ANGRY CHA LAYS BLAME FOR PROBLEMS ON HUD

In an attempt to block an imminent federal takeover, the Chicago Housing Authority released a report Wednesday that attacked the U.S. Department of Housing and Urban Development (HUD) as unresponsive, miserly, myopic and ”the primary cause” of the CHA`s many problems.

The report`s release came a day after a six-hour negotiating session in which city and federal representatives, communicating by telephone, were unable to reach an agreement on the future of the financially troubled CHA, the nation`s second largest housing authority.

”I wouldn`t say we`re on a collision course with HUD,” said interim CHA Executive Director Brenda Gaines at a news conference to release the report.

”The negotiations are still ongoing.”

But in a strongly worded cover letter to the CHA report, Gaines, who also is Mayor Harold Washington`s deputy chief of staff, was highly critical of HUD.

”It is virtually beyond debate that CHA`s historical lack of adequate funding from HUD is a primary cause of its present difficulties,” she wrote. ”HUD`s failures to fund, together with the delays associated with the burdensome, bureaucratic procedures and red tape and the piecemeal and miserly manner of reimbursement of funds spent to meet urgent needs, have all contributed materially to any alleged failures by CHA.”

Her letter criticized ”HUD`s myopic focus on only identifying alleged violations of HUD regulations or of the (annual funding contract), rather than working cooperatively to cure the root causes of the alleged violations.”

Such attention to minutiae, ”coupled with HUD`s inaction in approving pending funding requests to improve the quality of life of CHA residents, makes it virtually impossible for CHA” to live up to the provisions of the annual funding contract, Gaines wrote.

The question of whether the CHA has fulfilled the terms of its annual funding contract is an important one because any takeover attempt by HUD will be based on the contention that the housing authority has violated that contract. Under the contract, the CHA, landlord of 145,000 residents, expects to receive a federal operating subsidy of $98.6 million this year.

The CHA report, addressed to Gertrude Jordan, the regional HUD administrator, was a point-by-point response to–and, in many cases, rebuttal of–a critical management review of the housing authority that HUD released on May 27. As such, it is likely to be a basis for any CHA attempt to go to court to block a HUD takeover.

On Wednesday, the CHA board, in an unusual meeting by telephone, authorized the hiring of the Chicago law firm of Schiff Hardin & Waite to fight any HUD takeover attempt.

”We are very serious about maintaining the necessary local control of this authority,” said James Thomas, the CHA`s general counsel. ”We have no plans to initiate legal action, but we`re prepared if we`re required to protect the authority`s rights.”

One member of the CHA`s negotiating team said: ”There are two courts we are dealing with here. The first court is the court of law, and the second court is the court of public opinion. And the second court in this case can have a big impact on the first court.”

For several months, Mayor Washington has frequently blamed a lack of funding from HUD for the problems of the CHA and of public housing nationwide. On Wednesday, he said: ”I`m not a lump-lump. I`m not going to sit there and let HUD or mud or anybody take over the CHA.” He contended, ”We have done all the things that any reasonable person could do” to make improvements at the housing authority.

But Washington was criticized during his first four years as mayor for allowing the same sort of mismanagement, favoritism and political abuses that had occurred for decades at the CHA under previous administrations.

In a July 9 letter to U.S. Sen. Alan Dixon (D., Ill.), HUD Secretary Samuel R. Pierce Jr. wrote: ”CHA is beset with serious problems that have persisted for many years. Some of these problems are virtually intractable, stemming from the inherent relationship between the Authority and the City of Chicago.

”A continuation of any arrangement which continues `business as usual`

does not auger well for substantive improvement in the Authority`s operations.”

James Baugh, the acting assistant HUD secretary for public housing, has been the moving force behind the federal effort to persuade Mayor Washington and the CHA board to turn over the agency`s day-to-day operations to a private management team to be selected by HUD.

Arguing that drastic measures are needed to reverse years of mismanagement and political abuse at the agency, Baugh has threatened to seize the CHA unless Mayor Washington accepts the private management plan before Monday.

A HUD spokesman in Washington, D.C., said Baugh, who was HUD`s principal negotiator in Tuesday`s marathon meeting, had no comment on the CHA report because he had not seen it.

But the spokesman added that a break in the deadlock between HUD and the city is expected within the next couple of days.

Addressing the private management proposal, Gaines wrote in her cover letter: ”It is inconceivable that HUD, as a Cabinet-level department of a national administration which is so publicly committed to local control over local programs, would precipitously embrace a contrary course of action.

”CHA has undertaken precisely the same types of initiatives that any quality private management firm would seek to implement, except that CHA

(unlike a private management firm) has done so with intimate knowledge of the problems to be solved.”

She contended that HUD`s attempt to use private management firms to run the troubled housing authority of East St. Louis has been an ”obvious failure.”

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The strong words Gaines used in the report were highly unusual because CHA officials have studiously avoided negative comments about HUD ever since the local housing authority lost $7 million in federal funds for missing an end-of-1986 deadline.

This hat-in-hand attitude toward HUD has been even more noticeable since April 23, when the CHA revealed that it is in the midst of the worst financial crisis of its 50-year history and sought nearly $68 million in emergency funding from federal housing officials.

As Wednesday`s report noted, however, nearly every request for special funding to help the housing authority out of its financial hole has been rebuffed or blocked by HUD.

In a section titled ”HUD`s Unresponsiveness,” the CHA wrote, ”Just as actions by CHA alone cannot be the root cause of all extant problems, changes by CHA alone cannot furnish the full solution.

”Changes by HUD are imperative, as demonstrated by the following examples of instances in which CHA continuously experiences repeated delays, lack of responsiveness and inconsistent applications of policies from HUD.

”Without correction by HUD of its deficiencies, it will be exceptionally difficult for CHA management or, for that matter, any other form of management suggested by HUD or others, to effect the changes necessary to serve residents dependent upon CHA`s facilities and services.”

The report noted that, despite promises of cooperation, HUD has not approved a collateral proposal that would allow the CHA to take advantage of a $25 million loan from the city, and has not provided $5.4 million for a vacancy-reduction program that would enable the housing authority to receive a matching $5.4 million city grant for the same program.

HUD has ignored CHA requests for a $20.4 million reimbursement for renovations and a requisition for $2 million for an asbestos-abatement project, according to the report. In addition, the housing department has approved less than $6 million of an $18 million request for reimbursement for the CHA`s court-mandated scattered-site housing program.

The HUD management review was harshly critical of Gaines and other members of the emergency management team that Mayor Washington dispatched early this year to reform the CHA. It listed several examples of alleged violations of federal rules and regulations.

But the CHA report blamed many of those violations on HUD and questioned the objectivity of the federal housing experts who conducted the review.

”Our study of the management review,” Gaines said, ”has uncovered not only many factual inaccuracies within the findings but also blatant disregard for the numerous significant management improvements that have been accomplished over the last six months.”

For example, the CHA report criticized the review as ”blatantly misleading and inaccurate” for contending that the driver used by Gaines costs the housing authority $58,000 a year. According to the CHA, the driver is paid $13,841.

Gaines said the CHA agreed with ”about 40 to 50 percent” of the review`s findings, but she chided the HUD experts who conducted the review for failing to question CHA officials adequately.

”Had they talked with our staff before coming to their conclusions, we would have had different findings,” Gaines said.