Can developer bail out DuPage housing group?

A developer insists the DuPage Housing Authority might not have to repay some of the millions of dollars it owes the federal government.

But first, Michael Pizzuto must convince officials with the U.S. Department of Housing and Urban Development that he wasn’t given two no-bid contracts from the housing authority board he once served on.

“If they let me help them, they could help themselves,” Pizzuto said of the Wheaton-based agency, which was revamped after a series of federal audits revealed it misspent or failed to account for more than $10 million.

Pizzuto spoke to authority board members Thursday to voice concern about a “freeze” on new admissions to his Myers Commons and Rose Glen senior housing projects in Darien and Roselle.

The freeze, which also affects three other Section 8 housing projects throughout the county, began in March after the authority’s former executive director, John Day, was forced to resign. Day’s deputy, Robert Hess, also retired after DuPage County Board Chairman Dan Cronin learned about two audits critical of the agency by the federal Office of Inspector General.

Cronin then replaced every member of the housing authority board when a third audit charged the agency improperly spent more than $5.8 million in federal money and failed to adequately document another $4.7 million. Unlike the two prior reports, the last one specifically called for the repayment of nearly $5.1 million in misspent federal funds.

After Thursday’s meeting, Pizzuto confirmed that roughly $2.6 million of the “unsupported” spending mentioned in the audits is tied to Section 8 contracts the authority gave him for Myers Commons and Rose Glen.

But Pizzuto says he has provided paperwork to HUD that proves there was nothing improper about the way both contracts were awarded. He said there was a competitive process, and federal regulations were followed.

“There were RFPs (requests for proposals),” Pizzuto said. “There were publication notices. There were rules for the RFPs. There were numerous bidders. There were several selections.”

In addition, Pizzuto insists his involvement with Myers Commons and Rose Glen didn’t violate HUD conflict-of-interest rules. Those rules prohibit a board member from having an interest in a Section 8 contract with the housing authority while serving on the panel and for one year after leaving.

Pizzuto, who resigned from the DuPage housing board in May 2003, said the Section 8 contract for Myers Commons wasn’t executed until nearly two years after he stepped down. The contract for Rose Glen was approved in March 2007.

Peter Lennon, the DuPage Housing Authority’s interim director, said it’s up to HUD officials to review Pizzuto’s documents and decide if they support his case.

“But obviously, HUD and the Inspector General already have decided that there was no case to be made,” Lennon said. “If Mr. Pizzuto could convince them that they were wayward in their decision-making, then God bless Mr. Pizzuto.”

HUD officials said they have seen Pizzuto’s documents and are investigating.

As for whether any of the authority’s debt could be reduced, it’s up to the agency — not Pizzuto — to refute the findings in the audits, officials said.

“If the findings are shown to be inaccurate, it is then likely that the dollar amount would be reduced,” HUD spokeswoman Laura J. Feldman said in an email. “However, that decision would be made by the (Office of Inspector General).”

In the meantime, Lennon said the authority is still working with HUD on a corrective action plan. The biggest challenge facing the authority is how it’s going to meet a requirement that it repay millions of dollars from “nonfederal” sources.

Most of the agency’s budget comes from the federal government. It receives nearly $23 million a year in HUD assistance and has limited amounts of cash in its nonfederal accounts.

“We would anticipate that there will be some kind of a forgiveness system that will go into effect, assuming that we meet the goals and objectives of the corrective action plan,” Lennon said. “We’ve met some of those and continue to work on others diligently. It’s a slow process.”

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