CUOMO SAYS HUD WILL DRIVE SLUMLORDS OUT OF BUSINESS AND IMPROVE LIVING CONDITIONS FOR RESIDENTS OF ASSISTED HOUSING

Housing Industry Comments on HUD's Inspection Initiative

WASHINGTON - New inspections of low- and moderate-income housing by the Department of Housing and Urban Development will drive slumlords out of business and create better living conditions for residents, Secretary Andrew Cuomo announced today.

Cuomo announced that the first results of a new nationwide program he initiated to inspect affordable apartment complexes subsidized or insured by HUD show that the vast majority provide good housing for families in need. The inspections show that 83 percent of the first 3,722 privately owned apartment complexes that were inspected were in good or excellent condition.

Because the inspections identified the apartment complexes with the most problems, HUD will be now be able to focus its remediation and enforcement efforts on these developments to get them to improve conditions for resident families, Cuomo said.

"HUD will no longer hand out checks to landlords without checking their performance," Cuomo said. "They will be held accountable for the funds we put in their accounts."

"Landlords who provide good housing to families in need will continue getting HUD funds and will be given more flexibility to run their developments," Cuomo said. "Slumlords who exploit the poor to get rich at taxpayer expense will have to change their ways or stop doing business with HUD."

Cuomo said that before the nationwide inspection initiative began, HUD inspections were largely subjective and ineffective, with the results frequently just filed away and never acted upon.

HUD subsidizes or insures about 45,000 apartment complexes around the country - both privately owned and owned by public housing authorities - that are home to a total of about 3.7 million low- and moderate-income families.

Cuomo launched HUD's first-ever nationwide inspection program of all 45,000 developments in October. The inspections will be completed by the end of the 1999 calendar year, and there will be regular follow-up inspections in future years.

Of the 3,722 apartment developments inspected so far, 34 percent scored above 90 on a scale in which 100 is a perfect score. Only 17 percent of the properties inspected scored below the passing mark of 60, and only 2 percent scored below 30 - indicating severe problems.

The most frequent problems found in inspections were in individual apartments. They were: walls with holes, or with chipping or peeling paint; kitchens with missing countertops or cabinets, or damaged stoves; doors that were damaged or broken; smoke detectors that were missing or inoperable; and bathrooms that had leaking faucets and pipes, or damaged or missing cabinets.

In cases where imminent health and safety violations are discovered, owners are notified immediately and are given three days to take corrective action. Some of the health and safety violations considered imminent are: leaking propane, natural gas, or methane gas; exposed wires or open electrical panels; water leaks on or near electrical equipment; and gas-fired hot water heaters that are missing or hooked up to misaligned chimneys.

The HUD inspections found that the Northeast has the highest number of HUD-assisted apartments in poor condition. Initial indications are that properties in the Northeast are four times more likely to fail or receive a poor evaluation than properties elsewhere. Much of the oldest assisted housing in the nation is in the Northeast.

Apartment complexes that score below 60 in the HUD inspection will work with one of HUD's 18 Multifamily Housing Hubs to develop plans to improve living conditions.

Developments that score below 30 will be reviewed by HUD's Enforcement Center, which was created under sweeping management reforms initiated by Cuomo. The Enforcement Center works with landlords to develop immediate and effective remedies for violations.

The Enforcement Center can take administrative or civil legal action against bad landlords, including referring cases to the Department of Justice for possible prosecution, and cutting off rental assistance subsidies under the project-based Section 8 program.

As part of management reforms launched by Cuomo, HUD established a Real Estate Assessment Center to set up and operate a consistent and effective system to inspect the Department's inventory of subsidized and insured housing. The new process uses a computerized inspection system to enable contract inspectors (sometimes accompanied by HUD inspectors) to use hand-held computers that provide for instant data retrieval, updating and reporting.

The new inspection process is totally electronic and measures properties against an objective set of criteria that HUD established in consultation with Parsons/Brinkerhoff, an internationally recognized engineering firm based in Washington, DC.

The physical inspections cover: apartment development sites, building exteriors, common areas, building systems and a randomly selected statistical sample of the apartment units in each development. Inspectors also examine and verify certificates for boilers, elevators, fire alarms, lead-based paint, and sprinkler systems.

Once complete, inspection results are transmitted via the Internet to HUD's 18 Multifamily Housing Hubs. Owners and property managers receive inspection results in the mail within five days of the scores being transmitted to the hubs, along with a three-page explanatory letter.

HUD's current inspection contract is being carried out by Philadelphia-based Building Inspection Services Company, and Dallas-based Mullens, Thomas and Bielec, Inc. The contract calls for inspecting one-third of the privately owned HUD-subsidized or insured apartments and all the buildings in each of the nation's approximately 3,400 public housing authorities.

Building Inspection Services is inspecting properties in the Northeastern third of the nation, and Mullens is inspecting properties in the other two-thirds of the country. A new contract will be awarded in March for the other two-thirds of HUD's subsidized or insured apartment complexes.

HOUSING INDUSTRY COMMENTS ON HUD'S INSPECTION INITIATIVE

Don Lange, President of the Mortgage Bankers Association of America - "We are pleased that the initial results are so positive. We believe they support our view that HUD's multifamily programs have been an extremely successful vehicle for providing decent, affordable housing for low- and moderate-income families and individuals."

Jack Murray, President of the National Affordable Housing Management Association - "The new inspections, based on objective standards developed by HUD and industry partners, prove what most of us have known for some time - better than 80 percent of the properties are in good condition and provide good housing to hardworking families and senior citizens of low- and moderate-incomes. Fully a third of the properties score above 90 percent. That is an 'A' in any situation."

Tom Downs, Executive Vice President of the National Association of Home Builders - "We are pleased that HUD's initial results confirm what we have believed all along, that the vast majority of property owners and managers are doing a good job. We appreciated the opportunity to have input into HUD's new processes and look forward to continuing to work in partnership with HUD to further improve life in government-assisted housing."

Monica Hilton Sussman, President of the National Housing Conference - "This (housing) is an aging but very valuable asset. For the first time we will now know with certainty what is needed to preserve and recapitalize this irreplaceable affordable housing resource."