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HUD Paid $37 Million in Rent for Deadbeats

A resident stands in front an apartment where she lives with four children at a public housing apartment complex Thursday, Sept. 4, 2014 in Iowa City, Iowa

The U.S. Department of Housing and Urban Development (HUD) subsidized over 100,000 apartments for tenants who do not meet work or community service requirements, costing taxpayers at least $37 million.

According to an audit released by the Office of Inspector General (OIG) on Wednesday, the federal government is at risk of losing an additional $448 million worth of subsidies this year on "noncompliant tenants."

HUD offers subsidies for public housing, where rent can be as cheap as $50, to low-income individuals. Tenants between the ages of 18 and 62 who are not disabled, must do at least eight hours of community service or job training per month in order for the government to subsidize their rent, known as the "community service and self-sufficiency requirement" (CSSR).

The OIG found that HUD does not properly monitor the program, leading to thousands of ineligible tenants receiving subsidized housing.

"HUD subsidized housing for 106,000 units occupied by noncompliant tenants, out of nearly 550,000 potentially CSSR-eligible units nationwide," the audit said. "Out of the nearly 740,000 adult tenants living in these units, HUD’s system contained incorrect CSSR status codes for 201,000 tenants."

"This deficiency occurred because HUD did not have adequate controls to monitor compliance with CSSR," the OIG said. "As a result, HUD paid more than $37 million in monthly subsidies for public housing units occupied by noncompliant tenants that otherwise could have housed compliant households."

While ineligible Americans received subsidies, "potential tenants were kept on waiting lists," the OIG added.

HUD has required tenants in public housing to do community service or job training since 1998. Tenants can do eight hours of job training, employment counseling, work placement, basic skills training, or education to meet the obligation.

"It is intended to assist adult public housing residents in improving their own economic and social well-being and give these residents a greater stake in their communities," the OIG said. "The requirement allows residents an opportunity to ‘give something back’ to their communities and facilitates upward mobility."

However, in addition to the elderly and the disabled, HUD also exempts family members on welfare from the requirement.

The audit found that in some cases HUD has improperly exempted families who receive food stamps, which does not qualify as an exemption.

The OIG also found that government did not monitor the CSSR program at 75 percent of the housing authorities it reviewed. Out of 56 housing authorities, 42 said HUD did not check in on the program.

The agency has had problems enforcing the requirement since it began in 2008. An audit report that year found that HUD "did not have sufficient guidelines, adequate data collection and reporting systems, or effective enforcement mechanisms," costing taxpayers $21.5 million in improper subsidies.

Since there are now roughly 1.2 million households living in public housing units, the risk for subsidizing housing to ineligible participants is much greater.

"If HUD does not strengthen its controls, it will pay at least $448 million over the next year in subsidies for public housing units occupied by noncompliant tenants that otherwise could house compliant households," the OIG concluded.