NEWS HEADLINES

Assistant Secretary Leaves HUD

Orlando J. Cabrera has resigned as assistant secretary for public and Indian housing at the Department of Housing and Urban Development (HUD).

Cabrera officially took over the post in November 2005. His main focus has been public housing, where huge problems have remained largely unsolved under his tenure. For one, public housing redevelopment slowed substantially, as funding for the HOPE VI program was cut deeply. At the same time, public housing agencies have had to struggle to keep up with maintenance of their apartments in the face of deep cuts in public housing operating subsidies.

Cabrera’s office is at the center of several very controversial contracting decisions that are now under investigation in Washington, D.C. The HUD Inspector General is looking into allegations that “sweetheart” contracts were awarded by HUD for work on construction and management of public housing in New Orleans and the U.S. Virgin Islands. Published reports also say that a federal grand jury is investigating certain HUD contracts.

In the case of the Virgin Islands Housing Authority, the investigation centers on the reason for HUD’s decision to award about $750,000 in contracts to Michael R. Hollis of Atlanta to serve as executive administrator of the authority. One contract for $387,102 was awarded in February 2006. A second contract for $360,820 was awarded in July 2006. Each contract is for a six-month period of services as executive administrator.

There was no bidding process. The first contract was awarded to Hollis without bidding due to “unusual and compelling urgency,” according to HUD documents signed by Deborah Hernandez, deputy assistant secretary for public and Indian housing, who served directly under Cabrera at that time. The justification for the sole-source procurement for the second contract, also signed by Hernandez, said no bidding was needed because there was “only one responsible source and no other supplies or services will satisfy agency requirements.”

The HUD documents give no information about the qualifications of Hollis to run a housing authority, but they do say he served as a consultant to another vendor who had been charged with assisting in “the recovery of the Virgin Islands agency,” and for that reason, understood its problems.

A Virgin Islands newspaper reported that he had worked for Smith Real Estate Services, an Atlanta-based real estate firm, at one time. Confidential sources told AFFORDABLE HOUSING FINANCE the contracts are under investigation because Hollis is apparently a personal friend of HUD Secretary Alphonso Jackson.

In the case of the Housing Authority of New Orleans, as AFFORDABLE HOUSING FINANCE has previously reported, investigators and press reports have raised questions about why a sole source construction contract was awarded to a personal friend of Jackson’s without competition. They have also questioned the fact that Columbia Residential, a firm in which Jackson holds an equity stake, is part of a team chosen to redevelop some of the city’s old public housing.

The New Orleans and Virgin Islands contracts fall under the program area for which Cabrera was responsible, but it was unclear in mid-November whether he was under investigation for his role in those contracts. The primary focus of the investigations was believed to be Jackson.

Before joining HUD, Cabrera served as executive director of the Florida Housing Finance Corp.

He is the third high-level HUD official to leave Washington this summer and fall under a cloud of suspicion about ethical and legal lapses in contracting. Earlier this year, HUD Deputy Chief of Staff Scott Keller resigned, reportedly after coming under FBI scrutiny.

In October, Lilly Lee, deputy assistant secretary for housing, left her Washington post to relocate to Fresno. Several sources familiar with the case told AFFORDABLE HOUSING FINANCE she is the subject of an investigation into the fact that she has been paid substantial amounts of money for living expenses, in addition to her salary, on the grounds that she claimed to have been on temporary assignment in Washington after previously working in California.