Now that Dallas has a bold new affordable housing policy, it’s worth remembering that as excited as we are about the way things are heading, the city hasn’t yet reckoned with the incredible mess made under previous administrations.
The problems go beyond this month’s damning audit by the inspector general at the U.S. Department of Housing and Urban Development, which says Dallas failed to conduct proper environmental reviews for renovations at 13 reconstruction projects. That report recommends that the city repay $1.3 million in federal funds tied to those projects and, potentially, another $2.9 million in matching funds it says Dallas wasn’t entitled to.
That’s bad enough, but the stormier cloud hanging over Dallas is the one that gathered in March 2016. That’s when the city auditor found that $29.9 million in federal money had been spent on 54 projects between fiscal years 2012 and 2014 without proper records or even clearly understood standards for who got money and how much they received.
When HUD got wind of the 2016 audit, it began asking its own questions, and for more than a year Dallas has lived under the threat of having to pay all that money back, too.
On Friday, HUD spokeswoman Patricia Campbell in Fort Worth said the agency is still reviewing the Dallas matter and won’t comment on whether it might eventually ask for the money back.
We raise these issues today not to dump cold water on the enthusiasm over the new housing policy, which represents the city’s best thinking in years on housing.
What’s more, one of the policy’s architects, economic development and neighborhood services chief Raquel Favela, has been steadily addressing one problem after another raised by the audit and by HUD.
For instance, one thing she did soon after arriving was to develop underwriting rules for how much money to pass out when developers need city help to make affordable housing projects pencil out.
Before Favela’s arrival, a developer would argue that if spending $10 million on a $5 million apartment building would increase its value by more than $10 million, then the city should use its "gap financing" funds from Uncle Sam to cover that upgrade.
Favela argues that the city should chip in only enough to bridge that delta between what the project will support and what it will cost.
That switch in standards will save a lot of money and increase the numbers of projects Dallas can help build. It also reduces the discretion that City Hall has when third parties begin to weigh in with influence for this project or that one.
While neither the city nor HUD has accused anyone of any wrongdoing, the lack of standards is one reason why Dallas has been exposed to such heavy second-guessing.
No doubt the city’s oversight has been spotty. On several key areas, it hasn’t been able to provide HUD with the records it’s asked for. That could spell trouble around the bend, and that’s why we’re keeping it top of mind even as we celebrate the new discipline and better policies that were so badly needed.
Housing department issues
Two dark clouds continue to hang over this Dallas City Hall department:
#1 The city hasn’t been able to produce all the records HUD has demanded following a 2016 city audit showing Dallas had awarded $29.9 million to projects with few records and loose standards.
#2 This month, HUD’s inspector general recommended Dallas repay more than $4 million in federal housing dollars after errors were found.
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