oversight

Review of Village Garden Apartments� Operations, Aurora, Colorado

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-08-18.

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

                                    U.S. Department of Housing and Urban Development
                                 Office of Inspector General, Rocky Mountain
                                           633 17th Street, North Tower, 14th Floor
                                                  Denver, CO 80202-3607
                                                        (303) 672-5452
                                                     Fax (303) 672-5006

OFFICE OF INSPECTOR GENERAL FOR AUDIT
                                                                                    Audit Memorandum
                                                                                  No. 00-DE-212-1802

August 18, 2000

MEMORANDUM FOR: Larry Sidebottom, Director, Office of Multifamily Housing, 8AHMLA



FROM: Robert Gwin, District Inspector General for Audit, 8AGA

SUBJECT: Review of Village Garden Apartments’ Operations, Aurora, Colorado


                                           Introduction
We completed our survey of Village Garden Apartments and records maintained by the management
company, Urban Inc. Our objective was to identify, review, and test the management controls utilized
over the functions involving Cash, Tenant Occupancy, Bookkeeping, Section 8 Housing Assistance
Payments and Housing Quality Standards. We reviewed the activities of both entities, in the above
mentioned functions, for the period of January 1, 1998 through March 9, 2000.

During the survey, we reviewed the tenant and maintenance files and the cash accountability records of
Village Garden Apartments; and we reviewed the tenant files, and cash accountability and bookkeeping
records of the management company, Urban Inc., as they apply to Village Garden Apartments. We
performed tests of the controls for these functions using a random sample selection of files, records and
transactions. We interviewed the staff of Village Garden Apartments, Urban Inc., the Denver
Multifamily Housing and the Colorado Housing and Finance Authority. We also reviewed the project
files of both government entities.

                                           Background
Village Garden Apartments, Project Number 101-35373-PM-L8, is a 60 unit multifamily property
consisting of five two story buildings. The project is located at 13032 E. 14th Place, Aurora, Colorado.
The mortgagor entity is registered as Village Gardens Company, a limited partnership. Steve Shrailberg
is the project’s general partner.
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The project was rehabilitated under HUD’s Moderate Rehabilitation Program and was available for
occupancy in 1984. HUD insured the mortgage under Section 221(d)(4) of the National Housing Act.
The project was financed with Bonds through the Colorado Housing and Finance Authority. The HUD
mortgage documents were executed by the general partner. The original mortgage amount was
$1,710,000; as of December 31, 1998, the balance due was $1,431,347.

The Owner executed Regulatory Agreements with HUD and with the Colorado Housing and Finance
Authority, the holding mortgagee, in April 1984. These agreements limit the use of the project’s assets
and require the owner to keep the property in good repair and condition. The Regulatory Agreements
prescribe the conditions for distribution to owners.

The project is included under the Annual Contributions Contract between Colorado Housing and
Finance Authority and HUD, under Project Number CO99-K094-003. All of the project units are
included under the Section 8 Housing Assistance Payments Contract between the Owner and the
Authority, which became effective July 23, 1984, for buildings #3 and #5, and August 31, 1984, for
buildings #1, #6 and #7. The term of the contract is 15 years. Under the Section 8 Program, HUD
subsidizes rents paid by qualified tenants.

The Colorado Housing and Finance Authority obtained a waiver from a HUD Assistant Secretary on
May 9, 1984, which allows the Authority to transfer certain administrative responsibilities to the owners
and management agents. The specific administrative functions are: (1) establishing and maintaining a
tenant waiting list; (2) initial determination of family eligibility and contribution towards rent; (3) annual
family reexaminations and family contribution adjustments; (4) tenant selection; (5) family briefings; and
(6) determination of family ineligibility for continued assistance. The waiver stated that it does not
relieve the Colorado Housing and Finance Authority of its responsibilities in administering the Moderate
Rehabilitation Program. An Administrative Services Agreement, between the Colorado Housing and
Finance Authority and the Owner, transfers the specific tenant occupancy responsibilities to the Owner.

The project is managed by an identity-of-interest management agent, Urban Inc., located in Denver,
Colorado. This is also the location of the projects books and records. Records maintained at the
project consist primarily of copies of current tenant files and maintenance records for the units.

We conducted our on-site survey work from March 6, 2000 through March 17, 2000. We conducted
our review in accordance with Generally Accepted Government Auditing Standards.

                                         Results of Review
In our review we examined records that were maintained by Village Garden Apartments and Urban Inc.
Management Company. All of the records reviewed pertained to the functions of: Cash, Tenant
Occupancy, Bookkeeping, Section 8 Housing Assistance Payments and Housing Quality Standards.
We found that Village Garden Apartments and Urban Inc. were adequately fulfilling the obligations of




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their Regulatory Agreement and Housing Assistance Payment Contract and no significant deficiencies
were noted.

In summary, we concluded that the internal controls incorporated by Urban Inc. were thorough,
comprehensive and effective. All of the internal controls were being effectively utilized by the staff of
Village Garden Apartments and Urban Inc. Several minor discrepancies were noted and passed on to
the auditee for correction.




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APPENDIX
Distribution
Secretary’s Representative, 8AS (2)
Director, Office of Multifamily Housing, 8AHMLA (2)
Deputy Secretary, SD, Room 10100
Chief of Staff, S, Room 10000
Special Assistant to the Deputy Secretary for Project Management, SD, Room 10100
Acting Assistant Secretary for Administration, S, Room 10110
Assistant Secretary for Congressional and Intergovernmental Relations, J, Room 10120
Senior Advisor to the Secretary, Office of Public Affairs, S, Room 10132
Director of Scheduling and Advance, AL, Room 10158
Counselor to the Secretary, S, Room 10234
Deputy Chief of Staff, S, Room 10226
Deputy Assistant Secretary for Public Affairs, W, Room 10222
Executive Officer for Administrative Operations and Management, S, Room 10220
General Counsel, C, Room 10214
Assistant Secretary for Housing/Federal Housing Commissioner, H, Room 9100
Office of Policy Development and Research, R, Room 8100
Inspector General, G, Room 8256
Chief Information Officer, Q, Room 3152
Director, Office of Departmental Operations and Coordination, I, Room 2124
Chief Financial Officer, F, Room 2202
Director, Office of Multifamily Assistance Restructuring, Y, 4000 Portals Building
Assistant Deputy Secretary for Field Policy and Management, SDF, Room 7108
Deputy Chief Financial Officer for Finance, FF, Room 2202
Departmental Audit Liaison Officer, FM, Room 2206 (2)
Headquarters Audit Liaison Officer, Housing, HF, Room 9116 (2)
Acquisitions Librarian, Library, AS, Room 8141
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, 340 Dirksen
  Senate Office Building, United States Senate, Washington, DC 20510
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs, 706
  Hart Senate Office Building, United States Senate, Washington, DC 20510
Honorable Dan Burton, Chairman, Committee on Governmental Reform, 2185 Rayburn Bldg.,
  House of Representatives, Washington, DC 20515
Henry A. Waxman, Ranking Member, Committee on Governmental Reform, 2204 Rayburn
  Bldg., House of Representatives, Washington, DC 20515
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212, O’Neil
  House Office Building, Washington, DC 20515
Mr. Pete Sessions, Government Reform and Oversight Committee, Room 212, O’Neil House
  Office Building, Washington, DC 20515



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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 )
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street,
  NW., Room 9226, New Executive Office Building, Washington, DC 20503
Mr. Pete Garcia, Asset Management Office, Colorado Housing and Finance Authority, 1981
Blake St., Denver, CO 80202
Mr. James Murphy, Vice President, Urban Inc., 5000 S. Quebec St., Suite 400, Denver, CO
  80237




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