Kemp Drafting Proposal to End Discretionary Funding at HUD

Housing and Urban Development Secretary Jack Kemp is drafting a plan to revise procedures in his troubled department that would, among other things, abolish the discretionary funding of programs that congressional critics have faulted in their investigation of influence-peddling at the department.

The long-standing practice of setting aside money for the funding of special projects that require only the secretary’s signature has come under fire during months of hearings into the scandal.

The congressional fallout from the scandal continued Tuesday as the House Government Operations subcommittee on employment and housing prepared to issue three subpoenas today to former Housing Secretary Samuel R. Pierce Jr., who failed to appear as scheduled for testimony last week. He will be summoned to appear Sept. 26, Oct. 27 and Nov. 3.

Calls Subpoena Punitive

Pierce’s attorneys, who met with subcommittee staffers for two hours Monday and had what was described by one participant as a “heated discussion,” said their client will appear before the panel but considers the subpoena “punitive.”

Kemp and his top aides have been drafting their plan for several weeks, working from a blueprint of the agency’s problems that has emerged during congressional testimony and from critical reports of the HUD inspector general.

Kemp said Tuesday that the plan would, in effect, “clear the decks” at HUD of any residual problems so that Congress, the White House and the public will be reassured that the agency’s problems will be resolved.

Numerous Changes

The plan that has been agreed on, department officials said, will outline sweeping changes in ethics, management and programs at the troubled agency.

Under the proposed plan, all discretionary funds would be awarded competitively. Escrow agents responsible for selling HUD-owned property would have to be state licensed and bonded before HUD retains them to handle property sales and closing. All HUD funding decisions, under a “sunshine” provision, would be published in the Federal Register. More auditors would be hired to keep track of HUD’s financial management systems.