HUD Says O.C. Misspent Funds in Repair Jobs

A recent federal audit charges that Orange County has misspent money intended to rehabilitate housing for poor and low-income residents, causing some people to live in unsafe or unhealthful conditions.

The June 29 audit by the inspector general for the U.S. Department of Housing and Urban Development concluded that the county paid for some rehabilitation work that was never done and ignored some repairs that should have been made.

As a result, a house in Anaheim had its roof repaired by the county, but the resident still had to heat his home with an improper propane burner. Another house in Santa Ana had bare and inadequate wiring after the county repaired a wall, according to the audit.

“The repairs . . . left conditions uncorrected which exposed the occupants to safety and health hazards and detracted from the county’s efforts to improve substandard housing,” according to the audit, which was obtained by The Times under the Freedom of Information Act.

“We believe . . . that some repairs were overlooked because the staff did not follow prescribed procedures,” the report said.

Friday, county housing officials strongly denied the HUD charges, with one complaining that the auditors “were looking for some kind of witch hunt.” Officials said, however, that they will change some bidding procedures to comply with recommendations in the audit.

The audit targeted the county’s use of federal Community Development Block Grant money to repair homes owned by low- or moderate-income residents. A family of four with an annual income of less than $34,000 would be eligible under the federal rules.

Each year the federal government provides money that is distributed to individual projects by the county Housing and Community Development office. Last year, the county spent a total of $1.2 million in block grant funds to repair 93 homes under the rehabilitation program.

The auditors said they looked at 15 of those repairs that were selected at random.

Dhongchai Pusavat, director of the county’s Housing and Community Development office, called the findings in the report “absolutely untrue.” He attributed the charges in the audit to a philosophical difference that he has with HUD over how the federal money should be spent.

Pusavat said he believes that the county should only make major or emergency housing repairs so it can help more people, while HUD, he said, wants the county to correct all of the housing code violations for each resident who is eligible for assistance.

“We’ve got too many leaky roofs, and when the roof goes bad, the house goes bad,” Pusavat said. “The bottom line to me is, ‘Do we make these people’s lives better?’ Yes we do.”

‘Not Policemen’

Pusavat said his staff has not left unsafe or unhealthful conditions in any of the houses repaired by the county. But, he said, as a matter of policy his office does not inspect for building code violations, other than those being corrected.

“We are not policemen,” he said. “We are social workers.”

The audit charged, however, that the county should have inspected an Anaheim house when it paid to put a new roof on the building. Since it didn’t, the audit said, a faulty furnace had to be disconnected from the gas line by a utility company and “the owner heated his home with a large industrial-type propane heater not designed for residential use.”

The audit also said the county paid $1,360 to paint the exterior of the house when “we believe that the repair of the furnace was a more critical work item than the painting.”

Orlando Calleros, the county’s senior rehabilitation coordinator who inspected the work done on the Anaheim house, said that he was unaware of the furnace problems and that they were not mentioned by the owner.

“We don’t go through and check every appliance to be sure the heater keeps the house at 70 degrees or something,” Calleros said.

Help Refused

Pusavat added: “If we see it’s dangerous, we will say, ‘Can we fix that?’ We don’t force anything down anybody’s throat. Many times, property owners refuse our help.”

The audit said six of the 15 cases it reviewed had health or safety problems because the county either did not make repairs, made incomplete repairs or provided poor workmanship.

In another of the cases, the audit said, a Santa Ana home was left with improper wiring under the floor and one wire that spliced to a television set. Calleros said, however, that the wiring problems seen by the auditor were not present when he gave the house a final inspection.

“They took half facts,” Calleros said. “It’s all true, but it’s not the whole story.”

Calleros said, for example, the audit described a house in Silverado Canyon with only a plank over a trench where the county had paid to build a new porch. “This condition is a safety hazard which could cause persons to trip, fall and/or injure themselves,” the audit said.

Calleros complained, however, that the report did not say the homeowner had another entrance to the house that was safe.

The Silverado Canyon home was also listed in the audit as an example of poor management by the county.

Spent Money Elsewhere

The county originally gave a $5,000 grant to homeowner Michael Francis for the construction of a new porch and other repairs. But when the old porch was removed, Francis discovered serious problems in the walls that he spent the money on instead.

The audit concluded that county records were not modified to reflect the change so they inaccurately indicated that federal money was used to pay for a porch.

“If we were wrong on that one it was because we had written and verbal agreements but there was not a formal change order,” Calleros said.

Francis said he is frustrated by the whole experience, but he’s not sure who is to blame.

“I think some of the problems should have been more obvious to the original (county) guys who came out and made the assessment of what the house really needed,” he said. “There are still some parts of the house that do not have a proper foundation, and it’s something that I don’t have the time or money to do.”

Paper Work Problems

The audit also complained about other paper work problems in the county office that made it difficult for the auditors to determine if the federal money was properly spent.

County inspectors only filled out the correct inspection forms in five of the 15 cases studied, and in those, the forms were only partially complete, the audit said.

Pusavat said, however, that the records are complete but that they aren’t done the way the inspector general ordered. “We can spend a lot of time and manpower making those files neat, but then you don’t get any productivity out,” he said.

But Pusavat said the county will correct its procedures for bidding the rehabilitation work based on findings in the audit.

The audit said county housing officials violated their own procedures by not estimating the cost of construction before they sought bids. It also complained that only one bid was obtained in 13 of the projects reviewed.

“As a result, there is no assurance that the $88,590 spent for the 13 properties was reasonable,” the audit said.

In response, Pusavat wrote that the county will “revise the procedures for preparation of in-house estimates.” He also said the county has tried to solicit three competitive bids on each project and that it will continue to do so.