WASHINGTON -- A top HUD official Friday triggered doubts about the ability of the department to conduct several new programs related to tax-exempt bonds when he acknowledged that the agency is still far from solving its chronic staff shortages.
"Although the department is moving aggressively to address [various] problems, we remain very concerned about the human resource management issue," said John J. Connors, deputy inspector general of the Department of Housing and Urban Development. Connors was testifying before the House Banking Committee's subcommittee on housing and community development.
After the hearing, lobbyists said that if HUD cannot significantly ease staff shortages, it will have difficulty managing several new bond-related programs. One is the sale of nonperforming housing loans, another is a review of tax-exempt bond housing deals that receive federal subsidies, and a third is the newly enacted enterprise zone program.
"Anytime you have a new initiative, HUD is going to be hampered by staffing problems," said one housing lobbyist. "The federal government has no money" to allow HUD to hire enough staff for the new programs, the lobbyist said.
Connors told the committee that HUD not only has insufficient staff to carry out operations, "it does not have a plan for either acquiring additional competent staff, or restructuring operations based on the resources it has."
Over the past 10 years, as various new housing programs have been introduced, HUD's staff has declined to 13,500 from more than 17,000, Connors said. In addition, Vice President Al Gore's recently announced plan for reinventing government contains proposals that would cut staff still further, Connors said.
"The combination of increased need and decreased staff hampers new program delivery as well as effective monitoring and close-out of on-going and terminated programs," he said.
Rep. Henry B. Gonzalez, the chairman of the subcommittee and of the full Banking Committee, told Connors that his testimony "concerns me vastly." The situation at HUD "is worse than any Alice in Wonderland could conceive," Gonzalez said.
Connor's testimony comes less than a month after HUD officials said they plan to begin examining proposed multifamily deals that combine federal subsidies with tax-exempt financing to make sure developers are not making excessive profits.
HUD is already undertaking the so-called subsidy layering review for deals that use the low-income housing credit. Lobbyists have complained that the department's slow and cumbersome process for approving credit deals is likely to be repeated when it begins examining bond deals.
Another initiative that lobbyists said would be hindered by staff shortages is the Federal Housing administration's plan to sell off about $ 8 billion in nonperforming multifamily housing loans it has acquired over the years through defaults.
FHA expects to sell the troubled loans in pools to investors, but state and local officials are hoping to persuade the agency to sell to them as well so they can refurbish the deteriorated apartments built with the loans.
Connors said in his testimony that the FHA commissioner, Nicolas P. Retsinas, is trying to combat staffing problems by "evaluating ways to reorganize operations and restructure programs as a means to protect the insurance funds from further losses."
Although voicing concerns about the understaffing problems, Connors said that Housing Secretary Henry G. Cisneros "is making valiant attempts to address these problems." For Cisneros to be successful, Connors said, he will need the full support of the Office of Management and Budget and Congress.
