The downsizing, which will impact the Offices of Multifamily Housing Programs and Field Policy and Management, will begin this fall and will take about 2 1/2 years to implement. All told, the initiative will save as much as $65 million annually and will affect 900 of HUD's 9,000 employees.
"HUD hits us with two reogranizations, one a much bigger one, the multifamily, and the other, a few small offices, 16 of them," said Eddie Eitches, president of the American Federation of Government Employees council, which represents most HUD workers.
Those workers were among the thousands of federal employees furloughed last Friday due to sequestration.
Eitches told the Federal Drive with Tom Temin and Emily Kopp Tuesday that his union had signed a memorandum of understanding with HUD that the number of furlough days would drop from 13 to seven, with Friday being the first of those.
"The agreement itself says HUD must agree to reduce costs through all possible means and to implement cost savings to reduce the seven planned furlough days, hopefully to zero," Eitches said. "The cost of the savings that HUD has to reap is about $28 million from these furlough days."
AFGE believes HUD's planned reorganization runs counter to that agreement.
"Now the cost as you're going into those reorganizations is substantial," Eitches said. "And we've filed a group grievance stating that this violates, in fact, our memorandum of understanding as to furloughs."
Eitches said the agency can't reorganize until it reduces the remaining six furlough days to zero.
In addition, AFGE's analyses show that HUD's plan to close 40 to 50 multifamily housing offices around the country would cost a substantial amount of money, Eitches said, and it would also cause undue harm multifamily employees.
In Baltimore, for example, HUD signed a lease with the General Services Administration, with 35 percent of the office space being taken up by multifamily services.
"The lease is five years," Eitches said. "What HUD plans to do is move all of these multifamily people to New York City. Relocation costs are substantial. It could be up to $500,000 a person. And when these employees, assuming that it goes through, end up in New York City, they'll have to be paid more because locality pay is much more substantial in New York City."
Eitches also said that HUD had not thought-through what it would mean to close the 16 small offices.
"HUD decided to keep an office in every state, so there are offices like in Casper, Wyo., with one or two people," he said. "Now, those offices might very well be able to be closed and offices like in Camden, N.J., and Springfield, Ill., which don't have any employees left."
He explained that many of these employees are "outstationed," meaning they report to an office outside of the area where they work. This means that their local office may not have anyone attached to it and, therefore, could possibly be closed.
"If the cost savings is basically a building savings, as HUD won't have to lease this space, then there's no reason why these employees couldn't remain in their localities as outstationed employees," Eitches said. "And that would hold true for multifamily."
Rather than relocating all of the multifamily employees, Eitches said many of them could be outstationed, which would be more cost effective.
"There's no reason why the employees in Norfolk, (Va.), instead of moving to New York and costing HUD a lot of money couldn't remain in Norfolk [and] serve, of course, Virginia but report to New York," he said. "It's not like we'd object to a change in reporting structure to make it more rationed. What we really don't understand is why people have to physically move, especailly when HUD alleged the developers, that is, the multifamily developers never go into HUD offices anyway."
Employees working in multifamily services deal primarily with developers and large multifamily housing projects.
"That operation has been actually quite successful," Eitches said. "It's returned $1.2 billion to the Treasury and decreased the overall risk to the FHA multifamily insurance fund. They're doing more work. They're doing it better and now, what HUD wants to do is basically disrupt their whole lives."
While Eitches admitted that he was not in a position to negotiate how HUD wants to structure its operations, he thinks it makes more sense to outstation the employees rather than force them to move.
"If HUD wants it, it can still outstation employees and do everything," he said. "A lot of employees will not go. HUD will pay buyouts. HUD's estimated $20 million for HUD office-space alternations, $6 million for office closure costs, $16.8 million to $33.6 million in personnel relocation costs and there's an unassessed cost of relocation of workfiles in these located in these offices, $13.9 million to $20.8 million in buyouts and terminal leave costs. So, it's got all of these costs associated with this and, frankly, none of these costs need to be incurred and HUD can still have its model."
AFGE has filed demands to bargain on both of the operations. The union will meet to address its group grievance on Thursday.
"The group grievance is very, very critical. … They can't engage in these expenditures until they end those furlough days," Eitches said. "They can't do the reorganization until we no longer have those six remaining furlough days."