It seemed like a good homecoming for a well-respected bureaucrat charged with improving and increasing D.C.’s stock of affordable housing. But now it looks like Michael P. Kelly, appointed yesterday by Mayor Vince Gray to run the D.C. Department of Housing and Community Development, won’t have a very welcome homecoming after all.

Philadelphia’s ABC6 is reporting today that Kelly—who once worked under mayors Anthony Williams and Adrian Fenty, then for New York City and suddenly resigned from the top post at the Philadelphia Housing Authority last week—was involved in an affair with a subordinate:

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.

Kelly himself resigned Friday citing family reasons.

The news obviously isn’t good for Gray’s administration, which has already stumbled on a number of appointments (see Mallett, Robert and Pringle, Andi) and is constantly fighting the impression that it remains under siege.

But Gray officials told the City Paper that Kelly, who is married, fessed up to the affair while denying that the woman in question was given any raises as a consequence. Sex scandals with subordinates are never a good idea for senior government officials, but if it just stopped at the sex, then it’s something of a personal problem for Kelly. (NBC4’s Tom Sherwood tweets that HUD has cleared Kelly of any claims of improper raises.)

This afternoon Gray put out a statement on Kelly’s appointment:

Prior to his appointment, Mr. Kelly shared that he had had a consensual relationship with a woman at the Philadelphia Housing Authority. The U.S. Department of Housing and Urban Development investigated the matter and determined there was nothing more to the story. Michael made a personal mistake. He is a talented and committed public service who is dedicated to expanding affordable housing in the District, and we stand behind his nomination.

D.C. Council Chair Phil Mendelson similarly said that the affair would not disqualify Kelly from the post.

In taking the D.C. job, which he will start on July 2, Kelly took a $60,000 pay cut.