Corruption Hits HOME

November 18, 2010

Benjamin Franklin wrote that “in this world nothing can be said to be certain, except death and taxes.” Were he alive today, Franklin might add to the list corruption in federal housing programs. 

The latest victim is the HOME Investment Partnership Program, which is a $2.3 billion block grant program that provides funding to state and local governments to develop “affordable” housing. According to the Washington Post, HOME funds allocated to Prince George’s County in Maryland are part of a widespread corruption investigation that led to the recent arrests of County Executive Jack B. Johnson and his wife. It appears that Johnson took bribes from a developer in order to secure federal money for housing developments. 

From the article:
Johnson was arrested Friday after he pocketed $15,000 from the developer and was heard by federal investigators telling his wife over the phone to flush the check down the toilet and stuff $79,600 in cash in her underwear, according to court documents.
It’s unclear who Developer A is, whether he received money in the past two years or which project the money was allocated to fund. But the Prince George’s County Council auditor said the county will review the Housing Department, which has long been under scrutiny for suspected mismanagement.
Chief Auditor David Van Dyke said a contract will be finalized this week and will explain the scope and details of the audit. The council sought the review this year after it learned that the department had not used $2 million in federal housing money for low-income residents.
The Post reports that HUD officials admitted that Prince George’s County “has a history of poor performance in the HOME program.” Yet the money has continued to flow to Prince George’s County from federal taxpayers.
As a Cato essay on community development programs at the Department of Housing and Urban Development shows, this isn’t the first time that the HOME program has been fleeced. And more broadly, HUD’s housing programs have been a corruption magnet since the agency’s inception.
A Cato essay on HUD scandals explains why this is the case: 
A root cause of HUD scandals is that the department has a large number of costly subsidy programs, and each involves a tangled web of stakeholders. Many HUD programs divide responsibilities between federal, state, and local policymakers, and they involve private interests such as developers and financial companies. The multiplicity of interests and the complexity of the programs create opportunities for people in the public and private sectors to take personal advantage of programs. 



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