Suit charges L.A. wasting federal funds

The pipeline that channels funds from Washington to communities around the United State is frequently full of holes.But the one to Los Angeles is supposed to be leak free -- a smooth-running model of bureaucratic efficiency.

"That may be the image," says Cary Lowe of the California Public Policy Center, "but if is not borne out by the facts."

Mr. Lowe's comment is based on data turned up during a probe of the city's administration of federal housing rehabilitation programs. That probe resulted in a recent suit filed by a flock of community groups against the City of Los Angeles and the federal Department of Housing and Urban Development (HUD). In the suit, filed in federal court Dec. 10, the city comes out looking like a bureaucratic sponge.

In managing its leading housing assistance program, known as the Home Opportunity Maintenance Effort (HOME), the city in one 13-month period absorbed need of funds. The city, in other words, spent more than 68 percent of the HOME budget to manage the program.

The groups which filed the suit, known jointly as the Coalition for Community Development Reform, are still somewhat perplexed over the city's high administration expenses. "We're just beginning to find out where it all goes," says James Lowery of the Legal Aid Foundation of Los Angeles.

In the West Adams community in Los Angeles, for instance, five full-time staff members were retained for the HOME program even though just two applications for funds and less than 20 requests for information were being handled each week. The relatively light case load was not surprising considering that almost half of the area's residents are above the low-to-moderte income level at which the HOME program is aimed.

Top-heavy administration, say those who filed the suit, is partially attributable to vague HUD guidelines which allow local flexibility but make policing difficult.

HUD, for instance, stipulated in the 1978 amendment to the Community Development Block Grant Program that just 20 percent of the whole budget should be spent on administration; but it set no upper limit on individual programs within the broader framework. HOME money is reimbursed by block grant funds the city obtains from HUD. In 1979, spending through the block grant program was expected to total $3.75 billion nationally.

While not willing to comment directly on the Los Angeles litigation, a HUD spokesman says the action is not unusual. "We get suits all the time similar to this," he says. HUD recently won such a case in Boston and another is pending in St. Louis.

An attorney for the city says the case would hinge on interprettions of the block grant guidelines. The data in the suit, gathered by the plantiffs from city records, are probably valid, says John Mayeda, a lawyer in the general counsel division for the city. "The factual things are probably correct," he says. "We will dispute the conclusions."

The plantiffs will disagree. "It is not a matter of interpretation," Mr. Lowery says. "They are not even making the loans they predicted they were going to make."

The suit charges that during a three-year period ending December 1978 the city met just 50 percent of the goal it set for the elderly and 4 percent of its goal for families.