Senators Scott, Chairman Shelby call for Secretary of Housing and Urban Development to address substandard housing conditions

Washington, D.C. – (RealEstateRama) — Senator Tim Scott (R-SC), Chairman of the Banking Committee Subcommittee on Housing, Transportation, and Community Development, and Chairman Richard Shelby (R-AL), Chairman of the Committee on Banking, Housing, and Urban Affairs, are demanding Housing Secretary Julian Castro provide answers for the appalling conditions that persist at some of our nation’s federally funded public housing properties.

Following a hearing called by Scott last month, it was discovered that despite having tens of millions in leftover funding, the Department of Housing and Urban Development (HUD) has allowed the number of inspectors to decline by half, they have waived requirements for re-inspections of properties that had initially failed inspections, and there have been federal violations regarding annual inspections of underperforming properties. Secretary Castro refused to appear, or have any HUD staff testify, at the hearing and has not commented on the troubles faced by his department.

“We have some serious concerns that Secretary Castro has failed to fulfill his legal obligation to ensure HUD-assisted housing is safe, sanitary, and in good repair,” said Scott. “Castro’s inaction suggests serious negligence with respect to oversight of housing quality, to the detriment of many families.”

The full text of the letter is below, and a PDF version can be viewed here. Video from September’s hearing can be viewed here.

October 31, 2016

The Honorable Julián Castro
Secretary
U.S. Department of Housing and Urban Development
451 7th Street SW
Washington, DC 20410

Dear Secretary Castro:

Over the past year, Senator Marco Rubio has brought to the Committee’s attention the appalling conditions in certain Florida housing developments that receive federal assistance from the Department of Housing and Urban Development (HUD). These substandard conditions have persisted over a number of years in violation of the physical condition standards set forth in federal regulations. Even HUD inspectors have described these conditions as “life-threatening.”[1]

On September 22, 2016, through its Subcommittee on Housing, Transportation and Community Development, this Committee held a hearing to examine HUD’s inspection process at federally-assisted multifamily properties.[2] You were invited to testify at that hearing, directly or through a designee of your choosing, but refused to appear. We are deeply troubled that you have refused to testify on this important issue.

Moreover, we have serious concerns that you have failed to fulfill your legal obligation to ensure that HUD-assisted housing is “decent, safe, sanitary, and in good repair.”[3] According to HUD senior staff, over the last five years HUD has:

allowed the number of private certified inspectors to decline by half;
reduced the number of training days required for inspector certification;
allowed the number of quality assurance inspectors to decline by nearly two-thirds;
waived requirements that units with failing scores be reinspected by quality assurance inspectors within 60 days of a failed inspection;
violated federal regulations requiring annual reinspection for underperforming properties (some of which were not reinspected for more than four years); and
drastically reduced Management and Occupancy Reviews (MORs) – a critical fail-safe for standard physical inspections – due to a prolonged procurement dispute.
Most troubling, it appears these failings were not the result of budget constraints. Congress has fully funded the President’s budget request for the accounts associated with physical inspections and MORs in all but three years since FY2010. In the three years where the enacted amount was less than requested, the amount included in the final appropriation reflected substantial unobligated balances that were carried over from prior years. In other words, each year you have withheld millions of dollars that Congress appropriated for physical inspections of HUD-assisted properties. Your inaction suggests serious negligence with respect to oversight of housing quality, to the detriment of many families.

To better inform this Committee, please provide the following information for each year since fiscal year 2005, by state, unless otherwise noted:

The number of physical inspections of multifamily properties by certified inspectors, and the number of quality assurance reinspections and collaborative inspections by quality assurance inspectors.

The number of MORs of multifamily properties, listing separately those performed by performance-based contract administrators and by HUD employees.
The number of HUD-employed quality assurance inspectors.
A report of all multifamily properties that are assessed through the Real Estate Assessment Center and have Uniform Physical Condition Standards (UPCS) physical inspection scores of less than 60 or have received an unsatisfactory management and occupancy review within the past 36 months.
A detailed explanation of why the Office of Multifamily Housing Programs suspended MORs and how it ensured effective oversight of its portfolio in their absence.
All UPCS inspection reports and MORs for Eureka Gardens (PID 800004072), Windsor Cove (PID 800004507), and Stonybrook (PID 800004469), redacted only for personally identifiable information.
All documents and communications referring or relating to the findings, determinations, and/or recommendations of HUD’s inspections task force.
Please provide all requested information and documents by December 5, 2016.

Sincerely,

Richard C. Shelby,
Chairman, Committee on Banking, Housing, and Urban Affairs

Tim Scott,
Chairman of the Banking Committee Subcommittee on Housing, Transportation, and Community Development

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