FEDS WANT DRUG-GRANT FUNDS BACK FROM S.F.

Audit Rips Housing Authority, Says Money Spent On Guards, Not Programs

The grants were supposed to provide millions of dollars to keep San
Francisco's low income housing projects out of the grip of drug dealers and
criminals.

But instead, a federal audit has found that hundreds of thousands of
dollars in drug crime prevention grant money given to the Housing Authority
since 1994 was improperly spent on items that did nothing to serve San
Francisco's low income communities.

The audit, released Thursday by the federal Department of Housing and Urban
Development's inspector general, recommended that the federal government
make The City give back more than $200,000 in grant funds that it says was
improperly spent.

The audit found that:

*The Housing Authority wasted nearly $200,000 paying inflated San Francisco
Police Department billings that charged the agency overtime rates for every
hour worked by an officer assigned to the projects.

*The agency used $56,000 in drug elimination money to pay the salary of a
manager after he was forced to go on paid leave for 16 months and, thus,
did nothing to benefit the program.

*Other drug elimination grant money was used to pay part of a custodian's
salary and compensate a rent collector, though neither did jobs that had
anything to do with the program.

*The Housing Authority could not provide evidence that it used objective
methods to select drug prevention contractors to receive grant money,
giving the appearance of possible favoritism.

*Without first getting the required written permission, housing Director
Ronnie Davis took hundreds of thousands of dollars that were supposed to
pay for things like drug education programs and safety patrols by residents
and used the money, instead, to pay for armed security guards.

The audit found many instances of mismanagement of more than $3million in
grant money spent by four separate generations of housing agency leaders
since 1994, including the current Davis administration.

Little Monitoring

In most cases, the audit said, the Housing Authority did little monitoring
of programs and made no attempt to ensure that the money was being used to
accomplish anything.

"We concluded that the Housing Authority needs to improve management
practices and evaluation methods to assure the program is properly
implemented and the goals are accomplished," the audit said. "The Housing
Authority should also return certain funds."

Housing Authority spokesman Ron Sonenshine said that Davis already has
changed many of the procedures for monitoring grants and will do whatever
it takes to make the system work.

"I don't believe these problems will exist the next time HUD does an
audit," he said.

In the past, the drug program money has gone to provide such services as
after-school programs for low-income children, drug education for teenagers
and paying residents to patrol their own communities.

TURF Program

But in 1994 and 1995 much of the grant money, totaling about $1.6million a
year, was not spent. When Davis took over the Housing Authority in November
1996, he began using the money to pay for security guards and for Mayor
Brown's controversial TURF program, which uses at-risk youth to patrol the
projects.

Last November, the federal government rejected San Francisco's drug grant
application for the first time in eight years, making it virtually the only
large city housing authority in the nation not to receive the crime
prevention money.

Gen Fujioka of the Asian Law Caucus, which provides legal services to many
Housing Authority tenants, said residents have been wondering what was
happening to the drug grant money for years.

"We see a lot of need on the streets," he said. "This grant money has not
been reaching the people who need it. They get blamed for not working out
their social problems and, at the same time, the Housing Authority is
getting money for programs that the residents never see."

The audit found a host of improper charges by the Housing Authority and the
Police Department, which has been paid $1.1million since 1994 to provide
extra patrols at the projects.

It found that police overcharged the federal grant program for their
services by billing all police hours at overtime rates of more than $37 an
hour. It said the correct billing rate for the 14 full-time officers
devoted to the Housing Authority was closer to $29 an hour.

Cops To Provide Free Service

While the Police Department noted that it disagrees with some of the
audit's findings, it has agreed to compensate the agency for the money by
devoting extra service to the Housing Authority free of charge.

The audit also charged that drug elimination grants were used to cover the
payroll expenses of Housing Authority employees who had nothing to do with
the programs the grants were supposed to pay for. In one case, grant money
was used to pay $56,000 to a manager after he was put on paid leave
awaiting a termination hearing. He was simply left on the payroll for 16
months.

The audit said Davis did not explain to HUD officials why it took him 10
months after taking over the Housing Authority to hold termination
proceedings against the manager, who oversaw neighborhood relations until
1997. The manager has since been fired; he is challenging his termination
in court.

The inspector general's report found that contracts were managed in a
slipshod way that included little monitoring of costs billed to the Housing
Authority by contractors.

"Start-Up Costs'

It found that the agency had handed out $20,500 in payments to
community-based contractors for "start-up costs" without asking them to
justify what the money was to be used for.

Additionally, it found that the Housing Authority couldn't show whether it
had used proper bidding procedures to select contractors.

"The weaknesses resulted in excessive and unsupported costs and could lead
to . . . the appearance of possible favoritism," the report said.

In 1997, for instance, the Housing Authority held a bid competition for
service organizations wishing to do drug prevention work for Housing
Authority residents. The audit found that, while the agency went to the
trouble of scoring each of the 21 applicants, it then disregarded the
scores in selecting which bidders were to receive money.

The audit also criticized Davis for failing to get federal approval before
he used old grant money, much of it earmarked for community programs, to
pay for a controversial $6million program to put armed security guards in
all the projects.

Housing Authority spokesman Sonenshine said Davis believed he had the
federal government's verbal approval for the spending and did it as an
emergency measure to combat out-of-control crime in the housing projects.
"If you have an issue of crime and safety and you wait three months to do
something about it, you're going to get sued," Sonenshine said.