public housing 

authorities and programs. 

While HUD is responsible for overseeing PHAs, it has limited resources which are easily overwhelmed by the magnitude of the program and requirements. In order to address recurrent systemic 

problems, we have issued several broad prevention materials including integrity bulletins and posted them on our website. 

These are designed to showcase abuses as well as to educate 

PHA staff, local and State officials and the public on better ways 

to avoid mismanagement and fraud. 

The department’s role and mission has greatly increased over the 

last decade, including spearheading redevelopment in post-9/11 

lower Manhattan, the devastated post-Katrina Gulf Coast, the economic crisis caused by the sub prime mortgage collapse and the recent Hurricane Sandy disaster response. 

Because of the limited capability of the department to provide direct oversight, it is critically more important than ever that program participants, beneficiaries and local and State authorities 

take on more responsibility for proper administration and oversight 

of PHAs. 

My office is strongly committed to working with the department 

and Congress to ensure that these important programs operate efficiently, effectively and as intended. 

This concludes my oral testimony and I would be pleased to answer your questions. 

[Prepared statement of Mr. Montoya follows:] 

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Mr. MICA. Thank you for your testimony. We will go to questions 

after we have heard from the other witnesses. 

Let me now recognize Cecil House, General Manager of the New 

York Housing Authority. Welcome. You are recognized. 

STATEMENT OF CECIL HOUSE 

Mr. HOUSE. Thank you, Chairman Mica, Ranking Member 

Connolly and members of the subcommittee. 

I am Cecil House, General Manager, New York City Housing Authority or NYCHA, as we call it, the largest public housing agency 

in the United States. 

NYCHA is committed to fulfilling its mandate under federal law 

to provide safe, decent and affordable housing to over 630,000 low 

and moderate income Americans. To provide a sense of scale, as 

Congresswoman Maloney indicated, if the population of NYCHA 

was a city unto itself, it would be the Nation’s 23rd largest city, 

comparable in size to the City of Boston. 

Our public housing program encompasses over 178,000 apartments in over 2,600 buildings located throughout New York City 

with more than 31,000 private landlords participating in our Housing Choice Voucher Program. The Authority also provides housing 

assistance to an additional 225,000 individuals. 

I have been at the helm of the Authority’s day to day operations 

for the past 20 months and can say our new administration under 

the leadership of Mayor Bill de Blasio and NYCHA Chair and CEO 

Shola Olatoye is determined to ensure that NYCHA is a successful 

practitioner of good management and a provider of quality services 

to the working families, elderly and disabled citizens and veterans 

who rely on our programs for their housing, assistance in entering 

the workforce, educational opportunities and the stability of our 

communities. 

We are committed to preserving every unit of public housing in 

New York City, to strengthening our Housing Choice Voucher Program, and to ensuring that NYCHA is a responsible guardian of 

these public assets which will play an important role in the Mayor’s new housing plan to build or preserve over 200,000 safe and 

affordable housing units in New York City. 

We at NYCHA believe that ensuring public dollars are being well 

spent on providing housing assistance to the most vulnerable in 

our society is critical. We systematically review our operations to 

improve the quality of life of NYCHA residents and to increase the 

efficiency and productivity in the management of our programs. 

NYCHA is restructuring operations, reducing administrative 

overhead, modernizing our business systems and implementing 

data driven managerial controls to better monitor the performance 

of essential functions. We are working hard to implement cost savings in order to return the best value to the taxpayers for every 

public dollar allocated. 

At the managerial level, the Authority has implemented a hiring 

freeze and has reduced its total employee head count by over 16 

percent since 2004. We are relying on constantly updated metrics 

to derive efficiencies from a wide spectrum of functions resulting in 

improved service levels, for apartment maintenance and repair 

rates, heat and hot water complaints, elevator up times, Section 8 

26 

recertification and inspection rates, rent collection and delinquency 

rates and apartment prep turnaround time, among other essential 

markers. 

Our backlog, for open maintenance and repair work tickets in 

particular has been dramatically reduced. Our public housing assessment system and Section 8 management assessment program 

scores are trending upward. 

Procurement is another area in which NYCHA is bringing best 

practices from the private sector to bear on our operations with a 

continued focus on reducing costs. Following a thorough review, 

NYCHA is streamlining and updating our inventory systems. We 

have consolidated 14 procurement offices into a single department 

resulting in better internal controls, improved reliability and greater leveraging of our expenditures. 

No managerial objective is more critical than the fiscal responsibility and transparency the Authority owes to the public. NYCHA 

has implemented a rigorous, structured and thoughtful finance and 

budgeting process designed to deliver the greatest value for the 

limited resources that we have. 

The Authority publishes our annual budget online and meets regularly with residents and stakeholders to discuss the allocation of 

resources. NYCHA also maintains an audit department to provide 

assessment of the efficiency of the Authority’s operations, the adequacy of internal controls, the accuracy of financial data, and compliance with applicable laws, regulations and procedures. 

Beyond NYCHA’s own efforts, the City of New York maintains 

a robust anti-fraud, waste, theft and corruption infrastructure in 

the form of its Department of Investigations. Fundamental to ensuring that the highest standards are provided by NYCHA in the 

expenditure of public funds is the NYCHA Office of the Inspector 

General, a 50-member unit within the Department of Investigations working independently of the Housing Authority’s leadership 

and reporting directly to the Department of Investigations Commissioner. 

Specific IG teams are dedicated to monitoring the Authority’s activities in regard to contracting, construction management, labor 

and other key areas. 

The Authority faces great challenges in attempting to meet the 

need for affordable housing in New York City which far exceeds 

supply and is seeking to maintain a large portfolio of aging residential buildings in an era when federal commitment to public housing 

has dramatically receded and the Authority burden has grown. 

Mr. CONNOLLY. Excuse me. We are over time and with the Chairman’s permission, I am going to ask the gentleman to summarize 

because we have votes. We probably won’t be coming back after the 

votes because there will be around eight votes. We want to have 

the chance to dialogue. 

Mr. MICA. If you could begin to conclude, please. 

Mr. HOUSE. I would be pleased to respond to any questions you 

have. 

[Prepared statement of Mr. House follows:] 

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Mr. MICA. Thank you. 

Our next witness is Mr. Kelvin Jeremiah, President and CEO of 

the Philadelphia Housing Authority. Welcome and you are recognized. 

STATEMENT OF KELVIN JEREMIAH 

Mr. JEREMIAH. Good morning, Chairman Mica, Ranking Member 

Connolly and members of the subcommittee. 

I am Kelvin Jeremiah, the President and CEO of the Philadelphia Housing Authority. 

PHA was established in 1937 as a municipal corporation organized under the statutes of the Commonwealth of Pennsylvania to 

provide safe and decent housing to low and moderate income individuals in the City of Philadelphia. 

PHA is primarily funded and is accountable to the United States 

Department of Housing and Urban Development, its board of commissioners, the Mayor, the City Council and the citizens of the City 

of Philadelphia. 

As such, PHA employees, residents and contractors hold a significant position of public trust. The public therefore has a right to expect PHA’s employees, contractors and those doing business with 

PHA to perform their responsibilities honestly and with integrity. 

Thank you for the opportunity to highlight my perspective on 

waste, fraud and abuse and mismanagement of housing authority 

programs and appropriations. 

PHA is the fourth largest housing authority in the United States 

and the largest landlord in Pennsylvania. PHA is also one of a select group of housing authorities across the Country that has attained movement to work status. This designation allows PHA to 

spend its $375 million annual budget in a more flexible manner, 

strategically allocating resources on housing and self sufficiency 

programs to residents that best fits the local environment. 

Financial support for PHA’s operations and capital needs comes 

primarily from rent payments and subsidies provided by HUD. 

More specifically, approximately 93 percent of PHA’s revenues 

comes from the Federal Government in the form of subsidies for affordable housing. Only 6 percent of our revenue comes from tenant 

rents. The balance comes from grants from the city, the commonwealth and other sources. 

Approximately 75 percent or three quarters of PHA’s budget is 

dedicated to its core mission, funding the actual provision, protection, creation and maintenance of housing for low income individuals. 

With a staff of 1,300 full time employees, PHA provides housing 

assistance to nearly 80,000 people in its two main housing programs, the Public Housing Program and the Housing Choice 

Voucher Program. 

In the Public Housing Program, low income persons pay a set 

percentage below 30 percent of their income to PHA to rent PHAowned units. As of the close of fiscal year 2014, PHA served over 

13,000 households while maintaining a 93 percent occupancy rate. 

PHA has a public housing wait list of nearly 28,000 households. On 

average, PHA’s public housing families have an average household 

income of $10,645 and pay $267 in monthly rent. 

32 

In the HCV Program, formerly known as Section 8, low income 

persons receive a voucher to subsidize their rent to private landlords in units of their choosing. There are also variations of the 

program such as the VASH Program which exclusively serves 

homeless veterans referred to the housing authority by the local 

Veterans Administration. 

PHA is very proud of its efforts in this area and has set a model 

of efficiency in meeting the housing needs of this population, managing 460 VASH vouchers and is one of 25 cities nationally participating in the HUD, VA and U.S. Interagency Council on Homelessness collaborative effort to end chronic homelessness amongst veterans by 2018. 

As of the close of fiscal year 2014, PHA managed 19,073 vouchers 

with a utilization rate of 84 percent. PHA’s HCV waitlist is 34,000 

households long. On average, PHA’s families have an average 

household income of $10,061 and pay a monthly rent of $288. 

It is widely known, Mr. Chairman, that wasteful spending is 

present throughout government institutions, including the one I am 

privileged to head. It is my understanding that you and the members of this subcommittee have raised valid questions and concerns 

regarding fraud, waste and corruption in public housing and have 

been strong advocates for rigorous oversight that safeguard public 

resources from waste and mismanagement. 

I share your concerns and have spent my professional career 

bringing about positive changes in the integrity, efficiency and effectiveness of public housing programs. My experience over the 

past decade is one I am very proud of, Mr. Chairman. More importantly, I have been focused on building trust and restoring public 

confidence in public housing. 

I have seen firsthand the deleterious impact of corruption, fraud 

and waste which undermine scarce resources from reaching the individuals who need them most. It limits the number of eligible tenants’ ability to access limited funding and increases the cost of 

projects which in turn increases the cost to the agency. 

It is for those reasons that my tenure at PHA has been focused 

on accountability, transparency and making data driven decisions. 

I joined PHA in 2011 as the Director of the newly established Office of Audit and Compliance, a robust watchdog office focused on 

eliminating waste, fraud and abuse. 

Mr. Chairman, over the last two years PHA with the Office of 

Audit and Compliance has established strong collaborative partnerships with several federal, State and local enforcement agencies in 

an effort to protect the integrity of PHA and to further hold individuals who commit fraud accountable. 

We have conducted over 700 investigations, substantiated 299 

cases and referred 32 for further criminal prosecution working with 

our OIG partners and other city, State and local officials. 

Mr. Chairman, it is the consistent demand for affordable housing 

as evidenced by our waitlist of over 62,000 applicants, many of 

which wait on average ten years to be housed, reaffirms the critical 

importance of our mission, this demand, coupled with the shrinking 

federal resources, which makes it critical that public administrators take an active role in preventing and deterring corruption, 

33 

fraud and waste in addition to taking a more innovative approach 

to this improvement. 

Mr. MICA. If you can conclude, Mr. Jeremiah. 

Mr. JEREMIAH. Change and improvement in management operations, accountability and transparency will ultimately improve the 

lives of the people who benefit from the programs we administer. 

I appreciate the opportunity to testify before the subcommittee 

today. I would be happy to answer your questions. 

[Prepared statement of Mr. Jeremiah follows:] 

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Mr. MICA. Thank you. We will get right to questions. 

First of all, Mr. Montoya, we appreciate your work. How many 

people do you have working under your Inspector General operation for HUD? 

Mr. MONTOYA. Currently our staffing is about 615, that is the entire office. 

Mr. MICA. Is that adequate? 

Mr. MONTOYA. I would be remiss if I said—it is never going to 

be adequate. We are about 100 people down over the last two and 

a half years with budget cuts. 

Mr. MICA. With budget cuts? 

Mr. MONTOYA. Yes. 

Mr. MICA. First, I think we need to make certain you have the 

resources to do the job to conduct the oversight. HUD gave us HUD 

by the Numbers. It says, Public Housing by the Numbers under the 

HUD publication, where the money goes, 29 percent for administration. That to me seems very, very high and 33 percent for maintenance. You have a lot of old structures. I can see that. 

I have been in the rental business and I never pay more than 

10 percent to manage anything. Have you looked at these figures 

for administration within HUD? The money going out, I guess this 

is both operation of HUD and money for public housing authorities? Would you know if that is correct? 

Mr. MONTOYA. I don’t know that. Is that 33 percent within HUD 

that goes to administration? 

Mr. MICA. Thirty-three percent, that is where the money goes 

overall that HUD is spending. I believe 29 percent for administration. Most of HUD in Washington is administration which is probably very high. How many people are there in HUD in Washington? 

Mr. MONTOYA. I couldn’t tell you in Washington, 1,000 total, 

quite a few nationwide, quite a few in D.C. I don’t know the exact 

number. 

Mr. MICA. Again, it is a high number. If we could turn this over 

to private sector, I am sure management companies would chomp 

at the bit to get 29 percent of billions of dollars going out. That is 

a lot of money for administration. 

Mr. MONTOYA. What I would add is that yes, the administration 

portion of public housing authorities is quite high. The administration of public housing authorities is quite high. They recently established this Cost Office Center to manage the overall administration of these housing authorities. 

They are allowed to take a percentage of certain projects, so they 

are taking federal money, taking a certain percentage of that on 

certain projects as an administrative fee to cover their overhead. 

HUD gave them a blanket pass on about 10 percent of their capital fund. They can take 10 percent of their capital funds and make 

it administrative fees. Once these fees are earned, per se, they become non-federalized. 

We think de-federalizing these administrative funds doesn’t appear to be reasonable, especially in light of the fact that they are 

fully supported by grants and subsidies, a direct grant to begin 

with. 

49 

When these funds become de-federalized, they can virtually use 

these funds for anything they want. That then goes to the issue of 

high salaries. They can actually use de-federalized funds to pay 

some of these high salaries we have seen because it doesn’t fall into 

the category of reporting what federal money you spent on a salary. 

Mr. MICA. They are wasted to reduce this. If I was looking at this 

from a business standpoint, first, I would pass a law that did away 

with the administrative staff, re-contract this out with a limit and 

the cost of administration. There are hundreds of thousands of 

management real estate folks who could properly manage this. 

We haven’t talked about salaries of some of these. I know there 

are some caps put on the executive positions within the housing 

authorities. Isn’t there a federal cap currently of $155,000? 

Mr. MONTOYA. It is a little over with the increase in salaries that 

the Administration approved but it is not $155,000. 

Mr. MICA. Mr. House, what is your salary? 

Mr. HOUSE. My salary is $195,000. 

Mr. MICA. Mr. Jeremiah, what is your salary? 

Mr. JEREMIAH. My salary is $225,000. 

Mr. MICA. Sounds like you are getting screwed, Mr. House, but 

that isn’t the question at hand. The question at hand is how do 

they get to that number and we have a cap? Aren’t they subject to 

that cap? 

Mr. MONTOYA. I tell you, they both make more than I do, Mr. 

Chairman. Having said that, I would say there is a way around 

that cap. 

Mr. MICA. They both make more than we do too. They are not 

Mickey Mouse operations. Those are huge operations and maybe to 

find the right talent, you have to pay more. I have advocated for 

the Federal Government to pay to get the best expertise we can to 

operate systems and manage operations, attract them and reward 

people who do a good job. 

We have a law. How do they get around that? 

Mr. MONTOYA. The law says that only $155,000 of Federal money 

can be paid. We have an initiative that we will be talking to Congress and the department about with regards to the definition of 

salary. Salary doesn’t include such things as bonuses, PHA vehicles, benefits like retirement, life and medical insurance. These 

things aren’t covered. 

Mr. MICA. You two are relatively new in your positions, is that 

correct? Mr. House, how long? 

Mr. HOUSE. Twenty-two months and two days. 

Mr. MICA. You have been eligible for a bonus. Do you get a 

bonus? 

Mr. HOUSE. Absolutely not. 

Mr. MICA. You need to talk to some folks there. Of course it depends on your performance, that should be the criteria. 

Mr. Jeremiah? 

Mr. JEREMIAH. I am coming up in two years. 

Mr. MICA. Have you gotten a bonus? 

Mr. JEREMIAH. Yes, I have. 

Mr. MICA. How much was that? 

Mr. JEREMIAH. Ten thousand dollars. 

50 

Mr. MICA. Not a king’s ransom but significant. Not to pick on you 

two, we appreciate your coming to testify because you have two of 

the largest housing authorities in the Country. 

Every time I try to get some decision made, Mr. Montoya, on 

moving forward with some alternatives, for example, I don’t want 

to replace a ghetto with a ghetto, all I get is HUD will not permit 

this or HUD will not permit that. 

Have you any recommendations, for example, on replacement of 

some of these units? The worst place you would want to put an investment for real estate would be back into some public housing 

authority. Unfortunately, too our public housing authorities, where 

the public housing location is, if you talk to the sheriffs, the police 

chiefs and other law enforcement people, sort of the center of all 

kinds of difficult community crime issues. 

Do we have enough alternatives? I don’t like just replacing units 

with units. Do we have enough alternatives to allow variations, for 

example, bringing in the private sector to produce housing, come in 

with replacement projects? 

I have done Hope 6, or whatever we had, projects and other replacement projects for public housing? Have you looked at this at 

all, Mr. Montoya? 

Mr. MONTOYA. No, sir, we have not. While I couldn’t speak to 

that, I think from what we have seen, certainly not speaking with 

regards to the two gentlemen beside me because they seem to have 

a very good background and experience, we consistently see in 

these PHAs executive directors and boards or commissions who 

really don’t have the background and experience to run these 

PHAs. Some are running multimillion dollar programs. 

We feel that accreditation, certification or something on that 

order of these directors and boards would help. 

Mr. MICA. The one we got from HUD—I did everything I could 

after we had that taken over by HUD and another Congressman 

called me and said the guy they are sending over there is horrible. 

I could not get them to not employ him. These are people HUD is 

sometimes recommending. It was so offensive. Within seven or 

eight years, he ran it into the ground and ran off with money. 

The other thing too is you do criminal referrals? 

Mr. MONTOYA. Yes, sir, we do. 

Mr. MICA. I have been trying to find out what a criminal referral 

is. If I went in with a gun and a mask and robbed people of a fraction of this money, I would be in the slammer. I have written you 

all. Is it public knowledge when you do a criminal referral or do 

you have to keep it confidential? 

Mr. MONTOYA. Generally, we don’t speak to it. 

Mr. MICA. If a member of Congress asks you, I have a specific 

case? 

Mr. MONTOYA. Yes, sir. 

Mr. MICA. You call the Department of Justice and they won’t say 

anything. I can see that because of the proceedings they are involved in. Do you know anything about it? 

Mr. MONTOYA. In your case, we had criminal referrals to the Department of Justice. They were declined. 

Mr. MICA. They were declined by the Department of Justice? 

Mr. MONTOYA. Yes, sir, they were. 

51 

Mr. MICA. I did not know that. That just burns me. That is unbelievable. I want staff to look at that. I would like to see what the 

basis is or what they have to do. Do they have to use a gun or 

knife? The previous executive director stole a fortune and did all 

kinds of abusive things and got probation. 

People who do violate federal law can still be subject to prosecution under State law, is that right, in these cases? 

Mr. MONTOYA. Yes, sir. 

Mr. MICA. I may pursue that too. 

We have case after case of problems. I want to give credit because you have good operations. Mr. Connolly cited one. I have five 

or six great operations, but there are some consistently poor performers. 

Why has the East St. Louis Housing Authority been under government receivership for almost 30 years? Any idea what is going 

on there? 

Mr. MONTOYA. The last we had done with regard to that was I 

think HUD’s failure to properly plan for the management of that 

program. 

Mr. MICA. In the past, I wrote a letter with one specific housing 

authority I thought should be taken over. Can a member of Congress request that of any of these operations? 

Mr. MONTOYA. I wouldn’t see why not, sir. 

Mr. MICA. If I do my own review, I might be giving you a list. 

I have a lot to do. It is amazing. You can see poor performers one 

or twice. Of course, some of them, like Sanford, have gone on for 

two decades. Here we have St. Louis for 30 years. 

Mr. MONTOYA. In regard to your situation, sir, I couldn’t agree 

with you more that this gentleman should never have been allowed 

in your housing authority. He had previously been fired from one 

and asked to resign or face firing from two others. We consistently 

see this. 

We consistently see bad actors who either were under investigation or had questionable activity, moved from PHA to PHA and it 

exacerbates these problems we continue to see. When you say you 

see a lot of the same actors. 

Mr. MICA. Is there a suggestion today on a certification or some 

type of validation? Staff, let’s see if we can’t come up with something. Maybe you would join me, Mr. Connolly? We need to put 

some measures in place to bring some of this to a halt. 

I don’t want to take all the time. I tried to but I can’t. I must 

yield now to our Ranking Member, Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. I would be glad to 

join with you because I think you have put your finger on something. I guess I am dismayed, the most mild word I could use to 

describe, at the lack of professional criteria for running huge enterprises in some cases. 

The fact that you have someone who is a repeatedly bad actor, 

who somehow nonetheless gets hired—I have hired a lot of executives in local government. You have to check references, you have 

to Google them, you have look up their record, and you have to 

check around for their reputations in the localities in which they 

worked. That is just part of your due diligence. It is shocking to 

me 

52 

Let me ask you, Mr. Montoya, let’s refer to someone as a bad 

actor or someone with a very spotty record that is clear, by innuendo the record is clear, does HUD have the ability to tell a PHA 

we won’t reimburse you for any part of that salary if you hire that 

person? 

Mr. MONTOYA. HUD has quite a lot of latitude with regard to 

this, so I don’t know about that specifically but I would imagine the 

latitude they have in providing funding, they could do that. I don’t 

know. 

I would like to say thank you to Congress. It wasn’t until the recent appropriations that Congress mandated HUD to work with my 

office to incorporate some training on fraud awareness and the 

problems we have consistently seen. 

It has only been recently within the last month that we have 

been contacted by the assistant secretary for a PIH and some of the 

associations for these housing authorities in order to do that. I 

don’t believe it would have happened without Congress’ support. I 

appreciate that. We hope to take that further and time will tell. 

Mr. CONNOLLY. It seems to me, Mr. Chairman, that in addition 

to the whole certification thing, which I think is long overdue, 

there ought to be a training and certification program for managers 

and boards that oversee these enterprises. That is not a new concept; it is done in many other fields and is long overdue here. 

It seems to me we ought to also explore what authorities HUD has and can and should be using since it pays up to $150,000 per 

your previous question—I think you said $150,000? 

Mr. MONTOYA. Yes, $155,000, that is what we will pay in Federal 

funds. 

Mr. CONNOLLY. I know but if you get a bad actor with a bad history, presumably you have the power to say to a local PHA, you 

can hire that person but we are not going to reimburse you. It is 

on your watch, because they are on our list and have three strikes 

and they are out. 

When was HUD founded, Mr. Montoya? 

Mr. MONTOYA. I couldn’t tell you off the top of my head. 

Mr. CONNOLLY. Roughly in 1965, so it is coming up to its 50th 

anniversary. 

I am reading your testimony and you said in your testimony that 

the department ought to develop a physical inspection system for 

the HCV program. The HCV Program is the? 

Mr. MONTOYA. The Housing Choice Option Program. 

Mr. CONNOLLY. How long has the HCV Program been in existence? 

Mr. MONTOYA. You mean the program or housing quality standards? 

Mr. CONNOLLY. I am reading your testimony. You refer to the 

HCV Program. What do you mean by the HCV Program and how 

old is it? 

Mr. MONTOYA. The Housing Choice Option Program is really Section 8 housing. It has been around probably as long as HUD. 

Mr. CONNOLLY. We are just now talking about a physical inspection program at HUD? 

Mr. MONTOYA. We are talking about a physical inspection program with regards to the housing quality standards. If you were 

53 

paying housing choice vouchers for units, units that should be inspected for housing quality, it has been about six years that we recommended to HUD that they institute a better mechanism to do 

these inspections and they have yet to complete that. 

Mr. CONNOLLY. When did we adopt common standards at HUD 

for Section 8—here are the standards you really ought to be meeting? 

Mr. MONTOYA. With regard to Section 8, it has been around as 

long as the program, I believe. With regard to their inspections of 

these things, not quite sure. 

Mr. CONNOLLY. Standards first. The standards are not new is my 

point? 

Mr. MONTOYA. That is correct, sir. 

Mr. CONNOLLY. We are just now talking about maybe we should 

inspect some of them after 50 years? Then when HUD has inspected, reading again from your testimony, of the 119 units inspected, 99 didn’t meet the standards? 

Mr. MONTOYA. That is correct. 

Mr. CONNOLLY. That is just a sample. So 99 out of 119 sounds 

close to 90 percent. 

Mr. MONTOYA. Out of about 12,000 I think the universe is made 

up. 

Mr. CONNOLLY. Twenty-four of the 99 that didn’t meet the standards were in material noncompliance. 

Mr. MONTOYA. Those have been longstanding issues that should 

have been corrected some time before. 

Mr. CONNOLLY. I find that astounding. We have been in existence for 50 years, our mission is not new, the apparatus is not new, 

the bureaucracy is not new. This isn’t rocket science, it is housing. 

Standards of quality for clients who live in this housing, hopefully 

we are not in the tenements of the Bowery in 1900, we have higher 

standards in 2014 and one, HUD isn’t even inspecting them and we 

are still talking about maybe we ought to physically inspect. 

Does HUD delegate that responsibility to local PHAs like Mr. 

House and Mr. Jeremiah? 

Mr. MONTOYA. Yes, sir. In the case of NYCHA, yes, it is delegated. 

Mr. CONNOLLY. How good a job do they do? 

Mr. MONTOYA. Part of our report suggested there is no consistency in how those inspections are conducted. 

Mr. CONNOLLY. That tells me HUD doesn’t manage it. 

Mr. MONTOYA. The other concern we saw in the report was a requirement—I think it is a performance issue—a requirement that 

25 be inspected a day. We think this high level of measure is really 

driving bad behavior. 

Our inspectors could, at best, get to five or six a day and that 

was doing a full inspection to include driving between the boroughs. I think a performance measure of 25 is driving some bad behavior there. 

Mr. CONNOLLY. Good point. And it is a double standard. We don’t 

hold ourselves to that but we ask them to do it. 

Mr. MONTOYA. Correct. 

Mr. CONNOLLY. You are absolutely right, that is bound to get 

someone to say check because I don’t want to look bad. I got to 18 

54 

but I couldn’t get to 25, so the other 7 are roughly okay and maybe 

they are not. Yes, we have to look at that. 

I think there are some real fairly obvious, low-hanging fruit management improvements HUD could make itself that would have a 

positive impact on local housing authorities. After 50 years, it is inexplicable why they haven’t been adopted. To me, it is inexplicable. 

I have run a large government and I would never tolerate what 

you just described. That is the tip of the iceberg; there are all kinds 

of other aspects we could look at. I think HUD is going to have to 

clean up its act if we are going to have a positive impact on local 

PHAs and a whole bunch of standards. 

Mr. Jeremiah, you talked about 700-plus investigations for malfeasance, corruptions, mismanagement and the like, correct? 

Mr. JEREMIAH. That is correct. 

Mr. CONNOLLY. You said 299 were referred for criminal prosecution? 

Mr. JEREMIAH. Two hundred ninety-nine cases were substantiated; 32 were referred for criminal prosecution. 

Mr. CONNOLLY. By the way, why only 32? 

Mr. JEREMIAH. Two hundred ninety-nine were substantiated. A lot of these cases, quite frankly, are cases that are under $50,000 

and there is reluctance on the part of prosecutors to prosecute 

those cases. We often have to enter into repayment agreements 

with them. 

Mr. CONNOLLY. How often does that happen? 

Mr. JEREMIAH. Quite often. 

Mr. CONNOLLY. That would be buried in the 299? 

Mr. JEREMIAH. That would be buried in the 299. 

Mr. CONNOLLY. Do you have any idea how many of the 299 involves settlements, payback settlements? 

Mr. JEREMIAH. I don’t have that specific number with me. 

Mr. CONNOLLY. So 32 were referred for prosecution or for further 

action by the prosecutor? 

Mr. JEREMIAH. Yes, for prosecution. 

Mr. CONNOLLY. How many of the 32 were in fact prosecuted? 

Mr. JEREMIAH. Of the 32 cases that were referred, we have had 

10 arrests thus far and 5 are pending. The rest have not yet been 

acted upon. 

Mr. CONNOLLY. Any trials? 

Mr. JEREMIAH. Generally, no; they are usually pleas. 

Mr. CONNOLLY. The Chairman made reference to a housing authority in his district where we have had consecutive executive directors who apparently absconded with money. You would think 

having been burned once, you would be real careful about who you 

hired to replace that person. 

I guess what troubles me about these statistics is I understand 

we are always going to narrow down and we certainly want to be 

fair to everyone but if you want to deter theft and corruption, one 

good way to do it is to prosecute and incarcerate. 

Mr. JEREMIAH. I agree with you entirely. 

Mr. CONNOLLY. In fact, I would argue that white collar crime is 

precisely the crime you want to have jail time because them’s the 

folks that will really get the message—I don’t want to do that. 

They are often the ones exempted, unfortunately. 

55 

People who may be tempted or yield to temptation are going to 

calculate, what chance have I got of: one, getting caught; two, anything happening even if I am; and three, ever going to trial or even 

plea bargaining with some kind of serious consequence. Obviously 

the odds are pretty good if my intent is not a good one. 

I think we have to ramp up—as the Chairman suggested—more 

referrals both at the local level and the federal level, get tough 

about it and get the Justice Department and our local prosecutors 

to get tough about it. I understand the standard of $50,000 but I am not sure that is 

a good message either. It is not okay to be pilfering even sort of 

modest amounts relative to grand larceny. That can create a culture that undermines the mission and the faith of the public in the 

mission of the agency—it is all corrupt, they are all on the take 

and nobody does anything about it. 

You don’t want that reputation, you don’t want that perception. 

I think this is a very serious part of what we are doing to sort of 

get ourselves, where we have had problems, back on track in trying 

to win back the confidence of the public in our mission, what we 

do. 

Mr. JEREMIAH. Mr. Connolly, there is a perception that the 

crimes that are committed as it relates to fraud and corruption are 

sometimes victimless crime. I attend every sentencing in a case involving the PHA. I had the opportunity to deliver a victim impact 

statement which are often taken into account by the judge. 

There are those occasions when the judge does not take that into 

account. I can tell you that we have had some incredible successes 

working with our local and federal partners to hold people accountable but there have been a number of cases where folks got off on 

probation, where they only got six months. 

For example, one case involving the theft of construction mate- rials, well over $400,000 in construction materials, one of the defendants got six months in jail. There are kickback cases where we 

saw a very good result where that defendant got 50 months in jail. 

It does run the gamut. 

I believe that it is important in terms of deterring fraud and corruption that we hold those folks accountable but I will add that 

even when the system does not, PHA has taken a very aggressive 

stance in holding them accountable. We do that by forfeiting their 

pensions. 

Mr. CONNOLLY. Good. I would just say to you, as someone who 

spent 14 years in local government, the key to success is you have 

the public with you. They have confidence in the organization, in 

the machinery, in the people and the leadership. 

If they don’t, your mission is in trouble. The notion of victimless 

crime, fair enough, it is not someone who has been violent and has 

physically hurt someone else but if you are responsible for eroding 

confidence in such an important subject area, affordable housing, 

so the public no longer has any confidence at all in what you are 

doing, so resources decline, fewer families are assisted, they are 

victims, through no fault of their own, because of some venality or 

mendacity by an employee, or a contractor or whoever it may be. 

That needs to be taken into account because the erosion of confidence is not a trivial matter. 

56 

Look at Mr. House of New York, you came from the Bloomberg 

administration but you are now in the de Blasio administration. 

Mayor de Blasio set a breathtaking, to me, goal of 200,000 affordable housing units in New York City. That is astounding. 

My jurisdiction is about one-eighth the size and we couldn’t believe we would have 2,400 units in four years. Multiply by eight, 

maybe you could do 17,000 but 200,000 is going to be an extraordinary feat if it can be accomplished. 

If the public has no confidence in you to begin, you are never 

going to reach it. You are not even going to get a fraction of it. It 

is critical that if we are all going to get behind that goal in New 

York, we have to have confidence in you, Mr. House, and in the 

people who run that organization that they can get it done. 

That is what is so insidious about corruption, even petty corruption. I think we have to weed it out and we need HUD to double 

down on it because it is insidious. 

Mr. House, I want to give you an opportunity to respond and 

then I am done, Mr. Chairman. Thank you for your indulgence. 

Mr. HOUSE. I think the Mayor’s housing plan as you have recognized is a very ambitious goal but there is a very critical and necessary need in New York City. Housing costs have gone up significantly and there is a need to have this additional affordable housing across our city. 

If you look at the individuals that live in public housing, a good 

portion of them work with our Department of Education, with our 

health and hospital industries. Those are critical human resources 

to make our city work as we move forward. We need to provide 

housing similar to what you have done in Fairfax County and we 

need to do that in New York City. 

It is just a matter of scale. New York City is so much larger and 

the need is, as a result, so much greater. 

Mr. MICA. Thank you, Mr. Connolly. 

I didn’t put this up before but I just want to show you, Mr. Montoya. The Sanford Housing Authority is not in my district and has 

never been in my district. It is adjacent to my district. This is part 

of my file on this little housing authority that has gone wild and 

the problems we have had. 

That brings to mind the expenditure cited by the Inspector General on legal costs for the Philadelphia Housing Authority. Thirty 

million over three years is ten million a year. Was some of this 

money spent going after people and if so, how much? I read there 

were 15 law firms that were employed. How do you incur that kind 

of legal bill? 

Mr. JEREMIAH. Let me first say that was before Kelvin Jeremiah 

came to town, for the record. The report is about three years old. 

Since then we have cut our legal expenditures significantly. Last 

year alone, it was about $900,000 down from that $10-million plus 

a year. 

I couldn’t begin to justify what was done in the past but why 

there would be such an incredible need for what I would consider— 

I do share the IG’s comments that it is excessive. 

Mr. MICA. You investigated that but you couldn’t get documentation on what justified that $10 million a year average? 

57 

Mr. MONTOYA. We looked at a portion of it, sir. Out of the $30 

million, we looked at a representative sample of that, a little over 

$4.5 million. You are correct, of the amount we looked at, there 

was no real justification for the expenditure. 

Mr. MICA. The problem is there is $30 million over three years. 

He has gone to $900,000 and they were spending $10 million for 

15 firms, so it is money just gone. 

Mr. MONTOYA. Right. We basically extrapolated the entire $30 

million being questioned and out of all of that, $1.1 million was 

specifically spent to obstruct our audits. Again, this was not under 

the purview of Mr. Jeremiah. 

They did things like having three attorneys with each of our 

folks when we did interviews. They had to look at every record before they turned it over to us. These are the things that, as the IG, 

we have a right and responsibility to oversee. 

Mr. CONNOLLY. Mr. Chairman, can I interject on that? 

Mr. MICA. Yes. 

Mr. CONNOLLY. Aren’t there laws against that? Were they using 

federal money? 

Mr. MONTOYA. Yes, sir, it was federal money. 

Mr. MICA. They were using Federal money. 

Mr. CONNOLLY. Don’t you have some redress, both criminal and 

civil? 

Mr. MONTOYA. We ended up getting what we needed. 

Mr. CONNOLLY. That is not my question. Listen, if someone is investigating and you even lie to the FBI, it is a crime. To actually 

spend money from legal resources to deliberately obstruct and IG 

report involving federal money—adding insult to injury—using 

Federal money to obstruct, that has to be a crime and prosecutable. 

What happened? 

Mr. MONTOYA. What I would say is we are not done. If I can just 

leave it at that, we are not done. 

Mr. MICA. I just discussed with staff making certain that you 

have the resources to pursue some of this. What I have read and 

what I have heard is just astounding. Again, when you come to obstruction of your work and using taxpayer monies to obstruct, we 

are reaching about the limits. Somehow we have to drill down on 

this and go after these folks. 

We will see what we can do to give you the resources. 

Mr. MONTOYA. We appreciate your support. 

Mr. MICA. Unfortunately in my community, central Florida, 

about 25 percent of the homeless are veterans. Mr. House, was it 

you who said you had 460 homeless veterans? 

Mr. JEREMIAH. That was me. 

Mr. MICA. Mr. Jeremiah. How many total units do you have for 

your whole housing authority? 

Mr. JEREMIAH. We have approximately 13,000. 

Mr. MICA. Thirteen thousand does not sound like a big number. 

Mr. JEREMIAH. It does not. 

Mr. MICA. Is there a limit on the program or is that a limit on 

your effort or what? 

Mr. JEREMIAH. There have been some structural issues with our 

housing authority making units available. 

58 

Mr. MICA. Do veterans get a preference for housing when they 

are homeless? 

Mr. JEREMIAH. They do. 

Mr. MICA. They would naturally come to the top of the list. You 

have a waiting list? 

Mr. JEREMIAH. Yes, we do. The waiting list generally wouldn’t 

apply to homeless vets. 

Mr. MICA. How big is your waiting list? 

Mr. JEREMIAH. It is about 60,000. 

Mr. MICA. A good number of those would be veterans. They don’t 

get a preference in being first up? 

Mr. JEREMIAH. A good number of those would not be veterans. 

Mr. MICA. The ones that are identified, they apply and they list 

they are a veteran, do they do that? 

Mr. JEREMIAH. They do but they would be redirected into the 

VASH Program. 

Mr. MICA. I know but 460 is small and 13,000 units? 

Mr. JEREMIAH. We do. 

Mr. MICA. You have 60,000 plus. It would be my preference to 

give those who served the Country an opportunity to have the first 

show at whatever is available. Is that the way you are doing it? 

Mr. JEREMIAH. Yes, they do. Once they have indicated they are 

a veteran, they would be removed from the 60,000 plus. 

Mr. MICA. And given first preference? 

Mr. JEREMIAH. They would be given first preference. 

Mr. MICA. What is the acronym for the program? 

Mr. JEREMIAH. The Veterans Administration. 

Mr. MICA. VASH? 

Mr. JEREMIAH. Yes. 

Mr. MICA. Are you only assisting those to the limits of that program funding availability or are you going beyond that and 

prioritizing those folks so they get first up? 

Mr. JEREMIAH. We are doing both. 

Mr. MICA. That was my question. 

Mr. CONNOLLY. Just to be fair, Mr. Chairman, just real quick I 

want to get some stuff in the record. 

Mr. MICA. Go right ahead. 

Mr. CONNOLLY. If one only heard our previous exchange, one 

might think we are still in the middle of this so I want to be fair. 

Obviously the events we were describing in terms of the obstruction of the IG’s investigation was not on your watch, Mr. Jeremiah, 

is that correct? 

Mr. JEREMIAH. That is absolutely correct. I would also remind 

the members that prior to coming to the Philadelphia Housing Authority, I was an IG so I understand all too well. 

Mr. CONNOLLY. You are a recovering IG. 

It is also important to get in the record, correct me if I am 

wrong, your predecessor was debarred in part because of his attempts to obstruct the IG report, is that correct? 

Mr. JEREMIAH. That is not quite correct. The debarment related 

to the failure to file certain lobbying disclosures. 

Mr. MONTOYA. That is correct. We also found they had been 

using federal money to lobby. 

Mr. CONNOLLY. Which is illegal. 

59 

Mr. MONTOYA. Right. 

Mr. CONNOLLY. In March 2011, the entire board of the Philadelphia Housing Authority resigned? 

Mr. JEREMIAH. That is correct. 

Mr. CONNOLLY. So you have a new board? 

Mr. JEREMIAH. We do. 

Mr. CONNOLLY. You went into receivership at that time under 

HUD control. Are you still under receivership? 

Mr. JEREMIAH. No, we are one year out of receivership. 

Mr. CONNOLLY. Have you closed all of the recommendations 

made by the HUD IG? 

Mr. JEREMIAH. We have, including a reimbursement to the pro- gram of about $8.2 million for the legal services that we collectively 

determined were not necessary or appropriate. 

Mr. CONNOLLY. Thank you. I want to be fair and not leaving it 

hanging because that is not the case. There is a new guy in town, 

a new board and hopefully we can make sure we try to learn from 

the terrible mistakes of the past. 

Thank you, Mr. Chairman. 

Mr. MICA. Those are very good points. We appreciate the cooperation of both of you. Both of you are fairly new. 

Mr. House, after you learned how much the guy next to you is 

making and how many more units he has, you can have a little 

talk. You have a lot of important responsibilities. 

This is a very important subject. I don’t know of too many hearings that have gone into this depth, at least from our investigative 

standpoint. We would like to follow up because you do have a lot 

of people who need housing assistance and affordable housing and 

we need to make certain we have the alternatives. 

We have to take a real look at the administrative costs overall 

and see what we can do to bring that down. I don’t mind paying 

to help people who need housing help but 29 percent premium on 

administration seems over the top. We will look at that further. 

I want to thank the New York and Philadelphia directors for 

being here. I salute you, Mr. Montoya on your work and the information you brought to the committee and Congress today. 

We will leave the record open for a period of seven days, without 

objection. We may have additional questions we didn’t have time 

to get into because votes have been called. 

We thank you so much for being with us and participating in this 

enlightening hearing. We thank Mr. Connolly and Mrs. Maloney 

who are gone. We will continue to get the facts and hopefully improve the expenditure of public funds. It is such an important area. 

There being no further business before the subcommittee, this 

hearing is adjourned. 

[Whereupon, at 10:33 a.m., the subcommittee was adjourned.] 

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