The city of Dallas owes a $4.2 million reimbursement to the federal government for housing money it misspent building homes in the city’s poorer areas.
An audit by the Inspector General’s office of the U.S. Department of Housing and Urban Development found the city’s HOME Investment Partnerships program, which builds and renovates homes for residents living in poverty, did not follow its own policies on who receives assistance.
Over half the money to be repaid, $2.9 million, comes from a failure to properly understand the requirements for matching funds. That money will not cost the city, as it will come from credits the city has accrued, leaving $1.3 million to be paid back. The review was based on HOME’s renovation of 13 homes in the city.
The language of the audit is forceful and urgent even by the standards of one of the federal government’s most watchful internal watchdogs.
From the audit:
“The City demolished and reconstructed 13 homes and did not (1) follow environmental regulations, (2) properly assess contractors or ensure that they followed contract terms, (3) check the eligibility status of subcontractors, (4) sign loan agreements, or (5) support and calculate income correctly. These conditions occurred because City staff did not obtain necessary training or comply with guidance received and supervisors did not ensure compliance.”
“Further, the City hastily reprogrammed $1.02 million to its reconstruction program without proper planning because it believed the money would be recaptured by HUD. The City rushed projects without ensuring that it followed HOME regulations or its own policies.”
Several pages in the review deal with the city’s troubled contract with Dry Quick Restoration, a Fort Worth firm.
Before enlisting the services of Dry Quick, there were indications that it had “limited financial capacity,” the audit states. Additional problems included a failure to monitor the work of Dry Quick and the finding that the projects “were not completed in a professional manner.”
The owner of Dry Quick is Kenneth W. Williams, a Fort Worth pastor who in March was reported to be connected to Carl Wagner, a manager in the city’s housing department.
Wagner was placed on paid administrative leave amidst allegations that he steered $825,000 in contracts to Williams. Dry Quick has twice lost its state charter for failure to pay taxes, most recently in January, records show.
The city contests the repayment of $1.3 million, insisting that despite the fact that “mistakes were made, construction was delayed and documentation was deficient,” the money was spent appropriately.
The audit and the city’s response will be assessed for a final ruling.
Dallas has grappled with housing for the middle to lower income group for some time, as developers have constructed high-end apartments and homes that demand a high price.
While these dwellings have a high occupancy rate and provide the city with a healthy tax base, they drive up the rents in neighborhoods that were once dilapidated, and have driven out the former residents.
Steve Miller can be reached at [email protected].