HOUSING AUTHORITY OF THE
CITY OF MIAMI BEACH
MIAMI BEACH, FLORIDA
01-AT-202-1001
OCTOBER 20, 2000
OFFICE OF AUDIT
SOUTHEAST/CARIBBEAN DISTRICT
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Issue Date
October 20, 2000
Audit Case Number
01-AT-202-1001
TO: Karen Cato-Turner, Director, Office of Public Housing,
Florida State Office, 4DPH
FROM: Nancy H. Cooper
District Inspector General for Audit-Southeast/Caribbean, 4AGA
SUBJECT: Housing Authority of the City of Miami Beach
Miami Beach, Florida
We completed an audit of the Housing Authority of the City of Miami Beach, Florida (HACMB).
We conducted the audit pursuant to a request by your office dated July 9, 1999. This report
contains four findings that require follow-up action by your office to ensure HACMB
implements appropriate corrective action.
Within 60 days please give us a status report, for each recommendation in this report, on: (1) the
corrective action taken; (2) the proposed corrective action and the date to be completed; or (3)
why action is considered unnecessary. Also, please furnish us copies of any correspondence or
directives issued because of the audit.
Should you or your staff have questions, please contact James D. McKay, Assistant District
Inspector General for Audit, or Senior Auditor Narcell Stamps at (404) 331-3369.
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Management Memorandum
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Executive Summary
We conducted the audit in response to a request by the Department of Housing and Urban
Development (HUD), Office of Public Housing. We reviewed selected aspects of the HACMB’s
Section 8 and public housing operations. Our primary objectives were to determine if the
HACMB complied with HUD and/or State of Florida requirements for: (1) Section 8
expenditures for inter-local projects with the City of Miami Beach (City); (2) Section 8
expenditures for construction of a single parent family housing and resource center; (3) Section 8
rent reasonableness and rent increases; and (4) procurement and general disbursements of public
housing funds.
The audit disclosed violations of HUD requirements with regard to each audit objective and over
$1 million in questioned costs and $9,267 ineligible costs. These conditions resulted from the
HACMB’s mismanagement of its Section 8 and public housing programs and its financial affairs.
Specifically, the HACMB:
• Spent $795,178 of its Section 8 reserves for questionable activities provided through
contracts with the City. The HACMB paid the City for police protection, recreation, and
code enforcement. We questioned the reasonableness and necessity of the $795,178 paid
for police protection, code enforcement and recreation. The costs were for public
services the City should have provided from its local tax revenues.
• Spent over $2 million in a failed effort to provide housing and social services. In 1995
HUD waived regulations to allow HACMB to refund bonds to refinance Rebecca
Towers North on the condition that HACMB use a portion of the bond proceeds to
construct a women and children housing and resource center. The HACMB spent over
$2 million for site acquisition, site improvements, architect fees, City fees and various
preliminary costs for the planned project. However, the project had been delayed for
over 5 years and the HACMB had lost or was at risk of losing almost all of the $5.8
million originally committed to fund the project. Also, HACMB’s failure to complete
the project deprived the City’s low-income community of the needed housing and social
services. We questioned $209,570 paid to the City for fees and permits because the fees
were excessive considering the joint venture project was not constructed.
• Did not adhere to HUD requirements designed to assure the reasonableness of Section 8
rents. The HACMB also did not timely execute new leases for tenants who moved from
one assisted unit to another, and did not pay tenants the amounts by which their utility
allowances exceeded the family’s contribution for rent. As a result, there was
inadequate assurance that HUD subsidized reasonable Section 8 rents and that tenants
received the full benefit of their utility allowances. We noted some cases where the
HACMB and owners provided false representations concerning rent reasonableness.
These conditions caused HUD to pay $9,267 in excessive subsidy.
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Executive Summary
• Had not implemented corrective actions recommended by past reviewers of its
operations to comply with procurement requirements. For instance, subsequent to being
put on notice concerning violations of procurement requirements, the HACMB acquired
legal services and small purchases without adequate assurance that they obtained the
most advantageous cost from the most qualified sources.
We recommend that you require HACMB to: (1) obtain additional supporting documentation or
recover the $1,004,748 paid to the City, (2) reimburse HUD $9,267 for excessive housing
assistance payments (HAP) to owners, (3) submit evidence that it has the financial capability and
commitment to complete construction of the center within a reasonable time, and (4) establish
the necessary controls to improve its operations. Although various reviews have identified
noncompliance and systemic problems, the HACMB has shown a disregard for HUD
requirements and associated management controls. If improvements are not made within a
reasonable period of time, we recommend you consider declaring HACMB in substantial default,
and identify other entities that can effectively carry out the programs. We also recommend that
you restrict the use of all Section 8 administrative fee reserves until you determine and provide
written notice to the HACMB that it has substantially resolved the systemic problems in its
Section 8 Program, and the issues identified in the findings.
We provided copies of the draft report to the HACMB and HUD’s Florida State Office. We also
discussed the draft report with HACMB officials at an exit conference on August 5, 2000, and
with HUD officials on August 6, 2000. The HACMB provided its written response to the draft
report on September 27, 2000. The HACMB disagreed with findings 1 and 2 but they basically
agreed with findings 3 and 4. We considered HACMB and HUD responses in finalizing the
report. The HACMB’s comments are summarized within each finding and included in their
entirety in Appendix B.
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Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Findings
1 Section 8 Reserve Funds Used to Pay for Questionable
Activities 5
2 Housing and Social Services Not Provided 13
3 Mismanagement of Section 8 Program 21
4 Need to Improve Procurement Administration 27
Management Controls 33
Follow-Up On Prior Audits 35
Appendices
A Schedule of Ineligible and Unsupported Costs 37
B HACMB Comments 39
C Distribution 43
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Abbreviations
CFR Code of Federal Regulations
ED Executive Director
HA Housing Authority
HACMB Housing Authority of the City of Miami Beach
HAP Housing Assistance Payments
HQS Housing Quality Standards
HUD U.S. Department of Housing and Urban Development
IPA Independent Public Accountant
RFP Request for Proposal
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Introduction
Background
The Housing Authority of the City of Miami Beach (HACMB) is a public body organized under
Section 421 of the Florida State Statutes. As of July 2000, the HACMB administered 2,943
housing units for low to moderate-income families. The HACMB owned and operated a 200-
unit conventional public housing project for the elderly, a 200 unit Section 8 new construction
project, and a 16 unit affordable housing project. The HACMB also administered 1,856 Section
8 vouchers, 346 Section 8 certificates, and 131 Section 8 moderate rehabilitation units. In
addition, the HACMB was the contract administrator for 3 Section 8 substantial rehabilitation
projects that consisted of approximately 194 units.
A five-member Board of Commissioners, who were appointed and served pursuant to Florida
State Law, governed the HACMB. The Board of Commissioners was primarily responsible for
ensuring the integrity of the HACMB’s programs and operations, fiscal management, and hiring
the Executive Director (ED). The ED was responsible for the day-to-day management of the
HACMB, implementation of Board policies and procedures, and overseeing HACMB staff that
consisted of approximately 44 employees.
Prior to and during our fieldwork, several independent
History entities reviewed the HACMB operations and detected
serious problems related to its administration of programs
and its financial affairs. The different reviewers reported
similar deficiencies in the HACMB’s operations.
Specifically:
• In 1999, the HACMB hired a consultant to conduct
a review of its financial operations, accounting
department, and Section 8 department. The
consultant reported several financial management
deficiencies and gross inadequacies in determining
rent reasonableness and lack of procedures in its
Section 8 department.
• In February 2000, HACMB’s independent public
accountant (IPA) issued a report on the results of an
audit of the HACMB’s operations for the fiscal year
ended June 30, 1999. The report contained 37
findings that included issues concerning Section 8
and financial management. HACMB’s IPA audit
for the fiscal year ended June 30, 1998, contained a
finding on procurement issues.
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Introduction
• In February 2000, HUD’s Office of Public Housing
conducted an In-depth Consolidated Management
Review of HACMB’s operations (report issued June
22, 2000). The report contained 30 findings,
including several related to Section 8 issues. Due to
the seriousness of the Section 8 issues, HUD placed
the HACMB’s Section 8 Program on a 1 year
probation.
The following table shows the similarity of findings cited
by the various reports:
HUD’s
Consultant’s 1998 and June
August 1999 1999 IPA 2000
Findings / Concerns Report Audits Report
Section 8
Rent Reasonableness / Rent Increase ü ü ü
Utility Allowance / Reimbursement ü ü
HQS / Abatement of HAP ü ü
Incomplete files / Waiting List ü ü
Financial Management
Cash Controls / Lack of Safeguards ü ü
Cost Allocation / Budgeting / ü ü ü
Monitoring
Accounting and Recording of Expenses, ü ü ü
Assets, and Individual Funds
Segregation of Duties ü ü
Procurement ü ü
Lack of Policies and Procedures ü ü
HACMB recently developed an action plan to address
findings and concerns cited in the HUD report. However, it
had not prepared a written plan with target dates to address
the IPA findings. Following these reviews, the HACMB
initiated some organizational and operational changes in an
effort to improve performance. During our audit, the
HACMB hired a new ED (who reported on July 17, 2000)
and Finance Director, and initiated measures to address
problems within its Section 8 department. For instance, the
HACMB assigned its Executive Secretary to oversee both
the Section 8 leasing and inspection departments. The
HACMB also retained the services of a consultant to help
the new Section 8 manager address the issues raised by
HUD. However, as cited in our findings, we observed a
need for continued improvement.
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Introduction
We conducted the review based on an audit request from
Audit objectives, HUD concerning the reasonableness of Section 8 contract
scope, and rents. In planning the audit, we considered the findings and
methodology concerns cited in past reviews of HACMB’s operations by
HUD, independent auditors, and consultants. We
developed our audit objectives to further examine certain
issues, in addition to rent reasonableness, that were subject
to waste and abuse and to determine if such conditions had
occurred.
Our primary objectives were to determine if the HACMB
complied with HUD and/or State of Florida requirements
for: (1) Section 8 expenditures for inter-local projects with
the City of Miami Beach; (2) Section 8 expenditures for
construction of a single parent and family housing resource
center; (3) Section 8 rent reasonableness and rent increases;
and (4) procurement and general disbursements of public
housing funds.
To accomplish the audit objectives, we examined records
maintained by the HACMB, City of Miami Beach,
landlords, HUD, and HACMB’s independent auditor. We
also interviewed HACMB (past and present), City, and
HUD officials as well as landlords, tenants, and
consultants. We visited housing units to determine their
condition but we did not conduct a detailed review for
housing quality standards (HQS) because the conditions we
observed were similar to those included in recent reports by
HUD and a consultant. Those reports contained
appropriate recommendations for corrective action. While
conducting the review, we used judgmental sampling
methods. Specifically, we:
• Examined 20 tenant files for rent comparability
and/or rent increases.
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Introduction
• Visited the offices of five landlords and reviewed
records related to assisted and unassisted rents
charged at 11 projects that consisted of 163 units.
• Interviewed 27 tenants. We asked questions to
determine the propriety of the tenant selection for
Section 8 assistance, amount of subsidized rent,
tenant’s rent payments to landlords, and payments
to landlords for extra services (e.g., furniture or
other fees). Regarding fees for extra services, we
also asked the tenants to confirm whether or not
they received anything of value in return for the
fees.
• Walked through 40 units to determine their general
condition and/or to determine if the unit bedroom
size agreed with what the files showed.
• Examined 78 percent of the $938,872 paid to the
City for activities funded through inter-local
agreements and assessed the progress of HACMB’s
efforts to construct the single parent family housing
and resource center.
• Tested disbursements from the low-income housing
program that equaled or exceeded $1,000 for the
period December 1999 through May 2000.
We performed the on-site review in September 1999 and
January through July 2000. The audit generally covered the
period July 1, 1997, through December 31, 1999.
However, we extended coverage to other periods when
needed to ensure full development of the issues cited in the
findings. We conducted the audit in accordance with
generally accepted government auditing standards
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Finding 1
Section 8 Reserve Funds Used to Pay for
Questionable Activities
The HACMB spent $795,178 in Section 8 reserve funds for questionable projects implemented
by the City of Miami Beach. HACMB’s records indicated that the City might have pressured it
to execute contracts for the projects. However, the HACMB was responsible for ensuring proper
use of the Section 8 funds. Specifically, the HACMB funded the projects without adequate
consideration of an opinion from its attorney that some of the projects did not represent an
allowed use of funds and that other projects required attention to certain details during
implementation to ensure their eligibility. As a result, the HACMB paid the City $795,178 for
three projects which were for activities the City should have provided and paid from local tax
revenues. The expenditures occurred because the HACMB’s Board of Commissioners and
Executive Director mismanaged Section 8 resources.
Housing authorities may use administrative fee reserves for other housing purposes permitted by
state and local law (24 Code of Federal Regulations (CFR), 982.155 (b)(1)). Florida’s Housing
Statute states that no housing authority shall construct or operate any housing project as a source
of revenue to the City (Section 421.09).
On June 11, 1992, HACMB and City officials met and
Origin of funding agreed to a mission statement designed to utilize portions of
arrangement the HACMB’s large Section 8 reserves for community
development activities. The mission statement provided
that the projects must meet HUD’s criteria and receive
annual HUD approval. On June 24, 1992, the HACMB’s
Board adopted a resolution that approved the mission
statement. The HACMB’s attorney prepared a
memorandum, dated October 13, 1992, which indicated
that the City used some pressure to persuade the HACMB
to enter into contracts for project services. The
memorandum, addressed to the Executive Director and the
HACMB’s Board, commented that:
” …A perceived threat that the City administration
will ‘take over’ the Housing Authority if it does not
acquiesce is not sufficient consideration for the
Authority to contractually obligate itself to
relinquish control over a substantial portion of its
cash reserves.”
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Finding 1
During the October 13, 1992, HACMB Board meeting a
City official stated that the City never threatened to take
over the housing authority.
Funded activities On November 10, 1992, HACMB’s Board of
Commissioners voted to fund projects for police,
recreation, childcare, and code enforcement to be
implemented by the City. HACMB’s attorney attended the
Board meeting and voiced his objections and reservations
to the proposed projects in an oral presentation before the
Board and in a memorandum, also dated November 10,
addressed to the HACMB Board Chairman, Executive
Director, and Board. The memorandum provided a legal
opinion which opposed funding for the police and code
enforcement projects and provided conditional approval of
the recreation and childcare projects. However, the Board
approved the police and code enforcement projects despite
the valid concerns raised by the attorney. Also, the
HACMB did not heed the attorney’s advice to ensure that
the recreation program was implemented to benefit the
targeted group of residents. The HACMB heeded the
attorney’s advice in the way it implemented the childcare
project. The contracts between the HACMB and City
contained provisions that required the City to reimburse the
HACMB should HUD take exception to contract costs.
From inception through February 2000, the HACMB
Project implementation expended $938,619 of its Section 8 administrative fee
reserves to fund projects with the City through inter-local
agreements. We used judgmental tests during our review of
HACMB and City cost records and performance measures
associated with the projects. The costs incurred for the
childcare program were supported and reasonable.
However, we identified questions concerning the police,
recreation, and code enforcement activities that paralleled
the concerns expressed by HACMB’s attorney prior to the
projects’ initial approval for funding:
Activity Total Costs Allowed Questioned
Police Protection $425,842 $425,842
Recreation 335,736 335,736
Childcare 143,441 $143,441
Code Enforcement 33,600 33,600
Total $938,619 $143,441 $795,178
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Finding 1
The HACMB inappropriately paid the City $795,178 for
projects that the City should have funded with local tax
revenues. We identified the following issues that caused us
to question the amounts the HACMB paid to the City for
police protection, recreation, and code enforcement
projects:
Police protection - The HACMB funded the project
over the objections of its attorney who advised the
HACMB that the activity did not represent an allowed
use of funds. The attorney’s November 10, 1992,
memorandum stated:
“This proposal, for the HACMB to fund two
new CMB [City of Miami Beach] police
officers, in my opinion, does not set forth a
permitted or lawful use of housing assistance
funds. If we had massive, self-contained
housing projects in Miami Beach, requiring
special police services on a regular basis, the
Housing Authority might be permitted to
purchase police services from the City. It
should be noted that the Miami Beach
Housing Authority already employs private
security guards for the protection of its
public housing tenants.”
The Board minutes showed that HACMB
commissioners voted to approve the project despite the
attorney’s objections. The HACMB continued to fund
the project from November 1992 through the period
covered by our audit at a cost of $425,842.
We examined 100 percent of the costs. The agreements
called for police to patrol areas at and in the vicinity of
where Section 8 tenants lived and to provide other
services related to investigations and community
relations. The services were of the type normally
expected from a police force as routine services paid
from local tax revenues. The HACMB owned only two
large projects (200 units each) joined by a common
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Finding 1
walkway for which it employed a firm to provide
security. The other 2,600 privately owned Section 8
units were not in concentrated areas, but were scattered
throughout the Miami Beach area.
On September 9, 1992, the Assistant City Manager
informed the HACMB’s Board that the police
department had divided the City into 26 sectors. He
stated that an officer is responsible for patrolling each
sector and identifying areas within the sector they are
going to pay more attention to. This comment further
indicated that the City’s normal police patrol covered or
should have covered the areas and vicinity where
Section 8 tenants lived in privately owned housing.
We agree with the attorney’s determination that the
activity did not represent an allowable use of funds.
Recreation - The inter-local agreements stipulated or
implied that the recreation program would provide top
priority to tenants of Section 8 units and other
subsidized housing. The agreements did not limit the
level of assistance the program may provide to
individuals who were not in the target group. The later
agreements stated that the City would continue to
provide all transportation and related services for
participants.
The HACMB paid the City $335,736 for this activity
which we considered questionable. We examined costs
totaling $254,542 (76 percent) and determined that the
payments amounted to an operating subsidy for City
parks. To illustrate, the City claimed reimbursement for
general park operating expenditures such as salaries,
bus services, instructor fees, trophies, baseball
supplies/uniforms, picnic supplies, recreational
supplies, etc. The costs appeared to represent general
local government parks and recreation costs. Vendor
invoices did not support some of the payments. We
also noted that the City requested and received
reimbursement for $12,439 incurred for bus services.
The inter-local agreement stipulated that the City would
provide all transportation and related services for
participants in the program.
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Finding 1
Furthermore, the HACMB and City did not maintain
records to demonstrate whether any of the $335,736
benefited the target group. The HACMB did not heed
the advice of its legal counsel during its implementation
of the recreation activity to employ strict controls to
ensure that the program served those for whom it was
intended. The attorney stressed that the HACMB funds
must be utilized for the benefit of qualified housing
assistance recipients. We questioned the full $335,736
paid for this project because HACMB lacked any
documentation that the activity provided any
measurable benefit.
Code enforcement - The costs paid for this activity
appeared to be a supplement to the City’s code
enforcement division and it was not a reasonable and
necessary HACMB expense. We examined 100 percent
of the $33,600 the HACMB paid the City for the code
enforcement project. The agreement provided that the
activity was for one City code enforcement officer to
annually inspect 1,000 Section 8 units or units that
affect those living in subsidized housing. The
documentation provided to support the payments did
not show how many units the City inspected.
On November 10, 1992, the day the Board voted to
approve the project, HACMB’s attorney advised the
Board of Commissioners and Executive Director that
the code enforcement project did not meet the legal
requirements for funding because the HACMB
employed its own inspectors. The Board did not heed
the attorney’s advice and approved funding for the
project. We agreed with the attorney’s rationale and
assessment that the project did not meet the
requirements for HACMB funding. The activity
appeared to be a supplement to the City’s inspection
division for work that it was required to do anyway.
For instance, during the November 10 Board meeting,
the Assistant City Manager stated that the City was
behind on conducting preventive inspections and that
the HACMB funding would close the gap. HACMB’s
inspections supervisor stated he did not see a benefit to
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Finding 1
paying the City for code enforcement. The HACMB
funded the project for only 1 year (1992/93) at a cost of
$33,600.
The HACMB basically paid what the City billed for inter-
Inadequate monitoring local activities without adequately monitoring project costs
and services. For instance:
• Services were not provided at contract levels.
The HACMB did not establish adequate general
ledger expense accounts to track costs paid under
the inter-local agreements. Until November 1999,
the HACMB charged contract disbursements
directly to the 2826 reserve account. The only
payment charged to an expense account was check
number 25303, dated November 15, 1999, for
$163,330.15. The payment was charged to one
account; however, the check included $90,106 for
recreation, $63,754 for police protection, and
$9,470 for childcare. The HACMB had not
established accounts to track costs for each separate
activity. Separate accounts were needed to assure
that the City provided services at the contracted
level and price.
To illustrate, from inception of the inter-local
agreements through February 2000, the HACMB
paid the City $58,585 in excess of the contract
amount for police services (costs questioned above)
and $129,559 less than the contract amount for
childcare services. HACMB and City officials were
not aware of these conditions until we brought them
to their attention. The HACMB should have been
aware of contract payment trends and it should have
initiated timely actions to prevent the overpayment
and to assure that the City provided the contracted
level of childcare services.
• The HACMB disbursed funds in advance of its
need to pay for contract activities. In March
1993, the HACMB advanced $245,667 to the joint
benefit fund used to pay the City for inter-local
project activities. HACMB and City officials had
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Finding 1
to sign checks issued from the benefit account.
Large portions of the $245,667 remained in the
account for over a year without being utilized. For
instance, following the payment, the account
balance remained at over $200,000 for seven
months and over $100,000 for an additional four
months. We noted other similar periods of delayed
spending. As of February 29, 2000, the account had
a balance of $46,562. Interest earned on the funds
was charged back to the benefit account.
The above issues resulted from mismanagement of
financial affairs by the HACMB’s Board of Commissioners
and Executive Directors. The former HACMB attorney put
the Board on notice prior to their approval of the projects
that the police and code enforcement activities were not
allowable and that the recreation activity required special
considerations to ensure its eligibility. The Board virtually
ignored the attorney’s advice and approved the projects.
Furthermore, the Board did not obtain HUD approval for
use of the funds. The HACMB’s September 9, 1992, Board
minutes showed that HUD had reminded the HACMB of its
responsibility to ensure that each activity conform to the
statutes, regulations, and the obligations of the housing
commission.
On June 22, 2000, HUD issued a report stemming from its
HUD’s concerns February review of HACMB’s operations, which contained
an observation concerning the inter-local agreement. HUD
questioned the reasonableness of the cost and directed the
HACMB to cancel the contracts with the City and not to
award future contracts of this type to the City.
HACMB comments HACMB officials did not concur with our opinion that the
Authority and City did not realize services in excess of
baseline services for police, recreation, and code
enforcement services. HACMB officials believed the City
had provided services for police, code enforcement, and
recreation in excess of City baseline services to the benefit
of the population to and around the agency’s service area.
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Finding 1
HACMB officials stated they currently did not have an
inter-local agreement with the City for services. In the
event the Authority contemplated revisiting such
relationships with the City again in the future, the
Authority would 1) obtain proper authorization for the use
of funds from HUD, and 2) provide a clear audit trail of
proper acceptable documentation to support the exchange
of services for compensation.
The Authority provided no support to justify its claims that
OIG evaluation of the police, code enforcement, and recreation activities
HACMB comments provided benefit in excess of City baseline services to
individuals the inter-local agreements were designed to
serve. As mentioned in the finding, the Authority ignored
the advice of its attorney by funding the police and code
enforcement projects and in the way it implemented the
recreation activity. The Authority’s assertion that the
activities provided benefit in excess of City baseline
services was not supported during the audit or by the
Authority’s written response to this finding.
Recommendations We recommend you require the HACMB to:
1A. Obtain additional supporting documentation or
recover from the City the $795,178 paid for police
protection, recreation and code enforcement
activities.
1B. Establish proper general ledger accounts for inter-
local projects and properly monitor expenditures for
future activities funded with Section 8 reserves.
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Finding 2
Housing And Social Services Not Provided
The HACMB spent over $2 million in a failed effort to provide housing and social services due
to inadequate planning and management of human and financial resources. The HACMB had not
broken ground or developed final plans to fund, construct, and operate the project. The project
had been delayed for over 5 years and the HACMB had lost or was at risk of losing almost all of
the $5.8 million originally committed to fund the project. Furthermore, the City was considering
a road construction project that may prevent the HACMB from constructing the center on the
planned site or recovering its full investment in the site. HACMB’s failure to complete the
project deprived the City’s low-income community of the needed housing and social services.
We questioned $209,570 paid to the City for fees and permits because the fees were excessive
considering the joint venture project was not constructed.
In November 1994, HACMB requested HUD’s approval to
HUD’s waiver to refund the bonds originally issued in 1978 to finance
allow for the project Rebecca Towers North, a 200 unit Section 8 new
construction project. The 1978 bonds were issued pursuant
to 24 CFR 811 which prohibited the issuance of obligations
to refund the bonds. However, the HACMB’s request for
waiver stated that they wanted to refund the bonds to
generate over $2 million to finance the construction of a
single parent family housing and resource center. The
project would provide shelter for battered women and
children. On April 17, 1995, HUD approved the waiver
request on condition that the funds be expended to provide
housing for the purposes described.
On April 26, 1995, the HACMB refunded the bonds, which
Project funding and provided $2.3 million to fund the center. At the time of our
delays review, 5 years had passed since the bond refund. The
HACMB still had not constructed the center nor had it
developed final plans to construct and operate the center.
In June 1999, the HACMB’s Board met to discuss the
failed project. The Board minutes showed the project had
not succeeded because of mismanagement. During the
meeting various members of the Board and/or the
Executive Director expressed concerns such as:
• The project did not succeed due to mismanagement.
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Finding 2
• The HACMB returned $525,000 in state funding for
the project.
• The project’s cost estimates were incomplete.
• HACMB does not have the money nor plans to
construct the project.
• Despite controversy from the start, the Board always
voted to move forward with the project.
We agree with the Board’s belated but accurate assessment
as to why the project was not completed. However, the
Board and HACMB had a responsibility to assure proper
management of staff and financial resources to complete
the project. The poor planning and management prevented
the HACMB from providing the needed housing and social
services to residents of the City’s low-income community.
For instance, the HACMB’s June 1994 application to the
state for $525,000 to assist with financing the project stated
that the target population was homeless women and
children, battered women and children who become
homeless when removed from abusive situations, and
families on HACMB’s waiting list. The application stated
that the HACMB identified the need for the housing and
social services through needs assessment performed by a
university.
HACMB’s mismanagement of staff and financial resources
associated with the project resulted in its:
• Loss or risk of losing almost all of the $5.8 million
initially committed to the project.
• Expenditures of over $2 million for site acquisition;
site improvements; and predevelopment costs that
may not be recovered.
• Lack of a final project design and financial plan
needed to complete and to operate the project.
Funding lost or at risk of The HACMB obtained the following funding commitments
being lost for the project which it had lost or was at risk of losing:
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Finding 2
Per 1994 State Per 1995 HOME
Sources of Funds Loan Application Agreement
Private loan $2,039,000 $1,598,943
State loan 500,000 0
State grant 25,000 0
Federal Home loan 0 500,000
HOME loan 380,000 760,000
Bond proceeds 2,287,313 2,300,000
Other - HACMB Equity 559,200 1,500,000
Total $5,790,513 $6,658,943
The HACMB lost or was at risk of losing all except the
HACMB equity portion of funding due to project delays
and redesign. For instance:
• HACMB’s latest redesign of the project resulted in
a facility that cannot take on any of the private debt
anticipated by the above projections. In October
1996, HACMB reduced the number of proposed
housing units in the project from 52 to 40. The
HACMB stated that they made the revision due to
costs, community pressure, and special needs that
arose. HACMB’s estimated cash flows for the 40-
unit project, which excluded debt service, showed it
would operate at a negative cash flow. Thus, the
project could not take on any of the private debt
anticipated by the initial plans to construct 52
housing units.
In addition, HACMB’s board chairman and board
minutes from the June 1999 board meeting
indicated that prior cost estimates for the project
were flawed because they did not anticipate certain
construction (e.g., water and sewer) and operating
costs for the center.
• The HACMB returned the $525,000 state funding
which it applied for and needed to assist with
construction of the project.
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Finding 2
• The HACMB did not meet the HOME agreement
requirement that the project be completed and ready
for occupancy by December 1997 or no longer than
60 days thereafter. On June 9, 2000, the City of
Miami Beach requested confirmation of HACMB’s
plans and time frame regarding whether it would
pursue the project or an alternative project. The
City made this request in response to HUD’s
identifying the project as “slow moving” and an
effort to expedite the expenditure of the HOME
funds. On August 8, 2000, the HACMB wrote the
City and informed them that they were committed to
constructing the project using the HOME funds.
• The HACMB did not meet the 2 year deadline
required by bond certifications to complete the
project. This may result in the loss of the remaining
$2 million bond proceeds held by the trustee
(Section 3(d) of the Non-Arbitrage Certification).
The HACMB had spent over $2 million but still had not
Expenditures broken ground to construct the project. The expenditures
included the following amounts recorded in HACMB’s
general ledger, which we did not audit, and for bond issue
costs:
Section 8
Description Total Bonds Reserves
Bond issue costs $203,175 $203,175
Land acquisition 980,000 $ 980,000
Architectural services 340,322 340,322
Seawall Construction 183,251 183,251
City fees and permits 209,570 209,570
Other 125,018 125,018
Total $2,041,336 $726,748 $1,314,588
The $2,041,336 was a poor use of funds considering that
the HACMB never constructed the project. For instance,
the HACMB incurred $203,175 in bond issue cost
specifically for the purpose of obtaining funds to help
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Finding 2
finance the project that after 5 years is still not underway.
The high architectural fees ($340,322) primarily resulted
from years of HACMB mismanagement and indecisiveness
concerning the project design and approach. We question
the fees paid to the City of Miami Beach ($209,570)
because they were excessive considering the project was
not constructed. The project was a joint venture between
the City and the HACMB pursuant to an affordable housing
joint venture agreement. The HACMB should seek relief
by recovery of fees paid to the City in anticipation of
construction that never occurred.
At the time of our review, the HACMB and its Board had
Incomplete plans to not developed plans and financial arrangements needed to
construct and operate construct and operate the project. The HACMB’s board
the project had discussed the possibility of a revised project design and
use of an alternative site if they proceeded with the project.
The Board Chairman and others also expressed concern that
the existing site has an irregular shape for such a project
and was not safe for children because a canal borders one
side. These concerns should have been considered prior to
site acquisition.
In 1999, the HACMB obtained a consultant’s assessment of
the project’s status. The consultant reported an estimated
cost of $9,662,145 to construct the project. The consultant
also projected annual operating deficits of over $100,000.
The consultant further stated that HACMB’s prior cost
estimates for the project omitted certain capital costs valued
at approximately $1 million (e.g., water and sewer).
The HACMB paid $980,000 for the site. HACMB officials
stated that the property was appraised for $2.1 million.
However, the City recently informed the HACMB that it
was considering a road construction project that may
impact the site planned for the center. The City’s plans
may prevent the HACMB from constructing the project on
the planned site. Considering this development, the
HACMB may not be able to recover the $2 million it spent
on the project by selling the project.
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Finding 2
HACMB officials did not believe that the Housing
HACMB comments Authority “wasted” over $2 million expended on the Single
Parent Family Resource Center. They contended the
Housing Authority owns the 17th Street site in fee simple
and the expenditures on the site have added marketable
value to the site. Based upon an appraisal of market value
as of April 15, 1999 of $2,100,000, they believed that the
authority would recoup its expenditures on the site whether
by sale to a private owner or through an eminent domain
process initiated by the City of Miami Beach.
At their September 26, 2000, regular meeting, the Authority
Board decided to:
a) Declare the site neither financially feasible nor
appropriate for center development.
b) Remain committed to the continuation of the
project.
c) Agree to move the project to another location.
The Authority Board directed the Executive Director to
formally notify the City of this recent action and request the
HOME funds currently committed for the project remain
available to support an alternative site. The HACMB also
engaged the services of a consultant, with extensive
experience in these types of development projects, to assist
the agency in seeing the project is completed, within
budget, at another location.
We considered HACMB’s objection and eliminated the
OIG evaluation of reference that the funds had been wasted. However, the
HACMB response HACMB’s ability to sell the site at a price sufficient to
recover the costs paid for the failed project is not definite.
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Finding 2
Recommendations We recommend you require the HACMB to:
2A. Submit evidence that it has the financial capability
and commitment to complete construction of the
center within a reasonable time, as determined by
your office.
2B. Immediately complete its planned sale of the
existing site for its fair market value. The HACMB
should use the proceeds to reimburse Section 8 and
the bond construction funds in proportion to the
share of costs paid from each fund.
2C. Obtain additional justification or recover from the
City the $209,570 paid for fees associated with the
failed joint venture project.
2D. Submit a plan (for your approval) regarding the use
of the remaining bond funds obtained or
accumulated (e.g., interest earned) for construction
of the center.
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Finding 3
Mismanagement of Section 8 Program
The HACMB did not adhere to HUD requirements designed to assure the reasonableness of
Section 8 rents. The HACMB also did not timely execute new leases for tenants who moved
from one assisted unit to another, and pay tenants for the amounts by which their utility
allowances exceeded the family’s contribution for rent. As a result, there was inadequate
assurance that HUD subsidized reasonable Section 8 rents and that tenants received the full
benefit of their utility allowances. We also noted some cases where the HACMB and owners
provided false representations concerning rent reasonableness. These conditions caused HUD to
pay $9,267 in excessive subsidy. The noncompliances occurred because HACMB employees
failed to carry out the duties they were employed and entrusted to perform.
Findings from past Reviews conducted by HUD and a consultant contracted by
the HACMB disclosed serious problems with the
reviews HACMB’s administration of its Section 8 Programs. For
instance, HUD’s June 22, 2000, review reported violations
of requirements for occupancy (including waiting lists),
inspections, abatements, utility allowances, rent
comparability, and the approval of rent increases. Due to
the recent reviews, we primarily limited our examination to
the determination of rent amounts and utility allowances.
Additional problems We observed problems similar to those noted in the HUD
review for inadequate approval of rent increases. HUD’s
review adequately addressed the problem and
recommended appropriate corrective action. However, we
observed the following additional matters:
Excessive rents charged for assisted units
Leases not timely executed when tenants changed units
Excess utility allowance not paid to tenants
Excessive Rents Charged for Assisted Units - The
housing authority may not approve a lease and any rent
increase until it determines that the rent to owner is
reasonable in comparison to rent for other comparable
unassisted units. By accepting each monthly housing
assistance payment from the HA, the owner certifies
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Finding 3
that the rent to owner is not more than rent charged by
the owner for comparable unassisted units in the
premises. The owner must give the HA information
requested on rents charged by the owner for other units
in the premises or elsewhere (24 CFR §982.503).
We examined HACMB and owner records for rents
charged at 11 projects. The projects contained 72
assisted and 91 unassisted units. The rents charged by
three owners for seven assisted units (10 percent)
exceeded the rents charged within the same projects for
comparable unassisted units. The HACMB did not
obtain and evaluate the rents owners charged for
unassisted units located at the same properties.
The Housing Assistance Coordinator stated that they
generally provided landlords whatever rents they
requested as long as the rents did not exceed the
published fair market rent for the unit size. The
coordinator further stated they justified the owners’ rent
by selecting as comparables other assisted units that
rented for the same amount requested by the owner.
The violations resulted in false representation by
HACMB officials and the affected owners concerning
the determination of rents for the seven units. The three
owners did not maintain all the leases and rent rolls we
needed to calculate the dollar impact of the violations
during the audit period. However, from the available
records, we calculated excessive subsidies of $6,667.
The matter is significant considering that the HACMB
administered over 2,700 Section 8 units in an
environment of disregard for HUD’s requirements for
determining rent reasonableness.
The owners provided various explanations to justify
why they charged more for assisted units than they did
for the unassisted units located in the same projects.
However, the HACMB did not determine what the
owners charged for unassisted units. Thus, they
conducted no follow-up concerning the differences.
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Finding 3
In July 1999, the HACMB designated an employee to
conduct rent reasonableness determinations for all
initial leases. We noted improved performance for rent
reasonableness determinations for initial leases
following this action. However, the change only
affected initial leases and did not include rent
reasonableness determinations for lease renewals. The
HACMB continued to violate HUD’s requirements for
rent reasonableness determinations for lease renewals.
Leases Not Timely Executed when Tenants Changed
Units – The HAP Contract only applies to the family
and the contract unit. If the family moves out of the
unit, the HAP contract terminates automatically (Part B
of HAP Contract, Sections 4 and 6). Since both the
HAP contract and the lease are tied to the specific unit
address, a new contract and lease should be executed
when the tenant moves from the unit.
The HACMB did not require and execute new leases
for two tenants who moved from one assisted unit to
another (same owner) prior to the expiration of their
leases on the prior units. The HACMB allowed the
owners to continue charging rents stipulated in the old
leases at the new locations until the expiration dates for
the old leases. This was significant because the contract
rent for the old units exceeded the applicable fair
market rent at the time of the moves.
The HACMB’s failure to execute new leases and
appropriately establish initial gross rent (at or below fair
market rent) resulted in excessive subsidy payments of
$2,600. The Housing Assistance Coordinator said they
stopped this practice in mid 1999 based on clarification
from HUD. We reviewed documentation that
supported HACMB’s corrective action.
Utility Payments Not Made to Tenants – Utility
reimbursement, the amount by which any utility
allowance exceeds the tenant’s portion of rent, shall be
paid to the family (24 CFR §5.615).
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Finding 3
Prior to January 2000, the HACMB did not pay tenants
the amounts due when their utility allowances exceeded
their required contribution for rent. The HACMB
should have written checks to those tenants whose
utility allowance exceeded their portion of rent. We
could not determine the amount of utility
reimbursements due tenants because the HACMB did
not keep records needed to make that determination.
Utility reimbursements for January to June 2000
amounted to $3,565.
The above matters occurred due to mismanagement
associated with HACMB staff not performing the duties for
which they were employed and entrusted to perform. For
instance, the Housing Assistance Coordinator stated that no
one showed her and other staff what to do to meet HUD
requirements and that the HACMB administration did not
provide needed training. The HUD regulations and
handbooks are readily available to housing authorities from
HUD. At a minimum, the Housing Assistance Coordinator
was responsible for ensuring that she and her staff had and
were aware of the basic requirements associated with the
violations discussed in this finding.
By the time we completed our review, the HACMB had
initiated some changes designed to improve its
administration of Section 8 Programs. HUD placed the
HACMB’s Section 8 Program on probation for 1 year and
required the HACMB to contract out administration of the
Section 8 Program. We observed that the HACMB
assigned another employee to oversee the Section 8 leasing
and inspection departments and had hired a consultant to
assist with managing and training Section 8 staff. The new
Section 8 manager and consultant stated that their priority
would be to implement procedures to address HUD’s
findings and to bring the Section 8 department into
compliance with HUD regulations.
HACMB officials stated it had worked to improve its
HACMB comments management practices. The agency acquired the
EmPHAsys software package, which has drastically
changed the manner the rents are calculated, leases are
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Finding 3
tracked, and utility payments are paid. Emphasis is being
placed on training the staff to work in compliance with the
HUD regulations.
The new Executive Director will undertake and implement
sweeping changes. The rent reasonableness program was
implemented to eliminate errors in overpayments and a
database collection method is in place allowing tracking of
comparables for further assistance in rent reasonableness
determination. Written processes are in place outlining the
Rent Reasonableness determination method.
Overpayments of rents will be repaid to HUD. Leases are
now executed in a timely manner. As of February 2000,
excess utility payments have been paid to the tenants;
further, an independent verification of utility amounts will
be concluded on September 21, 2000. Any changes will be
immediately implemented and adjustments will be made in
the form of reimbursement to the tenant where warranted
from January 2000 to current date.
The HACMB basically agreed with the finding and will
OIG response to initiate corrective action.
HACMB comments
Recommendations We recommend you require the HACMB to:
3A. Reimburse HUD $9,267 for the excess HAP
payments disbursed to Section 8 owners and any
additional amounts identified during its rent
reasonableness reviews.
3B. Procure the services of an independent contractor to
calculate the amount of utility reimbursements due
tenants for past periods and to make the required
payments due tenants. Your office should instruct
the HACMB as to the calculation period for
inclusion in the request for proposal used to procure
the contract.
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Finding 3
3C. Resolve its administrative deficiencies in the
Section 8 Program identified by this audit and other
reviews within 1 year of the issuance of this report
(including the Section 8 cost issues discussed in
findings 1 and 2).
3D. Submit a written request for planned uses of Section
8 reserves and obtain your written approval before
obligating and spending any of its Section 8
reserves. Your office should review and approve
uses of all Section 8 administrative fee reserves
until you determine and provide written notice to
the HACMB that it has substantially resolved the
systemic problems in its Section 8 Program, and the
issues identified in findings 1 and 2.
We also recommend your office:
3E. Assess within 1 year, the HACMB’s improvement
in administering its Section 8 Program. If the
HACMB fails to improve to acceptable limits, you
should consider declaring the authority in
substantial default and identify other entities that
can effectively administer the program. You should
also identify and refer the responsible officials to
HUD’s Enforcement Center for consideration of
administrative sanctions.
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Finding 4
Need To Improve Procurement Administration
The HACMB had not implemented corrective actions recommended by past reviewers of its
operations to comply with procurement requirements. For instance, the HACMB subsequently
acquired legal services and small purchases without adequate assurance that they obtained the
most advantageous cost from the most qualified sources. These conditions occurred because the
HACMB and its Board mismanaged the administration of procurements.
The HACMB had not implemented adequate steps to
Inadequate attention to correct weaknesses in its administration of procurements
past procurement identified by its independent auditor and HUD:
findings
• Independent Auditor’s Report - The independent
auditor’s report for the fiscal year ended June 30,
1998 (report dated January 26, 1999) stated that the
HACMB did not properly advertise and seek
competition for consulting services. The report
stated that the HACMB split the work into two
contracts to avoid having to advertise and seek
competitive bids.
• HUD Monitoring Review - In February 2000, HUD
reviewed the HACMB’s operations and determined
that it had violated procurement requirements in its
purchase of accounting and program software, audit
services, consulting services, and air conditioners.
At least one of these procurements occurred after
the HACMB received its independent auditor’s
report that notified it of the need to follow
procurement requirements. For instance, HUD
reviewed a request for proposal (RFP) dated March
1999 to purchase accounting and computer
software. HUD determined that the HACMB did
not follow required procedures for competition.
We performed additional tests to determine whether the
HACMB initiated improvements in its procurement
practices following the above reviews. We observed that
on March 4, 1999, the Board approved HACMB’s revised
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Finding 4
procurement policy. However, we determined that the
HACMB had not implemented effective measures to follow
the policy and HUD requirements for legal services and
small purchases.
Procurement of legal All procurement transactions will be conducted in a manner
services providing full and open competition (24 CFR 85.36(c)(1)).
The HACMB’s procurement policy required use of the
competitive proposal method of procurement to acquire
legal services (Section D).
We reviewed HACMB’s in-process procurement of legal
services initiated by a board resolution passed on March 14,
2000, and identified numerous problems with the
procurement:
• The HACMB board authorized its general counsel
to handle the procurement versus the HACMB’s
administrative staff. The attorney prepared and
mailed the RFPs, advertised for bids, obtained and
evaluated bids, and recommended contractor
selection. The attorney had exclusive control over
the procurement process that should have been
handled by HACMB staff.
• The attorney did not obtain proper competition to
allow award of the contracts. The attorney stated
that he received three bids, one for each of three
different types of legal services, and proposed to
award a contract to each firm. We discussed our
concerns with HACMB’s Board chairman and
acting Executive Director on April 27, 2000, and
with HUD on May 4, 2000. On May 8, 2000, HUD
instructed the HACMB not to execute either of the
contracts until HUD conducted a pre-award review
of the proposed procurements.
• At the May 9, 2000, board meeting, the board voted
to award two of the three proposed legal service
contracts despite our concerns. We notified HUD
of this action and on May 24, 2000, HUD wrote
another letter to the HACMB that stated that if they
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Finding 4
awarded the contracts despite HUD’s expressed
concerns, then no federal funds may be used to pay for
the services. The HACMB decided to re-do the
procurement only after it received this notice from
HUD.
• The HACMB halted the procurement and
subsequent to our review prepared another RFP and
re-advertised for the legal services. We did not
review the subsequent procurement. However, our
limited follow-up revealed that the HACMB
received bids from eight firms in response to the
RFP from which the Board voted to approve four
legal service contracts. No Authority staff,
including the interim ED, reviewed the proposals.
We also observed several procurement concerns related to
the HACMB’s purchase of other legal services. For
example, the HACMB contracted with its current legal
counsel without following proper competitive procurement
procedures. The HACMB also made payments to two law
firms, which the HACMB hired based on the
recommendation of its legal counsel, without following
competitive requirements. Between July 1999 and May
2000, the HACMB paid the firms $44,690 that was charged
in part to public housing and in part to Section 8. One firm
was among the three mentioned above that the attorney
proposed awarding a recent contract for labor services
without proper competition.
Small purchase procedures When small purchase procedures are used, an adequate
number of price or rate quotations shall be obtained from
not followed
an adequate number of qualified sources (24 CFR
85.36(d)(1)). The Authority’s procurement policy required
price quotes from no less than three offers for purchases
between $1,000 and $10,000. Purchases greater than
$10,000 required competitive procurement methods
(Section B).
We examined small purchases charged to the HACMB’s
low-income housing program (Rebecca Towers South) for
the period December 1999 through May 2000. Through
April 2000, we noted numerous payments for small
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Finding 4
purchases which the HACMB did not obtain or document
bids or price quotes. The costs included $22,012 for office
and communication supplies and services, ADP and
accounting services and equipment, insurance, landscaping,
repairs and maintenance, trash removal, consulting costs,
and cleaning and laundry. We noted sporadic instances
where the HACMB did obtain bids or price quotes, but for
the most part they did not.
Starting in May 2000, the HACMB demonstrated efforts to
correct its past inconsistent compliance with requirements
to obtain and to document bids or price quotes for small
purchases. We tested six small purchases during the
month. The HACMB properly obtained and documented
bids or price quotes for each purchase.
We attributed these conditions to the HACMB’s failure to
properly administer the procurement of goods and services
after it was alerted to the need for corrective actions. The
Board and the HACMB had a duty and responsibility to
assure compliance with procurement requirements,
especially considering past findings related to this issue.
The Board’s lack of consideration for requirements was
demonstrated by its direct involvement in the most recent
procurement of legal services and its reluctance to assure
compliance with competitive procurement procedures.
HACMB officials stated a new Executive Director would
HACMB comments undertake and implement sweeping changes to bring the
agency into regulatory compliance. The Authority Board,
in recognition of the need to document the basis for legal
service selection, re-advertised and selected the legal firms
based on qualifications and cost. The Board has scheduled
the process of documenting their selection basis for their
next Board meeting of October 4, 2000. A copy of the
results of that process will be forwarded to HUD for
authorization when completed. Authority Management is
also presently developing a written action plan with target
dates to address each finding identified in the 1999 IPA
Audit Report. The response will be forwarded to HUD not
later than October 6, 2000.
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Finding 4
HACMB Management staff has been provided a copy of
the agency Procurement Policy. The Authority Board has
instructed HACMB Management to strictly adhere to the
procurement policy. A procurement committee has been
set up and in operation to ensure procurement processes
adhere to policy. The new Executive Director (Contracting
Officer) will be responsible for ensuring staff and agency
compliance.
OIG response to The HACMB basically agreed with the finding and will
initiate corrective action.
HACMB comments
Recommendations We recommend you:
4A. Review and determine if the HACMB properly
procured its legal services. If the procurement was
not handled properly, you should prohibit the
HACMB from charging any of the costs to its
Public Housing Program.
4B. Monitor the HACMB’s procurement actions to
ensure compliance with HUD procurement policies
and procedures. You should also identify and refer
the responsible officials to HUD’s Enforcement
Center for consideration of administrative sanctions.
4C. Place the agency on a reimbursement basis for
funding, if the HACMB fails to improve to
acceptable levels.
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Management Controls
In planning and performing our audit, we considered the management controls of the Housing
Authority of the City of Miami Beach only to determine our auditing procedures and not to
provide assurance on these controls.
Management controls include the plan of organization, methods and procedures adopted by
management to ensure that its goals are met. Management controls include the processes for
planning, organizing, directing, and controlling program operations. They also include the
systems for measuring, reporting and monitoring program performance.
We determined that the controls most relevant to our audit objectives pertained to the following:
• Management philosophy and operating style;
• Procedures and practices for determining and assessing the reasonableness of Section 8
rents and utility allowances; and
• Procedures and practices for procurement and general disbursements.
We assessed these controls by obtaining an understanding of the HACMB’s procedures and
HUD requirements. However, based on past review of HACMB’s operations by consultants,
IPAs, and HUD, the HACMB controls and procedures relevant to our audit objectives were not
reliable and we placed no reliance on the controls in designing our audit tests.
A significant weakness exists if controls do not give reasonable assurance that goals and
objectives are met; resource use is consistent with laws, regulations and policies; resources are
safeguarded against waste, loss, and misuse; and that reliable data are obtained, maintained, and
fairly disclosed in reports. Based on our review, significant weaknesses existed in each of the
management controls considered relevant to our audit objectives. The specific weaknesses are
discussed in the findings.
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Management Controls
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Follow-Up on Prior Audits
The OIG issued an audit report on June 7, 1991, regarding the HACMB’s Section 8 Project-
Based Certificate Assistance Program. The audit contained three findings that have since been
resolved.
Independent Public Accountants (IPA’s) performed single audits of HACMB’s operations for the
fiscal years ended June 30, 1998, and 1999 that contained findings on issues that were relevant to
our audit objectives. The IPA report for the fiscal year ended June 30, 1998, contained a finding
on procurement that involved issues similar to those presented in finding 4 of this report. The
IPA report for the fiscal year ended June 30, 1999, contained findings related to purchasing and
utility allowances that involved the type of concerns presented in findings 3 and 4 of this report.
At the time of our on-site review, the HACMB had not developed a written action plan with
target dates to address all the problems identified by the IPA reports.
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Appendix A
Schedule of Ineligible and Unsupported Costs
Recommendation Type of Questioned Costs
Number Ineligible1 Unsupported2
1A $ 795,178
2C 209,570
3A $ 9,267
Total $ 9,267 $1,004,748
1
Ineligible - Costs that are questioned because of an alleged violation of a provision of a law,
regulation, contract, grant, cooperative agreement, or other document governing the
expenditure.
2
Unsupported - Costs charged to a HUD-funded or insured program or activity whose
eligibility cannot be determined at the time of the audit since costs were not supported by
adequate documentation.
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Schedule of Ineligible and Unsupported Costs
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Appendix B
HACMB Comments
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HACMB Comments
Letter – Ms. Nancy H. Cooper
September 27, 2000
Page 2
RESPONSE- MBHA Management does not concur with the IG opinion that the
Authority and City did not realize services in excess of baseline services for police,
recreation, and code enforcement services. The Authority is of the opinion that
City services rendered for police, code enforcement, and recreation were provided
in excess of City baseline services to the benefit of the population to and around
the agency’s service area.
Additional Comments- The Authority currently does not have in place an Interlocal
Agreement with the City for services. In the event the Authority contemplates
revisiting such relationship with the City again in the future, the Authority would 1).
Obtain proper authorization for the use or funds from HUD and 2). Provide a clear
audit trail of proper acceptable documentation to support the exchange of services
for compensation. The Authority values it’s positive and collaborative relationship
with the City and desires to maintain such relationship.
Proposed Resolution- The Authority proposes to follow the process described above
for any future Interlocal Agreements contemplated with the City.
HUD PROPOSED FINDING #2
HOUSING AND SOCIAL SERVICES NOT PROVIDED
RESPONSE- MBHA Management does not concur that the Housing Authority
“wasted” over $2 million expended on the Single Parent Family Resource Center.
The Housing Authority owns the 17th Street site in fee simple and the expenditures
on the site have added marketable value to the site.
Additional Comments- Based upon a appraisal of market value as of April 15, 1999
of $2,100,000, that the Housing Authority will, at the very least, reasonably
anticipates that it will recoup its expenditures on the site whether by sale to a
private owner or through an eminent domain process initiated by the City of Miami
Beach.
Proposed Resolution- The Authority Board has proceeded with recent timely
deliberation of the 17th Street site disposition, evidenced by specific action at their
September 26, 2000 Regular meeting;
a). Declare the site neither financially feasible nor appropriate for center
development.
b). Remain committed to the continuation of the project.
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HACMB Comments
Letter – Ms. Nancy H. Cooper
September 27, 2000
Page 3
c). Agree to move the project to another location.
The Authority Board has directed the Executive Director to formally notify the
City of this recent action and request the HOME funds currently committed
for the project remains available to support an alternative site. The HACMB has
also engaged the services of a consultant, with extensive experience in these
types of development projects, to assist the agency in seeing the project is
completed, within budget, at another location.
HUD PROPOSED FINDING # 3
MISMANAGEMENT OF SECTION 8 PROGRAM
RESPONSE- HACOMB has worked to improve its management practices in light
of HUD’s proposed findings that the Section 8 Program allowed excessive rents in
the amount of $9,267.00, that leases were not timely executed during the move
process, and that excess utility payments were not paid to tenants.
Additional Comments- The agency acquired the EmPHAsys software package,
which has drastically changed the manner the rents are calculated, leases are
tracked, and utility payments are paid. Emphasis is being placed on training the
staff to work in compliance with the HUD regulations.
Resolutions- The Commission has hired a new Executive Director to undertake
and implement sweeping changes which include, but are not limited to the
following; 1). The Rent Reasonableness program was implemented to eliminate
errors in overpayments; a database collection method is in place allowing
tracking of comparables for further assistance in rent reasonableness
determination. Written processes are in place outlining the Rent Reasonableness
determination method. Overpayments of rents are being re-claimed to be re-
paid to HUD. 2). Leases are now executed in a timely manner as verified in the
IG draft page 18. 3). As of February 2000, excess Utility payments have been
paid to the tenants; further an independent verification of utility amounts will be
concluded on September 21, 2000. Any changes will be immediately
implemented and adjustments will be made in the form of reimbursement to the
tenant where warranted from January 2000 to current date.
HUD PROPOSED FINDING # 4
NEED TO IMPROVE PROCUREMENT ADMINISTRATION
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HACMB Comments
01-AT-202-1001 Page 42
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Appendix C
Distribution
Executive Director, Housing Authority of the City of Miami Beach
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)
Deputy Assistant Secretary of Administrative Services/Director of Executive Secretariat, AX
(Room 10139)
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 and Policy, S (Room 10226)
Director, Office of Special Actions, AK (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)
Director, Office of Federal Housing Enterprise Oversight, O (9th Floor Mailroom)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
Office of Policy Development and Research, R (Room 8100)
Inspector General, G (Room 8256)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and 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 Equal Employment Opportunity, U (Room 5128)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Chief Financial Officer, F (Room 2202)
Director, HUD Enforcement Center, X, 1250 Maryland Avenue, SW, Suite 200
Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y, 1280 Maryland Avenue, SW,
Suite 4000
Deputy Chief Financial Officer for Finance, FF (Room 2202) (2)
Director, Office of Budget, FO (Room 3270)
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Distribution
Secretary's Representative, 4AS
State Coordinator, Florida State Office, 4DS
Director, Office of Public Housing, 4DPH
Director, Office of Multifamily Housing, 4HHM
Audit Liaison Officer, 3AFI
Audit Liaison Officer, Office of Public and Indian Housing, PF (Room P8202)
Departmental Audit Liaison Officer, FM (Room 2206)
Acquisitions Librarian, Library, AS (Room 8141)
Counsel to the IG, GC (Room 8260)
HUD OIG Webmanager-Electronic Format Via Notes Mail (Cliff Jones@hud.gov)
Public Affairs Officer, G (Room 8256)
Director, Housing and Community Development Issue Area, U.S. GAO, 441 G Street N.W.,
Room 2474, Washington DC 20548 ATTN: Judy England-Joseph
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs,
United States Senate, Washington DC 20510-6250
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs,
United States Senate, Washington DC 20510-6250
The Honorable Dan Burton, Chairman, Committee on Government Reform,
United States House of Representatives, Washington DC 20515-6143
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform,
United States House of Representatives, Washington, DC 20515-4305
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212,
O'Neil House Office Building, Washington, DC 20515-6143
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street,
NW, Room 9226, New Executive Office Bldg., Washington, DC 20503
Sharon Pinkerton, Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug
Policy and Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515
01-AT-202-1001 Page 44
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Housing Authority of the City of Miami Beach, Miami Beach, Florida
Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-10-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)