In his sworn testimony, Secretary Pierce stated that he had never directed Deborah Dean or anyone else to fund a particular project:

..

Mr. SHAYS.
Did you ever ask Mrs. Deborah Gore Dean to
fund a particular project and convey that to anyone else?

Mr. PIERCE. Not that I recall. I don't remember telling her to fund any-- I never told these people to fund anything. I might give them a-- (emphasis added)

Mr. SHAYS. I'm not sure what-

Mr. PIERCE. Say some project is-- look into it and see what you think of it and if it's a good one. If it's not, don't.

Mr. SHAYS. So-

Mr. PIERCE. That was a general way in which I approached all

of these.

Mr. SHAYS. You never said, I think this is a good program and
I think you should fund it? You never said that?

Mr. PIERCE. No. I don't-

Mr. SHAYS. In your entire eight years there?

Mr. PIERCE. I don't believe so.

(I Tr. 227)

However, at our hearing on July 14, 1989, Shirley Wiseman, former HUD General Deputy Assistant Secretary and Acting Assistant Secretary for Housing, testified under oath that Secretary Pierce had phoned her and directed her to fund a Moderate Rehabilitation project, Durham Hosiery Mill, in North Carolina.

Ms. Wiseman testified that her professional staff had reviewed the Durham Hosiery Mill project and strongly recommended against approval because of cost, site safety, and other factors:

[T]he project professional staff

was so violently opposed by the it required separate subsidies, it would have required mod rehab and either HODAG or UDAG, and there would have to be waivers, and the cost appeared to be exorbitant in the opinion of the professional staff. (7/14/89 Tr. 27)

She reported receiving two telephone calls from Deborah Dean asking that the project be reviewed and "sent forward, " i.e.,

5

approved. According to Ms. Wiseman, in her last conversation with Dean concerning the Durham Hosiery Mill project, she told Dean that she could not approve it:

Mr. LANTOS. What was her response?

Ms. WISEMAN. Just that she thought I should fund it, that I knew the Secretary wanted it funded...

Mr. LANTOS. Ms. Deborah Dean told you that Secretary Pierce wanted the project funded?

Ms. WISEMAN. Yes sir.

(7/14/89 Tr. 24)

Ms. Wiseman testified that she did nothing further on the Durham Hosiery project and between two and five days later, she received a phone call from Secretary Pierce:

Mr.

Ms.

Mr.

LANTOS.

.. Now, can you, to the best of your recollection, tell us what exactly Secretary Pierce told

you?

WISEMAN. Yes, sir. It was a very short conversation. Heasked me if I had received the Durham packet and had Deborah spoken with me, and I said yes, I had received it, and yes, Deborah had spoken with me, and he said-the Secretary said I want the project funded, and-(emphasis added)

"I

LANTOS. Those were his exact words, as you recall? want that project funded"-- or words to that effect? Ms. WISEMAN. I believe that is the exact words. You know it could be-

Ms. WISEMAN. But he said I want the project funded. I said I can't fund it, Mr. Secretary, and he said, well, I want it funded, and I said, well, I am sorry, I can't fund it, but I will send it upstairs to you, and that was the end of the conversation.

Mr. LANTOS. And you did?

Ms. WISEMAN. Yes, sir.

(7/14/89 Tr. 26)

After Ms. Wiseman left HUD, her successor, Janet Hale was given the funding documents for the Durham Hosiery Mill project on her first day in office, and was asked to formally sign them:

6

Mr.

LANTOS. Alright, SO Ms. Dean told you to fund this project?

Ms. HALE.

Mr. LANTOS.

Yes, sir.

Can you recall the phrasing that was part of that directive?

Ms. HALE. The Secretary wanted the project funded.
I had his authorization, and I should move forward
with the funding.

Mr. LANTOS. That is what Ms. Dean told you?

Ms. HALE. Yes.

Dean said the

Mr. LANTOS. Your testimony is that Ms.
Secretary wanted this project funded, and you should
sign the funding documents?

Ms. HALE. Yes, sir.

Mr. MARTINEZ.

Did she [Ms. Dean] say that the project is approved, sign it and forward it?

Ms. HALE. Congressman, I received a piece of paper
called a "rapid reply, a part of our process, that
was the authorization to tell our folks to go ahead
and cut the funding documents to the field. That
had the Secretary's signature on it.

(7/14/89 Tr. 38-39)

Mr.

MARTINEZ.

But on this project, do you know of anyone other than Mr. Pierce and Deborah Dean who thought the project was good, who wanted the project?

Ms. HALE. To my knowledge, there was no one else in support of the project within the building.

(7/14/89 Tr. 51)

the

After the Durham Hosiery Mill project was approved, developers sought several waivers from usual HUD requirements to go forward, one because the project was too close to the railroad tracks, another because it called for rent 132% above ordinary rent levels, and another waiver relating to the occupancy level. Ms. Hale testified that she was concerned about the requested waivers and attempted to talk directly with Secretary Pierce:

Mr. LANTOS.

Why did you want to talk to him?

7

Ms. HALE. I wanted to again express the concerns I had
about the waivers that I was being asked to sign.

** * *

Mr. LANTOS. And it is reasonable to conclude that you
requested the opportunity of meeting with the
Secretary .
because you felt that what you were

told to do was really not right?

Ms. HALE. I guess I wanted to be sure that Deborah or
the Secretary understood, having it be now my
signature that would be on those documents, that
there was tremendous opposition and that, in fact,
although these waivers were legal, they were within
the bounds of the authority for the Assistant
Secretary to waive, that, again, the project
continued to have opposition from the housing part
of the Department.

Mr. LANTOS. And you shared that opposition?

Ms. HALE. I asked to see him. I had told Debbie of
that concern, and was told that the Secretary wanted
the project done. (emphasis added.)

(7/14/89 Tr. 43-46)

Secretary Pierce's sworn statement that "I never told these people to fund anything" is further contradicted by the documents relating to an award of mod rehab units for "Project Dignity" in St. Louis, MO. Secretary Pierce received a memorandum, dated August 30, 1984, from Thomas B. Evans, Jr. a partner in the law firm of O'Connor and Hannan, urging HUD approval of 303 moderate rehabilitation units for the Homer G. Phillips site, part of the implementation of "Project Dignity" (Attachment 1). On that same day, August 30, 1984, Secretary Pierce sent the following

handwritten note to Deborah Dean:

(Attachment 2)

I talked to Barksdale about this. He is to get 203 units for this project by the first part of October. The balance 100 units

will be supplied by the city of St. Louis...

Follow up with Barksdale on this.

SRP

On October 9, 1984, Ms. Dean sent the following letter to Thomas Evans: (Attachment 3)

8

Dear Tommy:

We are expecting to send out our Moderate Rehabilitation units for FY 1985 sometime near October 20, 1984. Please make sure that all of the proper requests and applications for the 203 units going to Project Dignity are in the office of Multifamily Housing, U.S. Department of Housing and Urban Development by that date so I can process the papers quickly.

Thank you for dropping in the other day. It is always a pleasure to see you and I'll be speaking to you again sometime near the HODAG rounds.

With best wishes.

Very sincerely yours,

Deborah

Deborah Gore Dean

Executive Assistant to the
Secretary.

At a subcommittee hearing on October 13, 1989, Gerald Carmen, former head of the General Services Administration (GSA), testified that he had discussed a mod rehab project with Secretary Pierce, the Pebble Creek project in Arlington, Texas in which he was one of the developers. (10/13/89 Tr. 140-147). At one of the earlier subcommittee hearings we heard testimony about moderate rehabilitation applications languishing at HUD, bureaucratic delays, and too much red tape. James Watt spoke about "paralysis by analysis." (I Tr. 372) Thus, it is noteworthy that the Pebble Creek project was approved by HUD officials in little more than two weeks, and apparently before an application had been filed with HUD by the local public housing authority (PHA). (Attachments 4-16)

In an April 7, 1987, memo, Deborah Dean told Secretary Pierce with respect to Mod Rehab: "Demery, Dorsey and I met today. Brooke and Carmen are set." (Attachment 9) Since mod rehab funds are supposed to be requested by a local PHA and distributed to that PHA for competitive bidding, it should not have even been referred to as "Carmen."

Hunter Cushing, former HUD Deputy Assistant Secretary for Multi-Family Housing Programs, appeared before the subcommittee on June 29, 1989. Prior to that hearing, Mr. Cushing transmitted to the subcommittee staff an advance copy of his prepared statement, with the express understanding that by doing so he did not waive