HUD took over a Missouri town’s housing authority 22 years ago - now they're broke and residents are suffering

This article was produced in partnership with The Southern Illinoisan, which is a member of the ProPublica Local Reporting Network.

Twenty-two years ago, the U.S. Department of Housing and Urban Development seized control of the public housing authority in Wellston, one of Missouri’s poorest towns. The authority had been beset by mismanagement, financial problems and unsafe buildings.

The goal of the federal takeover was to stabilize the authority and then return it to local control.

That hasn’t happened. Instead, the authority, still under federal control, is broke and its residents are being pushed out. The authority will be shut down on Jan. 1.

The move will be a crushing blow not only to some families who do not want to leave the city, but to Wellston itself. Some 400 public housing residents — a fifth of the city — are set to lose their homes sometime next year. They will receive vouchers that they can use to subsidize rent in the private market, but there’s a lack of affordable housing options in Wellston and limited choices in the St. Louis area.

“HUD, nationally, you failed us and you’re putting us in a worse predicament,” Mayor Nate Griffin told a HUD official during a closed-door City Council meeting in late November. A reporter stood outside the room and could clearly hear the discussion.

What’s happening in Wellston is emblematic of HUD’s longer-term shift away from public housing, advocates and even some HUD officials say. For years, the federal government has cut funds to public housing programs. The Trump administration has doubled down on those trends by proposing massive cuts to programs that pay for operations and repairs.

Diane Yentel, president and chief executive officer of the National Low Income Housing Coalition, said she and fellow advocates sense that, under President Donald Trump and HUD Secretary Ben Carson, the department is retreating from its core mission of supporting public housing.

“We’ve been hearing this for a few months and seeing signs,” she said. Yentel noted that HUD recently sent a letter to housing authorities nationally calling on them to look toward the private sector to help fund expensive repairs under a program started under the Obama administration, or to demolish and sell old buildings and issue residents Section 8 vouchers, which help subsidize their rent in the private sector.

Struggling rural communities and small cities often aren’t able to participate in these programs because they can’t attract the interest of private developers and suffer from a critical shortage of private rental options.

HUD’s failure in Wellston also shows the difficulty the agency has had in recent years turning local authorities around, even when it is in charge.

HUD has put housing authorities in administrative receivership only about 20 times since 1985, when it first did so in East St. Louis, Illinois, across the Mississippi River from Wellston. In August, The Southern Illinoisan and ProPublica revealed that Carson had ended HUD’s 32-year federal receivership of East St. Louis’ housing authority and hailed it a success last year, even though most of the small city’s properties had recently failed their federal inspections.

In 2016, HUD took over a troubled housing agency based in Cairo, Illinois, the state’s southernmost town. Confronted by the housing authority’s mounting financial problems and unsafe living conditions, HUD last year decided to shutter two large public housing complexes there, saying they were beyond repair.

Most recently, federal officials have discussed the potential of placing the New York City Housing Authority, the nation’s largest, into receivership after a raft of problems. Citing what happened in East St. Louis and Cairo, 11 members of New York City’s congressional delegation recently wrote to Carson opposing a HUD takeover in their city.

Wellston would mark the second time that the agency has exited a receivership by abolishing a housing authority (the first was in Orange County, Texas, in 2004), and the first time HUD has proposed demolishing or selling all of the public housing complexes in the process.

During the closed-door City Council meeting last month, Daniel Sherrod, a HUD Midwest regional official, blamed the authority’s financial woes on a recent spate of copper wire thefts from air conditioning units, vandalism and apartment fires, which drove up insurance costs, and on tenants who had racked up hundreds of dollars in past-due rents.

But ultimately, he said the authority’s aging buildings are in need of extensive repairs and “the federal government is not investing money in public housing like they used to.”

In a statement on Thursday, HUD spokesman Jereon Brown said his agency began making plans to return the housing authority to local control in 2017, to be overseen by a board of commissioners appointed by the mayor and trained by HUD. But increased security risks around the properties and the withdrawal of a top executive director candidate necessitated a “change in strategy,” he said. Brown declined comment on Sherrod’s statement behind closed doors about the challenges posed by years of federal budget cuts to housing authorities like Wellston’s.

More generally, HUD officials have said they are trying to transform public housing, moving away from their reliance on decades-old dilapidated structures in need of massive repairs and toward public-private partnerships. Carson has suggested raising tenant rents and has held listening tours to encourage more private landlords to accept vouchers as public housing complexes are sold or demolished.

HUD’s departure comes as the agency’s inspector general prepares to send teams of agents out to examine dozens of “troubled” housing authorities nationwide, which it has never done before, officials said. HUD labeled the Wellston Housing Authority as troubled in 2015. It barely passed an assessment the following year.

This summer, the inspector general released a stinging report criticizing HUD for waiting so long to take action in Cairo, where residents lived for years in unsafe buildings as local managers misspent federal funds. Officials at HUD headquarters refused to sign off on a takeover as they worried over political repercussions, the financial cost of receivership and a lack of staff knowledge about how to run a housing authority, the report said. “Ultimately, we want to help HUD to prevent the next Cairo,” said Darryl Madden, spokesman for the Office of Inspector General.

At Wellston’s council meeting, Sherrod, who is the HUD director over public housing in Illinois, also mentioned what had happened in Cairo, saying HUD did not want to repeat its mistakes.

“Cairo, Illinois, was a huge failure — a huge failure,” Sherrod said. He told the council that Wellston’s buildings are in better shape than Cairo’s were, but without much hope for federal investment in public housing, the situation could rapidly deteriorate. “Instead of waiting for the housing to fall apart like it did in Southern Illinois, this is the most prudent thing we can do,” he said.

The mayor directed a reporter from The Southern to leave the room after Sherrod announced that his presentation was intended for a closed executive session. But the walls are thin at City Hall, and most of the meeting could be heard from the hallway. (A handful of other citizens in attendance, who were not part of the official presentation, were allowed to stay.)

City officials in Wellston had a decidedly more optimistic view than those at HUD. Like in other cities, Wellston officials felt that they could make additional progress when decisions were being made at a local level, and they wanted the opportunity to try on behalf of their citizens. “It’s pretty much a done deal,” Griffin, the mayor, told The Southern in the fall of 2017, about the prospects of returning the authority to local control. “That is awesome for us.”

But in response to the mayor’s criticism of HUD for allowing the housing authority to fail, Sherrod called it a “combined failure.” He noted that a former housing authority executive director was indicted this August on a federal charge of stealing tenant rent payments and marking relatives’ rents as paid when they were not. She has pleaded not guilty.

“I lost sleep making this decision,” he told them.

In his statement on Thursday, HUD spokesman Brown said Wellston’s mayor and the City Council had unanimously agreed that it is best for the city and its residents to transfer their housing authority’s property to a neighboring housing authority on Jan. 1. He described the plans Sherrod outlined to the council about the demolition and sale of all apartment complexes as “tentative.”

During the closed-door meeting, council members asked if they had a say in the dissolution of the housing authority, and they were told no. That night, Sherrod asked them to approve a resolution that stated they could have their land back after the public housing properties were demolished. The resolution they signed included a line saying they agreed with HUD’s plan, but in an interview Thursday, the mayor said he and other council members were “backed into a corner.

“They told us: You support what we want to do, or you have no say-so about the future of your city’s land — period,” Griffin said.

With the end of the housing authority weeks away, community leaders are concerned about losing so many people at once and how it will affect their hopes of rebuilding Wellston.

“It’s a national policy attack on public housing,” said Farrakhan Shegog, who was among the five members named to an advisory committee late last year as HUD was preparing to return the housing authority to local control.

Wellston is the poorest city in St. Louis County. About 44 percent of residents live below the poverty line, and more than half of the city’s children. The city’s population has shrunk by 75 percent since the 1950s, and its financial struggles have grown more extreme in recent years. In 2015, cash-strapped Wellston dissolved its troubled police department and a neighboring department took over patrolling the streets.

Among those who will have to find a new home is Herman Lee White.

Until he moved to Wellston about 15 years ago, White said he had never lived in public housing. But at the time, White, now 75, said he took stock of his finances — he was then driving forklifts and trucks for a living — and realized this was the only way he could ever retire.

When HUD officials called tenants to a meeting in October to let them know that they may have to move, White was startled and filled with dread at the thought of packing up all of his belongings. As a young man, White wanted nothing more than to move about the country. He marched for civil rights in Mississippi and Alabama. He drove a taxi in Pasadena, California. He built tires for Goodyear in Akron, Ohio. But now, he’s tired of moving.

He assumed this is where he would spend his final years.

Wellston grapples with high crime, he said, but neighbors look out for one another, especially the seniors. Many of them live alone, and White said that if someone hasn’t been seen for several days, a neighbor comes knocking. He worries that he may end up in a neighborhood that is less safe and less familiar. White, who suffers from chronic obstructive pulmonary disease, said his doctor is only a couple of miles away.

“They’re putting us at a real inconvenience,” he said. “If you want to shut some of it down, that’s up to you. But we don’t want to move.”

Beyond concerns about the loss of housing here, Shegog said he doesn’t believe that HUD is providing residents the information they need to ensure they receive all the benefits they’re entitled to if they’re forced to move.

In preparing for this action, tenants told Shegog the housing authority has begun eviction proceedings on numerous tenants who owe hundreds of dollars — thousands, in some cases — in back rent, he said. Shegog said that the agency has told these tenants they will not be able to access their rental vouchers until they pay. But most cannot come up with this kind of money quickly, he said.

In a Facebook post announcing his resignation from the advisory committee, Shegog called the plan to move residents and demolish or sell all of the apartments a “manufactured crisis, which HUD played a role in creating.”

A HUD official said the housing authority filed the notices in order to encourage tenants to come into the office to arrange a payment plan.

Legal advocates also have been frustrated with HUD.

“We’re certainly concerned about how fast everything is moving and the fact that it seems like things are happening behind closed doors,” said Susan Alverson, the co-managing attorney of the housing program of Legal Services of Eastern Missouri, which represents low-income clients. “Secrecy and lack of transparency is bothersome when we’re talking about federal money and public housing.”

Because the city is so distressed, Quintella Stevenson, who moved in only eight months ago, said she has mixed feelings about HUD’s decision. “Wellston is like a family,” she said of neighbors who watch out for one another, but Stevenson said she also worries about her children playing outside because of crime. Stevenson was among a number of families who said they were excited to learn about being able to access a voucher, because of the flexibility that it provides. But she’s also worried about finding a place large enough for her family of nine in a neighborhood that offers the safety and opportunities she desires for her children.

Most of the nearly 7,000 tenants whose rent is subsidized by vouchers managed by the St. Louis County Housing Authority live north of Delmar Boulevard. The “Delmar Divide,” as it’s known, separates poor, majority African-American communities like Wellston from more prosperous majority white neighborhoods in the southern part of the county.

The divide is stark. Wellston, for all of its challenges, sits just miles from million-dollar mansions, a university campus and premier regional medical facilities. That’s why community leaders see so much potential here.

Losing so many people at once may prove too much, though. “This is the beginning of the end of Wellston,” Shegog said.