HUD, Southern California Contract Administrator Resolve Dispute
In June, lawyers for the Section 8 contract administrator (CA) in Southern California announced that they had reached an agreement with HUD that will allow their client to continue as CA into 2010.
In January 2003, HUD designated a nonprofit affiliate of the Housing Authority of the City of Los Angeles (HACLA), called the Los Angeles LOMOD Corporation, to be the CA for selected project-based housing assistance payments (HAP) contracts in Southern California. In 2008 LOMOD was responsible for the oversight of 733 HAP contracts covering over 45,000 subsidized rental units in Los Angeles, San Diego, Riverside, Orange, Santa Barbara, and five other counties in Southern California.
In November 2008, HUD refused to extend LOMOD's Section 8 Project-Based Annual Contributions Contract (ACC) and opened the contract for bidding from new firms. The Section 8 HAP and fees paid through the contract total about $284 million annually and make HACLA, with its large public housing and Housing Choice Voucher programs, one of the largest housing subsidy administrators in the nation. HUD did not disclose the reasons for its decision at the time. However, federal law gives HUD substantial discretion in administering its programs.
In response to HUD's decision, the City of Los Angeles sued HUD in federal court, accusing the agency of acting arbitrarily and capriciously in taking away a contract the city has administered for several years. According to LOMOD's lawyers, HUD overstepped its authority. The court granted a temporary stay preventing HUD from terminating the contract.
“The hasty decision to implement this dramatic policy change in the last days of a presidential administration raises serious questions about the motivation behind the change,” said Thomas Saenz, counsel to Mayor Antonio Villaraigosa.
In June, LOMOD and HUD announced an agreement under which HUD will extend LOMOD's contract for six months and will renew for 12 more months if LOMOD's performance is acceptable. According to HUD spokesman Lemar C. Wooley, the department is currently renewing all other Project-Based Contract Administration (PBCA) contracts for 12-month periods.
HUD announced some time ago that it will “recomplete” the entire PBCA program nationally sometime in FY 2010. Wooley said that will still happen. HUD's decision to reopen the PBCA program to competition was not affected by the LOMOD lawsuit.
According to news reports, HACLA and the City of Los Angeles use about $8 million in administrative fees from LOMOD's contract administration work to fund other activities, including providing healthcare centers at five public housing projects, funding unmet capital needs of public housing, and running summer jobs and sports programs for at-risk youth.
Rudolf C. Montiel, president and CEO of HACLA, said, “We want to thank Los Angeles Mayor Antonio Villaraigosa, HUD Secretary Shaun Donovan, Deputy Assistant Secretary Carol Galante, and their respective staff for working toward a workable and imaginative solution. HUD's decision means that we can continue to provide the vital services and programs essential to the well-being of our community. We look forward to continuing a positive relationship with HUD.”
Lemar C. Wooley: HUD Office of Public Affairs, 451 7th St. SW, Washington, DC 20410; (202) 708-0685; Lemar.C.Wooley@hud.gov.
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