06/19/2012 01:52 pm ET Updated Dec 06, 2017

Michael Kelly, Man Appointed To D.C. Housing Post, Leaves Philadelphia Amid Sex Scandal Report (UPDATED)

WASHINGTON -- The man District of Columbia Mayor Vincent Gray nominated on Monday to be the director of the Department of Housing and Community Development in the nation's capital is leaving the Philadelphia Housing Authority under a cloud of suspicion.

As The Washington Post reported, Monday's naming of Michael Kelly, who resigned from the D.C. Housing Authority three years ago, was "an unexpected shake-up of a major city agency.":

[Kelly's] wish to return meshed with Gray’s desire to move more aggressively on affordable housing measures, according to two administration aides with knowledge of the shake-up. At a citizens summit hosted by the mayor in February, Gray (D) rated affordable housing as the top priority in city government, easily trumping education, crime and other concerns.

When Kelly resigned from his Philadelphia job on Friday, he did so for "personal reasons," which were not explained at the time.

Now, Philadelphia's WPVI-TV is reporting that Kelly's departure has been tarnished by an alleged sex scandal:

PHA staffers had complained to HUD (U.S. Department of Housing and Urban Development) officials that Kelly was having a consensual affair with a woman he had appointed to a senior staff position and, that despite having little or no credentials for the post, he was approving her for large pay increases.

After questions began to be raised, the 38-year-old woman who was here on a work visa suddenly resigned three weeks ago and went back to her native country.

WRC-TV/NBC4 reported Tuesday afternoon that Kelly disclosed the relationship to Gray and that the mayor's office "cleared the appointment with the federal Housing and Urban Development (HUD) which oversees federal funding for housing in the nation."

WTTG-TV/Fox5's Matt Ackland relays:

The D.C. Council must give Kelly's nomination a thumbs up in order to make the appointment official, the Post reported.

The Examiner's Alan Blinder reports that the new information about Kelly's departure from Philadelphia wouldn't necessarily scuttle his nomination, quoting interim D.C. Council Chairman Phil Mendelson (D):

The Philadelphia Inquirer reported that Kelly, who has maintained a home in the nation's capital, was taking a $60,000 pay cut with the DHCD post.

Watch WPVI-TV's report here: