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August 21, 2014, 5:57 pm

PHA to remain under HUD control

Mayor Michael Nutter and officials with the Department of Housing and Urban Development are expected to sign an agreement this week keeping the Philadelphia Housing Authority under federal control for the near future.

“For a variety of reasons PHA, HUD and the Nutter administration believe that we should continue in the same mode for some period of time to come,” said Mark McDonald, Nutter’s spokesman, citing the fact that PHA remains at the center of several ongoing investigations, and legislation regarding its governance remains pending in Harrisburg. “There are a variety of investigations and studies being done by the federal government, and consequently, this isn’t the moment.”

Nutter is expected to sign the agreement Wednesday.

Unlike the previous agreement, which placed PHA under the authority of a federal receiver and ceded authority to HUD for a year, the new agreement is expected to allow HUD to remain in control for a period of months.

McDonald was unsure how long.

Director Michael Kelly said the agency is on firm footing and should revert to local control “soon.”

The scrutiny generated by Carl Greene’s departure has ultimately strengthened PHA, he said.

“We may be one of the strongest agencies in the whole country right now,” he said. “Because we spent the last year revising our systems and procedures. It’s the kind of improvement most housing authorities don’t think about, because they’re not under the kind of heavy scrutiny that we’ve been put under.”

In the 18 months since Greene’s exit, PHA has created a legal department, eliminating the use of outside attorneys, a practice established by Greene; created an audit department and put in place new procurement and contract rules and procedures.

But, Kelly said he was most proud of the less tangible changes at the agency.

“I feel very strongly about a very profound cultural shift of how people interact with each other around here, interact with clients and interact with our stakeholders,” Kelly said. “I’m most proud of the things you can’t see.”

PHA was placed under Kelly’s authority as federal receiver and a HUD commissioner – one person who replaced the previous board of five local members – last March after the board resigned to facilitate a federal takeover of the scandal plagued agency.

Since the takeover, two commissioners have overseen the agency.

Currently, Karen Newton-Cole, acting chief of human resources at HUD, administers the agency. Prior to her appointment, Deputy Secretary of HUD, Estelle Richman served as commissioner. She resigned in September, after receiving the promotion to deputy secretary.

The takeover was the result of a series of shakeups that started in August 2010 when news broke that Greene, the former director who was fired in September 2010, had been accused of sexual harassment on at least four different occasions, and used PHA money to pay for out of court settlements, all unknown to the board.

The fallout generated by the scandal prompted at least three investigations: by the FBI, the U.S. Attorney’s Office, and HUD - and numerous audits, one of which is expected to be made public next month. Kelly said three investigations remain open.

In addition, it raised questions in Harrisburg and resulted in two bills proposing new governance for the agency.

At the moment, the mayor picks two board members, the city controller selects two and those four choose a fifth member who is required to be PHA resident.

Under one of the proposals, now before the state Senate, the mayor would appoint nine commissioners, three of whom would subject to city council approval. In the second proposal, now in the House, the mayor would appoint five commissioners; city council would choose two and PHA residents elect two.

McDonald said the administration thought it wise to allow PHA to remain under federal control until some of those outstanding issues are resolved.

“While a lot of great things have occurred, you still have outstanding questions,” he said.

Among the things McDonald listed was a significant cultural shift under Kelly’s leadership.

“He has done a good job. There is no longer the kind of fear and worry that existed under the old regime,” said McDonald. “Its just that they’re not to a point where anybody wants to change the current status.”


To comment, contact staff writer Eric Mayes at 215-893-5742 or This email address is being protected from spambots. You need JavaScript enabled to view it. .