It's been one year since federal housing officials seized control of the Philadelphia Housing Authority, but both they and Mayor Nutter agree the agency is not ready to revert to local control.

Nutter is expected to sign an agreement this week to keep the agency in federal receivership for up to a year more, according to Sandra Henriquez, an assistant secretary of the U.S. Department of Housing and Urban Development.

Henriquez said in an interview that PHA's new executive director, Michael P. Kelly, had succeeded "in putting reforms in place to signal that this is a new day." But, she said, the agency needs more time to complete its recovery in the aftermath of the ouster of executive director Carl R. Greene.

A delay helps Nutter, meanwhile, who is pushing lawmakers in Harrisburg to change PHA's bylaws so the board is directly accountable to his office.

The PHA board fired Greene in September 2010 after learning that he had settled three sexual-harassment complaints without informing them and had a fourth pending. Settlements in the four cases totaled $1.1 million.

On March 4, HUD took over the housing authority after the resignation of its five-member board, which had been criticized for lax oversight of Greene.

In the last year, Kelly has worked on a 12-point recovery plan. In a recent letter to Nutter and HUD acting deputy secretary Estelle Richman, Kelly said there had been "profound cultural and corporate improvements."

"It really does begin with things that can't be seen," Kelly said in an interview.

A veteran turnaround expert in public housing, Kelly has rebuilt PHA management, restoring a general counsel office and hiring new senior executives in finance, compliance, and resident relations.

He also has worked to make PHA operations more transparent, restore confidence among employees and tenants, and build bridges with other city officials.

"He's trying to get it together, but he hasn't had enough time," said Virginia Wilks, a tenant leader for the Richard Allen Homes.

Nutter spokesman Mark McDonald said the mayor was "very satisfied with the work that's been done thus far at PHA under the leadership of Michael Kelly."

Nutter agrees with HUD and Kelly that the "current arrangement should continue," McDonald said.

One reason: Nutter is trying to break an impasse in Harrisburg to restructure the board of PHA to make the agency more accountable to the mayor.

Two bills pending in the General Assembly would expand the size of PHA's board of commissioners and increase the mayor's influence.

PHA is the only housing authority in the state not controlled by a mayor's office, and it has the fewest number of directors.

Under current bylaws, the mayor picks two commissioners and the city controller selects two. Those four commissioners, in turn, elect a fifth member from the ranks of public housing tenants.

In a Senate bill Nutter supports, the mayor would appoint nine commissioners, with three of those selections subject to approval by City Council.

But a competing House bill introduced by State Rep. W. Curtis Thomas, a Philadelphia Democrat on the Urban Affairs Committee, would split the appointments, with the mayor selecting five commissioners; City Council two; and public housing residents two.

"The mayor believes that he needs to have total responsibility," Thomas said. "I believe in shared responsibility."

Thomas said he had requested a face-to-face meeting with Nutter and City Council President Darrell L. Clarke to resolve the matter before a full vote in the House.

State Rep. Michael O'Brien (D., Phila.) a member of the Urban Affairs Committee, said he favored the sharing of authority between the Mayor's Office and City Council.

He said putting sole power for appointing PHA's board in the hands of the mayor would be "a recipe for disaster."

"Michael Nutter is a lame duck," O'Brien said. "We have no idea who follows him, and absolute power corrupts absolutely. You can't write legislation for the moment. It has to stand the test of time."

In addition to the impasse in Harrisburg, another reason for extending HUD's control of PHA is the continuing federal investigations of the housing authority.

Among the key audits of PHA in the last year was the HUD inspector general's review of the agency's spending on outside legal firms. PHA is in the process of justifying the spending of $30.5 million in legal fees from April 2007 to August 2010.

The inspector general operates separately from HUD, which needs to finish its own forensic audit of PHA's operations before it considers returning the agency to local control, Henriquez said.

That audit, being conducted by the consulting firm KPMG, involves a thorough review of thousands of PHA documents. The process has been slowed by the competing demands for information and records, Henriquez said, and "making sure we're not stepping on other people's toes."

A federal grand jury has been requesting information from PHA, and the HUD inspector general's office also is conducting a separate criminal investigation.

After a long wait, PHA recently released significant amounts of new information to KPMG, including e-mail traffic from the Greene era, Henriquez said.

One area of documentation - legal bills - has been stalled by a federal court challenge brought by Greene, who has argued that the release would violate his attorney-client privilege. The matter is before the U.S. Court of Appeals for the Third Circuit, with a hearing scheduled for April 20.

"A number of documents are being held by the court. We will not interfere with any ongoing litigation," Henriquez said.

Contact Jennifer Lin
at 215-854-5659,, or @ j_linq on Twitter.