D.C. Mayor Vincent C. Gray’s pick to lead the D.C. Department of Housing and Community Development had an affair with a subordinate at his last job in Philadelphia but was hired anyway after an investigation debunked claims that he offered her preferential treatment, officials said.
Mr. Gray selected Michael Kelly to run the agency as part of a shake-up that sent existing director John Hall to the Office of the Deputy Mayor for Planning and Economic Development in an effort to “sharpen” the administration’s focus on affordable housing.
The administration knew about an affair that Mr. Kelly, who is married, had with an employee in Philadelphia. But its investigation of claims — outlined in multiple news reports in Philadelphia on Tuesday — that he offered her raises and promotions proved to be unfounded after officials cross-checked their information with an investigation by the U.S. Department of Housing and Urban Development, according to the mayor's office.
“Michael made a personal mistake,” spokesman Pedro Ribeiro said in an official statement. “He is a talented and committed public servant who is dedicated to expanding affordable housing in the District, and we stand behind his nomination.”
The employee who had the affair with Mr. Kelly was in the country on a work visa and left after she was passed over for a senior position, according to a source at the John A. Wilson Building.
The Philadelphia Inquirer described Mr. Kelly’s resignation Friday from a job he held since December 2010 as a “sudden and unexplained move” from a man “credited with reforms.”
His nomination in the nation’s capital must be confirmed by the D.C. Council.
Mr. Gray had intended to strengthen affordable housing initiatives — a top priority among residents who attended the mayor’s One City Summit in March — with Mr. Kelly’s hire, yet it raises the specter of vetting problems that plagued the first year of his term.
Mr. Gray’s transition team engaged in nepotism when it gave city jobs to several children of city employees and Cabinet members in early 2011, a special D.C. Council committee concluded in August.
Insufficient vetting continued to be an issue for Mr. Gray, when residency issues sank both his initial nominee to head the D.C. Board of Elections and Ethics and his first pick to serve as his deputy chief of staff in September.
Mr. Kelly, who took a pay cut from $225,000 in Philadelphia to $165,000 in the D.C. position, has a home in Takoma and served as director of the D.C. Housing Authority from 2000 to 2009.
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