DuPage housing scandal fallout continues with order from HUD

Audits find agency misspent or can't account for $10 million

Fallout from the DuPage Housing Authority scandal continues.

The U.S. Department of Housing and Urban Development says the housing authority must change the way it subsidizes two senior housing projects because of mistakes made before a series of federal audits found the Wheaton-based agency misspent or failed to account for more than $10 million.

The Stough Group manages the Rose Glen and Myers Commons apartments in Roselle and Darien. The Burr Ridge-based company and its partners have been receiving payments directly from HUD since the projects were awarded in separate Section 8 contracts in 2005 and 2007.

During the federal scrutiny of the housing authority, it was learned that roughly $2.6 million of the “unsupported” spending mentioned in the audits is tied to the Myers Commons and Rose Glen deals.

Now officials with the revamped housing authority have been told that all the so-called “project-based vouchers” for both developments must be converted to tenant-based vouchers.

HUD spokeswoman Laura J. Feldman said the change means that the housing subsidy will belong to the individual renters — not the project owners.

“If the tenant wishes to remain at Rose Glen or Myers Commons, which we assume most will, then the tenant may use their housing assistance there to help pay the rent,” Feldman wrote in an email. “If they choose to move, they may do so and take their housing assistance and use it at their new location.”

A representative from The Stough Group declined to comment on Monday.

Meanwhile, DuPage Housing Authority officials said they are complying with the directive.

“We're looking to responsibly use the federal money, which is scarce,” said David Hoicka, the executive director of the agency. “We want to use taxpayer dollars responsibly and follow the HUD guidelines carefully, efficiently and effectively.”

Hoicka replaced former executive director John Day, who was forced to resign last year after the federal Office of Inspector General released two audits critical of the agency. 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.

The contract for Myers Commons — a 91-unit apartment complex near Lemont Road and 83rd Street — was executed in March 2005. The Section 8 contract for Rose Glen was approved two years later.

In a Jan. 26 letter to the housing authority, Steven Meiss, the Illinois State Office of Public Housing Region V director, wrote that the DHA didn't follow HUD's program requirements before approving and contracting housing assistance for units at Myers Commons and Rose Glen.

For example, the 10-year deal for Myers Commons automatically renews unless both parties choose to terminate. But HUD regulations only allow for 5-year deals that can be terminated if the housing authority doesn't want an extension.

“Automatic renewal of a HAP (housing assistance payments) contract is not permitted under any circumstances,” Meiss wrote.

The housing authority also didn't administer a waiting list for its program. Instead, it let the project owners and/or managers pick the households and didn't perform quality control reviews of the selection process.

“This noncompliance occurred because DHA administrators and staff, during the applicable time frame, chose to disregard or lacked an understanding of the program requirements regarding the selection of only elderly or disabled applicants,” Meiss wrote.

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