The Department of Housing and Urban Development has suspended James Grier, the president of Section 8 apartment complex Mantua Gardens East in Philadelphia, Pa. from conducting business with the federal government.
HUD alleges that Grier failed to properly notify the low-income tenants who live in the apartment complex about his intent to opt out of the project-based program.
For almost thirty years, MGE received Section 8 subsidies under a housing assistance payment contract with HUD. Through this contract, MGE and its president had to give apartment dwellers one year of notification if it decided to opt out of the program. However, Grier told HUD about his decision to leave the affordable housing program in October 2011.
“By failing properly to notify their tenants, Grier and his company deprived them of an important legal right to make other housing arrangements and to spare them from the possibility of eviction,” said Helen Kanovsky, general counsel for HUD.
Since 1970, MGE agreed to a $720,000 mortgage loan insured by the Federal Housing Administration to establish and maintain a reserve account to meet emergency needs at the multifamily housing development.
HUD filed the suspension because it said Grier and MGE improperly withdrew $325,000 from reserves without HUD approval and subsequently failed to restore those funds to the company's reserve account. HUD said Grier used those funds, along with one of the development's buildings and future rent payments, as collateral for a separate loan from a financial institution, which violates FHA requirements.
Grier also submitted false and misleading financial reports to HUD by failing to note this liability, HUD said.
In addition to the immediate suspension, HUD proposed debarments to prevent Grier and MGE from participating in any other type of government-related business in the next five years.
Grier could not be reached for comment.
