PHILADELPHIA -- The federal government took charge of all functions of the Philadelphia Housing Authority on Wednesday, including hiring and firing, contracting and daily management.
The Department of Housing and Urban Development made the move with the concurrence of Mayor Edward G. Rendell, City Controller Jonathan A. Saidel and the four other members of the PHA board. Mr. Saidel, the board chairman, announced Wednesday that he would resign from the board.
HUD's decision, after PHA failed for years to address the squalid living conditions of thousands of public housing tenants, came just as a bruising political brawl was threatening to split the agency apart.
HUD Regional Administrator Michael A. Smerconish appointed Elton Jolly, the executive vice chairman of OICs of America, a job-training organization, as HUD's "special master" to manage the authority. Mr. Jolly, a former Philadelphia school principal, is also chairman of a related organization that manages property in six states.
Mr. Jolly said his goals were simple. "We will do what the Housing Authority has been designed to do," he said. "We will see to it that the tenants receive the benefits."
The agreement signed Wednesday by Mr. Smerconish and local officials said PHA was in "flagrant substantial default of its obligation . . . to provide decent, safe, and sanitary dwellings."
Mr. Smerconish said the action fell short of a complete takeover because the agreement calls for the PHA board to continue intact in an advisory role and because there is a one-year limit on HUD's intervention -- though HUD is not bound by that limit.
According to the agreement, which was also signed by the PHA board members, the board will remain intact to "provide advice" and enact policies, so long as it does not interfere with Mr. Jolly's operation.
As the funding source for PHA's $200 million-a-year budget, HUD has the power to take control of the agency if it sees fit.
It has taken that step in four other cities, most recently in Chester, Pa. PHA, with more than 80,000 tenants, is the largest housing authority ever taken over by the federal government.
As the federal government was preparing to make its move Wednesday, divisions on the PHA board deepened.
Four board members, led by former Mayor W. Wilson Goode, the board's vice chairman, met Wednesday morning without Mr. Saidel and voted to fire PHA Executive Director John Paone.
It also took steps to replace Mr. Saidel as chairman.
Mr. Saidel, however, said he had canceled Wednesday's scheduled meeting and declared the meeting illegal. Mr. Paone said he was remaining as executive director; several sources said it would be up to HUD officials to decide whether he stayed.
Those board members had opposed federal intervention, but by late afternoon they had signed the agreement with HUD and stood with
other officials at a City Hall news conference where the announcement was made. City and federal sources said Mr. Smerconish told them that he was taking control with or without their concurrence.
The federal action left some board members bitter.
Board member Sandra McArthur said she believed the push by Mr. Rendell and Mr. Saidel for federal intervention had racial overtones.
"It's the first time you have a majority of people on the board who are African Americans. We are pushing for change and reform," she said. "That was very threatening to the powers that be."
PHA, which HUD officially declared "troubled" eight years ago, has become known for poor maintenance, patronage hiring and an inventory of more than 22,000 homes with a 20 percent vacancy rate. PHA is the fourth-largest public housing authority in the nation.
A recent HUD audit of the agency, yet to be released, found that in a random sample of 87 homes, all but one failed federal housing quality standards, according to sources who have reviewed the document.
The audit also found that PHA received subsidies for homes that were demolished, that the backlog of major repairs rose from 4,322 to 7,048 from 1990 to 1991 and that the number of vacant residences had more than doubled in five years.
Mr. Rendell reviewed the audit, which he termed "devastating," and said it was one factor that made him favor federal intervention. A federal criminal investigation of the agency's
contracting practices is under way.