Watt-Aided Housing Cost Millions Extra
A housing project that former Interior Secretary James G. Watt helped push through the Department of Housing and Urban Development apparently wound up costing taxpayers an extra $4 million in rent subsidies, according to documents released Monday.
In 1988, Thomas T. Demery, then assistant secretary for housing at HUD, raised numerous questions about whether the 300-unit apartment project in Essex, Md., should have been funded by HUD in a housing subsidy program.
Demery complained in a letter to the developer that HUD-approved waivers allowing the developer to charge above-market-value prices would cost an additional $4 million in rent subsidies over 15 years. He noted the project charged $488 a month for one-bedroom apartments when comparable new apartments on the open market were renting for $360 a month.
Watt was not involved in the rent waivers. But his $300,000 consulting fee for helping win initial approval of the project has been a focus of allegations of widespread influence peddling and political favoritism at HUD during the eight years the agency was headed by Samuel R. Pierce Jr.
Watt has testified before a House panel that he shared in a $300,000 consulting fee for a brief amount of work on the project, including a short meeting with Pierce.
The letter was among about 500 pages of Demery’s files released by HUD under the Freedom of Information Act. The files were discovered when House investigators questioned Demery’s former secretary.
Stuart E. Weisberg, staff director and counsel to the Government Operations Committee’s subcommittee on employment and housing, said committee members expect to question Demery about rent waivers, among other things, when he appears before the panel on Nov. 3.
The newly released letter appears to support contentions that the Maryland project never should have been approved.
The developers were stalled in their efforts to obtain HUD rent subsidies under the department’s Section 8 moderate rehabilitation housing program until Watt’s involvement. Judith M. Siegel, president of the development company, told the House panel she hired Watt because he understood the bureaucracy.
The initial funding was approved in 1986. It was followed by a waiver allowing the developer to charge above-market rents on June 23, 1987.
Three days later, Demery wrote Siegel a note on HUD letterhead thanking her for “the outstanding day of hookey” he and his wife spent as Siegel’s guests on a cruise on the Chesapeake Bay.
An attempt to reach Siegel at her office was unsuccessful Monday. A woman who answered the telephone said she was out for the day.
In May, 1988, Demery wrote Siegel another kind of letter. He questioned whether the waivers should have been approved, saying HUD’s Baltimore office had informed Washington that new construction projects were available at lower rents.
The waiver allowed the developer to charge a higher rent to tenants, with the HUD subsidy providing the increased money. The letter said Demery wanted to discuss the situation with Siegel, but there was no follow-up correspondence in the files.
Demery’s files also included numerous examples of his politicking from office. One was a March 7, 1987, “background sketch of invitees” apparently prepared for a fund-raising event on behalf of the presidential candidacy of religious broadcaster the Rev. Pat Robertson.
In the rundown, Demery described a Tennessee man and his wife as “strong believers,” adding: “I believe he has the potential to organize a $50,000-$75,000 event in Tennessee.”
