In shadow of PHA tiff, HUD boss quits

HOUSING SECRETARY Alphonso Jackson announced yesterday that he would leave his Cabinet post amid calls for his resignation, an ongoing criminal probe of his office and a nasty dispute with the Philadelphia Housing Authority.

In a five-minute statement to HUD employees, Jackson said that he had resigned to devote more time to personal and family matters.

He had informed President Bush of his plans in a letter yesterday, he said.

Jackson's office is under federal investigation for payments of $392,000 that HUD had made to a Jackson friend hired as a construction manager in New Orleans after Hurricane Katrina.

Two U.S. senators - Democrats Chris Dodd and Patty Murray - sent Bush a letter March 20 asking him to fire Jackson.

PHA, meanwhile, has filed a lawsuit alleging that Jackson tried to punish PHA executive director Carl Greene because he nixed a development deal involving Jackson's friend Kenny Gamble.

Jackson did not mention either controversy yesterday in his resignation statement.

Instead, he touted his record of reducing homelessness, preserving affordable housing and increasing minority homeownership during his four-year tenure as housing czar.

Jackson said he would stay on until April 18 to aid in the transition to new leadership.

Within hours of Jackson's announcement, a federal judge in Philadelphia denied a motion by PHA for an injunction in its dispute with HUD.

PHA had sued the federal agency last December after HUD said it would strip PHA of as much as $40 million in federal funds.

HUD claimed that PHA was in violation of rules requiring housing for disabled residents.

But PHA has claimed that was a red herring ginned up by HUD to justify its decision to strip the money - and retaliate against Greene for nixing the Gamble deal.

PHA wanted an injunction to stay in the federal program that gave the agency that $40 million, and flexibility in how to spend it.

Without the injunction, PHA would be forced to lay off 250 workers, including police, freeze new admissions to public housing and increase rents for its 84,000 residents, the agency claimed.

U.S. District Judge Paul S. Diamond said in a 13-page opinion that PHA "offered no evidence" to support those allegations or charges that HUD was treating PHA differently from other housing authorities.

And the agency may keep the money after all. A HUD lawyer informed a lawyer for PHA on March 27 that the department would develop a transition plan over the next year to minimize any "unnecessary and adverse consequences to PHA's residents and programs."

As a result, PHA will retain its funding flexibility until March 31, 2009 - into the next presidential administration.

Greene hopes that by then Congress will pass legislation that preserves funding flexibility for local housing authorities with less rigid requirements.

Greene also said that Diamond's decision gave HUD a momentary "tactical victory" - but that PHA's lawsuit continues.

"We're still in the game to serve citizens for another day and Jackson is going on to greener pastures," Greene said, adding that perhaps HUD would now focus more on its public-housing responsibilities and less on contracts and deals for Jackson's pals.

Sen. Bob Casey said Jackson's resignation was a "positive development" because public confidence in Jackson's leadership had "eroded."

Jackson has been sharply criticized for allegedly helping friends - and punishing enemies. The FBI has been examining the ties between Jackson and a friend who was paid by Jackson's department as a construction manager in New Orleans.

And he's been scrutinized for his handling of the PHA matter ever since e-mails exchanged by two of his top deputies in January 2007 surfaced, suggesting that HUD tried to punish Greene by threatening to cut off funding.

Jackson told both Sens. Arlen Specter and Casey at Senate hearings last month that he was unaware of the e-mails until very recently.

According to court filings in the lawsuit, Jackson asked then-Mayor John Street in December 2006 to intercede with Greene about transferring $2 million of vacant city property in South Philadelphia to Gamble's Universal Homes for a minimal fee.

Street informed Greene of the call, but Greene explained to Street, the PHA chairman, that he wouldn't transfer the property to Gamble.

Jackson has declined to answer questions about the redevelopment deal, and Gamble has insisted that he did nothing improper, noting that neither he nor his company is a party to the lawsuit involving PHA, Jackson and HUD.

The deal never happened and the property is still vacant. *