Federal officials wrested control Friday of the troubled Philadelphia Housing Authority, a move that followed the spectacular flameout of the agency's long-acclaimed director.
Embattled board members of the Philadelphia Housing Authority resigned and ceded control of the agency to the U.S. Housing and Urban Development agency amid investigations of secret sexual harassment payouts at the agency, purported slush funds and more than $33 million in outside legal fees since 2007.
In a rare move, HUD officials had publicly asked all five members to resign in the aftermath of last year's firing of longtime executive director Carl Greene and the ensuing federal investigations of his long tenure.
Greene's firing followed revelations that the $350,000-a-year director was facing foreclosure on his luxury townhouse and that the agency had secretly agreed to pay nearly $900,000 to settle sexual harassment complaints against him.
"He came to Philadelphia with such high hopes ... and failed so spectacularly," City Controller Alan Butkovitz, who had controlled two of the five board seats, said at Friday's news conference.
Chairman John F. Street, the former mayor, had vowed just a day earlier to retain control of the housing agency despite the public pressure from HUD, which provides most of its $345 million annual budget. But he changed his mind amid repeated discussions with HUD officials.
"It's really time for us to go," Street said moments before the unanimous vote.
Estelle Richman, a former city managing director and state welfare official now working at HUD, will serve as the receiver in Philadelphia, HUD Deputy Secretary Ron Sims announced at an afternoon news conference. Michael Kelly, recently appointed interim executive director, will continue in the job.
"This is an important moment for an important agency," Mayor Michael Nutter said. "The focus has to stay on the residents, the families, the children, the tenants."
The housing authority administers more than 14,000 affordable housing units serving 80,000 residents.
HUD began a forensic audit of the agency Monday. Sims declined to comment Friday on the timing of the board members' departure, except to say it was time to restore confidence at the agency.
The first hint of Greene's personal problems came last summer when news broke about his mortgage troubles.
Greene, then 53, pleaded distractions, but the bad news kept coming.
A string of women say Greene sexually harassed them and retaliated at work if they turned him down. Both men and women complained of shakedowns in the form of weekly payroll deductions that they say funded lobbying and lavish parties for the boss. And the agency, despite a legal department of its own, spent more than $33 million for outside legal work from 2007 to 2010, including millions to a law firm that employed Street's son.
Street defended his votes to send work to the law firm, insisting Friday that he had gotten a waiver to do so and that his son, a young associate, did not profit from the work.
A framed plaque near the board room has Street praising Greene for revitalizing the city's public housing stock after he arrived from Detroit in 1998. But Street's relationship with Greene had frayed by the end, when Greene had a female agency lawyer who worked solely for Street monitored to see if she was doing agency work. And Greene has since filed a defamation suit over comments Street made amid the troubles last year.
Greene underwent residential treatment for stress and other undisclosed conditions after his ouster and has rarely surfaced in public since then. Clifford Haines, the lawyer representing him in his wrongful termination lawsuit, declined to comment Friday. The lawsuit seeks at least $600,000 for the two years remaining on Greene's contract.
The other board members who resigned are City Councilwoman Jannie Blackwell, labor leader Patrick Eiding, elderly tenant representative Nellie Reynolds and Debra Brady, the wife of U.S. Rep. Bob Brady, D-Pa.