Mismanagement Confirmed at County Housing Division

A county division that controls $12 million in housing and redevelopment funds must begin a wholesale review of its fiscal procedures to avoid repeated abuses, according to a report released Monday.

The report, from the County Environmental Management Agency, validates all of the reforms proposed last month by an auditor’s report that found the Housing and Community Development Division to be riddled with mismanagement.

In response, a team of four EMA officials on Monday began a three-month task of trying to plug holes and put in place more than 30 recommended improvements at the housing division.

“We’re going to look at their entire program,” said Al Bye, chief of financial operations in the EMA administration, who will head the team. “We want to make sure they work efficiently.”

The housing division, which provides loans and grants to poor families for housing rehabilitation and helps fund community projects for upgrading blighted neighborhoods, is a part of the EMA.

For some critics, the county’s response is not enough.

Sam Rodriguez, who as a member of the Concerned Citizens of El Modena has been critiquing the housing division’s operations for the last year, said he was “appalled” by the county’s lack of in-depth investigation. Allegations by him and others in his low-income neighborhood helped prompt the county’s audit into the way housing funds were used.

“(County officials) are trying to shove it under the carpet and make it look as if they’ve found the problem, and we’re saying, ‘No, you have massive problems in that agency--major conflicts of interest, loans being given out by favoritism, possible fraud, and who knows what else,’ ” Rodriguez said.

In a critical report released in early January, county Auditor-Controller Steven E. Lewis said his office had found “significant weaknesses” in the management of a number of housing programs.

For instance, the report cited several cases in which rehabilitation grants, housing loans and other assistance were apparently given to people whose assets or incomes exceeded a $75,000 cap for such benefits.

The report also raised questions about the approval of some contractors for low-income projects and about the perception of a conflict of interest in some projects that involved housing division personnel and relatives.

The report circulated to the County Board of Supervisors Monday from EMA Director Michael M. Ruane offers a point-by-point assessment of the proposals from the auditor-controller’s office, concurring with each proposal.

Ruane agreed that steps should be taken to ensure that signed tax returns are obtained to determine loan eligibility, to require all employees to provide conflict-of-interest disclosure statements, and to strengthen the bidding process for development projects, among other provisions.

In the past, housing officials have said they disagreed with some of the auditor-controller’s assessments, but a top-ranking official took a more conciliatory tone Monday after the release of Ruane’s report.

“This is coming from the direction of the (Environmental Management) agency, and we take it as our orders,” said Rick Efker, the county’s manager for housing and community development.

“We expect (the ongoing review) to improve our efficiency and to resolve whatever problems the auditor-controller thought needed to be addressed,” Efker said.

Housing division director Dhongchai (Bob) Pusavat could not be reached for comment.

In an interview, Ruane said it was unusual for him to send a fiscal management team to work in one of his divisions. But, he said, “they need help from within . . . and (Bye) is tough and very thorough.”

Despite some charges from critics of the housing division, both Ruane and Bye said they are satisfied that no individual has engaged in criminal conduct in executing his or her duties.

“It’s a matter of interpretation as to what is legal and what is illegal, what is appropriate and what is inappropriate,” Bye said. “Anyone could take any organization and critique it and say, ‘There’s no way I would do that.’ My job is to take a fresh look at the structure.”