City Controller – $10.3 Million City Housing Loan Mishandling

City Controller – $10.3 Million City Housing Loan Mishandling

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MEDIA ADVISORY                                                                          Contact:        Ben Golombek
April 7th, 2010                                                                                                            (213) 595-2650
CONTROLLER GREUEL TO RELEASE AUDIT SHOWING $10.3 MILLION CITY HOUSING LOAN WAS MISHANDLED
Department Proceeded With Project, Knowing That a Development Partner Was Under Federal Investigation
(Los Angeles) – City Controller Wendy Greuel will release her Waste, Fraud and Abuse team’s audit of how the Los Angeles Housing Department (LAHD) managed a $10.3 million City loan to a developer, which had a major financial partner under federal investigation for misusing public funds, on Thursday, April 8th, at 10:30 AM, OUTSIDE OF CITY HALL EAST (on Main St., between 1st St. and Temple), 200 N. Spring St., Los Angeles, CA 90012.
In 2008, the LAHD awarded a Permanent Supportive Housing Program loan of $10.3 million to Bonnie Brae Village Partners (BBVP) to build a 92-unit project to provide housing to previously homeless seniors.  The Controller’s audit, which was requested by the new leadership of LAHD, evaluated whether proper policies and procedures were followed in awarding this loan. 
Some of the audit’s findings included:
    • On the developer’s application to the Housing Department they explicitly failed to disclose that one of their major partners was under federal investigation.  However they did disclose this on a separate application to the State of California, which they gave to the Housing Department. 
    • The Housing Authority of the City of Los Angeles, which was to provide Section 8 vouchers to operate the project, requires that an “Agreement to enter into a Housing Assistance Payment (HAP) Contract” must be executed before construction can begin.  LAHD issued a “Notice to Proceed” to the developer, which allowed them to begin construction without the required HAP contract being signed.  LAHD blatantly ignored federal regulations in allowing the developer to begin construction.  
WHO:         City Controller Wendy Greuel
                   Los Angeles Housing Department GM Doug Guthrie
                   HACLA GM Rudolf Montiel
                      &nb
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WHAT:      Release of Controller’s audit, which shows $10.3 million City Housing loan was mishandled.  
WHEN:      Thursday, April 8th, 10:30 AM
WHERE:   CITY HALL – OUTSIDE OF CITY HALL EAST
                   (on Main St., between 1st St. and Temple
                   200 N. Spring St.
                   Los Angeles, CA 90012
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