Almost exactly one year ago, U.S. Department of Housing and Urban Development Secretary Shaun Donovan compared the Housing Authority of New Orleans to a rehabbed airplane ready to land on time — this summer — at its planned destination: a return to local control, with a board appointed by the mayor.
All that needed to be determined was the plane’s path of descent, or, as Donovan said: “What does the glide path look like?”
But a year later, with city ground crews still grappling with issues arising from federal oversight of both the police department and sheriff’s prison complex, Donovan is expected to extend HUD’s control of the housing agency for several additional months.
A HUD official, who spoke on condition of anonymity, confirmed that HUD will keep HANO under receivership a bit longer than the original timeline, which had the receivership ending this summer. The official would not confirm that the contract with federal fix-it man David Gilmore would be extended, but others close to the matter expect HUD to do so.
In 2009, in an unprecedented move, Donovan instructed Gilmore to bring down a team of experts to transform the notoriously dysfunctional public housing authority. First formally declared “troubled” by the HUD secretary in 1979, the agency has been in at least partial HUD receivership for 17 years.
During a visit last year Donovan said the team’s work was almost complete and that the return to local control could occur within a year, maybe sooner.
According to Louisiana law, governing state-chartered “political subdivisions” such as public-housing authorities, reversion to local control requires the mayor to appoint a seven-member board; two of them would have to be drawn from a nominee list provided by the Citywide Tenants Association, a group of public-housing leaders.
But even with Gilmore’s contract nearing its July expiration date, Mayor Mitch Landrieu’s office had not pretended it was ready to reclaim HANO. Mayoral spokesman Ryan Berni said in March and again in April that there was “no timeline.” The city, Berni said, “had begun preliminary conversations with HUD about what a transition would look like and when it would occur.”
Still, HUD officials seemed to hold out hope that the city might meet the transition deadline. About four months ago, HUD gave HANO approval to launch a search for an executive director — a position that, according to state law, can be filled only by a mayorally appointed board.
The ad, which ran in housing-industry trade publications in February, sought “an innovative, dynamic and results-driven Executive Director to lead the agency as it transitions back from receivership by the U.S. Department of Housing and Urban Development (HUD) to local oversight.”
Until very recently, HUD officials seemed to believe that Landrieu, though engrossed in thorny debates about the city’s long-troubled police department and jail, would find the time to choose commissioners for its equally long-troubled housing authority.
As recently as late April, when asked about a contract extension, Gilmore said that HUD had offered him nothing and that he and his team were preparing to depart in July.
Second thoughts about receivership
Ironically, New Orleans public-housing leaders — who began pleading with HUD to release the agency from federal receivership shortly President Obama named Donovan to the cabinet — now resist such a move. They’ve come to like and respect Gilmore and want HUD to extend his and his team’s tenure.
“I think we’re headed in the right direction, but we’re not finished yet,” said Cynthia Wiggins, a Citywide Tenant Association leader and the president of the nonprofit Guste Homes Resident Management Corporation in Central City. She speculates that HUD wants to end the receivership at least in part because of the annual administrative costs: about $2 million, though declining year by year.
Wiggins says too much construction is still in the works for Gilmore to leave. “HANO has a lot of projects out there; it had better have somebody who knows what he’s doing,” she said, noting that in the past, deals simply fell apart and work went undone.
Prior to Gilmore’s arrival, the HANO receivership had been overseen by a revolving door of HUD appointees who generally arrived in pairs, with one serving as executive receiver and the other as board chair. Eight receivers and four board chairpersons moved through those positions between 2002 and 2009. Gilmore currently serves as both receiver and one-man board.
In the three years since the Gilmore team took charge, they have found creative ways to finance two stalled site overhauls: B.W. Cooper, near the Superdome, and Lafitte, along Orleans Avenue. But neither is finished, resident leaders said recently, as they ticked off tasks to be completed all across HANO’s holdings:
- None of 50 planned apartments has yet broken ground at the Florida development in the upper 9th Ward.
- After a delay, the reconstruction of a large section of Guste has just begun.
- Most notably, the massive redevelopment of the Iberville development lies ahead; plans call for creating 2,500 apartments in a 300-block area radiating from the 10-block Iberville site near the French Quarter.
All involve complicated, tax-credit deals that, Wiggins says, can’t be handed off to “just anybody.”
Troubles date back decades
After a drum roll of criticism that began years earlier, in 1996 HUD essentially took over HANO, as part of a cooperative endeavor agreement with the city.
Tulane University administrator Ron Mason, a lawyer who served as executive monitor for the first two years of that agreement, described HANO’s housing developments at the time: “Buildings were toppling, pipes were leaking, rats were scrambling through rubbish piles, and in some cases, sewage had backed up into tenants’ kitchens. The murder rate was sky high and drugs were ubiquitous.”
There are differing opinions about what was accomplished under that agreement. Then-Mayor Marc Morial testified at a Congressional field hearing in 2001 that HUD’s funding process and bureaucracy made it very difficult for anyone to “fundamentally change” the agency. He urged them to streamline their processes.
A scathing 2001 audit conducted by HUD’s inspector general described HANO’s progress as “all smoke and mirrors.” In 20 years it hadn’t revitalized even one of its 10 sprawling public-housing sites, despite an infusion of $440 million in federal money allocated for that purpose.
“There’s been some demolition, some new windows, some new doors, but generally speaking, there has been no progress at all during the five years on any one of the 10 conventional sites,” Michael Beard, HUD’s inspector general for the Southwest region, testified at the 2001 field hearing in New Orleans.
Other housing officials also testified at the hearing, as did residents. Laura French, a resident of the St. Bernard development, said rats had “full run of these apartments” and described how the rodents “ate their way through walls, air-conditioner closures, clothes-dryer vents, through toilet commodes, up bathtub drains, through holes in the floor that contractors left open after renovation in the 1980s.” Others testified that children had fallen to their death from unsecured windows that still hadn’t been repaired.
“This is a public embarrassment,” then-Louisiana Rep. Richard Baker, R-Baton Rouge, said at the end of the hearing. He said the situation required immediate action —“I don’t care how radical.”
A year later, in 2002, HUD dissolved HANO’s board and placed the agency in full administrative receivership. It took seven years, but in late 2009, HUD released details of the “radical reorganization” it was proposing.
The description was within a federal “Justification & Approval” notice published by HUD to explain its initial nine-month, no-bid, $2 million contract with Gilmore’s firm, Gilmore Kean, LLC. HUD later invited competitive applications for the position; Gilmore Kean submitted the lowest bid and was retained under terms of a contract that began in 2010 and ends in July.
The 2009 justification explained that the first contract was awarded to Gilmore Kean without competitive bidding because of the “exigency of the situation,” due to “numerous and prolonged failures” at HANO. It said the agency had “been plagued by ongoing and extreme malfeasance at the highest levels.”
Improvements finally take root
Gilmore’s reign at HANO is the result of a fed-up HUD secretary. In 2009, Donovan had just landed in New Orleans for a Katrina-anniversary groundbreaking at the Lafitte when he turned on the TV in his hotel room and learned that HANO Section 8 director Dwayne Muhammad, notwithstanding his $114,400 salary, for two years had used a voucher issued in his mother’s name to rent a Gentilly house for himself.
Less than a week later, Elias Castellanos, a Florida contractor who served as HANO’s chief financial officer, was indicted on charges of stealing $900,000 from a self-monitored contract. Castellanos had created fake invoices that he submitted in his wife’s maiden name, though she’d never worked at HANO. But because HANO’s accounting department used three different types of incompatible software, it was nearly impossible for staff to even reconcile accounts, let alone detect embezzlement. The fraud was made even easier because Castellanos was supervising his own contract, or as then-U.S. Attorney Jim Letten put it, “The fox was guarding the chicken coop.”
Edwin Jamora, a newly hired financial director from out-of-town, detected the payments as he sifted through mounds of paperwork in an attempt to finish years of uncompleted audits. Jamora sounded the alert, leading to an investigation by the HUD inspector general and Letten’s office. Castellanos’ arrest made headlines across the country because he had been extravagant with the money he looted from HANO. Purchases ranged from a $1.6 million mansion just north of Miami to five fancy cars: a Ferrari F430, a $200,000 Lamborghini Gallardo, a Porsche 911 and two Mercedes-Benzes.
A few months before Castellanos’ downfall, HANO had fired three employees for an accounting ruse that, according to federal prosecutors, funneled nearly $662,000 in checks drawn on HANO accounts to purchasing clerk Janice Staves and her boyfriend. The two were charged in the matter earlier this year.
Beyond the criminal cases, the agency’s sheer incompetence became evident to Donovan soon after he took office and sent a staff team from Washington to New Orleans to help transfer thousands of low-income families from disaster rental assistance to the agency’s Section 8 voucher program. It proved to be a task that HANO and its expensive voucher contractor couldn’t complete, partly because of a bureaucratic black hole that required families to resubmit paperwork again and again.
Donovan’s awareness was also heightened by the criticisms of U.S. Senator Mary Landrieu, D-Louisiana, who continued to apply the pressure she’d brought to bear after Hurricane Katrina, asking for audits and sending letters to HUD leaders demanding explanations and documentation.
But to Donovan, Muhammad’s malfeasance was “the straw that broke the camel’s back.”
He moved quickly. By October 2009, a week before Obama visited New Orleans, Donovan announced his plans. Instead of the usual pair of HUD administrators, HUD would be governed by Gilmore and a full fix-it team “steeped in public-housing operation.”
The goal always was to return HANO to local control at some point in 2013, said Gilmore, who also has turned around troubled housing agencies in the District of Columbia, Seattle, Boston and San Francisco. Some thought that the timeline was overly ambitious, but in a recent interview, Gilmore shrugged at the assertion. “In three years, you can fix almost anything that’s broken,” he said.
Gilmore arrived in 2009 to an audience that had become skeptical of HUD and the often bumbling, sometimes hostile appointees assigned to the New Orleans office. Some browbeat staff on a regular basis and refused to meet with resident leaders.
“Horrible. Horrible,” said Wiggins, recalling some of HANO’s leaders in the years after Katrina. “It made me bitter,” Wiggins said. “You never walked into the room and got the truth. There was nowhere to get redress.”
Gilmore wins tenant support
Right from the start, Gilmore was different, Wiggins said. Unlike his predecessors, he shifted the public-comment period to the beginning of the meeting, allowing people to walk to the front microphone and weigh in about agenda items before they had been approved.
As a long line of people vented and complained, he listened, even choking up over a particularly sad story. At one point, he stopped testimony, looked toward his staff and gave one of the soliloquies that he’s become known for:
“No one should be at all surprised by the level of passion expressed at this microphone,” he said. “If we can’t solve everybody’s problem, let’s at least solve the ones we can.”
Gilmore’s style is folksy. He is given to wearing suspenders and a checkered shirt, without a jacket, a style that resident leader Paula Taylor describes fondly as “so regular.” He opens up his semi-annual HANO progress reports with sentimental quotes, from composer-lyricist Stephen Sondheim, poet Walt Whitman,or writer Alan Paton.
Last year, at an Iberville pre-development meeting, Gilmore told residents that he knew no one trusted HANO and he didn’t expect them to trust him either. “But I’m going to work like the dickens to earn that trust,” he said.
Over his tenure, Gilmore has often used HANO’s dais as a bully pulpit. He typically orders staff to make a repair or resolve a complainant’s problem within the day and occasionally chews out employees publicly if they have mishandled an assignment or treated residents badly. “I’m no picnic to work for,” he’ll readily acknowledge, and he’s been known to walk out of community meetings where activists issued demands he thinks unreasonable.
Not infrequently, as he approves board items meant to clean up a HANO mess, Gilmore kvetches about his predecessors. At one meeting, he rolled his eyes as he approved a long list of repairs at a shoddily built complex. Not only was the construction substandard, HANO had given the contractor immunity from lawsuits. “This is more than sheer incompetence — it’s plain old thievery,” Gilmore said. “The facade of this building must look like an ATM to some people.”
Given the abusive or indifferent treatment they were used to, resident leaders were almost shocked at Gilmore’s solicitude. “I’m here to fix this agency and the way for me to do that is to include you in what I do,” Wiggins recalls him saying. He did just that, Wiggins said, and he met with resident leaders whenever they called on him. When he couldn’t act on their proposals, he told them so.
Now, however, Wiggins and other leaders worry that HANO may again unravel, if HUD holds out hope for a handoff to local control anytime soon. They believe that a short extension of Gilmore’s contract isn’t enough.
Last year, Wiggins, along with Citywide Tenant Association president Lillie Walker-Woodfork and 10 other resident leaders, penned a letter to Donovan: “We ask that your office would allow Mr. Gilmore’s contract to run to the end of 2013,” they wrote.
But in recent months, the Citywide Tenant leaders have revised their request, with hopes of keeping Gilmore in place until July or even December of next year. The group has been in close touch with Landrieu and his staff and believe that their request is in sync with what the city wants.
“The mayor is overwhelmed with a lot of important issues here in the city,” Wiggins said. “We said that we didn’t believe the city was ready for the responsibility of HANO. And the mayor agreed with us — he said he wasn’t ready to take it on just yet.”