Los Angeles Housing department officials admitted Thursday they had erred in awarding a contract to build housing for seniors and the homeless to a firm under investigation by federal authorities.
Controller Wendy Greuel, in an audit requested by housing officials, said the department failed to adequately review an application from Bonnie Brae Village Partners to discover one of its partners, CDR Financial Planning, was under federal investigation.
As a result, the 92-unit building at 208 S. Bonnie Brae Ave. that was completed last December could not be opened because federal officials refused to issue Section 8 housing vouchers needed to cover the cost of the building.
“Once the Housing Department discovered this, they proceeded with the project, which put the city at tremendous financial risk,” Greuel said.
CDR Financial was indicted by a federal grand jury last October on accusations of rigging bids in which it was alleged firms made kickbacks to the firm to win government contracts. CDR officials have denied any wrongdoing.
The apartment complex was completed on time and on budget, officials said, but could not be opened because of the problems in getting federal approval of housing vouchers because of the inquiry into CDR.
Housing General Manager Doug Guthrie acknowledged the department had made a mistake, but said new procedures have been put in place to deal with similar problems in the future.
“We take these findings and recommendations to heart and we have already started to make changes,” Guthrie said. “Our primary goal now is to fix the problems that allowed this to go through and our priority now is to get that housing filled with the people it was meant to help.”
Contra Costa Times – April 8, 2010 – © 2010 Bay Area News Group