in Houston, Texas
Texas' housing agency -- which failed to rebuild houses post-Hurricane Ike -- criticized in 2010 audit for mishandling some of $503 million for relief from hurricanes Katrina, Rita
Thursday, Aug 25, 2011, 08:53AM CST
By Mark Lisheron
Galveston post-Ike

A year before Gov. Rick Perry wrested control of nearly $3 billion in Hurricane Ike funds from the state’s housing agency, a federal audit criticized the agency for mishandling some of the $503 million in federal funding for relief from the destruction of hurricanes Katrina and Rita in 2005.

As Texas Watchdog reported last week, Perry turned the troubled federal Department of Housing and Urban Development block grant program to the state General Land Office in the hope of giving relief to coastal families, many of whom have been waiting nearly three years for their homes to be rebuilt.

After spending just $200 million of the $3.1 billion in block grants, Michael Gerber, executive director of the state Department of Housing and Community Affairs, resigned. The Texas Department of Rural Affairs, which had been in charge of administering the block grants to rebuild infrastructure ruined by Ike in 2008, was abolished by the Legislature and its duties given to the Department of Agriculture.

State officials, however, had been alerted to TDHCA’s problems administering disaster funds much earlier with the publication in July of 2010 of an audit done by the Disaster Recovery and Special Issues Division of the HUD Inspector General’s office.

The audit found Housing and Community Affairs had billed for nearly $19 million in costs the agency could not support or were ineligible for federal reimbursement. Inspectors asked that either the agency prove the legitimacy for all $19 million or reimburse the federal government.

Gordon Anderson, a spokesman for TDHCA, said late Wednesday the agency agreed to all of the recommendations, having reimbursed for all funds that could not be justified through documentation.

The agency began its program in debt by accepting a bid for the housing work with multiple budgets totalling nearly $36 million, or $3.7 million more than its own budget, according to the audit.

Inspectors were particularly troubled by the way in which Housing and Community Affairs handled contracting for a $222 million piece of the half-a-billion-dollar disaster grant total.

In spite of the appearance at a bidder’s conference of 34 people from 17 companies, the agency received and accepted just one, a joint bid filed by three of the companies. The agency made changes to its own contract that added nearly $2 million in costs to accommodate the lone bid, the audit says.

The agency provided a justification for that increase in its response to the audit, Anderson said.
Contact Mark Lisheron at 512-299-2318 or or on Twitter at @marktxwatchdog.

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Photo of Galveston following Hurricane Ike by flickr user, used via a Creative Commons license.
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