oversight

North Bergen Housing Authority, Low Rent Housing Program, North Bergen, New Jersey

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-09-01.

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

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                                         U. S. Department of Housing and Urban Development
                                                                  New York/New Jersey Office
                                                               Jacob K. Javits Federal Building
                                                                 26 Federal Plaza - Room 3430
                                                             New York, New York 10278-0068

                                                         OFFICE OF INSPECTOR GENERAL
                                                                          Office of Audit

September 1, 2000                                                      Audit Memorandum
                                                                       No. 00-NY-202-1802

TO:    Carmen Valenti, Director, Office of Public Housing, 2FPH


FROM: Alexander C. Malloy, District Inspector General for Audit, 2AGA


SUBJECT:       North Bergen Housing Authority
               Low Rent Housing Program
               North Bergen, New Jersey

In response to a citizen complaint, we performed a limited review of the Housing Authority of the
Township of North Bergen (herein referred to as the Public Housing Authority (PHA). The review
was conducted to determine the validity of complaints pertaining to the PHA’s tenant selection
procedures and occupancy policy. Specifically, the complainant alleged that: (1) tenants were not
reporting their full income or family size; (2) tenants were allowed to occupy units that exceeded
their needs; (3) employees were not required to pay appropriate rents; and (4) applicants were
selected without regard to waiting lists. The review covered the period from January 1, 1999 to
December 31, 1999. Our onsite work was performed between April and July 2000.

To accomplish our objective, we reviewed the PHA’s tenant files, application logs, and occupancy
policies and records. We also reviewed documentation provided by the HUD New Jersey State
Office (NJSO), and Federal, State and local government regulations. In addition, we interviewed
members of the PHA’s staff including management officials.

Within 60 days, please furnish this office, for each recommendation cited in this memorandum 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 review.

If you have any questions, please contact William H. Rooney, Assistant District Inspector General
for Audit at (212) 264-8000, extension 3976.




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                                             SUMMARY

We conducted a limited review of the PHA’s operations to determine the validity of complaints
pertaining to the PHA’s tenant selection procedures and occupancy policy. Specifically, the
complainant alleged that: (1) tenants were not reporting their full income or family size; (2) tenants
were allowed to occupy units that exceeded their needs; (3) employees were not required to pay
appropriate rents; (4) applicants were selected without regard to waiting lists.

Our review disclosed that three tenants (two of whom were named in the complaint) did not
disclose their entire household income. Therefore, the amount of each tenant’s rent, as computed
by the PHA, was not accurate. Also, the PHA did not collect back rent from those tenants after
discovering that their rents were not correct. This occurred because the PHA staff did not adhere
to Federal Regulations, nor did it exercise its own policy of taking action against tenants who
misrepresent their eligibility status. Specifically, PHA staff did not recover the assistance
improperly provided to the tenants whose rents were inaccurate. As a result, three tenants, who
are currently living at the PHA, inappropriately received a total of $42,468 in HUD assistance
because their rents were not based on their total household income.

We found that the second complaint is valid because numerous families are improperly housed in
units with either an insufficient or an excessive number of bedrooms. The PHA's Admission and
Continuing Occupancy Policy, dated December 17, 1999, provides that each bedroom should have
at least one occupant but no more than two occupants per bedroom. However, a review of family
compositions disclosed that the PHA placed large families in small units and did not relocate the
small families that occupied large units. PHA management officials stated that they have been
working on the problem for over a year, and provided us with lists showing tenants who have been
recently relocated. A review of the lists disclosed that that the PHA staff appear to be making an
effort to re-house seniors in appropriate size units. However, we believe that the PHA did not make
a sufficient effort to assure that large families received the appropriate size units. In this regard, we
found 21 instances where large families were overcrowded; while at the same time, 19 large units
(12 two bedroom and 7 three bedroom units) contained tenants that had small families.

We found that the third complaint is not valid. The PHA reduces the rent of employees who
reside at the PHA and are on call 24 hours a day to assist the PHA in performing various PHA
functions. In return, the rents of those employees are reduced to $100 per month. This gives the
appearance that employees are not required to pay appropriate rents. However, a review of this
matter disclosed that HUD allows PHAs to have such arrangements with tenant employees, and
that the tenant employees at the subject PHA are paying the appropriate amount of rents.

Regarding the fourth complaint, we found that this complaint is not valid. Our review disclosed
that when applicants apply for units at the PHA, they are assigned priorities, such as a resident or a
non-resident status. An applicant who is a resident in the PHA’s area is given a higher priority for
placement in a PHA unit than an applicant who is a non-resident. Thus, a resident applicant who
recently applied for a unit at the PHA, will most likely be placed in a unit before a non-resident
applicant. This gives the appearance that applicants are selected without regard to the waiting list,
when in fact it is allowable according to HUD’s polices.



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Regarding the first and second complaints, which are valid, we recommend that: (1) the NJSO
require the PHA to collect back rent of $42,468 from those tenants whose rents were inaccurately
computed; and (2) the NJSO direct the PHA to increase its efforts to relocate those families that are
overcrowded into appropriate size units.

We held an exit conference on August 3, 2000 at the PHA, which was attended by the PHA’s
Executive Director, Executive Assistant, and the HUD Office of Inspector General (OIG), Senior
Auditor. The Executive Director concurred with our findings, provided informal details regarding
PHA actions to resolve the findings, but declined to provide a written response for inclusion in this
report.


                                         BACKGROUND


The Housing Authority of the Township of North Bergen (PHA) was created through a resolution
of the Township of North Bergen, New Jersey. It was organized as a public housing authority as
defined by State Statute N.J.S.A. 4A: 12A-1, et seq. (the Housing Authority Act), to provide
housing for eligible low and moderate-income families. The PHA functions under the
supervision of HUD and the N.J. Department of Community Affairs (DCA). The PHA's Board
of Commissioners is a seven-member board with six members appointed locally and one member
appointed by the DCA Commissioner.

The Board of Commissioners is ultimately responsible for ensuring that the PHA complies with
Federal, State and Local regulations and policies. The Executive Director is responsible for
carrying out daily activities and the general administration and management of the PHA.

The PHA administers 1,405 units as follows:

Program                     Contract No.      Project Number         Units Authorized

Low-Income                     NY-214         NJ 4-1, 2, 3 & 4               985
Section 8 Certificates         NY-1210        NJ 39-E-004-008                310
Section 8 Vouchers             NY-1210        NJ 39-V-004-009                110

The PHA also received Community Development Block Grant funds from the Township. The
funds are not designated by a Grant Agreement or Contract and the costs are capitalized as part of
the Low-Income Housing Program.




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                                   RESULTS OF REVIEW




COMPLAINT 1

Tenants were not reporting their full income or family size.

EVALUATION OF COMPLAINT 1

Our review disclosed that the first complaint is valid because three tenants (two of whom were
named in the complaint) received income that was not included in the household income that was
used to compute their rents. (See Finding 1 below.)

We were unable to determine if other allegations regarding unreported household income or
unreported family size had merit; therefore, we forwarded the names of the various tenants to our
Office of Investigation for further review. When the Office of Investigation completes its review
you will be provided the results.

Finding 1

The PHA did not collect back rent from tenants whose rents were not based on their total
household income.

Our review disclosed that three tenants (two of whom were named in the complaint) did not
disclose their entire household income. Therefore, the amount of each tenant’s rent, as computed
by the PHA, was not accurate. Also, the PHA did not collect back rent from those tenants after
discovering that their rents were not correct. This occurred because the PHA staff did not adhere
to Federal Regulations, nor did it exercise its own policy of taking action against tenants who
misrepresent their eligibility status. Specifically, PHA staff did not recover the assistance
improperly provided to the tenants whose rents were inaccurate. As a result, three tenants, who
are currently living at the PHA, inappropriately received a total of $42,468 in HUD assistance
because their rents were not based on their total household income.

The Code of Federal Regulations, 24 CFR, Part 5.528, requires tenants to reimburse HUD for
funds they receive by misrepresenting their eligibility status. Moreover, the Code encourages the
PHA to refer such tenants to the Office of Inspector General for further investigation. The PHA's
own policy states that tenants who do not provide timely and accurate information regarding their
incomes will have their leases terminated.

Our review disclosed that a retired professor avoided paying $32,400 in rent by not reporting his
pension benefits between 1995 and 1998. The review further disclosed that a retired postal
worker avoided paying rent in the amount of $7,020 by not reporting his pension benefits
between 1994 and 1997. When PHA staff became aware of the unreported income, the PHA



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confirmed the amount of the pensions, re-certified the tenants and began charging them the
appropriate rents. However, we found no evidence that the PHA staff attempted to determine
and recover the undercharged amounts that resulted from the rents being inaccurately computed.

Additionally, a brother and sister living at the PHA were not charged rent in the amount of
$3,048 during the period between July 1999 and February 2000. The PHA only used the sister’s
income in the rent calculations. However, our review disclosed that the brother’s income should
have been included in the total household income prior to February 2000, and that back rent
should be paid to the PHA.

Auditee Comments

During the Exit Conference, the Executive Director stated that one tenant executed a payment
agreement with the PHA, but the other two tenants (retired professor and postal worker) have not
been willing to sign a payment agreement. The Executive Director stated that the PHA staff will
continue its efforts to collect all back rents.

Evaluation of Auditee Comments

No evaluation of Auditee Comments is necessary.

RECOMMENDATIONS

1A.    We recommend that the NJSO require the PHA to collect back rent of $42,468 from
       those tenants, whose rents were inaccurately computed.


COMPLAINT 2

Tenants were allowed to occupy units that exceeded their needs.

EVALUATION OF COMPLAINT 1

We found that this complaint is valid because the PHA has numerous families residing in over
crowded or under utilized units. (See Finding 2.)

Finding 2

The PHA has allowed tenants to occupy units that are either too small or too large for the
size of their families.

The PHA's Admission and Continuing Occupancy Policy dated December 17, 1999, provides
that each bedroom should have at least one occupant but no more than two occupants per
bedroom. A review of family compositions at the PHA disclosed that large families are residing
in small units, and that small families in large units are not being relocated.



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PHA Officials stated that they have been working on the problem of overcrowded and under
utilized units for over a year. Those officials provided us with lists showing tenants who have
been recently relocated. Specifically, the lists showed that 19 families were relocated to larger
units and that three families were in process of being relocated. Also, it showed that nine
families were relocated into smaller units in the Senior Buildings. In this regard, the PHA staff
appear to be making an effort to correct this problem.

However, we believe that more needs to be done. We found that 21 one bedroom units were
overcrowded; while at the same time 19 large units (12 two bedroom and 7 three bedroom units)
contained tenants that have small families. We observed that in at least 15 of the 19 large units,
small families were in these units since 1997 and possibly earlier. This occurred because of
changes in family compositions. For example, families had children who reached adulthood and
moved out of the units.

Auditee Comments

During the Exit Conference, the Executive Director stated that the PHA is making progress, and
will continue its efforts to relocate tenants. The Executive Director also said that the PHA has
only 6 families left to relocate.
.
Evaluation of Auditee Comments

No evaluation of Auditee Comments is necessary.

RECOMMENDATIONS

2A.    We recommend that the NJSO direct the PHA to increase its efforts to relocate families to
       appropriate size units to alleviate the overcrowded conditions.


COMPLAINT 3

Employees were not required to pay appropriate rents.

EVALUATION OF COMPLAINT 3

We found that this complaint is not valid. The PHA reduces the rent of some employees who
reside at the PHA and are on call 24 hours a day to assist the PHA in performing PHA various
functions. In return, the rents for those employees are reduced to $100 per month. Our review of
this matter disclosed that HUD allows PHAs to have such arrangements with tenant employees
and that tenant employees at the subject PHA are paying the appropriate amount of rents.




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COMPLAINT 4

Applicants were selected without regard to waiting lists.

EVALUATION OF COMPLAINT 4

We found that this complaint is not valid. Our review disclosed that when applicants apply for
units at the PHA, they are assigned priorities, such as a residents or a non-residents status. An
applicant who is a resident in the PHA’s area is given a higher priority for placement in a unit than
an applicant who is a non-resident. Thus, a resident applicant who recently applied for a unit at the
PHA, will most likely be placed in a unit before a non-resident applicant. This gives the appearance
that applicants are selected without regard to the waiting list, when in fact it is allowable according
to HUD’s policies.




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Distribution

Deputy Secretary, SD, Room 10100
Chief of Staff, S Room 10000
Special Assistant to the Deputy Secretary for Project Management, SC, Room 10100
Acting Assistant Secretary for Administration, S, Room 10110
Assistant Secretary for Congressional & 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 Chief of Staff for Operations, S, Room 10226
Deputy Chief of Staff for Programs & Policy, S , Room 10226
Deputy Assistant Secretary for Public Affairs, W, Room 10222
Special Assistant for Inter-Faith Community Outreach, S, Room 10222
Executive Officer for Administrative Operations and Management, S, Room 10220
Senior Advisor to the Secretary for Pine Ridge Project, W, Room 10216
General Counsel, C, Room 10214
Office of the Deputy General Counsel, CB, Room 10220
Director, Office of Federal Housing Enterprise Oversight, 0 , 9th Floor Mailroom
Assistant Secretary for Housing/Federal Housing Commissioner, H, Room 9100
Office of Policy Development and Research, R, Room 8100
Assistant Secretary for Community Planning and Development, D, Room 7100
Government National Mortgage Association, T, Room 6100
Assistant Secretary for Fair & Equal Opportunity, E, Room 5100
Chief Procurement Officer, N, Room 5184
Assistant Secretary for Public and Indian Housing, P, Room 4100
Chief Information Officer, Q, Room 3152
Director, Office of Departmental Operations & Coordination, I, Room 2124
Chief Financial Officer, F, Room 2202
Director, Enforcement Center, V, 200 Portals Building
Director, X, Real Estate Assessment Center, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y, 4000 Portals Building

Secretary’s Representative, New York/New Jersey, 2AS (2)
Senior Community-Builder Coordinator, 2FS (2)
Director, Office of Public Housing, 2FP, Newark State Building
Assistant General Counsel, New York/New Jersey, 2AC
Assistant Deputy Secretary for Field Policy & Management, SDF, Room 7108
Director, Office of Budget, FO (Room 3270)

CFO, Mid-Atlantic Field Office, 3AFI (2)


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Office of Public & Indian Housing, PF (Attn: Management Analyst, Room 5156
Departmental Audit Liaison Officer, FM, Room 2206 (2)
Acquisitions Librarian, Library, AS (Room 8141)
Executive Director, North Bergen Housing Authority, North Bergen, New Jersey

Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug Policy
& Human Resources, B 373 Rayburn House Office Building, Washington, DC
Chief, Housing Branch, Office of Management and Budget, 725 17th Street, NW,
 Room 9226, New Executive Office Building, Washington, DC 20503

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 Building, House of Representatives
Washington, DC 20515

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

Subcommittee on Oversight & Investigations
Room 212, O’Neil House Building
Washington, DC 20515
Attn: Ms. Cindy Fogleman

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




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