During a time when the Housing Authority of Baltimore City has pleaded poverty to explain everything from allowing hazardous conditions to spread in its public housing developments, to turning away tens of thousands of needy families seeking rental assistance, to slashing jobs and benefits for its own workers, the agency has in fact been awash in disposable income, the result of an extraordinarily generous funding stream secured from the federal government with the help of powerful political allies and a pattern of underfunding its own housing assistance programs.
An analysis by City Paper and the Chicago-based research group Center for Tax and Budget Accountability (CTBA) shows that under the leadership of Housing Commissioner Paul T. Graziano, the Housing Authority has used money earmarked for housing the city's most vulnerable residents to build up reserves that at their peak topped $150 million, or roughly half the agency's annual operating budget.
Examination of Housing Authority audits and annual reports indicates that during the seven-year period from 2008 through 2014, the agency carried an average annual surplus of about $112 million, some of it in the form of investments or funds earmarked for particular projects, but most of it sitting in an unrestricted cash-operating fund. During those seven years, the amount of ready-to-spend cash the authority kept on hand grew from $55 million to almost $98 million.
The agency's cash reserves are so substantial that last year it was able to expand its investment in a retirement benefits trust fund by $16 million. Since it was established in 2011 with a $25 million deposit from the Housing Authority's cash reserves, the trust fund has been built up to almost $50 million. It is now itself a source of investment revenues, and is sufficient, the agency estimates, to cover the agency's retirement health care benefits for the next 25-30 years. The Housing Authority calculates that, combined with cuts to employee retirement benefits, the creation of this trust fund will save the agency roughly $1.7 million a year.
Also last year, the Housing Authority was able to make an early payment in the amount of $19 million on a loan from the state of Maryland.
To put these numbers in perspective, the $35 million Baltimore's Housing Authority spent last year to improve its debt position is more than would be needed to house every homeless person in Baltimore for a year ($27 million-$30 million); or to move 3,000 families off the city's long waiting list for rental assistance ($33.7 million); and would cover most of the agency's 2014 expenditures for major repairs and rehab at the city's 49 public housing developments ($41 million).
According to the Housing Authority, the $19 million loan prepayment was a required part of a plan to privatize some 4,000 of the agency's approximately 10,000 public housing units. The agency says money saved on the loan will be put toward renovation of the city's remaining public housing developments.
But CTBA analysts say that the $16 million payment into the retirement trust in particular was clearly a policy decision on the part of the Housing Authority for which there was no legal or regulatory mandate. And while the Housing Authority says the $19 million loan payment was required to move forward with its plans to privatize some of its housing stock, CTBA says it is notable that the agency had the funding available to make such a payment in one lump sum. Having the luxury of doing so could be taken as a sign of fiscal good health, if considered separately from the agency's performance in fulfilling its mission—actually housing the tens of thousands of people on its waiting list.
"There's a good argument to be made that paying down your liabilities is a good thing because you don't have the debt on the books anymore, but at the same time, if this money should be going towards helping people have housing, then that's a policy decision that is interesting, to say the least," said Bobby Otter, budget director with the CTBA.
Critics say that what in another time and place might look like sound fiscal policy takes on a decidedly grim aspect in the Baltimore of 2015.
"There are 98,620 households in the city of Baltimore who can't afford their rent every month, and there are at least 2,700 people that the city officially says are sleeping on the street tonight or in overcrowded shelters," said Jeff Singer, former president and CEO of Health Care for the Homeless.
Linda Couch, senior vice president for policy at the National Low Income Housing Coalition (NLIHC), questions whether the Housing Authority has been sufficiently transparent in how it has chosen to use its funds.
"The Housing Authority operates the nation's housing safety net in Baltimore, and anyone who's concerned about homelessness or the lack of affordable, decent housing in Baltimore should be able to find out where Baltimore's money is, what it's being used for, and whether or not the money is going where it needs to go," she said.
Although the CTBA found that the Housing Authority's reporting practices make it difficult to quantify exactly how much money is being diverted away from housing assistance programs to build up reserves and pay down debt, City Paper estimates that during one three-year period, from 2010 through 2012, the agency underfunded its rental assistance and public housing programs by an average of $18 million a year.
According to a source with specific knowledge of the agency's budget and spending practices, Housing Authority financial planners have historically used inordinately conservative estimates of both revenues and costs to pad the agency's budget, and then refused to release funds for operational uses such as making additional repairs to housing projects when annual surpluses began to build up.
The Authority's robust financial position could come as something of a shock to those outside the agency's top leadership, given the housing commissioner's habit of advertising his agency as being in near-constant financial distress. But in some ways, it's not surprising that his comments have escaped scrutiny. CTBA analysts describe the Baltimore Housing Authority's financial records as extremely difficult to parse, worse even than the Chicago Housing Authority, which they found last year was using practices similar to those at work in Baltimore to sock away hundreds of millions of dollars.
In addition to underfunding housing operations, Baltimore's Housing Authority took steps to further protect its financial position with severe austerity measures that slashed benefits for its workers, eliminating pension and retirement health benefits for new hires and freezing benefits for current employees at 2012 spending levels. Also during this time, the Authority has taken steps to scale back the size of its workforce, shedding jobs by means of early-retirement offers and eliminating open positions the agency allowed to go unfilled.
Given its conservative financial approach, an outside observer might be forgiven for mistaking this governmental entity for a private enterprise, and indeed programs promoted by the federal government and intended to impart the "agility" of a business to Housing Authority practices have had a profound influence on the agency during the last decade. But for advocates like Singer, a private enterprise approach doesn't appear to be effective in promoting the public good when it comes to housing they city's neediest citizens.
"It's not the right model for running a public agency in which your prime directive is to serve people who need the most help," Singer said.
"Now it's true you can't fulfill that mission without resources, and you want to use your resources effectively, but that's not quite the same as saying you want to reduce your costs to the greatest extent so that you can have the most money at the end of the year. That's the wrong approach," Singer said.
Linda Couch puts the matter somewhat more bluntly.
"They better have a really good reason for sitting on all that money," she said. "If your mission is to serve the housing needs of your poorest residents, how is a healthy balance sheet helping the people on a waiting list?"
While not contesting the $112 million surplus mentioned above, the Housing Authority said in an emailed response that it is not as rich as it looks, and its "unrestricted net position" is a better indicator of the agency's financial health. Still, by its own measure—"unrestricted net"—the Housing Authority carried an average annual reserve of $58 million from 2008 to 2014.
In the emailed statement, agency spokesperson Tania Baker said that these reserves are "needed to ensure that daily operations continue in the event of a delay or a reduction in appropriations from the federal government."
"Given the ongoing uncertainty about the federal budget process over recent years, it is imperative that these funds be held in reserve to address such problems," the statement said.
On Monday, Graziano told City Paper the agency's reserves were "not excessive" and characterized them instead as "very modest," estimating that they would only be enough to keep the programs he oversees running for six weeks in the event of a government shutdown.
"You watch the news like I do, are you going to tell me that you can predict what Congress is going to do these days?" Graziano asked.
In addition to providing emergency operating funds, Graziano said the agency's reserves provided the capital needed to enable redevelopment projects that have brought hundreds of new and rehabbed housing units into the public housing inventory.
But Housing Authority data shows the number of occupied units has held fairly steady over the years, from 10,445 units in 2008 to 9,764 in 2015.
Critics of the Housing Authority say that a cash reserve of tens of millions of dollars is far in excess of what the agency can reasonably argue it needs to weather congressional budget battles.
"Having run a nonprofit, I understand that having some cash reserve can be very important, but the Housing Authority is a public agency that gets appropriations every year, and if they need to have a cash reserve, it seems to me that it shouldn't be anything like what's being described here," Jeff Singer said.
Low Income Housing Authority
It's no secret that Baltimore's biggest housing projects are generally located in blighted neighborhoods that have become the designated hubs for the region's street drug trade, and can therefore be dangerous places as well as old and dilapidated. For some residents, Section 8 housing is viewed as a way up and out of the neighborhood. Section 8, a program also overseen by the federal Housing and Urban Development (HUD), gives potential tenants a voucher saying the government will pay a portion of their rent to a private landlord. Section 8 rental assistance is therefore a precious commodity among poor residents looking to avoid life in the projects. So when in 2014 the Section 8 waiting list was opened to new applicants for the first time in more than a decade, roughly 74,000 people registered during the weeklong window the Baltimore's Housing Authority provided, all hoping to be among the 25,000 lucky applicants chosen by lottery to wait for an unknown number of years to receive assistance.
More recently, the Housing Authority itself took center stage this fall after a headline-grabbing lawsuit was filed accusing top Housing Authority executives of looking the other way while their maintenance workers harassed women tenants and withheld vital repairs to crumbling apartments in an attempt to extort sexual favors. So far 20 women from the Gilmor Homes and other public housing complexes have come forward in the civil suit, alleging that maintenance workers demanded sex for repairs. A few weeks later, tenants in another part of the city began staging protests after the high-rise Lakeview Towers development sat without heat or running water for four days. Elderly residents had to be bused to an area motel to keep them safe.
Current and former Housing Authority employees say failures of critical water, heating and electrical systems in the city's public housing developments can be traced back to an ongoing policy of reducing staff to cut costs. It is a practice, they say, that has also led to massive backlogs of routine maintenance requests. A recent article by The Baltimore Sun found that those backlogs now encompass more than 4,000 work orders that have gone unresolved for more than 30 days, and cited examples of repairs that have gone unaddressed since 2012.
Two recent examples of the staffing cuts employees say are hampering maintenance and repair efforts are an early-retirement offer made in the spring to older workers that 74 employees opted for, and the elimination of 25 positions with a department known as the Central Maintenance Crews when that group was broken up in June.
All told, the Housing Authority reports that it has eliminated 253 positions, or just under a quarter of its workforce, since 2008. That number doesn't include the roughly 50 open maintenance positions the agency told The Sun were currently unfilled.
The Housing Authority in its emailed statement to City Paper denied any connection between staffing cuts and the breakdown that occurred at Lakeview Towers last month, said the buildings were antiquated and in need of repair, and noted that at the time of the malfunction that left residents without heat, drinking water or working toilets, heating contractors were performing work on those systems.
As with other cost-saving measures, the Housing Authority says it has reduced staff because it is worried about budget cuts from the federal government. But a former high-ranking Baltimore Housing Authority executive questions the agency's priorities and motives in making such cuts given its budget surpluses, which he says have been building up for years.
"Everything they do, they say is due to cuts, that's [Graziano's] excuse. The fact is that they do have money, but they choose to spend it in different ways," said the former official, who spoke on condition of anonymity.
Staffing cuts have meant that the remaining maintenance workers are unable to keep up with demand, creating an environment at the Authority that is stressful, demoralizing, and ultimately puts the safety of the residents at risk, according to the former official. In addition, he said, the agency has chosen headcount elimination techniques such as the early retirement offer that are particularly damaging to the agency because they target the most experienced—and therefore most expensive—workers.
In addition to attrition and early retirement, severe cuts to employee retirement benefits have affected staffing levels, the former official said. "Changes in post-employment health benefits and changes in the pension just literally made some people leave, and limited the ability of the agency to attract qualified people," he said.
Agency audit reports show that as of 2012 the Housing Authority eliminated pension and retirement health benefits for all new employees. In addition, pension payouts for existing employees were frozen at 2012 levels, meaning that an employee hired that year at a salary of $24,000 will only ever receive pension benefits on that amount, even if they work for the agency for 30 years and retire making $100,000.
Financially, these and other benefit cuts were a windfall for the agency, cutting its non-pension benefit liabilities alone almost in half, from $96 million in 2011 to $49 million in 2012.
In an emailed statement to City Paper, the Housing Authority said the benefit cuts saved the agency $7.6 million annually, and were needed to balance the agency's annual budget due to "continued reduced funding from the federal government."
According to the former agency executive, however, the cuts were poison to the workforce. "Especially the people who were starting with really low salaries, they would basically be poor for the rest of their lives once they stopped working," he said.
And while some of these changes affected the entire agency, the former official said the public housing staff, whose work and conduct are now under such intense scrutiny from the public, were particularly hard hit.
"What they really did over the last several years is to completely demoralize the public housing staff and then destroy the capacity of the department to deliver the services they need to deliver," he said.
Current Housing Authority maintenance workers are questioning in particular the authority's breakup of the Central Maintenance Crews, a collection of skilled tradespeople who were charged with maintaining complex building systems such as those found in high-rise developments, and helping on-site maintenance mechanics reduce work order backlogs. In June the majority of Central Crews staff were reassigned to work in maintenance offices at specific housing projects around the city.
In an emailed statement the Housing Authority said the Central Crews were reassigned "so skilled trades staff could deliver service more quickly and in an integrated way with the maintenance demands of each particular property."
But former members of the Central Crews say that the decentralization has actually created inefficiencies, requiring managers to round up skilled tradespeople ad hoc from the various developments to tackle a big job or deal with a crisis.
"Central Crews was the backbone of the Housing Authority. Whenever a development had a problem or an emergency, they called Central Crews and Central Crews jumped on it. Now you have just the regular maintenance men that can only really do minimal to minor repairs," said a Housing Authority employee who had been a part of the group, and who spoke on condition of anonymity for fear of losing his job.
In addition to operational efficiencies, the Central Crews decentralization was "part of an on-going staff reorganization meant to address continued budget cuts from congress/HUD," the Housing Authority said in its email to City Paper. Because the Housing Authority was planning to sell its high-rise developments, including Lakeview Towers, to private developers, the Central Crews would no longer be essential.
Those properties have been chosen to be part of the first wave of a privatization experiment authorized by HUD and known as the Rental Assistance Demonstrations (RAD). Under RAD, the Housing Authority plans to sell buildings accounting for slightly more than 4,000 of the city's roughly 10,000 occupied housing units. In exchange for tax breaks and favorable terms of sale, the private developers will agree to rent the properties to low-income individuals.
The first of those deals, covering half of the 22 affected properties including Lakeview, were supposed to have closed by June 30, but according to the agency's annual report, it had been unable to close on financing as anticipated. The agency has instead found itself holding on to most of those properties until almost the end of the year. Four of those deals have closed, four more are expected to close before year's end, and three will not close until 2016. As a result, the Housing Authority is trying to manage maintenance and repairs at high-rise locations with a skeleton crew that can't respond as well or as quickly as residents need them to, according to one employee who was recently assigned to do emergency work at Lakeview.
"They broke us up prematurely. They still have to deal with the high-rises and there's nobody at the high-rise buildings to do the work. So periodically they call the Central Crews employees that they sent to the developments and we'll go to wherever they have an emergency. Even at that point it's only for the major repairs. A lot of the minor stuff is still going undone," the employee said.
In the past, according to one of the former staffers, Central Crews made regularly scheduled visits to developments that needed help catching up on their work-order backlog, but no extra help is available under the current system. As the recent Sun article on repair backlogs found, in the context of Baltimore's enormous stock of public housing, what is considered "minor stuff" is not always a small matter, and includes a variety of problems that can quickly lead to serious hazards: leaks that develop into burst pipes and structural damage, exposed wiring that can cause fires, and mold outbreaks and pest infestations that can exacerbate conditions such as asthma.
All of these problems were on display for Commissioner Graziano during an Oct. 28 tour of the Gilmor Homes. Amid calls for his resignation from seemingly every quarter—including many of the city's leading mayoral candidates—and scrambling to get in front of the almost-daily public-relations disasters that were emerging from the dilapidated housing stock he oversees, Graziano began a whistle-stop tour of the projects to examine conditions firsthand. Despite being well into his second decade as the city's top public housing official, Graziano expressed distress and surprise at what he found as he and his top lieutenants peered into rat holes and inhaled fumes from gas leaks in projects like McCulloh and Gilmor Homes.
At Gilmor Homes, epicenter of the sex-extortion scandal, Graziano was preceded by the bustle of busy maintenance workers. Walls that hadn't seen the business end of a paintbrush in years were suddenly tacky with fresh coats as maintenance crews emerged from the proverbial woodwork to patch up what they could and plaster over the rest. Some residents wondered where the money was coming from to pay for all that spackle, or the recently arrived replacement appliances that tenants had been waiting on for years. In particular, some of the 20 women who were named plaintiffs in the sex-for-repairs civil suit saw their apartments suddenly spiffed up.
As City Paper went to press on Monday, Graziano announced he would be hiring 50 new maintenance technicians.
More Money, More Problems
Nine out of every 10 dollars Baltimore's Housing Authority spends comes from the federal government to support the two pillars of housing assistance in America: public housing projects and rental assistance vouchers, commonly known as Section 8. Earlier this month Commissioner Graziano took the opportunity to cite, as he often does, a set of figures which appear to tell a stark tale of federal housing budget cuts and their impact on Baltimore's public housing.
In a Nov. 14 interview with The Sun, Graziano pointed out that in 1993 the federal government sent Baltimore $43 million for what are called "capital improvements" to its public housing, major renovation and rehabilitation projects that go beyond day-to-day maintenance. In fiscal year 2015, Graziano reported, the fed only earmarked $15 million for Baltimore's capital needs.
"It is always going to be a chase here to keep up with things, because the capital needs are just so far above and beyond what we have available," Graziano told The Sun.
While accurate in a strict sense, Graziano's statement was somewhat misleading. Although it is true that the money explicitly designated for capital improvements by the feds was only $15 million last fiscal year, in point of fact there were tens of millions of dollars in federal funding that were not labeled for capital work but were nonetheless available to the Authority for this type of spending. To see this, one only has to review the agency's annual report for fiscal year 2015, which ended June 30, showing that the agency spent over $40 million on capital projects. In fact, the Housing Authority has spent an average of $56 million on this kind of work every year since 2008, peaking in 2011 when spending reached $81 million. What Graziano isn't saying is that the Housing Authority has the ability to draw on monies from other HUD funding streams that haven't been as severely cut, specifically the Section 8 rental assistance program and the Public Housing operating budget. It is that same flexibility that allows the Housing Authority to not spend money—banking it—when it so chooses.
More broadly, Graziano might have shed substantial light on the Housing Authority's relative position in the world of public housing by explaining that it is part of a select group of 11 agencies that, through a special arrangement with HUD, receive tens of millions of dollars in extra funding. On average, Baltimore receives twice as much per apartment for operation of its public housing facilities as almost every other housing authority in the country, according to a report published in January by the Center on Budget and Policy Priorities.
What's more, the city's sweetheart deal with HUD allows Graziano and his executives wide latitude, with little oversight, to move around the roughly $285 million to $300 million in federal money they receive in a given year as they see fit. Among the handful of agencies who have deals with HUD similar to Baltimore's, a common use of this spending flexibility would be to shift money from Section 8 vouchers for use in a capital-scale public housing rehab project, and that is one of the strategies Baltimore has employed in recent years to limp along its aging housing stock in an era when capital funds from HUD are scarce.
In Baltimore, however, another practice has become common as well: not spending the money at all. It's a practice that in some ways is a holdover from before Graziano's arrival, when the Baltimore Housing Authority was, if anything, even more dysfunctional than it is today, and regularly had to give back tens of millions of dollars in federal assistance that the agency was too inept to distribute to those in the city who needed it. The difference in the current deregulated environment is that rather than being re-circulated through the federal housing system, that money is now pooling in Baltimore Housing's coffers.
Working the System
What in other circumstances could be considered mismanagement of public funds is allowed and even praised by Graziano's supporters such as Mayor Stephanie Rawlings-Blake thanks to the city's participation in a controversial federal program that has substantially deregulated the spending of federal funds by a small number of public housing agencies scattered around the country, and for a few "sweetheart cities," Baltimore among them, it has even meant they get tens of millions of dollars in extra funding in an era when seemingly every public housing dollar has to be wrung from Congress by force.
The program is called "Moving to Work" (MTW), a name that reflects its origins in the late '90s wave of welfare reform experiments. Despite allowing for "self-sufficiency" measures such as tying housing assistance to work requirements or limiting how long a renter can receive a subsidy, the program's primary impact has been to free participating housing agencies to spend federal dollars more or less as they see fit.
The intention, according to HUD, is to give the 39 participating housing authorities across the U.S. wide latitude in how they use federal funds, with the aim of decreasing regulatory burdens and fostering innovation. Public housing advocates such as the NLIHC's Couch say it's an approach that unsuccessfully attempts to substitute deregulation for actual funding. Nonetheless, the ability to spend federal dollars in the absence of substantive federal regulations is an enviable position to be in for an agency like the Baltimore Housing Authority, according to Barbara Samuels, managing attorney for the American Civil Liberties Union of Maryland's Fair Housing Project.
"Congress has been killing public housing through a slow death," Samuels said. "So while Graziano uses this as a crutch, he's blaming things on the budget cuts on a federal level, it's certainly true that Congress has been squeezing funds for public housing. Now Moving to Work cushioned that to a great extent, and that's why being in Moving to Work was so important to Graziano and [the Baltimore Housing Authority], because it creates this slush fund of voucher money, public housing capital, and operating money, and you can move it around pretty much how you want."
In addition to conferring the power to operate their organization's finances outside all but the most basic federal guidelines, the program gives an even smaller group of 11 housing authorities, including Baltimore, preferential funding schemes, siphoning as much as 5 percent of revenues away from other cities and pumping those hundreds of millions of extra dollars into a lucky few agencies. The Baltimore Housing Authority recently estimated that its preferential funding agreement brings in roughly $42 million in additional revenues every year.
Aside from the reserves the agency has built up over the last several years, it is this MTW funding windfall that makes observers of the Baltimore Housing Authority somewhat skeptical about the agency's repeated claims that a lack of funding has been responsible for its myriad problems.
"They have a much harder case when pleading poverty than 99 percent of all the other housing authorities in the country," said NLIHC's Couch.
Moving to Work (MTW) loosened the rules for housing and covered three federal housing subsidy streams (rental assistance vouchers, public housing maintenance and operations, and a capital fund to support major public housing renovations). For the thousands of housing authorities outside the MTW program, there are strict rules as to how money from each of these three programs can be spent. For example, the standard for Section 8 vouchers is that at least 95 percent of available funds will go directly to subsidizing rents for the poor. Under MTW, however, rental assistance money may be diverted for housing development, or simply socked away for a rainy day. As a result of these "MTW flexibilities," as they're often referred to, Baltimore's Housing Authority is now able to engage in spending practices that nearly put the agency into receivership 15 years ago.
When Paul Graziano took over the Housing Authority in December of 2000, the agency was on the verge of collapse. Then-Mayor Martin O'Malley had been forced to fire the former executive director after widespread reports of mismanagement at the agency. In 2001 HUD's office of the inspector general weighed in with an audit showing that Baltimore's Housing Authority had either misused or simply failed to spend more than $124 million in rental assistance vouchers in the previous four years. HUD took back that money, and recommended the Authority be taken over by federal authorities if major changes weren't made.
It's not clear from HUD records exactly how Baltimore's Housing Authority avoided a federal takeover. Despite having retained its independence, however, the Authority came in for continued criticism from HUD's inspector general, which followed up its scathing 2001 report with a December 2004 audit in which it asserted that the Authority was still failing to adequately distribute assistance funds to poor renters. The report noted that in 2002 HUD forced Baltimore's Housing Authority to return $42 million in housing voucher funds that it had failed to distribute to those in need, and that the Authority had stashed in reserve another $38 million intended for rental assistance, $25 million of which auditors wanted immediately paid back to HUD.
Commissioner Graziano had a different idea, however. According to the 2004 audit, the Housing Authority told HUD inspectors that it hoped to "solve the problem of poor utilization" of its housing voucher money by joining the Moving to Work program. MTW "solved" the problem inasmuch as Baltimore would no longer be held to HUD's usual accounting standards, and would be able to keep the rental assistance money it had banked.
At the time this seemed unlikely; the inspector general's report noted dryly that HUD had already rejected an MTW application from Baltimore that was incomplete and "vague," not to mention arriving two and a half years after the statutory deadline. In a surprise reversal, however, HUD authorities accepted Baltimore into the program effective March 2005, and overnight Baltimore went from a troubled agency that couldn't effectively distribute tens of millions of dollars in aid to the city's neediest residents, to being part of an elite group of agencies given wide latitude to use those monies in whatever way they saw fit. Suddenly the agency's failures became financial innovations, and the $25 million that HUD was on the point of reclaiming became part of a nest egg that the agency would double and redouble in the next few years.
Friends in High Places
Who pulled which levers at HUD to gain Baltimore admission to MTW is unclear. Several analysts who have scrutinized MTW have said that admitting Baltimore to the program was almost certainly more a matter of politics than good policy-making, and in fact HUD's handling of it was so questionable that its own office of the inspector general issued a report sharply criticizing the move and instructing HUD to kick Baltimore out of the program as soon as reasonably possible. However, before that could happen, Senator Barbara Mikulski intervened on Baltimore's behalf, inserting a provision in a 2008 spending bill that made it illegal for the head of HUD to rescind the city's MTW status "based on any alleged administrative or procedural errors."
According to Sen. Mikulski's office, she fought for this language because HUD, at the end of the George W. Bush administration, was trying to opt out of major funding that was needed to address key problems in the city.
Baltimore is just one of several big-city housing agencies whose participation in MTW has drawn scrutiny and criticism by outside observers and HUD itself. Philadelphia, Pittsburgh, and most recently Chicago have all faced questions and in some cases regulatory actions as a result of irregularities in how they have chosen to use—or not use—federal funding under MTW's deregulation scheme. At the same time, lawmakers have been pushing to expand the MTW program, with a bill introduced this year to extend MTW's deregulation scheme to 300 more agencies. But as political pressure to expand MTW has mounted, analysts and advocates have responded with a push to re-establish some basic guidelines for how MTW agencies spend their money and to scale back the sweetheart funding deals given to "alternative funding" cities like Baltimore.
Last year HUD floated a proposal that would among other things end those preferential funding schemes and mandate that at least 90 percent of housing voucher money given to Baltimore and other MTW agencies actually be used for vouchers. Anxious to protect the city's privileged funding position and the power to dispose of that money on projects other than housing vouchers, Commissioner Graziano and Mayor Stephanie Rawlings-Blake reached out to Sen. Barbara Mikulski.
Addressing HUD Secretary Julian Castro at a Senate subcommittee hearing this year, Mikulski described city officials' chagrin.
"As you can imagine, the mayor of Baltimore, who you know very well, sir, called me and we had a meeting about this. We understand the loss could be as much as $42 million a year. My city can't lose $42 million a year," Mikulski said.
"Obviously Baltimore Housing Authority didn't think they were going to be able to come out of this with their extra operating subsidy monies, so they found a friend in Senator Mikulski," said Couch.
Mikulski's office points out that while public housing operating subsidies are higher for Baltimore, it receives less than some cities for Section 8 vouchers and has seen money for capital improvements cut.
Mikulski introduced a bill in June of this year that would write into law special protections for Baltimore's Housing Authority by dictating to HUD how it can operate the MTW program. The bill would mandate that, rather than level the financial playing field for all agencies, HUD would instead renew for a period of 10 years starting in 2018 the terms of its agreements with Baltimore and the other "alternate funding" agencies, and prohibit "any significant change to the financial terms" of those agreements. That language now appears in an appropriations bill that was taken up by the Senate last week.
The Challenge of Oversight
The language in Mikulski's bills will protect not only Baltimore, but also other big-city MTW agencies with troubled histories and questionable accounting practices. One of these is Chicago's.
Last year the CTBA completed an analysis of the Chicago Housing Authority that revealed the agency had used various accounting mechanisms to squirrel away a whopping $432 million in available reserves by the end of fiscal year 2012, a cash reserve that it had built up primarily by not spending federal rental assistance voucher funds. In 2012, Baltimore's reserves had dipped from their 2010 high of $154 million to a slightly more modest $140 million, roughly a third of what Chicago had managed to store up. However, Baltimore's reserves as a percentage of its budget actually slightly exceeded Chicago's, quite an accomplishment for a town one-fifth the size of the Windy City.
"From our perspective it's interesting to see a city or an agency doing something in a more opaque manner than Chicago," said CTBA's Otter.
"Usually when you hear about 'bad government,' it's Illinois, New Jersey, and Louisiana—that's the holy trinity. So it's interesting to see somebody else throw their hat in the ring," he said.
The ACLU's Barbara Samuels notes that her own work with the Housing Authority, which involves commenting on the agency's budget every year, has been hampered over the years by its convoluted financial reckoning and lack of clear communication.
"My very first comment is always the lack of transparency and accountability," Samuels said. "My second comment is always the millions of dollars that they're transferring out of the voucher program and putting to other uses, but it's been pretty difficult ever to pin it down to an exact dollar amount."
Samuels says that in recent weeks, the focus in the press and among activists on the Housing Authority's chief has actually begun to hamper the goal of reforming the agency.
"I think this whole situation now is too focused on Paul Graziano," Samuels said. "Clearly there are things that he has done wrong. But there are bigger issues."
For her part, the National Low Income Housing Coalition's Linda Couch attempts to sound an optimistic note as she surveys Baltimore's possible housing future.
"Unfortunately Baltimore's housing shortages are not unique, they are repeated in most every large city," Couch said. "But Baltimore's been given a leg up financially to meeting those needs and to help insure that its housing authority is in a really strong position. It would be great for the people of Baltimore to feel that the Housing Authority is working really well. And I hope that we get there."
From activist Jeff Singer's point of view, the fact that so much of the story of how big housing authorities like Chicago and Baltimore's conduct business has remained buried for years in obscure accounting documents reflects poorly not only on the agencies themselves, but also on the advocates who have set themselves the task of watchdogging those agencies.
"There's a whole lot more that needs to be done and done effectively, and one part of it is making this agency transparent and accountable," Singer said.
The task ahead of them is not an easy one. "The people of Baltimore don't believe that they have the ability to determine in any way the direction, shape, and fate of public housing and the Section 8 program," said Singer. "It's as if the Housing Authority is a private corporation and we can't see the internal workings."