Leadership, waitlists, vouchers: Unpacking key findings in HUD’s DCHA audit

In early October, the US Department of Housing and Urban Development (HUD) issued a devastating assessment of the District of Columbia Housing Authority (DCHA). The audit identified 82 violations of HUD policies that span every step of the District’s delivery of HUD-subsidized housing services.

The audit’s findings are extensive. Below, I zoom in on three problem areas: DCHA leadership, its public housing waitlist, and its housing choice voucher program.

Now’s a good time to do this. Last week, three big developments happened. On Tuesday, November 28, DCHA formally responded to HUD’s audit. The next day, DCHA’s Director Brenda Donald and her senior staff answered questions about the audit during a hearing hosted by the DC Council’s Committee on Housing and Executive Administration. Finally, on Friday, December 2, Mayor Bowser announced that she and DC Council Chair Phil Mendelson were introducing legislation to give the mayor more control over the agency via a “streamlined reform board.”

But first, some background on HUD assistance to DCHA: The agency receives HUD funding to support two affordable housing initiatives, the city’s public housing (PH) program and its Housing Choice Voucher (HCV) plan.

In 2022, HUD distributed nearly $53 million to cover operations in 8,084 public housing units owned and operated by the District. It also provided an additional $23 million in capital grant funds. HUD outlays were even greater for the city’s HCV program — just over $250 million to support its 16,038 units.

Issues with governance

Although HUD did not uncover malfeasance by agency leaders, it found other faults. The HUD audit started at the top, noting that Donald, “has no experience in…managing federal housing programs” and seemed unaware of some basic HUD regulations to which DCHA is subject.

The audit also reported that the board appears divided between mayoral appointees and those elected by residents, labor groups, and housing advocates. Those in the latter groups told auditors they believe Mayor Bowser’s appointees “vote as a group without individual review of the action requested.”

Given the scope of problems at DCHA, I reached out to Amanda Korber, an attorney at Legal Aid DC, to see what she thought DCHA should tackle first.

She noted that it was a difficult question because “a lot of things have to happen quickly and all at once.” But, to fire on multiple cylinders, “the agency needs to be completely restructured,” beginning with “a total overhaul of the Board of Commissioners and breaking up the mayoral control of the board.” Korber also acknowledged Donald wasn’t wrong to say she had inherited a mess, but noted that dysfunction “continued under her leadership.”

Donald isn’t likely to leave anytime soon. She clearly wants to keep her job, as her agency’s response to the audit made clear. Indeed, the agency began its 60-page response with a list of Donald’s accomplishments during her brief tenure. In its response, DCHA also downplayed the audit’s findings, observing, “Despite the headlines, the HUD on-site assessment report was not a wake-up call for anyone.”

That phrase elicited the hearing’s sharpest response, with Councilmember Elissa Silverman asking incredulously, “Really? I mean it. Really?…the Bowser admin has been in office eight years. Its DMPED [Office of the Deputy Mayor for Planning and Economic Development] director has a seat on the housing authority board. If this was not a wake-up call, then why hasn’t there been progress in the last eight years?”

For the most part, however, the council showed little appetite for a public grilling. Indeed, Councilmember Vincent Gray used his allotted time to praise Donald: “Brenda, you know I think the world of you. I mean, you did such a great job with us before.” Gray’s only question for Donald was why she had taken the job. This prompted Donald to laugh and then burnish her bonafides – “I know how to build teams” – without challenge from Gray.

The Mayor’s announcement at the end of the week that she and DC Council Chair Mendelson hope to restructure the Board by removing the positions that are not Mayor-appointed suggests Gray isn’t alone in his support for Donald.

A decades-long waitlist

Another notable finding in the audit is DC’s failure to manage the waitlist for public housing owned and operated by the District. DCHA closed the list to new applicants in 2013, citing its unwieldy size and long waits. At the time, media reports suggested there were as many as 70,000 people in the queue, and wait times ranged from 28 years for a 1-bedroom to 39 years for a studio.

Washington Post columnist Petula Dvorak did some digging after the announcement and discovered the oldest application on the list was submitted when Ronald Reagan was president.

DCHA took pains to note that while the decision to close the list was necessary, it was also temporary. According to DCHA spokesperson Dena Michaelson, managing the list was a drain. “We have a whole department whose job is managing the waiting list,” she said at the time, adding that the agency would reopen the list within a year to seniors and extend it to others as clean-up progressed.

The promised clean-up never happened. The HUD audit found DCHA “has not updated its waiting list in 10 years” and doesn’t know how many people are on it. It further noted that the staff couldn’t say whether there was one list or individual lists for each complex.

During the hearing, Donald and her team answered only some of the questions raised about the District’s public housing waitlist in the HUD audit. DCHA disagreed with the audit’s finding that the agency didn’t know how many people were on its waitlist and provided an actual number: 22,038. But Donald described the figure as a “sub-portion of the master waitlist.”

DCHA’s explanation of how it takes people off the list was also unclear. The confusion started when Councilmember Christina Henderson asked why DCHA was hosting “mass eligibility events” (fairs where listees are invited to verify current eligibility) when the number of invitees (thousands) is so much greater than the available units (hundreds). Donald cited two reasons: response rates are low and many eligible listees end up rejecting units the city offers them.

When Henderson asked what happens to listees who reject units, Donald’s team noted they are “removed from the list” after two refusals. But when Henderson was told by a member of Donald’s team that the same approach was used for those who don’t reply to invitations to verify eligibility, Donald interjected to say they are “inactive” but not removed. It’s not clear how applicants find out they are listed as inactive. The practical difference between “removed” and “inactive” as it pertains to list management also was not explained.

Mismanagement of housing choice vouchers

The HUD assessment also found problems with how DCHA manages its Housing Choice Vouchers (HCV) program. Under the program, eligible tenants can use vouchers to rent market-rate apartments across the city. The tenant pays 30% of their income toward rent and the city chips in the remainder, up to a maximum amount. HUD requires public housing authorities (like DCHA) to use a “rent reasonableness” standard to determine the maximum.

Rent reasonableness is defined comparatively: a unit covered by a voucher should cost roughly the same as rent in a similar unit rented to a non-voucher holder. HUD also lays out criteria for identifying similarity including location, quality, unit type, and age as well as items covered by a landlord such as housing services, maintenance, and utilities.

How DCHA sets reasonable rent is a complicated, multi-step process. The agency begins by identifying the maximum amount it will pay for a voucher recipient’s rent. To do this, it starts with the fair market rent (FMR) in the Washington region, and then adjusts upward to account for the fact that rents are higher (on average) inside the city than in its suburbs. Currently, DCHA’s maximum rent is 187% of the region’s FMR (this translates to a maximum rent of $2,930 for a 1-bedroom apartment). However, to account for variation across the city (on average rents are higher west of Rock Creek Park), DCHA sets rent ceilings for 59 distinct neighborhoods, as well.

The HUD audit found that DCHA does not take the next step of assessing rent reasonableness at the unit level, comparing rents in units of similar size, age, quality, etc. Instead, it’s using neighborhood averages.

This is important because these averages don’t account for variation across buildings. In neighborhoods with high concentrations of new apartment buildings, for example, the use of averages will result in higher-than-appropriate reasonable rents for older, less well-maintained buildings in the same neighborhood. And, conversely, in neighborhoods with mostly older buildings, the maximum accepted rents in new buildings will be lower than they should be.

The HUD audit didn’t say whether DCHA is paying more or less for housing vouchers than it should. Indeed, HUD couldn’t make that assessment because, as the report notes, “It’s unclear what DCHA’s actual process is for establishing reasonable rents at the unit level.” However, the audit did note that, “while [HUD was] on site, concerns were raised to the HUD review team that DCHA was not following its local rent reasonableness process and that it was being exploited by HCV landlords.”

DCHA’s response to HUD’s finding that the District isn’t employing unit-level rent reasonableness analysis received little attention at the hearing. In its written response, DCHA disagreed with HUD’s finding, arguing it has the right to “establish an alternative rent reasonableness policy.” When Councilmember Robert White expressed concern, Donald said her agency was reconsidering that approach.

The fact that neither HUD nor DCHA can say with certainty whether the District is over or underpaying voucher rents means taxpayers can’t assess allegations that landlords who accept vouchers are not only fleecing the city but pushing out longtime tenants in rent-controlled buildings in favor of voucher holders not covered by rent control.

What’s next?

This is a story with legs. In the immediate term, the big question is whether Bowser and Mendelson’s legislation to restructure DCHA’s board will pass. If it does, we can expect Donald to stay put, at least for the short term. We’ll see if she chooses to step up as the change agent she has promised to be – and if the DC Council will continue to hold her feet to the fire.