The Philadelphia Housing Authority's interim executive director, Michael P. Kelly, said Tuesday that he would soon meet one-on-one with federal investigators, while pledging "to let the community at large know we're doing everything we can to work in a more transparent and accountable fashion."
The Inspector General's Office of the U.S. Department of Housing and Urban Development is conducting two audits of PHA. One reviews the authority's hiring of outside lawyers and contractors. The other examines PHA's use of federal stimulus funds to improve scattered housing sites.
Kelly's pledge of cooperation is a marked change for PHA, which has had a history of contentious dealings with HUD and had failed to comply with a subpoena on the housing sites, which was issued last summer. A subpoena was issued last month on payments to lawyers.
Last week, U.S. Sen. Charles E. Grassley (R., Iowa), the ranking minority member of the Judiciary Committee, sought billing records from 20 law firms that had worked for PHA.
On loan from New York City, where he holds a similar job, Kelly started work five weeks ago after the firing of Carl R. Greene amid revelations that PHA secretly paid three women $648,000 to settle sexual-harassment complaints against him.
Kelly has said that he would rein in the authority's use of outside law firms, which have been paid $33 million since 2007. And he said in an interview Tuesday that he would hire his own outside auditors to review certain aspects of PHA's finances.
He also said he would be creating an internal audit-and-compliance unit at PHA that would report to him and to the PHA board. This would allow him to "muscle up" oversight at the agency, he said, and to let "my commissioners know that I am reevaluating the Housing Authority's role."
On Thursday, he told the authority's five commissioners that "revelations over the past several months have uncovered deep internal problems that overshadow PHA's reputation as a provider of affordable housing."
This has "eroded [the] confidence of our residents and employees, elected officials, and the public at large," he added.
In both audits, HUD staff has had to deal with outside lawyers hired by PHA, which has slowed its progress.
Kelly said that, during his coming meeting with the inspector general, scheduled for Feb. 1, he hoped to clarify what further information auditors needed.
Grassley said Tuesday that "oversight is long overdue on the part of the federal agency responsible for these housing dollars, and I hope to see the inspector general fully exercise its authority to protect the interests of taxpayers and those needing assistance."
He said he saw "no legitimate reason for law firms to stand in the way of accountability."
The HUD inspector general issued a new subpoena to Kelly on Dec. 10, demanding that PHA turn over invoices and documentation about work done on specific dates by six law firms: Duane Morris; Fox Rothschild; Ballard Spahr; the defunct WolfBlock; Schnader, Harrison, Segal & Lewis; and Flaster Greenberg.
The subpoena, obtained by The Inquirer, shows that the HUD inspector general is also seeking documents describing any settlements of claims or lawsuits; access to PHA's general ledger, contract register, and accounts-payable records; and bank statements, canceled checks, and bank reconciliations.
Kelly said he was limited in discussing details of the audit, but said it was "unfair" to categorize PHA as being wholly uncooperative. He said "thousands of documents and hundreds of man-hours" have been put into responding to auditors.
The audit of legal fees is part of a broader review of consulting contracts that was initiated Aug. 27 by the HUD inspector general. The Inquirer reported Aug. 25 that PHA paid out more than $33 million in legal fees since 2007, with about half the money going to Ballard Spahr and WolfBlock.
The subpoena zeroes in on $4 million in legal spending between 2007 and August 2010.
The scattered-site audit was launched April 9, HUD documents show. In addition to conventional public-housing, PHA maintains about 6,000 scattered units, the largest inventory of stand-alone properties of any public housing authority.
Among the information HUD has requested for the scattered-site audit are the first five digits of the Social Security numbers of all PHA employees since 2008. Investigators want to determine if any employees are living in some of the units.
Greene had refused to disclose the Social Security information to HUD.
In addition to the reviews by the inspector general, HUD is also conducting a forensic audit of PHA's entire operation under Greene.
Greene, who was fired in September, has denied that he harassed female colleagues and has sued the PHA board for dismissing him.
Kelly said the team of outside auditors he planned to hire would also look at "the risk potential" of four major PHA affiliates. Some are facing lawsuits over allegations that funds were misused and that employees were dunned for payments for parties, outings, and lobbying.
They are Tenant Support Services Inc.; the Philadelphia Asset & Property Management Corp.; the Pennsylvania Institute of Affordable Housing Professionals; and the Pennsylvania Association of Public Service Agencies.
The accountants will review the performance of each group and make recommendations on areas "that should and could be tightened up," Kelly said.
"It's important to look at taking the initiative ourselves," he said, "rather than wait for long-term auditing with the HUD inspector general."