David Riley

@rilzd

Blaming controversy and double standards from federal housing officials, Adam McFadden said Wednesday he will resign as interim executive director of the Rochester Housing Authority, effective Saturday.

His announcement came less than a week after a U.S. Housing and Urban Development official directed the authority board to take immediate action to terminate McFadden's contract, saying that his role violated federal conflict-of-interest rules because he also serves on the City Council.

McFadden acknowledged no conflict and said instead that he was stepping out of the spotlight so the board can move on and focus on residents.

"Due to the controversy and discourse to date, it's become a huge distraction," he said at the first authority board meeting since HUD's letter arrived.

McFadden said afterward that he went into the interim job knowing it would be a "crap storm."

The board accepted McFadden's resignation, but applauded him. Chairman George Moses said McFadden had been disparaged because he addressed problems that people don't like to talk about, including poverty.

Much of the controversy, however, focused on the process that the authority board used to name McFadden director of the agency. It oversees roughly 2,400 public-housing units, millions of dollars and subsidies for tens of thousands of people.

The board on Oct. 14 fired Executive Director Alex Castro and immediately hired McFadden as interim replacement. A majority of board members had been freshly appointed by Mayor Lovely Warren since she took office in January.

The Housing Authority board later cited concerns about the length and cost of Castro's contract. McFadden, a political ally of Warren, had no background in public housing, but insisted that he had the vision and administrative background for the job.

As controversy brewed, Warren asked McFadden to step down. He declined, but said he would not seek a permanent appointment to the position.

On Wednesday, McFadden said if he had been offered the permanent job anyway, he would have reviewed it, "but I wasn't thinking that way."

While the city's Board of Ethics found no problem with McFadden's dual roles, HUD did.

Lisa Pugliese, director of HUD's Buffalo office, wrote that federal rules bar contracting a local official "who exercises functions or responsibilities with respect to public housing and who has an interest, direct or indirect."

McFadden questioned why HUD viewed his role any differently than that of John Accorso, who was named interim director in 2010. Accorso, a former city official, was a member of the Victor Town Board at the time.

"It seems that HUD has a different set of rules for different people," McFadden said.

A HUD spokesman said that unlike the city, Victor had no relationship with the Housing Authority.

"Mr. McFadden and the Rochester Housing Authority Board took the correct action to resolve a conflict of interest that was in violation of HUD regulations," spokesman Charles McNally said in a written statement.

However, McNally said HUD still is looking into whether the authority must reimburse any federal funds used to pay McFadden.

Also on Wednesday, the Housing Authority board approved a separation agreement with Castro.

Moses declined to discuss the terms of the deal, and Castro's attorney could not be reached for comment. The Democrat and Chronicle has filed an open records request for the document.

Moses said the board will look to appoint an interim director from within the authority. A search for a permanent appointment is set to begin Monday.

McFadden said during his brief tenure, he launched efforts to better track and address residents' complaints and to improve communication among the authority, the people it serves and the public. He said more improvements are needed: A forensic audit, better efforts to hire minority and women contractors, and diversity training.

He referenced a letter from about 50 RHA employees about a potential discrimination complaint to the Equal Opportunity Employment Council, but did not explain it in detail.

McFadden said his last day will be Saturday so he can attend a holiday dinner that he planned for residents and for which he arranged sponsors.

Moses said the authority board learned lessons from the episode — among other things, that it needs a public relations employee. But hiring McFadden was not a mistake, he said.

"We knew it would be controversial," Moses said. "We looked for who can take that hit."

DRILEY@DemocratandChronicle.com