HUD Consultants Were Paid $5.7 Million

TWENTY consultants earned more than $5.7 million by helping funnel much of the money in a federal housing program to developers in a handful of states that didn't need it, says a report to a United States Senate committee. Most of the 20 consultants were former Housing and Urban Development Department (HUD) employees or well-connected Republicans, said a report by HUD Inspector General Paul Adams. The consultants were paid by developers to help them get about one-fifth of the money from a HUD program to repair housing for the poor.

Meanwhile, the US House of Representatives Government Operations Subcommittee on Housing planned a vote August 2 on whether to subpoena Lance Wilson, a former aide to ex-HUD Secretary Samuel Pierce Jr. Mr. Wilson had been scheduled to voluntarily testify last week, but did not appear, saying that he wasn't prepared with legal counsel.

Mr. Adams, who conducted the study at the request of Senate Banking Committee Chairman Donald Riegle Jr. (D) of Michigan, said the well is starting to run dry for the outside consultants because of recent media attention.

One of those consultants was Fred Bush, ambassador-designate to Luxembourg, who has had $45,000 in payments withheld since April, the report said. Mr. Bush, who is no relation to the President but was the chief fund-raiser for his 1988 campaign, was paid $215,000 to help land HUD funds for developers.

Joseph Strauss, a former aide to Mr. Pierce, made nearly $1.7 million - more than any other consultant found by Adams's inquiry.

Under the HUD program, developers were eligible for tax credits and could get HUD to subsidize the rent of tenants who otherwise couldn't afford it. ``Developers often received windfall profits through tax credit syndication,'' Adams wrote. Excess payments for rent subsidies could cost the government more than $413 million by 1999, he said.