oversight

Housing Authority of the City of Bridgeport Bridgeport, Connecticut

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-07-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    AUDIT REPORT




              HOUSING AUTHORITY OF THE
                 CITY OF BRIDGEPORT

              BRIDGEPORT, CONNECTICUT

                      00-BO-204-1004

                       JULY 5, 2000




                OFFICE OF AUDIT, NEW ENGLAND
                   BOSTON, MASSACHUSETTS



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                                                                     Issue Date
                                                                             July 5, 2000
                                                                    Audit Case Number
                                                                             00-BO-204-1004




 TO:   Donna J. Ayala, Director, Office of Public Housing, Massachusetts State Office, 1APH


 FROM:     William D. Hartnett, District Inspector General, Office of Audit, 1AGA


 SUBJECT:       Housing Authority of the City of Bridgeport
                Bridgeport, Connecticut


 We performed an audit of the Housing Authority of the City of Bridgeport Low-Income Public
 Housing and Section 8 programs. The objective of our review was to determine if the Authority
 has been operating its programs in an efficient and effective manner.

 Although the Authority is classified as a standard performer, the Authority has not operated their
 programs in an efficient and effective manner. The report contains nine findings which address:
 (1) excessive operating subsidies and failure to maintain a vacant high-rise building; (2) improper
 use of operating subsidies for development of 21 duplexes; (3) excessive vacancies; (4) need to
 improve procurement services; (5) replacement of Father Panik units which is behind schedule; (6)
 unused Section 8 certificates and vouchers; (7) duplicate Section 8 administrative fees received
 from HUD; (8) lack of internal controls for private initiative projects, and (9) lack of
 reconciliation of portable certificates and vouchers.

 Within 60 days, please provide us a status report on: (1) the corrective action taken; (2) the
 proposed corrective action and the date to be completed; or (3) why action is not considered
 necessary. Also, please furnish us copies of any correspondence or directives issued related to
 this audit.

 If you have any questions, please contact our office at (617) 565-5259.




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 Management Memorandum




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 Executive Summary
 We performed an audit of the Low-Income Housing Program and Section 8 Program operated by
 the Housing Authority of the City of Bridgeport. Our objectives were to determine if the
 Authority was operating its program in an efficient, effective and economical manner; and was
 complying with the terms and conditions of its Annual Contributions Contract, applicable laws,
 and HUD regulations.

 Our audit disclosed that the Authority did not operate in an efficient, effective and economical
 manner; and did not always comply with the terms of its Annual Contributions Contract and HUD
 regulations. In each area reviewed (occupancy, procurement, obtaining replacement units, and
 internal control) we found substantial deficiencies in the Authority’s operations that had existed
 for a number of years.


                                      Specifically, our audit disclosed:
  Audit Results
                                      •        The Authority received $750,000 of excess
                                               operating subsidies and incurred $300,000 of
                                               unnecessary utility expenses for units that have been
                                               vacant for four years. Management negligence
                                               resulted in many of these vacant units being severely
                                               damaged by vandalism, water and avian infestation.

                                      •        Poor management of a duplex development project
                                               resulted in a $2.5 million loss of Federal Low-
                                               Income Housing funds. The Authority used $2.5
                                               million of Low-Income Public Housing operating
                                               funds to complete a non-profit development which
                                               was not financially sound. Federal regulations
                                               prohibit the use of Low-Income Public Housing
                                               operating funds for development purposes. In
                                               addition, 3 duplexes were sold to families who did
                                               not qualify for housing assistance, as their incomes
                                               exceeded HUD income limits. Also, the Authority
                                               has not verified that the families living in the rental
                                               unit of each duplex meet HUD low-income
                                               requirements in 12 of 21 cases.

                                      •        A consistently high vacancy rate for Low-Income
                                               Public Housing units. Despite a waiting list of 1,900
                                               families, the vacancy rate has averaged 11 percent
                                               for fiscal years 1997 through 1999. The vacancy
                                               rate at February 8, 2000 was 13 percent. The
                                               Authority’s failure to reduce vacancies resulted in a

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 Executive Summary


                            loss of opportunity for low-income families to obtain
                            affordable housing and reduced rental income to the
                            Authority by $1 million. In addition, HUD provided
                            the Authority approximately $2.5 in operating
                            subsidies for these vacant units during fiscal years
                            1997, 1998, and 1999.

                     •      Ineffective procurement practices which include:
                            payment for services without a contract; selecting
                            contractors without competition; awarding contracts
                            with inadequate competition; unsupported sole
                            source contracts; contracts with unclear terms, and
                            awarding contracts to the high bidder without
                            proper documentation.

                     •      The Authority failed to meet the time schedule on a
                            court-ordered directive to replace 1,063 demolished
                            Father Panik Village Low-Income Housing units.
                            The $89 million replacement effort started in 1987
                            and was less than half completed at February 29,
                            2000. An outside developer hired in 1996 to speed
                            up the replacement effort has produced only 20 units
                            in three years at a cost of $1.8 million and is now
                            suing the Authority for $1.3 million for additional
                            services.

                     •      A consistently low utilization rate for Section 8
                            vouchers and certificates. The utilization rate
                            averaged 89 percent for fiscal years 1997, 1998, and
                            1999. The utilization rate at February 29, 2000 was
                            88 percent despite a waiting list of 2,600 families. A
                            utilization rate of under 95 percent is considered a
                            failing indicator by HUD. A low utilization rate
                            reduces affordable housing opportunities for low-
                            income families.

                     •      Failure to follow HUD billing procedures resulted in
                            $34,699 of duplicate billing to HUD for Section 8
                            administrative fees.

                     •      Internal control weaknesses resulted in HUD
                            subsidizing the Authority’s private business ventures
                            and a circumvention of the Authority’s normal
                            business practices.


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                               •        Reconciliation of portable vouchers and certificates
                                        is not performed timely. Therefore, the Authority
                                        does not know if $307,555 listed as accounts
                                        receivable from other housing authorities is
                                        accurate.

                               Authority officials disagreed with our conclusion that the
  The Authority Disagrees      Authority had not been operated effectively. The Authority
                               believed it was operating effectively based on favorable
                               yearly evaluations received from HUD and the fact that it
                               had increased its operating reserves to a total of $6 million
                               at September 30, 1999.

                               HUD provides its housing authorities an evaluation on a
  Authority rated a Standard   yearly basis using its Public Housing Management
  Performer                    Assessment Program (PHMAP).              Based on housing
                               authority financial and performance data input into the
                               PHMAP, HUD derives a rating between 1 and 100. A
                               housing authority is considered a standard performer if it
                               receives a score between 60 and 90. The Authority
                               received PHMAP scores in the mid 80s for fiscal year 1996
                               and in the mid 70s range for fiscal years 1997 and 1998.

                               The Authority significantly increased its operating reserves
  Budgets Consistently         during the last three years, but it accomplished the increase
  Under Run                    by under running budgeted expenditures for personnel and
                               supplies rather than by operating efficiently. Authority
                               records indicate that for fiscal years 1997 through 1999,
                               actual costs were approximately $4.1 million (10 percent)
                               under budgeted costs of $41 million. We believe that, based
                               on discussions with Authority officials, who cited a lack of
                               resources as a problem, this consistent reduction in
                               expenditures was the major cause of several of the
                               deficiencies noted above.

                               Authority officials were aware that significant weaknesses
  Management Lacks             existed for a number of years, but lacked the capacity to
  Capability                   implement effective corrective action. We attribute this
                               condition to poor management practices and a lack of
                               effective leadership. We are recommending that you apply
                               administrative sanctions against appropriate Authority
                               officials.

                               The Authority’s Board of Commissioners is ultimately
                               responsible for allowing the deficiencies to continue. The

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                     Board is responsible for assuring that the Executive
                     Director is managing the programs effectively, efficiently,
                     and economically. The Board should be held accountable
                     for improving the Authority’s operations.

                     We have provided specific recommendations to assist in
  Recommendations    correcting the reported deficiencies. Authority management
                     must change its focus from increasing its operating reserves
                     and obtaining additional business to providing needed
                     services to its existing clients -- the residents. Unit
                     vacancies must be reduced and utilization of Section 8
                     vouchers and certificates must be improved. A realistic plan
                     to complete replacement of Father Panik units must be
                     developed, implemented and monitored as to progress.
                     Finally, internal controls over procurement and accounting
                     must be followed to assure that assets are protected.

                     The findings were discussed with the Authority during the
  Findings and       course of the audit. On April 6, 2000, we provided the
  Recommendations    Authority a draft audit report for comments. We received
  Discussed          the Authority’s comments on June 1, 2000. We have
                     included pertinent comments from the Authority’s response
                     in the findings section of the report. Due to its voluminous
                     content, the Authority’s entire response was forwarded to
                     program staff under a separate letter. Pertinent excerpts are
                     included in Appendix C.




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 Table of Contents

 Management Memorandum                                                      i


 Executive Summary                                                         iii


 Introduction                                                              1


 Findings

 1    Authority Received $750,000 in Excess Operating Subsidies
      and Paid Over $300,000 in Utility Cost for Vacant Units              3


 2    Poor Management Resulted in Inappropriate Use of
      $2.5 Million In Low-Income Operating Funds                          17


 3    The Authority Needs to Reduce High Vacancy Rate                     27


 4    Procurement Practices Are Ineffective                               31


 5    Replacement of Demolished Low-Income Housing Is
      Not Being Accomplished                                              39


 6    Section 8 Vouchers and Certificates Are Under-Utilized              45


 7    The Authority Received Duplicate Section 8 Administrative
      Payments                                                            49


 8    Lack of Internal Controls Over Authority’s Private
      Initiative Account                                                  51


 9    Need to Account For Portable Section 8 Vouchers

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        And Certificates                                           61



 Management Controls                                               63


 Appendices
     A Schedule of Ineligible and Unsupported Costs                65

     B Schedule Showing Vacancy Rate and Average Days
       Vacant By Project                                           67

     C Auditee Comments                                            69


     D Distribution                                                87



 Abbreviations

 ACC          Annual Contributions Contract
 Authority    Housing Authority of the city of Bridgeport
 CCH          Creative Choice Homes
 CFR          Code of Federal Regulations
 CLS          Connecticut Legal Services
 HUD          Department of Housing and Urban Development
 HA           Housing Authority
 IPA          Independent Public Accountant
 IRS          Internal Revenue Service
 MOA          Memorandum of Agreement
 OMB         Office of Management and Budget
 PHMAP       Public Housing Management Assessment Program
 RBY          Requested Budget Year
 SEMAP       Section 8 Management Assessment Program
 UMA          Unit Months Available




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 Introduction
 The Housing Authority of the City of Bridgeport, Connecticut (Authority) is responsible for
 oversight and management of 2,503 low-income public housing units and 2,475 Section 8 units.
 The Authority has 6 family developments, 4 elderly developments, and 23 scattered site
 developments. The Authority is governed by a five member Board of Commissioners chaired by
 Carlos Garcia.

 The Executive Director, Collin Vice is responsible for administering the daily operations of the
 Authority. The administrative offices are located at 150 Highland Avenue, Bridgeport,
 Connecticut. The accounting records are maintained under the direction of Olive Harbor,
 Director of Finance.

 The public housing program was enacted by the United States Housing Act to provide decent,
 safe, and sanitary housing for elderly and low-income families. The Federal government enters
 into Annual Contributions Contracts (ACCs) with local housing authorities. Housing authorities
 are responsible for owning and operating public housing for the benefit of low-income residents.


                                     Our overall audit objective was to determine if the
  Audit Objectives                   Authority is operating in an efficient and effective manner.
                                     Specific audit objectives were to determine whether the
                                     Authority is:

                                     •   Using its resources and managing its programs and
                                         operations efficiently, effectively, and economically;

                                     •   Complying with the terms and conditions of its Annual
                                         Contributions Contract, applicable laws, HUD
                                         regulations, and other applicable directives;

                                     •   Replacing units demolished at Father Panik Village in a
                                         timely manner; and

                                     •   Adequately controlling their private initiative projects.

                                     To accomplish our objectives, we:
  Audit Scope and
  Methodology                        •   Reviewed Federal requirements including Code of
                                         Federal Regulations, HUD Handbooks, Public and
                                         Indian Housing Notices and Directives, and the
                                         Authority’s organizational and administrative structure,
                                         administrative plans and personnel policies, and
                                         recorded minutes of the Board of Commissioners
                                         meetings.

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                    •   Reviewed Independent Public Accountant (IPA) audit
                        reports, as well as monitoring reviews conducted by the
                        HUD Field Office.

                    •   Interviewed the Authority’s current and former
                        Executive Directors and applicable staff, staff from the
                        Connecticut State Office, Office of Public and Indian
                        Housing in Boston, Massachusetts, and representatives
                        of Creative Choice Homes, Inc. (Preferred Developer
                        for the replacement of the Father Panik Village units)
                        and Connecticut Legal Services.

                    •   Examined the Authority’s accounting books and
                        records.

                    •   Examined the Authority’s procedures and supporting
                        documentation for: procurement; leasing of units;
                        vacancies; calculating operating subsidies; Section 8
                        leasing of units and calculation of administrative fees;
                        replacement of units at Father Panik Village; and
                        development of 21 duplexes, known as Pembroke
                        Green.

                    •   Reviewed the Office of Public and Indian Housing’s files
                        maintained by the Connecticut State Office pertaining to
                        the Authority.

                    Audit work was performed between June 1999 and March
  Audit Period      2000 and covered the period October 1, 1997 through
                    September 30, 1999. When appropriate, the review was
                    extended to include other periods.

                    The audit was conducted in accordance with generally
                    accepted government auditing standards.




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                                                                                          Finding 1


      Authority Received $750,000 in Excess
    Operating Subsidies and Paid Over $300,000
          In Utility Cost For Vacant Units
 The Authority received $750,714 of excessive operating subsidies for 82 vacant units at Trumbull
 Gardens, Project Number CT26-P001-044. The Authority vacated the units without receiving
 required approvals from HUD which is a violation of its ACC. These units were vacant from
 three to four years. In addition, the Authority paid unnecessary utility costs of $325,054 for the
 vacated units. Due to management negligence, Building 10 of the project (64 of the 82 vacant
 units) has been severely damaged by vandalism; water leaks, and avian infestation and is not
 habitable.


                                        The Authority did not follow the HUD requirements for
  Excessive Operating
                                        calculating the operating subsidy regarding the Trumbull
  Subsidy Paid
                                        Gardens long-term vacant units. The instructions for
                                        completing HUD Form 52723, Calculation of Performance
                                        Funding System Operating Subsidy require the Authority to
                                        remove long term vacant units from the operating subsidy
                                        calculation. The instructions state: Units Months Available
                                        are calculated by taking the product of Project Units
                                        multiplied by the number of months the units will be
                                        available for occupancy during the subject fiscal year. A
                                        unit will be considered a long term vacancy and will not be
                                        considered available for occupancy in any given Housing
                                        Authority (HA) Requested Budget Year if the HA
                                        determines that the unit has been vacant for more than 12
                                        months at the time the HA determines its Actual Occupancy
                                        Percentage.

                                        Based on the above instructions, we calculate that the
                                        Authority received excess operating subsidies totaling
                                        $750,714 for Fiscal Years 1996 to 1999 (October 1, 1996
                                        to September 30, 1999); ($603,309 for 64 units in Building
                                        10 and $147,405 for 18 units in Building 11.) The amounts
                                        by year follow:


   Building Nos.   No. of Units   FY 1996   FY 1997     FY 1998     FY 1999           Total
  Building 10           64        $20,377   $ 93,309    $244,739    $244,884        $603,309
  Building 11           18              0   $ 27,215    $ 51,316    $ 68,874        $147,405
  Total                 82        $20,377   $120,524    $296,055    $313,758        $750, 714


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                              In February and March 1995, the Authority, by letter,
  Authority Instructed to     requested HUD approval for use of Father Panik Village
  Submit proposal in May      replacement funds to convert Building 10 and 11 of its
  1995                        Trumbull Gardens property into elderly housing. In its
                              response dated May 25, 1995, HUD directed the Authority
                              to submit a proposal for HUD evaluation.

                              In late 1995, the Authority stopped offering vacant units in
  Decision to Vacate Not in   Building 10 and 11 to prospective tenants. Non-elderly
  Accordance with ACCs        tenants of Building 10 were required to relocate to other
                              low-income properties operated by the Authority. Elderly
                              tenants in Building 10 were relocated to Building 11. The
                              Authority did not notify HUD of its decision to vacate
                              Building 10 until after the units were vacated, which is a
                              violation of its ACC contract with HUD. Section 4 of the
                              Authority’s ACC agreement with HUD states that, “The
                              HA shall at all times develop and operate each project solely
                              for the purpose of providing decent, safe, and sanitary
                              housing for eligible families in a manner that promotes
                              serviceability, economy, efficiency, and stability of the
                              projects…” Vacating serviceable units without a HUD
                              approved plan in place does not promote economy,
                              efficiency, and stability of the project.

                              By April 16, 1996, all 64 units in Building 10 were vacant
                              and the 18 units in Building 11 were vacant by March 12,
                              1997. The 82 units have remained vacant since March
                              1997. In addition, for Fiscal Year 2000, there are an
                              additional 9 units that became long-term vacancies for Fiscal
                              Year 2000 in Building 11.

                              The Authority’s Executive Director stated that because of
  Decision to Vacate Based    uncontrollable crime problems, the Authority decided to
  on High-Crime Rate at       vacate Building 10. The Executive Director stated that it
  Building 10                 was the Authority’s belief that conversion of Buildings 10
                              and 11 to elderly housing would solve the crime problem. It
                              was the Authority’s intention to have Building 10 vacated
                              so that conversion effort could proceed immediately upon
                              HUD approval of the conversion proposal. Once the
                              conversion of Building 10 was compete, tenants of Building
                              11 would be transferred to Building 10 and conversion of
                              Building 11 would commence. Prospective tenants were
                              not offered Building 11 vacant units as it was believed that
                              tenants in Building 11 would have to relocate in the near

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                         future. The Executive Director stated that the Authority
                         believed that HUD would approve the conversion proposal.

                         The Authority submitted a written proposal to HUD on
  HUD Has Not Approved   May 14, 1996, for the conversion of Buildings 10 and 11 to
  Conversion Proposals   elderly housing. The Authority did not receive HUD’s
                         approval. On March 17, 1999, the Authority submitted a
                         new proposal to HUD to convert Buildings 10 and 11 to
                         elderly housing with congregate care facilities. The March
                         17, 1999 proposal is currently under review by HUD.

                         In April 1999, the Authority agreed to remove the 64 units
  Subsidy Calculation    in Building 10 from its calculation of operating subsidy for
                         Fiscal Year 2000. The Authority’s Finance Director stated
                         that HUD directed the Authority to remove the units. For
                         Building 11, the Authority did not remove the 27 long-term
                         vacancies from its calculation of operating subsidy for fiscal
                         year 2000. We calculate that the operating subsidy on the
                         27 units in Building 11 would be $104,477 for Fiscal Year
                         2000. The 27 units should be removed from the operating
                         subsidy calculation. There are additional vacant units in
                         Trumbull Gardens and other Authority properties which will
                         become ineligible for inclusion in the operating subsidy
                         calculation for Fiscal year 2001, if they remain vacant. The
                         Authority should develop and implement policies and
                         procedures to remove long-term vacant units from future
                         subsidy calculation.

                         Our physical inspection of Building 10 disclosed severe
  Building 10 Is Not     damage caused by vandalism, water leaks, and avian
  Habitable              infestation. Because of this damage, Building 10 is not
                         habitable. All lighting and electrical items have been broken
                         or torn-out in the common areas of the building. Many of
                         the doors leading to apartments are broken and are no
                         longer serviceable. There were broken windows and holes
                         in the walls of the common areas that allowed birds and
                         water to enter the building. There was graffiti on every wall
                         and ceiling in the common areas. The Authority had
                         removed appliances from 58 of the 60 units we inspected.
                         There were dead birds and a significant amount of bird
                         droppings in the common areas and units that indicated the
                         problem had existed for a significant amount of time. The
                         Trumbull Garden’s Maintenance Foreman (Foreman), who
                         participated in the inspection, stated that he did not know


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                    how long the problems had existed because inspections of
                    the building were not performed.
                    Out of 60 units we inspected, 47 had deteriorating walls and
                    28 floors had water damage from leaking pipes. In 5 of the
                    units, there was standing water on the floor indicating that
                    the pipes were currently leaking. We found bird droppings
                    and/or dead birds in 21 of the units inspected. In addition,
                    our inspection disclosed that the steam heating radiators
                    were left on at a high setting in the units. The temperature
                    in most of the units ranged from 85 to 100 degrees even
                    though many of the windows were not completely closed or
                    were broken. We asked the Foreman why the heat was left
                    on at a high setting in a vacant building and he said to
                    prevent the pipes from freezing. We asked him why wasn’t
                    the water drained from the system to prevent freezing rather
                    than incurring the expense of heating and he said he didn’t
                    know how to drain the pipes. He also advised us that drains
                    in Building 10 and 11 had existed at one time but had been
                    removed when the Buildings were last renovated; therefore,
                    he had no means to drain the pipes.




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                                                                       Finding 1


                    The following pictures depict the condition of Building 10

                                         Dead Pigeons - Unit 707




                                        Pigeon Droppings - Unit 802




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                    Live Pigeons - Unit 405




                         Water Damage - Living Room
                         (Standing Water) - Unit 203)




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                                Deteriorated Wall and Damaged Floor - Unit 705




                              Periodic inspections of Building 10 by the Authority would
                              have detected the above conditions and the Authority could
                              have taken steps to prevent or limit the damage.

                              For the period April 1, 1996 to February 11, 2000, the
  Unnecessary Utility Costs   Authority incurred unnecessary utility costs of
                              approximately $325,000 for vacant units in Buildings 10 and
                              11. These unnecessary charges were for natural gas,
                              electricity, and water in Building 10 and natural gas in
                              Building 11.

                              As discussed above, during our physical inspection of
  Natural Gas                 Building 10, we noted that the heat was on in the units and
                              the temperature in many of the units was between 85 and
                              100 degrees. We also physically inspected vacant units in
                              Building 11 and found that the heat was on and the
                              windows were not fully closed in all cases. We believe that
                              having the heat on in vacant units is a waste of resources
                              and should be stopped. We estimate that heating the vacant
                              units cost the Authority approximately $255,000 for the
                              period of May 1996 through December 1999.

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                    Natural gas is used to heat a boiler that turns water into
                    steam. The steam is circulated through pipes to Building 10
                    and 11, and a project administrative building. There is one
                    gas meter for all three buildings. Most of the 82 vacant
                    units in Building 10 and 11 were vacant from April 1996
                    forward, a significant reduction in natural gas usage from
                    prior periods would be expected (64 percent). However,
                    our review indicated that the natural gas usage on the one
                    meter remained relatively consistent during the past five
                    years which supports our belief that the heat was left on in
                    the vacant units in each of the last four years. The total
                    charges for natural gas usage on the one meter were
                    $419,903 from April 1996 to December 1999. Based on
                    the size of the administrative building relative to Buildings
                    10 and 11, we estimate that 5 percent of natural gas usage
                    was for the administration building or $20,995 ($419,903
                    times .05). We calculate that $255,301 (64 percent) of the
                    remaining $398,908 was wasted based on the percentage of
                    vacant units in Buildings 10 and 11.

                    From April 1996 to December 31, 1999, the Authority
  Electricity       incurred unnecessary electrical costs of $54,320 for vacated
                    Building 10. Building 10 has an electricity meter in each of
                    the 64 units and a master meter. The master meter controls
                    lights and electrical equipment in the Building’s hallways
                    and common areas. Invoices submitted by the Utility
                    Company from April 1996 forward included a basic service
                    charges of $9.50 monthly per unit and $39 monthly for the
                    master meter. The Utility Company told us there was no
                    charge for discontinuing or reconnecting service to any of
                    the 64 units or the master meter. Had the Authority
                    discontinued service to Building 10 in April 1996, it could
                    have avoided service charges of $29,315. In addition to the
                    service charges, the Authority was billed $25,005 for
                    electricity usage on its master meter. As discussed above,
                    our physical inspection of Building 10 disclosed that there
                    were few functioning lights and no functioning electrical
                    equipment in areas the master meter services. We discussed
                    the issue with the Foreman who agreed that there was
                    nothing electrical operating in areas served by the master
                    meter. He stated that he had been unaware of the charges
                    related to the master meter and believed that the charges
                    were incorrect as nothing was in operation. We believe that
                    the Authority should discuss the matter with the Utility

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                     Company and determine if it was charged the $25,005 in
                     error or if something electrical is in use in the common areas
                     of the building.

                     As discussed above, Building 10 was completely vacated by
  Water Bills        April 1996. Since April 1996, the Authority received and
                     paid invoices for water usage at Building 10 totaling
                     $23,089. The invoices indicate water usage of 38,357
                     gallons. The Foreman stated that the only place water was
                     in use was in the rest rooms of the community meeting
                     room located on the first floor of Building 10. He indicated
                     that the room was only used several times a month and that
                     not much water was used.

                     We believe the water use in Building 10 resulted from leaks
                     in the water pipes as evidenced by our physical inspection of
                     the units, discussed above. The Authority should have shut
                     off the water to Building 10 when the Building became
                     vacant or when it received invoices showing significant
                     amounts of water usage. Discussion with the City of
                     Bridgeport Water Department indicated that there is a basic
                     service charge of $44 to turn off the water to Building 10
                     and an annual water system connection charge of $1,914 or
                     $7,656 for four years. If the Authority had turned off the
                     water to Building 10 in April 1996, it would have prevented
                     the water leaks and reduced costs by $15,433 ($23,089 -
                     $7,656).

                     The above facts demonstrate that Authority officials are not
  Management Lacks   meeting the requirements of its ACC agreement with HUD
  Capability         to provide decent, safe, and sanitary housing to low-income
                     families. Eighty-two units of public housing were taken off-
                     line despite the fact that HUD approval had not been
                     obtained and the Authority had no assurance that HUD
                     approval would ever be obtained . These units were not
                     available to low-income families for the past four years and
                     have now been damaged through negligence to the point it
                     might not be cost effective to bring the units back on-line.
                     Incurring hundreds of thousand of dollars of utility expenses
                     for vacant units shows a lack of management capability.
                     Authority officials must be held accountable for their poor
                     management.




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  Auditee Comments   The Authority agreed that long-term vacancies should have
                     been excluded from Performance Funding System
                     calculation for Fiscal Year 1996 through 1999. However,
                     they did not agree with the excess subsidy of $750,714. The
                     Authority attached a vacancy rule (PIH 96-35) which
                     entitles the public housing authority to 20 percent of the
                     Allowable Expense Level and utility costs. The Authority
                     estimated that the excess subsidy was between $200,000
                     and $300,00 and in accordance with “The Vacancy rule”
                     that amount should not be returned to HUD either, since the
                     units were vacant due to circumstances beyond their control
                     because of an uncontrollable crime problem. The Authority
                     agreed to implement policies and procedures and to adjust
                     for long-term vacant units in the future.

                     The Authority stated that heat to Building 10 could not be
                     localized and therefore, the entire building was heated to
                     provide heat to a room in the basement used for meetings of
                     the WIC program and the Girl Scouts of America. The
                     Authority indicated that upon completion of their new
                     community center the programs were transferred. The
                     Authority advised that all the broken windows in Building
                     10 were repaired to prevent birds from entering and the heat
                     could not be turned off in Building 11 since over half of the
                     units are occupied.

                     The Authority advised that they would be submitting a
                     request to HUD’s Special Application Center to designate
                     Building 11 for the elderly. The Authority stated that
                     Building 10 would be rehabilitated into low to moderate-
                     income cooperative housing and that discussions with HUD
                     had taken place.




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                      We disagree that the Authority is entitled to a reduced
  OIG Evaluation of   subsidy. As discussed in the finding, the Authority violated
  Auditee Comments    Section IV of its ACC’s by removing the units from
                      availability (deprogramming) without HUD approval. The
                      notice referred to by the Authority does not apply to units
                      that have deprogrammed.           HUD does not include
                      deprogrammed units in the subsidy calculation formula.
                      Therefore, there is no subsidy entitlement.

                      We also disagree with the Authority’s conclusion that the
                      vacancies were also due to circumstances beyond their
                      control because of an uncontrollable crime problem. In the
                      authority’s May 1996 proposal to HUD to convert Building
                      10 to elderly housing, the Authority indicated a difficulty in
                      leasing units due to a high degree of vandalism caused by
                      youngsters living in the building or visitors to the building.

                      The Authority should have taken steps to stop the
                      vandalism rather than vacating the building without HUD
                      approval. In addition, Building 10 and 11 are identical
                      buildings located adjacent to each other. Our inspection of
                      Building 11 did not show a high level of vandalism. If the
                      Authority was controlling vandalism in Building 11, then it
                      should have been able to control it in Building 10

                      We believe the Authority’s decision to heat the entire
                      Building (10) to provide a room in the basement for a few
                      meetings a month demonstrates the poor management
                      practices used by the Authority. Spending $325,000 on
                      utilities to provide space for infrequent meetings is not
                      prudent business practice. Further, although the Authority
                      indicated the programs using Building 10 were transferred
                      upon completion of the new community center, on June 23,
                      1999, the heat was on when we inspected the building in
                      February 2000. As we noted above, many of the units were
                      heated to above 90 degrees.

                      We agree that the heat should not be turned off in Building
                      11. We should have said turned down the heat in the vacant
                      units, since most of them had excessive heat.




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  Recommendations   We recommend that you require the Authority to:

                    1A.      Reimburse HUD $750,714 of excess operating
                             subsidy.

                    1B.      Adjust its fiscal year 2000 Calculation of
                             Performance Funding System Operating Subsidy to
                             reflect long-term vacant units at Building 11.

                    1C.      Implement policies and procedures to track long-
                             term vacant units and remove such from the subsidy
                             calculation.

                    1D.      Turn off the utilities in Building 10. Drains should
                             be installed so water can be drained from the pipes
                             in Building 10.

                    1E.      Verify that broken windows were repaired so birds
                             cannot enter Building 10.

                    1F.      Reduce the heat and completely shut the windows in
                             Building 11 vacant units.

                    1G.      Develop a plan for the use of Buildings 10 and 11.




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                  Poor Management Resulted in
               Inappropriate Use Of $2.5 Million
                In Low-Income Operating Funds
 In 1997, the Authority committed itself to a multimillion dollar duplex development project to
 provide home ownership opportunities to low-income families. The commitment was made
 without a contract in place; without appropriate disclosures to and approvals from the Board of
 Commissioners; without a definite source of funding, without an understanding of the potential
 contract cost, and without an understanding of what amount the duplexes would be worth. The
 Authority did accomplish its goal of constructing 21 duplexes. However, what was originally
 proposed as a project that would not require the use of Authority funds turned into a loss that
 required the Authority to use $2.5 million of its low-income public housing operating funds to
 complete the development. Federal regulations prohibit the use of low-income operating funds
 for development purposes. In addition, 3 of the duplexes were sold to families whose income
 exceeded HUD guidelines. Also, in 12 of 21 cases, the Authority cannot demonstrate that eligible
 tenants were placed in the rental portion of the duplexes.


                                     Section 4 of the Authority’s ACC agreement with HUD
  HUD Regulations
                                     states that “The HA shall at all times develop and operate
                                     each project solely for the purpose of providing decent,
                                     safe, and sanitary housing for eligible families in a manner
                                     that promotes serviceability, economy, efficiency, and
                                     stability of the projects…”. As discussed below, the
                                     development was neither economical nor efficient, and
                                     eligible families who were not qualified received benefits.

                                     The use of low-income operating funds for development
  Use of Low-Income Funds            purposes is prohibited by Federal Regulations. The United
  is Prohibited                      States Housing Act of 1937 as revised through December
                                     31, 1994, provides a clear separation between expenditures
                                     for development or acquisition cost of the lower income
                                     projects and the operation of such projects. Section
                                     9(a)(1)(A) of the United States Housing Act of 1937 states
                                     that: “In addition to the contributions authorized to be
                                     made for the purposes specified in Section 5 of this Act, the
                                     Secretary may make annual contributions to public housing
                                     agencies for the operation of low-income housing
                                     projects…”. Section 5(a)(1) of the Act provides annual
                                     contributions to public housing agencies to finance the
                                     development or acquisition cost of low-income housing.
                                     The Authority is required to use its low-income operating

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                           funds, including reserves, to benefit the tenants of existing
                           projects, not develop new projects.

                           The development project was proposed to the Authority in
  Home Ownership Was the   September 1993 by Fairfield 2000 Homes Corporation
  Goal                     (Fairfield), a nonprofit development corporation.         As
                           originally conceived, Fairfield would manage the project and
                           the Authority’s only responsibility was to provide 5 acres of
                           Father Panik Village land to Fairfield to accommodate the
                           constructing of 21 duplexes (their original proposal was for
                           309 units). The duplexes were to be sold to low-income
                           families who would live in one unit of the duplex and rent
                           the other unit to low-income families who would receive
                           Section 8 assistance. Project costs were estimated to be
                           $3.9 million in September 1996. Funding was to be
                           provided by the State of Connecticut for site development
                           and bank mortgage loans to low-income families to
                           purchase the duplexes. Fairfield provided the Authority a
                           cost and revenue estimate that projected construction costs
                           and sales at $141,700 per duplex not including a projection
                           of $879,000 from the state. Below is a typical picture of
                           one of the duplexes.


                                                Pembroke Green




                           On April 17, 1997, Fairfield sent the Authority a letter
  Value Over-estimated     stating that the duplexes had been appraised at $91,000 to
                           $92,000. The letter indicated that the projected sales price
                           had been $145,000. On May 5, 1997, Fairfield sent the
                           Authority another letter stating that estimated construction
                           costs had increased by $500,000 and that the Authority
                           would have to provide approximately $1,579,000 to

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                            complete the project. There was no explanation why the
                            value of the duplexes had been over-estimated and the cost
                            of construction had been under-estimated. The Authority
                            was under no obligation to continue the project but allowed
                            the project to continue.

                            In April, 1997, a contractor was selected to perform site
  Contractor Selected       development work based on a competitive bid of $575,000.
  Without Competition       Competitive bids were obtained from four contractors for
                            construction of the duplexes. The low bid for construction
                            was $2,825,000. Fairfield did not accept the low bid.
                            Instead, it selected a contractor that had not originally
                            submitted a competitive bid. The contract price was
                            $3,700,000 to provide modular structures which is
                            approximately $1,000,000 more than the low bid which was
                            for conventional construction.

                            The Board of Commissioner’s minutes for July 14, 1997
  Provisional Approval      show that the Board adopted a resolution to jointly develop
  Received                  the Pembroke site with Fairfield. The resolution required
                            that final commitments from HUD (for a $1.5 million
                            development grant) and from a bank (for a $1,685,555
                            construction loan) be in place to meet project requirements
                            before construction can proceed.

                            The minutes of Board of Commissioner’s July 14, 1997
                            meeting discusses the Authority using $1.5 million of
                            Authority funds, however, the use of Authority funds were
                            not included in the Board Resolution.

                            It is apparent that the Authority neglected to tell the Board
                            that construction had already started. Authority records
                            indicate that construction had already started. A letter from
                            Fairfield dated July 10, 1997 stated that construction was
                            underway, 4 days prior to the Board’s resolution requiring
                            commitments from HUD and a bank before construction
                            could start.

                            On July 23, 1997, HUD notified the Authority by letter that
  Construction Continues    its request for funding the development could not be
  Despite Funding denials   approved as submitted and that if the Authority wished to
                            pursue the matter further, it should submit a revised request
                            to conform with development regulations. The Authority
                            could provide no evidence that it submitted a revised
                            request to HUD or that it notified the Board of

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                           Commissioner’s that approval had not been obtained. Bank
                           financing was never obtained and there is no record that the
                           Board was notified of the problem. Construction was not
                           halted and the Authority’s financial liability continued to
                           increase. A contract with Fairfield was not signed until June
                           1998.

                           Our reading of the Board of Commissioner’s minutes
   The Board of            indicates that the Board did not follow-up on its
   Commissioners Did Not   requirement that construction not start until funding was
   Perform Due Diligence   obtained. Problems with the Board’s actions or lack of
                           actions include:

                           •   There was no evidence that the Board ever asked to see
                               the proposed contract with Fairfield or asked to review
                               the signed contract.

                           •   The Board did not request a legal opinion regarding the
                               release of Fairfield from financial responsibility nor did it
                               request a legal review of the contract with Fairfield. In
                               addition, a legal opinion on Fairfield’s subcontracts
                               valued at approximately $4.5 million was not obtained.

                           •   There was no evidence that the Board evaluated the cost
                               reasonableness of the project. Each duplex cost
                               approximately $236,000 and the appraised value was
                               estimated at $92,000.

                           •   The Board never adopted a resolution to approve the
                               use of low-income operating funds on the development.

                           •   The Board never adopted a resolution to proceed with
                               construction.

                           •   There was no evidence that the Board required the
                               Authority to justify why construction was proceeding
                               without funding in place.

                           The Authority did not provide the Board with all the
                           information necessary to make an informed decision. The
                           Board might not have released Fairfield from its financial
                           obligations had it been notified at an early date that 1)
                           funding was not available and 2) the Authority would have
                           to use $2.3 million of its own funds to complete
                           construction, in violation of Federal regulations. However,

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                         even though it lacked information, the Board still had a
                         fiduciary responsibility to fully understand and oversee the
                         development process which it failed to do.

                         The Authority did not enter into a contract agreement with
  Delay in Negotiating   Fairfield until June 1998, a year after construction had
  Contract               started. The Authority was paying invoices submitted by
                         contractor’s on Fairfield’s behalf up to six months prior to
                         signing a contract. These actions are contrary to HUD
                         regulations and the Authority’s policies and procedures.
                         Finding 4 of this report, discusses the Authority’s
                         procurement practices in greater detail.

                         As late as August 1999, the Board was not made aware
  Information Withheld   how much the project was going to cost the Authority. The
                         Board of Commissioner’s minutes for August 9, 1999
                         include comments by the Authority’s Executive Director
                         regarding costs on the development. In response to a
                         commissioner’s question the Executive Director stated that
                         “…we had to subsidize it and the board approved $1.3
                         million in terms of gap financing. We will not recover this
                         amount, but we will get some of the money which will be
                         put back in the reserve . . . .” This statement to the Board
                         by the Executive Director is not consistent with the facts.
                         In August 1999, the Authority had spent $2.2 of its funds
                         on the project and additional outside funding was not
                         available.

                         Three months later, the Executive Director told the Board
                         that an additional $1 million of Authority funding, over and
                         above the $1.5 million previously approved by the Board,
                         was now required. The Board minutes for the November 8,
                         1999 meeting indicate that the Executive Director told the
                         Board that cost overruns generated the need for the
                         additional funds. There was approximately $250,000 of
                         cost overruns the Authority was responsible for, not $1
                         million as the Executive Director indicated to the Board, but
                         as discussed above, it had been apparent for several years
                         that there was a total shortfall of $2.2 million based on
                         existing contracts and revenue projections.

                         The Chairman of the Board of Commissioners indicated he
  Commissioner’s         was shocked by the Executive Director’s request for an
  Comments               addition $1 million to cover cost overruns. He stated that
                         he told the Executive Director not to pay the contractors for

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                             the cost overruns because the overruns could not possibly
                             be justified, but she had stated that the contractors must be
                             paid. The Chairman stated that the Board had reluctantly
                             approved the use of additional Authority funds based on the
                             Executive Director’s assertions.
                             Again, the Executive Director provided the Board incorrect
                             information. The contractors were reimbursed for a
                             majority of the costs at the time she submitted her request
                             for additional funds to the Board.

                             Our review of the records related to the sale of the duplexes
  Ineligible Homeowners      disclosed that 3 of the 21 families who purchased the homes
                             did not meet Low-Income Program requirements. The
                             stated purpose of the project was to provide home
                             ownership opportunities to low-income families. Providing
                             opportunities to non-qualified families is not in compliance
                             with the Authority’s ACC agreement with HUD to provide
                             housing opportunities to eligible families.         Authority
                             officials stated that a sufficient number of low-income
                             families who qualified for bank loans could not be found.
                             Therefore, 3 families from the general public, who did not
                             meet income requirements were selected to purchase the
                             duplexes. Not counting land value, the duplexes cost over
                             $236,000 each to develop. The 3 non-qualified families
                             purchased their duplexes for $92,000 each. Therefore, the
                             Authority provided at least $144,000 of subsidy to each of
                             the three families or a total of $432,000.

                             The contracts with the families who purchased the duplexes
  Eligibility Not Verified   requires them to rent one of the duplex units to Section 8
                             low-income families referred by the Authority. We noted
                             that only 9 of the 21 duplexes had Section 8 families
                             assigned. The Authority had no record of who was living in
                             the remaining 12 rental units. In addition, the Authority had
                             no plan in place to annually verify tenant income or conduct
                             yearly inspection of the rental units. The Section 8
                             administrator for the Authority stated that persons living in
                             the 12 rental units were probably relatives or friends of the
                             families that purchased the homes so verification was not
                             performed.

                             The Authority has failed to assure that its goal of providing
                             rental housing assistance to qualified low-income families
                             has been accomplished. The Authority should determine if
                             the families living in the 12 units meet low-income

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                       requirements of the Section 8 program. In addition, the
                       Authority should develop a plan to annually verify income
                       and inspect the rental units.
                       As shown above, Authority management failed to operate in
  Management Must Be   accordance with its ACCs, Federal Regulations, and its own
  Accountable          policies and procedures. This project became unfeasible
                       when the appraised sales value of the duplexes dropped and
                       the construction costs significantly increased.        The
                       Authority could have ended its involvement in the project
                       when it became not feasible. Management must be held
                       accountable for their actions which resulted in the
                       unnecessary use of $2.5 million of Public Housing low-
                       income operating funds for development which is an
                       unallowable purpose.


                         The Authority did not consider the use of the Authority
  Auditee Comments       funds to build homes to be inappropriate. The Authority
                         agreed that the project cost more than was originally
                         anticipated and advised that the total cost to the Authority
                         will be $2.4 million of which $1.6 million was approved by
                         the Commissioners and also by HUD in the operating
                         budget. The Authority indicated that the balance of
                         $800,000 was subsequently approved by the Commissioners
                         and will be paid from the administrative fees earned from
                         administering the Section 8 programs.


                         The Authority did not address the two main conditions cited
  OIG Evaluation of      in this finding: 1) The Authority committed itself to a
  Auditee Comments       development project without: a contract in place to build the
                         project; a definite source of funding; an understanding of
                         the potential contract cost; and an understanding of what
                         amount the duplexes would be worth, and 2) Federal
                         regulations prohibit the use of low-income operating funds
                         for development purposes.

                         The Board of Commissioner’s minutes for November 25,
                         1997 includes comments from the prior Executive Directors
                         stating, “We are putting $1.5 million gap financing on this
                         project from the Authority to bring it into an affordable
                         posture. This is a worth while venture; it is going to be our
                         first home-ownership opportunity. Hopefully, in the future,
                         we will be able to do another one that is financially feasible.


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                      If the Authority had determined the cost to construct the
                      project and the potential sales prices of the duplexes prior to
                      construction, they would have known the project was not
                      feasible.


                    We recommend that you:
  Recommendations
                    2A.   Require the Authority to implement controls to fully
                          inform the Board of Commissioners on the financial
                          status of on-going construction contracts.

                    2B.   Require that the Authority obtain your approval to
                          use Low-Income Operating funds prior to making
                          commitments.

                    2C.   Impose appropriate administrative sanctions against
                          persons responsible for the misuse of low-income
                          operating funds.




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                  The Authority Needs to Reduce
                       High Vacancy Rate
 The Authority has not prepared vacated units for low-income tenant occupancy on a timely basis.
 There were 347 vacant units out of 2,503 low-income housing units, or 14 percent, as of October
 1, 1999, even though the Authority had a waiting list of approximately 1,900 applicants. The
 units had been vacant an average of 404 days. Authority management has been unable to correct
 the problem as evidenced by the fact that the vacancy rate has been increasing every year since
 1996. The Authority’s failure to fill vacant units on a timely basis resulted in a lack of housing
 availability for low-income families and lost rental income of approximately $1,000,000 for fiscal
 years 1997, 1998, and 1999. In addition, HUD provided the Authority approximately $2.5 million
 in subsidies on the vacant units during the three year time period.


                                      HUD regulations require Public Housing Authorities to
  Vacant Units Should be
                                      keep vacated units to a minimum to provide greater housing
  Kept to a Minimum
                                      opportunities for low-income families.         The Annual
                                      Contributions Contract, Part A, Section 4, requires the PHA
                                      to manage its projects to promote economy, efficiency, and
                                      stability.

                                      Our review of the Authority’s monthly Vacancy Control
  High Vacancy Rate a                 Reports and Secretary’s Reports indicates that a high
  Continuing Problem                  vacancy rate has been a continuing problem at the Authority
                                      since the beginning of fiscal year 1997. The number of
                                      vacancies has steadily increased. The vacancy rate at the
                                      beginning of each fiscal year were as follows:

                                                       Number of     Total Number of       Vacancy
                                                      Vacant Units         Units            Rate
                                       October 1996       122             2,588              5%
                                       October 1997       184             2,385              8%
                                       October 1998       299             2,431             12%
                                       October 1999       347             2,503             14%

                                      These figures do not include the 64 units at Trumbull
                                      Gardens High-rise Building 10, which have been vacant
                                      since April 16, 1996 (See Finding Number 1). Fourteen
                                      percent, or 347 of 2,503 low-income public housing units
                                      at the Authority were vacant as of October 1, 1999. These
                                      347 vacant units remained vacant an average of 404 days.
                                      See Appendix B for the vacancy rate and the average
                                      number of days that these 347 units remained vacant within
                                      each project.

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                            The Authority’s failure to occupy these vacant units in a
                            timely manner hinders its primary mission of providing
                            decent, safe, and sanitary housing to low-income families.
                            Based on Authority data, we calculated that the Authority
                            lost approximately $1,000,000 of rental income from
                            October 1996 to September 1999 as a result of vacant units.
                            In addition, HUD provided the Authority operating
                            subsidies of $2.5 million for these vacant units.

                            The Authority was been aware of the vacancy problem for a
  Authority Has Been        number of years through the annual Public Housing
  Unable to Correct Known   Management Assessment Program (PHMAP) scores.
  Problem                   However, the Authority was unable to reduce vacancies. In
                            fact, while aware of the problem the vacancy rate has
                            increased from 5% to 14%.

                            The PHMAP grades for vacancies for FYs 96 through 98
                            were as follows:

                                   FY 96                  FY 97                  FY 98
                                    D                      F                      D

                            The Authority’s maintenance policy states that it is the
  Maintenance Department    Authority’s goal to prepare a vacated unit for occupancy
  Not Meeting its Goal      within 30 days or less. Authority data indicates that the
                            maintenance department is averaging over 120 days to
                            prepare a unit or four times the stated goal of 30 days or
                            less.

                            The Director of Maintenance stated that when he took his
  Maintenance Department    current position in 1999, the maintenance department had
  Has Fallen Behind         not been able to prepare vacant units for occupancy on a
                            timely basis. The Director of Maintenance and the
                            Executive Director advised that in late 1999, contractors
                            were hired to reduce the backlog of unprepared units. The
                            Director of Maintenance stated that once the backlog is
                            reduced, the Maintenance Department should be able to
                            meet its goal of turning around units within 30 days or less,
                            with its current staff. The Executive Director advised that
                            the Authority will be conducting a time and motion study on
                            Maintenance Department efforts to determine if additional
                            staff need to be hired.




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                            The Tenant Selection Office does not process a sufficient
  Tenant Selection Office   number of applicants to reduce the backlog of vacant units.
  Has Fallen Behind         Based upon the Authority’s Secretary’s Reports, between
                            October 1998 and September 1999, there were a total of
                            376 units vacated at the Authority and only 328 new
                            applicants were placed. The Tenant Selection Coordinator
                            stated the Tenant Selection Office is understaffed and that
                            the Authority should hire an additional two people to
                            increase the number of applicants processed. Currently, the
                            Tenant Selection staff consists of 4 staff members, including
                            the Tenant Selection Coordinator. The Executive Director
                            advised that the Authority will be conducting a time and
                            motion study of the Tenant Selection Office staff to
                            determine if there is a need for additional staff.

                            In addition, the Executive Director stated that Authority
                            will change it procedures regarding offers to applicants.
                            New applicants will be made one offer only, and the offer
                            will be for a unit in a family development. If the offered unit
                            is rejected, the applicant will be placed on the bottom of the
                            waiting list. Currently, applicants are offered, depending on
                            availability, either a scattered site or family development
                            unit and are allowed up to three rejections prior to being
                            placed at the bottom of the waiting list. Scattered sites
                            units, which applicants and tenants consider to be more
                            desirable housing because of less congestion and crime, will
                            only be offered to good tenants who now occupy units in
                            family or elderly developments. Good tenants being defined
                            as tenants who pay their rent on time, maintain their unit,
                            and are in good standing with the community. The
                            Executive Director believes that the new policy will reduce
                            the number of rejections thereby increasing the number of
                            applicants placed.

                            According to the Authority’s Executive Director, a major
  Applicants and Tenants    factor in the high vacancy rate is crime. High crime rates at
  Worried About Crime in    certain family developments cause higher tenant turn over
  Family Developments       rates and increased rejections by applicants. In an attempt
                            to reduce crime, the Executive Director stated that the
                            Authority had hired two Bridgeport Police Officers to patrol
                            the family developments during the day on an overtime
                            basis. The Executive Director believes that the two officers
                            have not solved the problem and has prepared a proposal to
                            the City of Bridgeport to have full time police presence at
                            its family and elderly sites.

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                             As discussed above, the Authority recognizes that the high
  Proposed Actions Need to   vacancy rate needs to be reduced and is in the process of
  be Implemented             developing corrective action plans. However, since they
                             have been aware of the problem for a number of years and
                             have been unsuccessful in reducing vacancies, we believe
                             that they need to develop an aggressive plan which will
                             address all of the cited problems, i.e. time it takes the
                             Maintenance Department to prepare a unit for occupancy;
                             need to process more applicants by the Tenant Selection
                             Office; change in Admission Policy to reduce rejections; and
                             steps to reduce crime at family projects.


                             The Authority advised that it recognized the need to reduce the
  Auditee Comments           vacancy rate and developed a corrective action plan addressing
                             the four main factors affecting the rate: personnel factor; tenant
                             selection factor; crime factor, and public perception factor.
                             The Authority indicated that they plan to submit monthly
                             progress reports to the Office of Public Housing.


                             HUD should closely monitor the Authority to assure that the
  OIG Evaluation of          corrective action plan will reduce the vacancies in a timely
  Auditee Comments           manner.



  Recommendations            We recommend that you:

                             3A.      Require the Authority to submit their corrective
                                      action plan for your staff’s review and approval.

                             3B.      Require the Authority to submit periodic progress
                                      reports on its progress in reducing the number of
                                      vacant units.

                             3C.      Consider     imposing    administrative    sanctions
                                      including removing the vacant units from the subsidy
                                      calculation if the high rate of vacancies is not
                                      reduced in a reasonable amount of time.




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                                                                                        Finding 4


           Procurement Practices Are Ineffective
 The Authority’s procurement practices are not in compliance with HUD regulations and its own
 procurement policy. The deficiencies include: (1) paying for services without a contract; (2)
 contractors selected without soliciting competition; (3) contract awarded with inadequate
 competition; (4) failure to justify sole source contracts; (5) executing contract without having
 clear understanding of contract terms; and (6) awarded a contract to the high bidder without
 documentation. These problems occurred because Authority staff did not have a full
 understanding of procurement procedures. As a result, HUD has no assurances that the
 Authority’s procurement process is fair, equitable, and that the lowest responsive price was
 obtained.


                                     Part A, Section 5 of the Annual Contributions Contract
  HUD Requirements
                                     (ACC), requires the Authority to comply with all provisions
                                     of the ACC and all applicable regulations issued by HUD.
                                     Procurement regulations are contained in the Code of
                                     Federal Regulations (24 CFR 85.36). These regulations
                                     require the Authority to:

                                     •   Conduct all procurement in a manner to provide full and
                                         open competition. (24 CFR 85.36(c) (1))

                                     •   Maintain sufficient records to show the history of a
                                         procurement. The records should include the rationale
                                         and justification for the method of procurement, the
                                         type of contract, the selection of the contractor, and the
                                         basis for the contract price. (24 CFR 85.36 (b)(9))

                                     In addition, HUD Handbook 7460.8 REV-1, paragraph 4-
                                     26 (E) states if a housing agency receives fewer than three
                                     proposals, the Authority should analyze the proposals and
                                     document the reason for the poor response. Depending on
                                     the results of the analysis, the Authority may either reject
                                     the proposals and issue a revised solicitation or proceed to
                                     evaluate the proposals.

                                     The Authority’s procurement policy states that contracts are
  Housing Authority’s                to be in writing, specifying desired services and costs. It
  Procurement Policy                 also states that for purchases and contracts in excess of
                                     $25,000, the Executive Director or delegate shall use formal
                                     advertising methods (unless otherwise justified) and shall
                                     solicit bids by advertisement in at least one newspaper of
                                     general circulation, or by mailing solicitations to available

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                                         service providers. The Authority’s procurement policy
                                         dictates that each procurement based on a sole source shall
                                         be supported by a written justification for using such
                                         procedures. Furthermore, the justification shall be approved
                                         in writing by the Contracting Officer. In addition, the
                                         reasonableness of the price for all procurements based on
                                         noncompetitive proposals shall be determined by performing
                                         a cost analysis.

                                         We reviewed 14 of the Authority’s procurements/contracts
  Fourteen Procurements                  relating to services. For each of the 14, we identified at least
  Reviewed                               one violation of HUD regulations and/or Authority’s
                                         procurement policy as follows:

                  Vendor                        Service           Costs - Note 1         Deficiencies
   Columbia Energy Services              Natural Gas               $ 688,553                 2,5
   Prindle Leasing Company               Trash Removal                406,086                1, 3
   J R Mont Services                     Trash Removal                249,602                1, 2
   Joseph Siciliano                      Legal                        194,433                1, 2
   Diversified Properties Improvements   Painting                     128,060                1, 2
   Leroy Moye Painting & Decorating      Painting                      25,553                1, 2
   Liberty Construction                  Painting                     118,170                1, 2
   Morrison Quality Services             Painting                     149,619                1, 2
   Bliss Exterminator Company            Pest Control                 155,156                1, 2
   Connecticut Elevator Company          Elevator                      84,265                  4
   Aeco, Incorporated                    Elevator                      29,251                  4
   Thyssen Eastern Elevator              Elevator                     159,778                  4
   Schindler Elevator Corporation        Elevator                      42,821                  4
   Creative Choice Homes, Inc.           Hope VI Application           90,000                  6
                               Totals                              $2,521,347                 23

                                             Note 1:

                                             Costs represent either contract amount or actual cost for
                                             the period, January 1, 1998 to December 31, 1999,
                                             except for Prindle Leasing which represents amount paid
                                             without benefit of a contract for period June 1, 1996 to
                                             December 31, 1999 and Creative Choice Homes, Inc.,
                                             who was paid in 1997.

                                             Deficiency Explanations:

                                             1.      Paying for services without a contract.

                                             2.      Contractors selected without full and open
                                                     competition.


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                              3.     Contract awarded with inadequate competition.

                              4.     Failure to justify sole source contracts.

                              5.     Executing contract without having clear
                                     understanding of contract.

                              6.     Contract awarded to high bidder without
                                     justification.

                           We found eight occurrences where no contract existed for
  No Contracts in Place    services provided. The service providers include: four
                           painting contractors; two trash removal companies; a pest
                           control company; and a provider of legal services. The
                           Authority paid the contractors a total of $1,350,994 for the
                           period January 1, 1998 through December 31, 1999.
                           Without a contract in place, there is no basis to determine if
                           services provided are in accordance with contract terms or
                           that amounts billed are reasonable. In addition, there is no
                           basis to evaluate and settle legal issues. Not having
                           contracts in place puts the Authority at risk for over billing
                           and inadequate service.

                           The Chief of Procurement advised that the Authority should
  Authority Lacked
                           have contracts in place for all services but due to time
  Resources to Negotiate
                           constraints, she had been unable to negotiate contracts. The
  Contracts
                           Authority needs to develop procedures to assure that
                           contracts are in place prior to delivery of services.

                           The Authority contracted for services with eight companies
  Contractors Selected     (four painting contractors, a pest control company, a trash
  Without Competition      removal company, a provider legal services, and an energy
                           service company) without using full and open competition.
                           The Authority paid these eight contractors $1,590,398
                           during the period January 1, 1998 through December 31,
                           1999. Without adequate competition, there is no assurance
                           the lowest possible cost was obtained for the services
                           received.

                           The Chief of Procurement stated that she was aware that
  Authority Aware But      contracts should be competitively awarded but due to time
  Chose Not to Act         constraints had not been able to develop plans and
                           specifications necessary to solicit proposals. In addition,
                           she stated the Authority had been doing business with the


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                            same contractors for a long period of time and was happy
                            with the services provided and the service rates.

                            The Authority did not follow proper procedures when it
  Contract Awarded with     awarded a contract for trash removal to Prindle Leasing
  Inadequate Competition    Company. Even though the Authority properly advertised
                            the contract for bid, Prindle Leasing Company was the only
                            firm that submitted a bid proposal. When the Authority did
                            not receive an adequate number of proposals, it did not
                            follow required procedures before awarding the contract.
                            The Authority is required to: document the evaluation
                            process; document the reasons why only one firm submitted
                            a bid proposal; justify why it was not necessary to re-bid; or
                            document that they performed a cost or price analysis
                            verifying the reasonableness of the price. Because the
                            above procedures were not performed, there is no assurance
                            that the lowest possible price was obtained for the services
                            received.

                            The Chief of Procurement advised that she was not
  Lack of Knowledge Cited   completely knowledgeable regarding all procurement
                            procedures and believes she needs additional training in
                            order to fully understand all the procurement procedures.

                            The Authority does not maintain records that would justify
  Sole Source Contracts     using a sole source to provide elevator maintenance and
  Not Justified             repair services. The Authority entered into sole source
                            contracts with four elevator companies who were paid a
                            total of $316,115. The Chief of Procurement states that the
                            Authority believed that using a sole source to provide the
                            service was required as only one particular elevator
                            company would have access to the parts necessary to
                            maintain its brand of elevator. However, the Authority does
                            not have support for its belief that a particular brand of
                            elevator can only be serviced by the company that built the
                            elevator. In addition, the Authority does not have records
                            showing the rationale for the method of procurement,
                            selection of contract type, contractor selection and the basis
                            for contract price as required by 24 CFR 85.36.(b)(9).
                            Also, the Authority’s procurement policy provides that if
                            only one responsive bid is received, the award shall not be
                            made unless a cost or price analysis verifies the
                            reasonableness of the price. The Authority had not
                            performed a cost or price analysis.


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                             The Authority entered into a $2 million, three year contract
  Lack of Understanding of   with Columbia Energy Services for natural gas without
  Contract Terms             having a clear understanding of the terms of the contract.
                             Because it did not understand the terms, it could not
                             determine if amounts billed by Columbia Energy Services
                             were reasonable. The contract pricing was based on a
                             different gas usage measurement than was measured by the
                             Authority’s gas meters. The Authority did not pay invoices
                             for five months of service because it could not reconcile gas
                             usage listed on the billing invoices to gas usage listed on its
                             gas meters. In addition, there was a penalty clause in the
                             contract that did not describe what the penalty would be if
                             contract terms were not met. The Authority needs to
                             implement procedures to ensure that it does not enter into a
                             contract until contract terms are clearly stated and fully
                             understood.

                             The Authority awarded a contract to Creative Choice
  Contract Awarded to High   Homes, Inc. (CCH) for $90,000 to develop a Hope VI
  Bidder Without Support     application. The Authority received 2 proposals in response
                             to their request for proposals. The proposal from CCH was
                             for $115,000 the other proposal was for $50,175.

                             According to the minutes to the Board of Commissioners
                             meeting dated June 18, 1997 the Authority, “decided to
                             meet with both firms to see whether they would be willing
                             to join their efforts in order to prepare the best possible
                             application and enhance our chances of being selected.
                             Both firms agreed to our proposed plan.” The minutes
                             went on to explain that both proposals had their strengths
                             and weaknesses. The minutes indicate that CCH was
                             chosen as the lead developer for a proposed fee of $90,000.
                             The other firm was to serve as a local planner/architect,
                             subject to reaching a satisfactory agreement with CCH. The
                             Director of Development advised that CCH did in fact use
                             the other firm as a subcontractor to develop the application.

                             When procuring services by competitive proposals, HUD
                             Handbook 7460.8 REV-1, paragraph 4-23A. provides that,
                             “A written plan for evaluating technical and cost proposals
                             should be established and an evaluation review process
                             established before the RFP (Request for Proposal) is issued.
                             Failure to take this action until after the solicitation is issued
                             may give the appearance of favoritism toward one or more
                             contractors....The technical evaluation requires a detailed

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                         evaluation plan to be successful. This plan shall include a
                         rating sheet for each offeror, which lists each of evaluation
                         criteria and the weight assigned....The rating sheets should
                         require the technical evaluator to assign both numerical (or
                         similar) ratings and narrative justifications to support the
                         ratings given.”

                         The Authority could not locate any documentation to
                         support their evaluation of the two proposals received for
                         developing the Hope VI application. The Director of
                         Finance advised that the Authority procedures for this type
                         of contract award are to evaluate and score the proposals
                         using rating sheets. The Director of Finance advised after
                         discussing with the former Executive Director and Director
                         of Development that no one could locate the documentation
                         to support their evaluation or who performed the
                         evaluation.

                         The Authority did not follow HUD’s or its own
    Authority’s Staff    procurement      policies   and    procedures     for   the
    Not Trained to       procurements/contracts reviewed. The Authority’s Chief of
    Handle Procurement   Procurement and Director of Maintenance, who are
                         delegated responsibilities for procurement of maintenance
                         supplies and maintenance services, were not sufficiently
                         trained to handle these responsibilities. The Authority
                         drafted a revised Procurement Policy in November of 1997.
                         However, the Chief of Procurement and Director of
                         Maintenance did not maintain a copy and begin following
                         this policy until after we began our audit. The Authority’s
                         former Executive Director stated that the Authority never
                         bothered to bid competitively for another attorney because
                         of the attorney’s long history with the Authority. It has
                         become a common practice at the Authority not to solicit
                         bids/proposals and execute new contracts for services
                         provided by companies with a long history at the Authority.


                            The Authority generally agreed with the finding and
  Auditee Comments          recommendations and provided the actions taken and/or
                            planned to correct the ineffective procurement practices.




  OIG Evaluation of
   Auditee Comments
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                      Once fully implemented the actions proposed by the
                      Authority appear adequate to correct the cited deficiencies.




  Recommendations   We recommend that you instruct the Authority to comply with
                    the Federal Procurement Regulations, including:

                    4A.    Requiring the Authority to solicit bids for all
                           services exceeding $25,000 which are not under
                           contract.

                    4B.    Executing contracts with the lowest responsive and
                           responsible bidders.

                    4C.    Maintaining documentation supporting the basis for
                           contract awards, including history of procurement
                           and appropriate analysis.

                    4D.    Requiring the Authority to provide appropriate staff
                           sufficient training with regard to procurement
                           regulations.




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                     Replacement Of Demolished
                        Low-Income Housing
                     Is Not Being Accomplished
 In 1990, the Housing Authority of the City of Bridgeport(Authority) was directed by the United
 States District Court of Connecticut to replace all units demolished in the Father Panik Village
 Low-Income Housing Project (Father Panik). The Court ordered Settlement Agreement as
 modified in September 1993, required the Authority to replace all 1,063 units by March 31, 1997.
 HUD provided the Authority $89 million of development funds for the replacement of 818 units.
 The remaining 245 units were replaced with Section 8 Project Based Certificates. As of March 1,
 2000, only 421 units of Public Housing had been replaced at a cost of approximately $43.8 million
 and only 41 of the 245 Section 8 Project Based units have been leased. As a result, 601 low-
 income families have not had access to affordable housing.


                                      In September 1993, the Court ordered that all units be
  Replacement Pace is                 replaced by March 1997. The following schedule indicates
  Behind Schedule                     the number of public housing units replaced by year. At the
                                      end of 1997, the Authority had only completed 328 of the
                                      public housing units and 41 of the Section 8 Project Based
                                      units or 35 percent of total required units. The Authority
                                      has averaged 32 public housing replacement units per year
                                      for the 13 year period since the replacement began.

                                                            Units        Cumulative Units
                                            Fiscal Year    Replaced         Replaced
                                               1987          52                52
                                               1988          69               121
                                               1989          51               172
                                               1990          10               182
                                               1991           0               182
                                               1992          10               192
                                               1993          18               210
                                               1994          31               241
                                               1995          40               281
                                               1996          26               307
                                               1997          21               328
                                               1998          43               371
                                               1999          48               419

                                      The Authority was unable to meet the Court ordered
  Authority Unable to Meet            replacement schedule. The Authority’s Executive Director
  Court Ordered                       stated that the replacement was slowed because it was
  Replacement Dates                   difficult to find properties available for low-income
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                             programs, particularly in non-impacted neighborhoods. The
                             Executive Director advised that there is virtually no
                             undeveloped land in the City of Bridgeport and very little
                             existing properties in non-impacted areas which are suitable
                             for public housing.

                             HUD regulations require that low-income housing be built
                             in neighborhoods that are not depressed so property values
                             can be maintained. HUD also allows development in
                             impacted areas if the housing authority can document that
                             the area is being revitalized and HUD approves their request
                             for a determination of overriding need. The Executive
                             Director advised that in addition to the difficulty in locating
                             eligible properties other mitigating factors also delayed the
                             replacement of the public housing units, such as:

                             •   change in development method in the early 1990’s from
                                 purchasing and renovating condominium projects to the
                                 Turnkey method of development - this change delayed
                                 the process until the Authority could learn what HUD
                                 expected in the applications for the Turnkey Projects.

                             •   difficulty in dealing with local groups and local and
                                 federal representatives.

                             •   difficult and time consuming process of getting approval
                                 from all interested parties, including local groups and
                                 officials, Connecticut Legal Services, and HUD.

                             In 1995, the Plaintiffs (displaced tenants of Father Panik)
  Developer Hired to Speed   filed a motion with the Court citing the lack of progress by
  up Replacement Process     the Authority in meeting the performance schedule in the
                             1993 Amended Settlement Agreement. In a effort to settle
                             the suit, the parties (Plaintiffs, Authority and HUD) agreed
                             to hire a Preferred Developer to manage the replacement of
                             the Father Panik units. The Authority chose Creative
                             Choice Homes, Inc. (CCH) to be the Preferred Developer
                             and entered into a contract with CCH on August 16, 1996.
                             Subsequently the Authority entered into a Memorandum of
                             Agreement (MOA) with the Plaintiffs’ legal representative,
                             Connecticut Legal Services (CLS), regarding the type and
                             location of units and additional services to be provided. As
                             the Authority’s Preferred Developer, CCH was responsible
                             to follow the requirements of the MOA. The Authority and
                             CLS executed the MOA on February, 27 1998.

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                         The MOA envisioned that entire impacted neighborhoods
  MOA is Unworkable      would be revitalized using a combination of funding from
                         HUD, the State of Connecticut, the City of Bridgeport and
                         private sources. CCH estimated that additional funding
                         requirements from non HUD sources for the revitalization
                         totaled approximately $85 million. Each of the entities
                         contributing funds were part of the planning process.
                         Ultimately, the revitalization effort failed due to the lack of
                         funding from other sources.

                         The contract goal for CCH was to complete at least 350
  CCH Produces Only 20   units by August 1998. At the end of 1999 CCH had only
  Units                  completed 20 units and had an additional 10 units in
                         process. The Authority proposed a settlement agreement of
                         $1.8 million to terminate the contract with CCH. We issued
                         a separate report on the proposed settlement recommending
                         that the agreement not be approved.             See Audit
                         Memorandum No.: 00-BO-101-0801. CCH subsequently
                         sued the Authority for breach of contract and is seeking
                         $1.3 million in damages, $500,000 less then the proposed
                         settlement agreement.

                         The Authority plans to manage the replacement process
  No Formal Plans to     from now to completion. Currently the Authority has 114
  Complete Replacement   units in process in various stages. The Authority does not
                         yet have a specific plan as to cost and where, when and
                         what type of replacement units will be developed for the
                         remaining 487 units. Further, the Authority does not know
                         how they will overcome the problems that delayed
                         replacement in the first place i. e., locating existing
                         properties in both impacted and non-impacted areas that are
                         suitable for public housing. Although, there are no formal
                         plans, the Executive Director advised that she is totally
                         committed to having all of the replacement housing
                         complete or under contract within 2 years and completely
                         finished within 3 years.

                         We believe that HUD should be involved in this new
                         planning process from the start as the Authority cannot
                         explain how it will overcome the problems that have
                         delayed the project. HUD should also assess whether the
                         Authority, as currently staffed, has the capability to create
                         and accomplish a realistic replacement plan in a timely
                         manner.

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  Auditee Comments      The Authority advised that, since the revitalization efforts
                        envisioned in the Memorandum of Agreement did not
                        succeed, the Authority is prepared to move forward with
                        the Father Panek Village replacement program. The
                        Authority submitted the following documentation to
                        support their plan to replace the demolished units:

                               Staffing Plan

                               Unit Production Timetable

                               Replacement of Public Housing Units Report

                               Pipeline Properties

                               Status of Project Based Section 8 Certificates

                               Father Panek Village Replacement Housing
                               Summary


                        The Authority’s plan indicates that they will complete 399
  OIG Evaluation of     public housing replacement units in a 2 to 3-year period
  Auditee Comments      while only hiring one construction supervisor and
                        contracting the services of a consultant architect. However,
                        in the previous 13 years, the Authority only replaced 419.
                        There is no discussion or explanation from the Authority to
                        indicate how they could increase production so quickly or
                        remove the obstacles that have delayed the project over the
                        years.

                        Your staff should review the Authority’s plan and determine
                        if it is feasible to complete 399 units in 2 to 3 years with the
                        suggested staffing.



  Recommendations     We recommend that you:

                      5A.      Require the Authority to develop a realistic plan,
                               including a schedule for completion, for your staff’s
                               review and approval.

                      5B.      Once a plan has been approved, analyze whether the
                               Authority’s staff is capable of implementing the plan.

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                          If not, additional staff or outside sources should be
                          hired to insure timely replacement of the units.

                    5C.   Require the Authority to provide periodic status
                          reports on progress to measure against the plan.




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                      Section 8 Vouchers and
                  Certificates Are Under Utilized
 The Authority has not administered the Section 8 Existing Certificate and Housing Voucher
 Programs effectively. As of February 29, 2000, Authority records indicate that 290 of 2,475
 Section 8 certificates and vouchers were not in use despite a Section 8 waiting list of 2,630
 applicants. This equates to a utilization rate of 88 percent. HUD requires that the Authority
 prepare and implement a corrective action plan when utilization drops below 95 percent.
 Authority records indicate that the utilization rate has been under 95 percent since October 1996.
 As a result, low-income families are not provided with housing opportunities.


                                      The Section 8 Management Assessment Program (SEMAP)
  HUD Regulations
                                      is a management assessment system that HUD uses to
                                      measure the annual performance of Housing Authorities
                                      (HAs) that administer the Section 8 tenant-based certificate
                                      and voucher programs. The SEMAP final rule became
                                      effective October 13, 1998, and encouraged HAs to
                                      examine their program operations in the key areas measured
                                      by SEMAP and to improve performance if necessary (HUD
                                      Notice PIH 98-50 (HA)). One indicator under SEMAP
                                      used to measure the performance of HAs is the “Lease-up”
                                      rate. Ratings are based upon the percentage of units leased.
                                      HAs receives a zero rating for percentage under 95 percent.
                                      HUD requires that HAs must correct any SEMAP
                                      deficiency (indicator rating of zero) within 45 calendar days
                                      from the date HUD provides notice (24 CFR 985.106).

                                      Authority records indicate that the utilization rate has
  Utilization is Below 95             consistently been below 95 percent since October of 1996
  Percent                             as follows:

                                           Date                        Utilization Percent
                                           October 1996                       86%
                                           October 1997                       87%
                                           October 1998                       89%
                                           October 1999                       89%
                                           February 2000                      88%

                                      As of February 29, 2000, there were 2,630 families waiting
                                      for Section 8 affordable housing opportunities. The waiting
                                      list has been closed to new applicants since December 6,
                                      1997. The Authority’s failure to maintain an acceptable
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                         level of utilization has limited affordable             housing
                         opportunities for low-income families.

                         Authority management has been aware of their low Section
  Authority Management   8 utilization for a number of years but has not been able to
  Unable to Correct      implement effective corrective action. The Director of
                         Occupancy for Section 8 stated that the low rate was a
                         combination of several factors with a shortage of staff being
                         the most pressing problem. The Director of Occupancy
                         advised that several times in the past years, she had
                         requested authority to hire additional staff from the current
                         and prior Executive Directors but had been denied. The
                         Authority’s Executive Director advised that a time and
                         motion study would be performed to determine if the
                         current staffing level was adequate and to examine ways to
                         increase output of the staff.

                         Authority officials have not been able to agree on the cause
  Effective Corrective   of the low utilization rate, and therefore, have been unable
  Action Needed          to develop an effective corrective action plan. HUD needs
                         to provide the Authority assistance in determining and
                         correcting the cause(s) of the low utilization rate.


                         The Authority disagreed with our conclusion that the Authority
  Auditee Comments       could not agree on the cause for the low utilization rate. The
                         BHA provided the factors they believe are affecting the
                         utilization rate. The Authority did not note any internal factors
                         affecting the utilization rate. The Authority only cited external
                         factors from HUD, housing market, and landlords.

                         The Authority provided a corrective action plan and stated
                         that, “We believe this corrective action plan is aggressive and
                         will positively affect the Section 8 voucher utilization rate and
                         its administration over a three-year period.”




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  OIG Evaluation of     During the audit, we were advised by the Authority’s
  Auditee Comments      Director of Occupancy that the number one problem
                        concerning utilization of vouchers and certificates was a
                        shortage of staff. The Executive director advised that a
                        time and motion study would be performed to determine if
                        current staffing levels were adequate. However, a time and
                        motion study is not mentioned as part of the Authority’s
                        proposed corrective action.

                        The Authority’s plan to improve the utilization rate over a
                        3-year time frame is unacceptable. The Authority should
                        determine if there are alternative steps they could take to
                        increase the utilization rate more quickly; including
                        increased staffing.

                        If the Authority is unable to utilize the Section 8 vouchers
                        and certificates in a more timely manner, we believe that
                        HUD should recapture and reissue them to an Authority
                        which can use them in a timely manner.



  Recommendations     We recommend that you:

                      6A.   Work with the Authority to develop and implement
                            a corrective action plan to achieve at least 95
                            percent utilization in the Existing Certificate and
                            Housing Voucher Programs.

                      6B.   Require that the Authority submit status reports to
                            your office on its progress in increasing the
                            utilization rate.

                      6C.   Consider restricting the Section 8 Operating
                            Reserves use and/or cancel units not leased if the
                            Authority does not implement effective corrective
                            actions in a reasonable length of time.




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              The Authority Received Duplicate
              Section 8 Administrative Payments
 The Authority billed administrative fees for 18 to 24 Section 8 units to two separate HUD funded
 programs. We calculate that HUD was over billed by $34,699 for the period of June 1997
 through September 1999. The Authority should be directed to return the $34,699 to HUD and
 the Authority should determine if additional duplicate payments were received for the period prior
 to June 1997 and after September 1999.


                                      Administrative fees may only be used to cover costs
  HUD Regulations
                                      incurred to perform the Authority’s administrative
                                      responsibilities for the programs in accordance with HUD
                                      regulations and requirements. HUD may reduce or offset
                                      any administrative fee paid to the Authority, in the amount
                                      determined by HUD, if the Authority fails to perform HA
                                      administrative responsibilities correctly or adequately under
                                      the program requirements. (24 CFR 982.152)

                                      The Authority included from 18 to 24 Section 8 units it was
  Duplicate Costs Were                administering for the City of Bridgeport in its calculation of
  Charged to HUD                      administrative fees earned on units it was administering
                                      under its own Section 8 program. The Authority also billed
                                      administrative fees for these 18 to 24 units to the City of
                                      Bridgeport Section 8 program, thus the Authority was
                                      reimbursed twice for the same expense. Therefore, the
                                      Authority failed to perform its administrative responsibilities
                                      correctly and billed HUD for costs that were not incurred..

                                      Authority officials agreed that duplicate costs had been
  Authority Agrees                    billed and should be returned. Our analysis of the
                                      Authority’s records disclosed that $34,699 of duplicate
                                      administrative fees were paid for the period June 1997
                                      through September 1999. We were unable to determine
                                      duplicate costs paid prior to June 1997 as the Authority’s
                                      could not locate monthly computer printouts listing units
                                      that were included in the billing of administrative fees.
                                      However, we were advised by the Authority’s Finance
                                      Director that the duplicate charges would date to sometime
                                      in Fiscal Year 1995 when the Authority converted to a new
                                      computer system. Therefore, the Authority should calculate
                                      the amount of duplicate costs billed based on the
                                      administrative fee rate in effect during the period of October

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                         1994 through May 1997 to determine the amount of
                         additional duplicate payments.
 .
                         In addition, the Authority should also determine the amount
                         of duplicate payments after September 1999. All duplicate
                         payments should be returned to HUD.



     Auditee Comments    The Authority indicated that they had repaid the $34,699 in
                         duplicate administrative fees for the period June 1997 through
                         September 1999. The Authority advised they would conduct
                         an analysis for any other possible duplicate administrative fees
                         between October 1995 through June 1997 and return any
                         duplicate administrative fees identified.


     OIG Evaluation of   The Authority should also conduct an analysis to determine if
     Auditee Comments    payments were made after September, 1999.



     Recommendations     We recommend that you:

                         7A.      Require the Authority to determine the amount of
                                  duplicate administrative fees billed to HUD for
                                  periods prior to June 1997 and after September
                                  1999. Any duplicate amounts should be returned to
                                  HUD.




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               Lack of Internal Controls Over
            Authority’s Private Initiative Account
 In December 1995, the Housing Authority of the City of Bridgeport (Authority) started what it
 termed a “ Private Initiative” by seeking business with outside organizations. Our review
 disclosed that the Authority had not established internal controls to properly charge the time the
 Authority staff worked on the Private Initiative projects. Since costs were not properly charged
 to the Private Initiative we could not determine if the Private Initiative projects were a positive or
 negative source of funds for the Authority. In addition, the Authority circumvented its own
 internal controls over disbursements. As a result of the Authority not charging any staff time to
 the Private Initiative, the HUD programs have subsidized the cost of administering the Authority’s
 Private Initiative.


                                        Authority officials advised that the Private Initiative was
    Reduction in HUD                    conceived at a time when the level of HUD funding for
    Funding Was a Concern               housing authorities was expected to be substantially
                                        reduced. The Authority’s primary objective of undertaking
                                        the Private Initiative was to maintain or increase service
                                        levels. In addition, the former and current Authority
                                        Executive Directors, believed that funds earned through the
                                        Private Initiative could be used to improve staff morale by
                                        providing benefits that were not allowed by HUD
                                        regulations, such as, bonuses and employee loans.

                                        While HUD encourages housing authorities to seek outside
                                        business opportunities in order to maintain and/or increase
                                        service levels, HUD regulations provide that, “Income
                                        generated by subsidiaries, affiliates, or joint ventures.... is to
                                        be used for low-income housing or to benefit the residents
                                        assisted by the PHA.” (24 CFR Part 943.144)

                                        In December 1999, the Chairman of the Board of
  Chairman of the Board of              Commissioners wrote Secretary Cuomo expressing
  Commissioners Writes                  concerns over our review of the Private Initiative projects.
  HUD Secretary                         The Chairman suggested that we alluded to the Private
                                        Initiative account as a “secret fund that is used for illegal
                                        purposes”. The Chairman further stated, “The creation of
                                        the private initiative will afford us the opportunity to
                                        develop or grow other resources independent of our Federal
                                        resources to help us develop alternative housing choices for
                                        our community.”


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                             We commend the Authority for developing independent
                             sources of funds. Our primary concern is that the Authority
                             had not developed any controls to charge the Private
                             Initiative projects for the time worked by the Authority’s
                             staff. Our other concerns were that the Private Initiative
                             account was not recorded on the Authority’s books and
                             records, funds were not used for the primary objective of
                             increasing services, and that 1099’s or W-2’s were not
                             issued for bonuses paid in 1998 to the Authority’s staff until
                             February 2000.

                             OMB Circular No. A-87 establishes principles and standards
  Federal Requirements for   for determining costs for Federal awards carried out
  Supporting Costs           through grants, cost reimbursement contracts, and other
                             agreements with State and local governments.

                             Basic guidelines include factors affecting allowability of
                             costs, which include:

                             “a.      Be necessary and reasonable for proper and
                                      efficient performance and administration of Federal
                                      Awards.

                             “b.      Be allocable to Federal awards under the
                                      provisions of this Circular.” (Attachment A,
                                      paragraph C. 1. a. and b.)

                                      Allocable costs include, “A cost is allocable to a
                                      particular cost objective if the goods or services
                                      involved are chargeable of assignable to such cost
                                      objective in accordance with relative benefits
                                      received....” (Attachment A, paragraph C. 3. a.)

                                      For supporting salaries and wages these standards
                                      require that, “Where employees work on multiple
                                      activities or cost objectives, a distribution of their
                                      salaries or wages will be supported by personnel
                                      activity reports....Such documentary support will be
                                      required where employees work on:

                                      (a)    More than one Federal award,
                                      (b)    A Federal award and a non-Federal award,
                                      (c)    An indirect cost activity and a direct cost
                                             activity . . .”


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                                       (Attachment B, paragraph 11h.(4)
                               The minutes to the Board of Commissioners meeting dated
  Three Efforts Started        November 13, 1995 indicate that they approved the
                               management contract for a 24 unit project. This became the
                               first project which was placed in the Private Initiative
                               account. The contract became effective on December 1,
                               1995. The minutes to the November 13, 1995 Board
                               Meeting also indicated that the former Executive Director
                               stated that, “ . . we are basically asking for Housing
                               Authority staff to donate their time to some degree to get
                               this off the ground, and at some point we plan to reimburse
                               those involved in this effort with a bonus.”

                               Since that time, the Authority has entered into two
                               additional agreements: a second management contract for
                               six units was effective on April 1, 1998; and an agreement
                               to provide relocation services to a subsidiary of another
                               housing authority was also effective on April 1, 1998.

                               As noted above the primary objective of the Private
  Primary Objective of         Initiative was to maintain or increase the Authority’s service
  Private Initiative Not Met   level to their tenants. The fees earned by the Authority for
                               the period March 1998 through August 1999, were as
                               follows:

                                    Project                             Amount
                                    Meadow Landing                      $44,000
                                    Smith Street                          3,034
                                    Clinton Avenue                       10,493
                                    Total                               $57,527

                               During the period from March 1998 through November
                               1999 the Authority paid $54,766 for staff bonuses and
                               benefits, leaving $2,761 as a return to the Authority.
                               However, as noted below the Private Initiative was not
                               charged for any staff time worked on the project. The latest
                               payments of bonuses to employees in November 1999
                               totaling $21,630 indicated that 28 staff members worked on
                               the Private Initiative projects.

                               The Authority did not present any of the disbursements for
  Disbursements Not            the three Private Initiative projects to the Board of
  Approved by Board            Commissioners for review and approval until November
                               1999. The Authority’s policies and procedures requires that


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                    all disbursements for the other projects administered by the
                    Authority receive Board approval.

                    The Authority did not require staff members to record their
  Staff Time Not    time worked on the Private Initiative. Further the Authority
  Documented        did not develop a cost allocation plan to allocate costs of
                    those staff members who worked on the Private Initiative.
                    Without any documentation to support the time worked on
                    the Private Initiative (either for time during or after normal
                    office hours) the Authority paid at least 28 staff members,
                    including the current and former Executive Directors)
                    bonuses totaling $39,080 for services rendered.

                    The Authority’s Director of Finance advised that she and
                    the Authority’s current Executive Director had determined
                    the staff bonus amounts based on their estimation of how
                    much after hours work each staff member had spent on the
                    Private Initiative projects.

                    Without any supporting documentation it is impossible to
                    determine if any of the payments for after hours work is
                    reasonable or if work was performed after hours.

                    The current and former Executive Directors advised that
                    they attempted to only have staff work on the Private
                    Initiative projects after office hours. However, the former
                    Executive Director conceded that it was not possible to do
                    strictly after hours since phone calls would need to be taken
                    and made during normal work hours and some functions
                    could not be done at night.

                    Our review identified several areas were staff time would be
                    necessary during normal business hours, however, as noted
                    above no staff time was charged to the Private Initiatives:
                    1) The contract for relocation services provided $26,000
                    for “Management Oversight”.           Since the relocation
                    specialist was providing services during normal business
                    hours the “Management Oversight” would be required to be
                    provided during normal business hours; and 2) The
                    contracts for management services required the Authority,
                    in part, to collect rents, market the units, show units to
                    prospective tenants, take and process applications for
                    rentals, enforce full compliance with the terms of the Lease;
                    and maintain the projects in a safe and sanitary condition.


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                             Most of these services would need to be performed during
                             normal business hours.


                             The original payments were not made through the
  Miscellaneous Income Not   Authority’s payroll system so normal Federal and State
  Reported to IRS            withholdings and reports were not generated. Further, the
                             Authority did not issue Form W-2’s (Wage and Tax
                             Statements) or Form 1099’s Misc (Miscellaneous Income
                             Statement) to the IRS for bonus payments totaling $4,450
                             to four staff members in 1998 and $12,000 paid in early
                             1999. No withholdings for taxes were made at that time.
                             The Authority subsequently filed Form 1099 Misc for the
                             $12,000 earned in 1999 and the $4,450 earned in 1998.
                             The $21,630 paid to 28 staff members in November 1999
                             were processed as payroll checks so that the income would
                             be included in the employees W-2’s.

                             The Private Initiative account was not recorded on the
  Private Initiative Not     official books and records of the Authority. The Authority
  Recorded on Authority’s    established a separate bank account for the Private Initiative
  Books                      which was not included on the official books of the
                             Authority. The Executive Director stated that one of the
                             purposes of the account was to use the funds for items that
                             would not be allowed by HUD regulations and since they
                             were not working on the projects during normal business
                             hours they believed the account should not be on the
                             Authority’s books.

                             Although the Private Initiative account was not on the
                             books of the Housing Authority all three contracts executed
                             for the Private Initiative projects were executed in the
                             Authority’s name.

                             In September 1999 the Authority included the Private
                             Initiative account on the Authority’s books.

                             The checks only required one signature (the Director of
  Only 1 Signature on        Finance) rather than two as required by the other Authority
  Checks                     accounts.

                             In addition to the $39,080 paid to the staff for bonuses,
  Other Questionable         there were additional questionable charges totaling $15,686
  Charges Paid by Private    paid from the Private Initiative account. The questionable
  Initiative Account         charges included: $7,200 for merit pay (36 employees were

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                            paid $200 each); loans to 2 employees totaling $6,500;
                            $1,486 paid for a staff banquet where the merit pay was
                            disbursed and $500 for an employee’s funeral.

                            As noted above the Authority did not follow its own
  Profit/Loss Not           policies and procedures for documenting or accounting for
  Determinable              the costs incurred by the Private Initiative account. In
                            addition, the Authority did not require the staff to document
                            the time worked on the Private Initiative has is required by
                            OMB Circular A-87.

                            The former Executive Director advised that since this was in
                            effect a new business, it could not pay/reimburse all costs
                            associated with it, since there would very likely be a
                            substantial loss which is normal for a new business.


                                                     * * * * * *


                            Without any controls in place to account for the proper
  HUD Funds Indirectly      charges to the Private Initiative, it is impossible to
  Subsidizing the Private   determine whether or not the income generated by the
  Initiative                Private Initiative was sufficient to cover the expenses.
                            However, since no reimbursements were made by the
                            Private Initiative for Authority staff time, HUD funds were
                            indirectly subsidizing the Private Initiative since all staff
                            salaries are charged to HUD projects.

                            The former Executive Director advised that in hind sight
                            they should have operated the Private Initiative projects out
                            of the non-profit company that they had established (Urban
                            Innovative Development Corporation).

                            While we agree that would have been a better choice than
                            establishing a separate bank account off the books and
                            records of the housing authority, it would not eliminate the
                            need to establish controls over the time the Authority staff
                            would spend administering these projects.

                            As a result of our review the Authority has transferred the
                            Private Initiative account onto the Authority’ books where
                            it will be accounted for separately. The Executive Director
                            advised that all future disbursements will be presented to the
                            Board of Commissioners for approval as required for all

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                      other projects. The Executive Director further advised that
                      sometime in the future, when there is more activity, they
                      will establish controls to charge the staff’s time to those
                      projects.

                      We believe that the Authority should immediately require
                      the staff to document their time on a time and attendance
                      report or develop a cost allocation plan to allocate the cost
                      of the staff who are involved in administering the Private
                      Initiative projects. Without identifying the time worked on
                      the Private Initiative projects or an allocation of the staffs
                      time, HUD will be subsidizing those projects.



  Auditee Comments       The Authority disagreed strongly with our finding on the
                         Authority’s Private Initiative Account primarily for the
                         following reasons:

                         1. The Private Initiative revenue is less than half of one
                            percent of the total revenue and management spent
                            very little time which was usually after working hours.

                         2. “The Private Initiative income was generated outside
                            and separate from HUD funding .So the Inspector
                            General had no right to audit the operations of this
                            program . . . except for the fair and reasonable
                            treatment of shared costs and related expenses as
                            required under OMB Circular A-87 . . .Cost
                            allocations among programs within our Authority.”

                         3. The Inspector General grossly misstated the
                            transactions. “They reported fees earned from March
                            1998 through August 1999. Yet, they reported
                            disbursements from March 1998 through November
                            1999!!”


                         If the Authority had established adequate internal controls
  OIG Evaluation of      over the Private Initiative Account, our review would have
  Auditee Comments       been limited. However, without adequate internal controls
                         there are no assurances that the HUD programs are not
                         subsidizing the Private Initiatives and a detail review on our
                         part was deemed necessary.



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                      The Authority misunderstood our reporting of the Private
                      Initiative account.        The Authority interpreted our
                      comparison to be income versus expenses. The report
                      actually reflects the amount of the fees earned under the
                      three contracts (not all revenue) and the disposition of those
                      fees (not all disbursements). The reason we extended the
                      disbursements of the fees to November 1999 was to report
                      on the latest bonuses totaling $21,630 paid to 28 staff
                      employees. We did not have the information on the fees
                      earned for the period September through November 1999;
                      however, those fees would be less than $3,000 since they
                      had received all the fees due under the Meadow Landing
                      contract.

                      We believe the bonuses paid in November 1999 totaling
                      $21,630 for 28 employees supports our conclusion that
                      many of the Authority’s staff worked on the Private
                      Initiative, and their salaries were paid with HUD funds,
                      which were not reimbursed. In the minutes to the Board of
                      Commissioner’s Meeting dated November 8, 1999, the
                      Executive Director advised the board that, “ . . . the group
                      of people receiving the bonuses at this time are individuals
                      that provided assistance on the private initiative projects in
                      order to get the work done and there are many persons in
                      this operation that did not work on any of these projects.”

                      The Authority did not directly address any of the
                      recommendations which we are reporting.



  Recommendations   We recommend that you:

                    8A.      Require the Authority to develop adequate internal
                             controls to assure that the Authority properly
                             charges staff time to the Private Initiative projects
                             and reimburses the General Fund.

                    8B.      Require the Authority, at a minimum to reimburse
                             the General Fund $26,000 representing the funds
                             received for supervision under the relocation
                             contract.

                    8C.      Obtain assurances from the Authority that all future
                             disbursements for private initiative projects be
                             submitted for the Board of Commissioners approval.

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                    8D.   To submit to the Board of Commissioners an
                          accounting of all disbursements from the Private
                          Initiative account for their review and approval.




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                                                                                         Finding 9


               Need to Account For Portable
             Section 8 Vouchers And Certificates
 In the last 10 years, the Authority has only once reconciled amounts billed to and received from
 other Housing Authority’s for portable Section 8 vouchers and certificates. The last
 reconciliation was performed in September 1998. As a result, the Authority could not support
 $307,555 of Section 8 accounts receivable listed on its books of record on September 30; 1999;
 therefore, other housing authorities are disputing amounts billed.


                                     HUD requires the Authority to “…implement an
  HUD Requires
                                     accounting system that will be able to identify all
  Accountability
                                     transactions related to portability….”. (Office of Public
                                     and Indian Housing Notice 96-54, paragraph 7, dated July
                                     26, 1996)

                                     The accountant assigned responsibility for the Section 8
  Reconciliation Not                 program told us that when he was assigned the job in 1998,
  Performed                          he found that billings and receipts for portable vouchers and
                                     certificates had not been reconciled since September 1990.
                                     The accountant stated that he had performed a
                                     reconciliation through September 1998 but had not had the
                                     time to reconcile amounts after that date. The accountant
                                     advised that the $307,555 listed on the books of record as
                                     Section 8 portable accounts receivable at September 30,
                                     1999 was not accurate because billings and receipts had not
                                     been reconciled.

                                     The Section 8 accountant also advised us that billings to
  Billings in Dispute                other housing authorities were in dispute. He did not know
                                     the total amount in dispute but estimated it was
                                     approximately $100,000. Based on his reconciliation
                                     performed in September 1998, the accountant sent follow-
                                     up billing invoices to other housing authorities. The original
                                     invoices for many of the follow-up invoices were issued in
                                     the early 1990s. The accountant stated that many of the
                                     other housing authorities no longer had records for that
                                     period.     He stated that without records these other
                                     authorities could not verify that services were received or
                                     were not already paid for and have refused to pay.




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                          The Office of Public and Indian Housing Notice 96-54,
  HUD Resolves Disputes   paragraph 6, states “…HAs are encouraged to resolve all
  Between Housing         billing problems without HUD’s involvement. Situations
  Authorities             that cannot be resolved should be referred to the local HUD
                          Field Office….” The Section 8 accountant advised that he
                          had contacted the other housing authorities by phone and
                          letter for over 15 months but had been unable to convince
                          some of the authorities to submit payment. We believe that
                          the Authority should refer the amounts in dispute to HUD’s
                          Connecticut State Office for resolution.


  Auditee Comments             The Authority generally agreed with the recommendations
                               and indicated they had hired a temporary employee to
                               reconcile the Section 8 portable vouchers and certificates
                               and would refer disputes to HUD’s office for resolution.

                               For our recommendation to maintain an accurate
                               accounting of the Section 8 portability billings and receipts
                               on a monthly basis, the Authority advised that, “We will
                               review the possibility of hiring part-time help to maintain
                               portables.”


  OIG Evaluation of            The Authority should submit their planned corrective action
  Auditee Comments             should they decide not to hire part-time help to maintain the
                               portables.



  Recommendations         We recommend that you require the Authority to:

                          9A       Reconcile billings and receipts for Section 8 portable
                                   vouchers and certificates from September 1998
                                   forward.

                          9B.      Maintain an accurate accounting by reconciling
                                   Section 8 portability billings and receipts on a
                                   monthly basis.

                          9C.      Submit billings that are in dispute to the HUD
                                   Connecticut State Office for resolution.




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 Management Controls
 In planning and performing our audit, we considered the management controls used by the
 Housing Authority of the City of Bridgeport (Authority) that were relevant to our audit
 objectives. We considered the Authority’s management control systems to determine our auditing
 procedures and not to provide assurance on management controls.

 Management Controls consist of a plan of organization and methods and procedures adopted by
 management to ensure that resource use is consistent with laws, regulations, and policies; that
 resources are safeguarded against waste, loss and misuse; and that reliable data is obtained
 maintained, and fairly disclosed in reports.


                                        We determined that the following management controls
  Relevant Management                   were relevant to our audit objectives:
  Controls
                                        •     General Administrative Policies
                                        •     Financial Controls Over Program Funds
                                        •     Management Controls Over Program Expenditures
                                        •     Management Controls Over Procurement and
                                              Contract Administration
                                        •     Management Controls Over Budgets
                                        •     Management Controls Over the Leasing of Units
                                        •     Administration and Disbursement of Grant Funds
                                        •     Management Controls Over the Authority’s Private
                                              Initiative Projects and the Development of 21
                                              Duplexes known as Pembroke Green

                                        We assessed all relevant controls identified above.

                                        A significant weakness exists if management controls do
                                        not give reasonable assurance that resource use is
  Assessment Results
                                        consistent with laws, regulation, and policies; that
                                        resources are safeguarded against waste, loss, and
                                        misuse; and that reliable data is obtained, maintained, and
                                        fairly disclosed in reports.

                                        Our review disclosed significant weaknesses in all
                                        management controls identified above and are discussed
                                        in the Finding and Recommendations section of this
                                        report.




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                                                                                      Appendix A

 Schedule Of Ineligible and Unsupported Costs


 Finding                                        Ineligible (1)              Unsupported (2)

 1. Excessive Operating Subsidy                      $750,714
 7. Duplicate Administrative Fees                    $ 34,699
 8. Supervision Not Reimbursed                                                  $26,000




 (1)       Ineligible amounts obviously violate law, contract, HUD or local agency to policies, or
           regulations, such as buying unneeded services or not depositing receipts.

 (2)       Unsupported amounts do not obviously violate law, contract, policy, or regulation, but
           warrant being contested for various reasons, such as the lack of satisfactory
           documentation to support eligibility and HUD approval.




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                                                                                                 Appendix B

 Schedule Showing Vacancy Rate and Average
 Days Vacant By Project


                                                             Number
       Project No.                                           of Units   No. of Units   Vacancy     Average
       CT 26P001-               Project Name (4)                in       in average     Rate      Days Vacant
                                                             Project
  Family and
  Elderly
  Developments
  0003                Marina Village (1)                       405          47          12%          795
  0005                P.T. Barnum Apts.                        360          54          15%          226
  0006                Charles Green Apts.                      270          37          14%          153
  0008                Fireside Apartments, Ext-1                96           3           3%           63
  0009                Harborview Towers                        231          29          13%          167
  0010                Fireside Apartments, Ext-2               102           1           1%           99
  0070                Trumbull Gardens (2)                     338          88          26%          626
  0071                Pequonnock (3)                           256          73          29%          302
  Scattered Sites
  0022                Boston Commons                            33           5          15%          252
  0023                Atlantis                                  14           1           7%          128
  0025                Tudorhill Townhouse                       23           1           4%           66
  0026                Marlboro Court                            28           1           4%          248
  0029                Willow Mews Townhouse                     20           1           5%           42
  0035                Sheridan Street Townhouse                 10           3          30%          254
  0039                Concord Street Duplex                      5           1          20%           35
  0043                146 C Catherine Street                    27           1           4%           23
  0047                74 Hewitt Street                          16           1           6%           35
                            Totals                           2,234         347                       404



 (1)      25 units are in the process of being rehabilitated, as of October 12, 1999.

 (2)     Figures do not include the 64 vacant units at Trumbull Gardens High-Rise Building 10.

 (3)     On January 14, 2000, HUD approved the Authority’s request to dispose the 256 Pequonnock
         units. The Authority plans to relocate the families now residing in Pequonnock to other
         Authority properties.

(4)      Only projects with vacancies.




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                                                                               Appendix C

 Auditee Comments
                               Housing Authority of the City of Bridgeport
                                        150 Highland Avenue
                                    Bridgeport, Connecticut 06604




 May 31, 2000


 Mr. William D. Hartnett, District Inspector General
 New England Office of Inspector General
  for Audit, 1AGA
 U. S. Department of Housing
  and Urban Development
 Thomas P. O’Neill, Jr. Federal Building
 Room 370
 10 Causeway Street
 Boston, MA 02222-1092

 Dear Mr. Hartnett:

       Subject: Audit Response, Housing Authority of the City of Bridgeport,
              Audit Case No. 00BO-XXX-XXXX

        We have enclosed, for your review and consideration, our response to the
 issues raised in your draft audit report of April 5, 2000. Although, we take exception to
 the manner in which the findings were reported, it is our hope that our responses will be
 strongly examined for accuracy and consideration will be given to remove said item
 from the final report.

         Further, throughout the audit process the Authority endeavored to respond
 quickly to any issues raised by your auditors. We sincerely feel we were not portrayed
 fairly. Consideration should have been given to the OMB Circular A-87 where
 appropriate and no financial irregularities with regards to our operation were found and
 should have been noted. The finding identified as part of our replacement initiative
 needs to be examined more closely as the Authority cannot be held accountable for
 situations beyond our control, especially when other opinions and interests carry more
 weight than the responsible body.

       In closing, I would like to add that the audit experience has required us to
 monitor more closely our activities to ensure oversights do not occur and that our
 management and fiscal operations meet or exceed standards defined by the U. S.
 Department of Housing and Urban Development.




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 Mr. William D. Harnett
 District Inspector General                      2...
 Office of Inspector General
 May 31, 2000




       Should you require any further information or clarification, please feel free to
 contact me at (203) 337-8915.

                                                        Sincerely,

                                                        HOUSING AUTHORITY OF
                                                        THE CITY OF BRIDGEPORT



                                                        Collin Vice
                                                        Executive Director


 CV:em

 Enclosure

 cc:    Ms. Phyllis Smelkinson
        Ms. Sonia Samuels
        Board of Commissioners
        Mrs. Olive Harbor
        Mr. Jonas DeGuzman




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                                                                                     Appendix C




                                          FINDING 1


                  Authority Received $750,000 in Excess Operating Subsidies
                   And Paid Over $300,000 In Utility Cost for Vacant Units

 1A.   Require the Authority to reimburse HUD $750,714 of excess operating subsidy.

       See Attachment A

 1B.   Assure that the Authority adjusts its fiscal year 2000 Calculation of Performance
       Funding System Operating Subsidy to reflect long-term vacant units at Building 11.

       The BHA will revise the budget to reduce the subsidy for fiscal year 2000 for the long-
       term vacant units in Building 10 and 11.

 1C.   Require the Authority to implement policies and procedures to track long-term
       vacant units and remove such from the subsidy calculation.

       A unit will be considered “long-term vacancy” if the unit has been vacant for more than
       twelve (12) months. The Director of Management and Operations will submit monthly
       reports, to be reviewed by the Director of Finance, indicating vacant units longer than 12
       months. The Director of Finance will make the calculations to reflect this vacancy.

 1D.   Direct the Authority to turn off the utilities in Building 10. Drains should be
       installed so water can be drained from the pipes in Building 10.

       While the apartments in Building 10 were vacant, the WIC program and the Girl Scouts of
       America used the building (see Attachment B). Areas of the building cannot be localized;
       therefore, the entire building was heated. Upon completion of the community center, the
       programs were transferred. Nevertheless, the BHA turned off the utilities in Building 10.

 1E.   Direct the Authority to repair broken windows so birds cannot enter Building 10.

       The BHA repaired all broken windows to prevent birds from entering vacant apartments in
       Buildings 10.

 1F.   Require the Authority to turn off the heat and completely shut the windows in
       Building 11 vacant units.

       We could not find open windows in Building 11. This issue refers to Building 10 and has
       been resolved. Additionally, we cannot turn the heat off in Building 11 since more than
       half of the apartments are occupied.

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 Appendix C




 1G.    Require the Authority to develop a plan for the use of Buildings 10 and 11.

        The BHA is submitting a request to the Special Applications Center (see Attachment C),
        as per instructions from the CT State Office Program Center, within thirty (30) days to
        designate Building 11 into housing for the elderly. There are currently twenty-two (22)
        elderly families in the site. Twenty-eight vacant apartments will be included in the
        designation. The balance of the remaining occupied units will not be required to relocate.
        As soon as the designation has been determined appropriate and approved, the
        rehabilitation process will begin immediately.

        Building 10 will be rehabilitated back into a low to moderate-income cooperative housing.
        A Request for Proposal from a legal firm to assist the BHA legally structure the
        cooperative was published on May 15 and a selection date was scheduled for June 9 (see
        Attachment D). Discussions with HUD, Abbey Ogunbola, and HUD Washington, Office
        of Elinor Bacon, have been fruitful.

        In the meantime, the BHA will restore the condition of all vacant apartments with Comp
        Grant funding.




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                                                                                       Appendix C




 Attachment A




 Response to Finding #1:

 We agree that the long-term vacancies should have been excluded from our PFS calculations for
 FY1996 thru FY 1999. We do not agree with the excess subsidy, amount of $750,714. In
 accordance with the attached vacancy rule PIH 96-35, a PHA is entitled to 20% of the AEL for
 units that are deemed Long-Term Vacancies. The vacancy rule also states that these units are
 eligible for utility costs. Based on our estimates excess operating subsidies would be between
 $200,000-300,000. In addition, in accordance with The Vacancy rule, this amount should not be
 returned either. The Vacancy rule allows a PHA to obtain subsidy from HUD for units that are
 vacant due to circumstances beyond the PHA control.

 As stated in our initial response to your report, uncontrollable crime problems prohibited us from
 leasing these units. Also we did submit proposals to HUD to convert these units to Elderly
 Housing, once on May 14, 1996 and again on March 17, 1999. We still have not received a
 response from HUD. We have no control over this and as stated in your report we cannot act on
 these units without HUD approval.

 We feel these circumstances are beyond our control and in accordance with the Vacancy Rule,
 would allow us to be eligible for subsidy for these units.




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 Appendix C




                                            FINDING 2

                  Poor Management Resulted in Inappropriate Use of $2.5 Million in
                                 Low-Income Operating Funds


 We do not consider it inappropriate to use BHA funds to build homes for the poor. We are in the
 business of housing those in our populace with housing needs.

 We acknowledge that the project cost more than was originally anticipated and would have
 preferred that it didn't. However, we had already invested significant financial resources and also
 received financial commitments from other entities. The BHA did not think it was in the best
 interest of the BHA and the City of Bridgeport to leave the project unfinished.

 Nevertheless, the City of Bridgeport will receive approximately $70,000 in taxes per year in tax
 revenues in an area that was previously tax exempt.

 The total cost to the Housing Authority will be $2.4 million of which $1.6 million was approved
 by the Commissioners and also by HUD in the operating budget.

 The balance of $800,000 was subsequently approved by the Commissioners and will be paid from
 the administrative fees earned from administering the Section 8 programs, so in effect only $1.6
 million will be taken from the low-income operating reserve. We did not misuse low-income
 operating funds. We were and still are in excellent financial shape.

 We did obtain approval for the use of the low-income operating funds from the Commissioners
 and from HUD.




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                                                                                      Appendix C




                                          FINDING 3

                      The Authority Needs to Reduce High Vacancy Rate

 3A.   Require the Authority to submit their corrective action plan for your staff’s review
       and approval.

       The BHA recognizes the need to reduce the vacancy rate. The BHA’s corrective action
       plan addresses four main factors affecting the rate.
       1) Personnel Factor. Establish a long-term vacant unit “blitz crew” of current BHA
           maintenance staff to improve the average make-ready days. A five-week project was
           implemented and found to be successful. A permanent crew is scheduled for full
           implementation on May 30 (see Attachment E).
       2) Tenant Selection Factor. The BHA established a “Program Review Committee”
           consisting of the Director of Management and Operations, Special Assistant to the
           Executive Director, and the Senior Manager on April 17 (see Attachment F) to
           aggressively address the deficiencies in the tenant selection office. Our goal is to
           improve the processing time of applicants from a twelve (12) month wait to eight (8)
           months within a year, with further improvements the following year. Second, submit
           and approve a revision to the admission policy (see Attachment G), which should
           contribute to the improvement of this department. The Board of Commissioners will
           review this policy for approval within sixty (60 days).
       3) Crime Factor. The BHA and the City of Bridgeport has been aware of this issue. The
           BHA is partnering with the City of Bridgeport to create a Housing Authority Police
           Unit under the direction of the City Police Department (see Attachment H). A
           consistent presence by the police within the sites should increase resident confidence
           with safety. The BHA received preliminary approval from the Mayor of Bridgeport
           and the city’s Police Chief. The BHA will leverage existing funds to finance the
           additional officers.
       4) Public Perception Factor. The BHA is actively changing the perceptions of public
           housing. We aggressively engage in public relations activities such as print, press,
           community meetings and activities, Internet, customer surveys, public access TV, etc
           (see enclosures). The BHA is reaching out to the community and changing the image
           of public housing.

 3B.   Require the Authority to submit periodic progress reports on its progress in
       reducing the number of vacant units.

       The Program Review Committee will submit a monthly progress report to the Executive
       Director indicating the vacancy rate, make ready days, staff progress, & any adjustments
       to meet the vacancy reduction goals. The Executive Director will submit reports as
       required by the Office of Public Housing.


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 Appendix C




                                           FINDING 4

                              Procurement Practices Are Ineffective

 4A.    Require the Authority to solicit bids for all services exceeding $25,000, which are not
        under contract.

        All vendors with contracts over $25,000 are expected to be open for competitive bid
        according to terms and timelines. At which point, request for proposals will be published
        and upon selection, contracts will be written.

        Request for Proposals (RFP) for trash remover is scheduled for bid opening within thirty
        (30) days. The RFP guidelines for painting contractors will be submitted and published
        within sixty (60) days. A new elevator service company was selected in place of AECO,
        Incorporated most recently.

 4B.    Executing contracts with the lowest responsive and responsibility bidders.

        An “RFP Evaluation Committee,” which consists of the Special Assistant to the Executive
        Director, Director of Modernization, Director of Management and Operations, and the
        Director of Maintenance, was established on April 25, 2000 (see Attachment I) to review
        proper implementation of the procurement policy and guidelines on a regular basis. This
        committee will ensure that the RFP process and documentation is executed properly. This
        committee will also serve as a resource for the Procurement Officer.

 4C.    Maintaining documentation supporting the basis for contract awards, including
        history of procurement and appropriate analysis.

        The Committee will assist the Procurement Officer in the development of RFP’s with
        regards to criteria and weight associated, scope of work, deadlines, etc. and in the
        evaluation of “competitive bids” periodically. The Procurement Officer will provide the
        committee members meeting minutes, copies of RFP’s and proposals, and maintain
        records of all proposals reviewed indicating why and how a contractor was chosen. The
        Procurement Officer upon review by the committee will submit, in writing, its
        recommendation to the Executive Director. Upon approval by the Executive Director, the
        contract may be awarded. The Procurement Officer will be responsible for all
        documentation of the selection process.




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                                                                                    Appendix C




 4D.   Requiring the Authority to provide appropriate staff sufficient training with regard
       to procurement regulations.

       The Committee will serve as a resource for the Procurement Officer. Additionally, the
       BHA will train the Procurement Officer of the most current regulatory requirements of
       federal, state, and company procurement policies through conferences and inservices. The
       Procurement Officer will inform the committee of any additions or changes.




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 Appendix C




                                           FINDING 5

                        Replacement of Demolished Low-Income Housing
                                 Is Not Being Accomplished

 5A.    Require the Authority to develop a realistic plan, including a schedule for
        completion, for your staff’s review and approval.

        See Attachment J & K.

 5C.    Require the Authority to provide periodic status reports on the progress to measure
        against the plan.

 The Director of Modernization is expected to submit, in writing, a monthly report to the
 Executive Director evaluating the progress of the bids, contract approvals, unit replacement
 progress, remaining units, and timetables. The Executive Director will submit reports as required
 by the Office of Public Housing.




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                                                                                     Appendix C


 Attachment J



                                     FINDING NO. 5




 Replacement of Demolished Low Income Housing is not being accomplished


 Since the revitalization efforts envisioned in the MOA (Memorandum of Agreement) did not
 succeed, the Authority is prepared to move forward with the Father Panik Village replacement
 program.

 The following documentation is attached to support our plan to replace demolished low income
 housing units.

        -       Staffing Plan
        -       Unit Production Timetable
        -       Replacement PHU’s Report
        -       Pipeline Properties
        -       Status of Project based Section 8 Certificates
        -       Father Panik Village Replacement Housing Summary




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 Appendix C




                                             STAFFING PLAN


 Our current staffing for Modernization/Development is structured as follows:

        -         Director      Modernization/Development

        -         Administrative Assistant

        -         Contract Compliance Clerk

        -         Two part-time construction supervisors

 In order to expedite the housing replacement program, the Authority will add the following
 positions:

        -         Consulting Architect - (under contract)

                  To expedite plan reviews and proposals as needed

                  To prepare scope of work for rehabilitation work and new acquisitions

        -         Two full time Construction Supervisors

                  To monitor on-going construction, modernization/development activities and
                  project based Section 8




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                                           FINDING 6

                     Section 8 Vouchers and Certificates Are Under Utilized

 6A.   Work with the Authority to develop and implement a corrective action plan to
       achieve at least 95 percent utilization in the existing certificate and housing voucher
       programs.

       The BHA disagrees with the Inspector Generals conclusion that we have not been able to
       agree on the cause of the low utilization rate. The BHA provided the factors affecting the
       utilization rate of Section 8 vouchers.
       1)       HUD Factors. HUD issued a thirty (30) day delay in releasing Section 8 vouchers
                between 1996 through 1998 (see Attachment L & M page 3) and decreased the
                FMR in 1996 to 2000 (see Attachment N). When combined with the normal
                turnover of the vouchers (see Attachment O), the utilization rate was greatly
                affected.
       2)       Market Factors. A high number of apartments are unable to pass HUD and BHS
                HQS. This limits choices available to a prospective tenant. Second, quality
                apartments command a higher rate. The BHA hired a consultant to do a market
                analysis of the FMR in the community (see Attachment P). This study is due
                within ninety (90) days and will be made available upon completion.
       3)       Landlord Factors. There are a number of landlords who refuse to participate in
                the program, despite their knowledge of its illegality, due to their history and
                experiences. Some families left market apartments in poor standing. This made
                many landlords reluctant to accept a prospective Section 8 tenant.
       The BHA’s corrective action plan includes proactive activities such as:
       1)       A public-access television public relations campaign to address the issues of
                perception and to regain the trust of former and new landlords.
       2)       HUD removed barriers by revising the delay issuance (see Attachment M page 3).
       3)       Raising FMR, if appropriate, to a higher level.
       4)       Community education marketed towards new and former landlords.
       5)       Working with HUD, City of Bridgeport, and community organizations to improve
                HQS.
       6)       Establish a Section 8 Review Committee to review the practices, policies, and
                staff’s effectiveness in carrying out its mission. This committee is similar in
                concept to the Program Review Committee (see Finding 3A-2 response) and the
                RFP Review Committee (see Finding 4B response).
       We believe this corrective action plan is aggressive and will positively affect the Section 8
       voucher utilization rate and its administration over a three-year period.




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 6B.    Require the Authority to submit status reports to your office on its progress in
        increasing the utilization rate.

        The Director of Section 8 is expected to submit, in writing, a monthly report to the
        Executive Director providing the progress of the corrective action plan and of the
        utilization rate. The Executive Director will submit reports as required by the Office of
        Public Housing.




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                                                                                 Appendix C




                                        FINDING 7

                         The Authority Received Duplicate Payments

 7A.   Require repayment of $34,699 in duplicate administrative fees.

       The BHA returned $34,699 in duplicate administrative fees (see Attachment Q). The
       error occurred when the BHA changed from the Wang Computer System to the AS400.
       The number of units was immaterial and somehow got overlooked when the new system
       was set up.

 7B.   Require the Authority to determine the amount of duplicate administrative fees
       billed to HUD for periods prior to June 1997 and after September 1999. Any
       duplicate amounts should be returned to HUD.

       The BHA will conduct an accounting analysis for any other possible duplicate
       administrative fees between October 1995 through June 1997. The BHA will return any
       duplicate fees upon determination by the analysis.




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 Appendix C




                                          FINDING 8

              Lack of Internal Controls Over Authority’s Private Initiative Account

 8A.    Require the Authority to develop adequate internal controls to assure that the
        Authority properly charges staff time to the Private Initiative projects and
        reimburses the General Fund.

        See Attachment R.

 8B.    Require the Authority, at a minimum to reimburse the General Fund $26,000
        representing the funds received for supervision under the relocation contract.

        See Attachment R.

 8C.    Obtain assurances from the Authority that all future disbursements for private
        initiative projects be submitted for the Board of Commissioners approval.

        See Attachment R.

 8D.    To submit an accounting of all disbursements from the Private Initiative account, to
        the Board of Commissioners for their review and approval.

        See Attachment R.




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                                                                                         Appendix C



 Attachment R




 Finding #8

          We disagree strongly with the Inspector General's statements on the Authority's Private
 Initiative Account. This Authority receives approximately $44,000,000 per year in
 Revenues/Subsidies and Grants. Of this $18,000 is generated by the Private Initiative account
 which is less than HALF OF ONE PERCENT OF OUR TOTAL REVENUES/GRANTS.
 Management spent very little time on this account, and this time was usually after working hours.
 Sure, there were occasional times when we answered questions, responded to an issue or made a
 phone call during the workday, but this was minimal!

         Secondly, the Private Initiative Income was generated outside and separate from HUD
 funding. The $18,000 we made per year was for the Housing Authority as established under state
 laws and not for HUD ACC programs. So the Inspector General had no right to audit the
 operations of this program and include each detail of this program in their report except for the
 fair and reasonable treatment of shared costs and related expenses as required under OMB
 Circular A-87... cost allocations among programs within our authority. Any further auditing
 work outside of OMB Circular A-87 will be performed by outside auditors for the Housing
 Authority as required under the Single Audit Act.

         Thirdly, the Inspector General staff grossly MISSTATED the transactions. They reported
 fees earned from March 1998 through August 1999. Yet they reported disbursements from
 March 1998 through November 1999!! Any good accountant knows that the income and
 expenses should be for the same period. Yet the I.G. chose to include an additional three (3)
 months of expenses. This is a distortion of facts!! If the Inspector General chose to report
 transactions in a correct accounting format, they would have shown $57,527 in revenues and
 $33,136 in disbursements of which $6,000 were loans which were repaid, so the net expenses for
 this time period was $27,636 versus income of $57,527!!; a net revenue of $30,000 and not
 $2,761 as stated in the I.G. report!!

         The I.G. was correct that miscellaneous income of $4,450 was not reported to the IRS for
 1998. This was an oversight and was corrected when the I.G. brought it to our attention. For the
 $12,000 paid out in 1999, 1099's were issued within the time frame allowed by the IRS!! This is
 not a finding.

        The Authority transferred the Private Initiative account to the authority's books based on a
 recommendation by their auditor Malcolm Johnson and Company, so that this program could be
 audited along with all our programs. The review by the I.G. had nothing to do with this transfer.



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 Appendix C




                                            FINDING 9

                  Need To Account For Portable Section 8 Vouchers and Certificates

 9A.    Reconcile billings and receipts for Section 8 portable vouchers and certificates from
        September 1998 forward.

        We have hired a temporary employee to apply payments to receivable balances from
        September 1998 to present

 9B.    Maintain an accurate accounting by reconciling Section 8 portability billings and
        receipts on a monthly basis.

        We will review the possibility of hiring part-time help to maintain the portables.

 9C.    Submit billings that are in dispute to the HUD Connecticut State Office for
        resolution.

        We will refer disputes to HUD’s office for resolution.




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                                                                                    Appendix D

 Distribution
 Deputy Secretary, SD, Room 10100 (1)
 Chief of Staff, S, Room 10000 (1)
 Special Assistant to the Deputy Secretary for Project Management, SD, Room 10100 (1)
 Acting Assistant Secretary for Administration, S, Room 10110 (1)
 Assistant Secretary for Congressional and Intergovernmental Relations, J, Room 10120 (1)
 Senior Advisor to the Secretary, Office of Public Affairs, S, Room 10132 (1)
 Director of Scheduling and Advance, AL, Room 10158 (1)
 Counselor to the Secretary, S, Room 10234 (1)
 Deputy Chief of Staff, S, Room 10226 (1)
 Deputy Chief of Staff for Operations, S, Room 10226 (1)
 Deputy Chief of Staff for Programs and Policy, S, Room 10226 (1)
 Deputy Assistant Secretary for Public Affairs, W, Room 10222 (1)
 Special Assistant for Inter-Faith Community Outreach, S, Room 10222 (1)
 Executive Officer for Administrative Operations and Management, S, Room 10220 (1)
 Senior Advisor to the Secretary for Pine Ridge Project, W, Room 10216 (1)
 General Counsel, C, Room 10214 (1)
 Director, Office of Federal Housing Enterprise Oversight, O, 9th Floor Mailroom (1)
 Assistant Secretary for Housing/Federal Housing Commissioner, H, Room 9100 (1)
 Office of Policy Development and Research, R, Room 8100 (1)
 Inspector General, G, Room 8256 (1)
 Assistant Secretary for Community and Development, D, Room 7100 (1)
 Government National Mortgage Association, T, Room 6100 (1)
 Assistant Secretary for Fair Housing and Equal Opportunity, E, Room 5100 (1)
 Chief Procurement Officer, N, Room 5184 (1)
 Assistant Secretary for Public and Indian Housing, P, Room 4100 (1)
 Chief Information Officer, Q, Room 3152 (1)
 Director, Office of Departmental Operations and Coordination, I, Room 2124 (1)
 Chief Financial Officer, F, Room 2202 (1)
 Director, Enforcement Center, V, 200 Portals Building (1)
 Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800 (1)
 Director, Office of Multifamily Assistance Restructuring, Y, 4000 Portals Building, (1)
 Secretary’s Representative, 1AS (2)
 Senior Community Builder for Connecticut, 1ES (1)
 Assistant Deputy Secretary for Field Policy and Management, SDF, Room 7108 (2)
 Deputy Chief Financial Officer for Finance, EF, Room 2202 (1)
 Director, Office of Budget, FO, Room 3270 (1)
 Primary Field Audit Liaison Officer, 3AF1(2)
 Headquarters Audit Liaison Officer, PF (2)
 Departmental Audit Liaison Officer, FM, Room 2206 (2)
 Acquisitions Librarian, Library, AS, Room 8141 (1)
 Assistant Inspector General for Audit, GA, Room 8286 (1)
 Deputy Assistant Inspector General for Audit, GA, Room 8286 (1)
 Assistant Inspector General for Investigation, GI, Room 8274 (1)
 Appropriate Special Agent-In-Charge, 1AGI (1)

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 Appendix D


 Director, Program Research and Planning Division, GAP, Room 8180 (1)
 Director, Financial Audits Division, GAF, Room 8286 (1)
 Director, Information Systems Audit Division, GAA, Room 8172 (1)
 Counsel to the Inspector General, GC, Room 8260 (1)
 Central Records, GF, Room 8256 (4)
 Semi-Annual Report Coordinator, GF, Room 8254 (1)
 Office of Inspector General Webmanager - Electronic Format (1)
 Public Affairs Officer, G, Room 8256 (1)

 Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug Policy & Human
 Resources, B373 Rayburn House Office Building, Washington, DC 20515

 The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, 340 Dirksen
 Senate Office Building, United States Senate, Washington, DC 20510 (1)

 The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs, 706
 Hart Senate Office Bldg., United States Senate, Washington,DC 20510 (1)

 The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn Bldg.,
 House of Representatives, Washington, DC 20515 (1)

 Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn Bldg.,
 House of Representatives, Washington, DC 20515 (1)

 Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212, O’Neill House
 Office Building, Washington, DC 20515 (1)

 Director, Housing and Community Development Issue Area, United States General Accounting
 Office, 441 G Street, NW, Room 2474, Washington, DC 20548 (Attention: Judy England-
 Joseph) (1)

 Steve Redburn, Chief, Housing Branch Office of Management & Budget, 725 17th Street, NW,
 Room 9226, New England Executive Office Building, Washington, DC 20503 (1)




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