HUD names ethics czar at PHA amid probe

PHILADELPHIA - March 25, 2011 (WPVI) -- The Philadelphia Housing Authority earned high marks for its financial performance after an annual audit, despite ongoing federal probes of secret legal payments and alleged slush funds.

The audit figures released Friday show the agency's revenues, assets and cash flow all increased last year. However, a more extensive audit by the U.S. Housing and Urban Development agency is under way, and expected to take at least six months.

HUD funds most of the Philadelphia authority's nearly $400 million annual budget, and recently took over the agency after persuading a former mayor and four other board members to step down.

Friday's meeting marked the debut of Estelle Richman, HUD's chief operating officer, as the sole member of the board. Richman will remain at her Washington-based job with HUD, while traveling to Philadelphia when needed. Michael P. Kelly, a former New York City housing officer, is running the agency.

The pair pledged to enforce a strict ethics code and to make more financial, legal and other information available to the press and public.

HUD is investigating allegations that the authority secretly agreed to pay about $900,000 to settle sexual-harassment lawsuits filed against former director Carl Greene, and demanded payments from top employees for lobbying, parties and entertainment including belly dancers. A preliminary HUD report this month blasted the agency for spending $31 million on outside legal fees, including work steered to the law firm that employed the son of former Mayor John F. Street, who named himself to the board before leaving office in 2008. Street has defended his votes to approve the legal work, saying his son did not benefit from it.

The new audit was done by a private firm that has conducted them for a decade, and said the agency's record-keeping had improved greatly during that time. The agency's assets, mostly real estate, were valued at $1.1 billion.

The authority received about $423 million from HUD last year - reflecting a one-time boost from federal stimulus money - along with $24 million in rental income from tenants and $9 million from investments and other sources.

The agency will write off $1 million in uncollected rent, up from about $780,000 in recent years, a spike blamed on the economy. Unemployed tenants typically pay $25 rent a month.

Greene earned a reputation as an innovative, hard-charging housing official during his 12-year tenure, but he also frequently clashed with HUD, especially during Republican administrations. The first sign of any trouble came when the $350,000-a-year executive missed mortgage payments last summer on his luxury townhome. The board forced him out a few months later amid a steady stream of troubling revelations.

Along with HUD, the Justice Department is investigating the authority's operations.

The Philadelphia agency, Richman said, had a "two-edged" reputation at HUD, one known as a strong agency that accomplished good things, while raising questions about how money was being spent.

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