MTW PHAs Have Higher Legal Costs than Other PHAs

HUD’s Office of the Inspector General (OIG) recently reported that PHAs participating in the Moving to Work (MTW) demonstration have significantly higher costs for legal services than PHAs that are not part of the demonstration. The OIG also asserts that HUD didn’t provide adequate oversight of the MTW agencies to ensure that their legal costs were reasonable and necessary.

From FY 2010 through FY 2015, 2,992 PHAs spent $590.7 million on legal costs, while 35 MTW agencies spent $131.3 million. MTW agencies accounted for 22 percent of the total legal costs, but represented just 1.2 percent of the PHAs. Of the 20 PHAs with the highest overall legal costs, nine were MTW agencies responsible for 47 percent of the total legal costs at the 20 PHAs. The average legal service cost per unit at MTW agencies was significantly higher than at comparable non-MTW PHAs:

• $333 per unit at very large MTW PHAs, compared to $169 per unit at very large non-MTW PHAs;
• $251 per unit at large MTW PHAs, compared to $177 per unit at large non-MTW PHAs; and
• $727 per unit at medium-sized MTW PHAs, compared to $151 per unit at medium-sized non-MTW PHAs.

The OIG audited three of the 39 PHAs currently participating in the MTW demonstration and found that records couldn’t support at least $9.2 million of the $16.5 million the three spent for outside legal services between October 2007 and September 2012. The three MTW agencies audited by the OIG were Chicago, District of Columbia, and Pittsburgh.