Housing Agency Told to Track Money Better

Mayor Maureen O’Connor and her colleagues on the San Diego Housing Commission on Monday tightened their grip on the troubled housing agency, ordering administrators there to begin keeping closer watch on how developers spend public funds on low- and moderate-income housing projects.

The direction came after housing commissioners expressed dismay that the agency would lend money to developers for housing projects but never conduct audits during construction or rehabilitation to make sure the money was spent properly.

O’Connor ‘Shocked’

O’Connor said she was “shocked” that commission audits looked at housing projects after the fact and didn’t track spending during construction.

“We have no way of knowing whether the money was spent on-site,” she said. “The audit doesn’t go into that. I want everyone to understand that we’re watching the public’s dollars here, that we’re not casual about it.”

O’Connor added that she was surprised that the agency had no way to check the developers through fund-control or other methods.

Commission staff members explained that their previous practice was to rely on other entities--conventional lenders involved in a project, for example--to make sure the money was used properly. The agency would only be concerned that it be paid back the amount it had contributed, staffers said.

But with the commission’s direction, administrators said they will ask auditors to watch public funds as they are used by developers.

Monday’s order was only one of several steps taken by the commission to tighten controls over the controversy-plagued agency.

Commissioners also unanimously approved special audits to determine the scope of potentially questionable financial practices, particularly under the direction of former Executive Director Ben Montijo.

Funding Questions Persisted

The commission voted in late February not to renew Montijo’s contract, and he was subsequently placed on leave. Montijo was dogged by questions over how he handled the public funds during land transactions and to buy furnishings for housing agency offices.

One of the special audits ordered Monday will determine how many questionable financial practices or transactions were conducted by the agency before Montijo was officially placed on leave in early March.

Another audit is to determine a “reasonable estimate” of a “discretionary fund” that Montijo told City Council members during budget hearings last summer amounted to $164,000, but subsequently grew to as much as $5 million. That revelation helped subvert Montijo’s credibility with the council and led to his downfall.

In addition, the agency wants to audit and certify 11 projects that used money from the U.S. Department of Housing and Urban Development.

Agency staffers had recommended that Peat, Marwick, Mitchell & Co. do all of the audits, which could cost as much as $46,000, but commissioners voted to give only part of the job to the firm. It asked administrators to come up with a list of other auditing firms.