Federal Funds Lost in Las Vegas

0 Comments | Insight on the News, August 30, 1999 | by Scott Rubush

Gamblers aren't the only ones hitting the jackpot in Las Vegas these days. According to the latest semiannual report from the Inspector General's Office, or IG, of the Department of Housing and Urban Development, or HUD, the department's lax enforcement has allowed the Housing Authority of the City of Las Vegas to strike it rich with millions in ill-gotten federal funds.

After audits in 1989 and 1992, the IG revealed that the housing authority -- which works closely with, though independently of, the city's government -- had misappropriated $7 million in funds intended to pay for a federal low-rent housing project.

Effectively giving the housing authority a loan after it had misused the federal money, HUD ordered the authority to repay the funds in annual installments of $220,000 during a period of five to 16 years. But the IG reports that the authority has failed to make a payment since May 1998. In January, the housing authority's executive director wrote a letter to HUD requesting that the agency forgive the outstanding debt of $3.5 million.

Housing-authority officials claim that they need the money to pay for a senior-citizens' housing program and have yet to decide if they will forgive the "loan." Meanwhile, nary a peep has been mentioned about punishing the authority for misusing the federal funds.

But the story doesn't end there. Since the IG's findings came to light a decade ago, the HUD bonanza has continued relentlessly. According to reports by the Las Vegas Review-Journal, HUD has pumped almost $300 million more into the Las Vegas area since 1994, including $239 million in public-housing funds. And in April a new HUD service office opened in the city. These days, it seems, HUD -- not the slots -- is the surest bet in Vegas.