oversight

City of Hattiesburg, Mississippi, Community Planning and Development Programs, Hattiesburg, Mississippi

Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-08-27.

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

                                                               Issue Date
                                                                      August 27, 2001
                                                              Audit Case Number
                                                                       2001-AT-1006




TO:            Emily Cuby Eberhardt, Director, Community Planning and Development
                 Division, 4GD




FROM:          Nancy H. Cooper
               District Inspector General for Audit-Southeast/Caribbean, 4AGA


SUBJECT:       City of Hattiesburg, Mississippi
               Community Planning and Development Programs
               Hattiesburg, Mississippi

We have completed an audit of the City of Hattiesburg, Mississippi’s Community Planning and
Development Programs (CPD). The audit was initiated in response to a citizen’s complaint. Our
objectives were to determine whether the City: (1) complied with Federal laws, Department of
Housing and Urban Development (HUD) regulations, and other requirements; (2) had adequate
controls to comply with the requirements; and (3) carried out its activities in an efficient, effective,
and economical manner. Our report presents five findings that detail the City’s need for
improvement with recommendations for corrective action.

Within 60 days, please give us a status report for each recommendation in the report on: (1) the
corrective action taken; (2) the proposed corrective action and a planned implementation date; or (3)
why action is not considered necessary. Also, please furnish us copies of any correspondence or
directives issued as a result of the audit.

Should you or your staff have any questions, please contact me or Sonya D. Lucas, Assistant District
Inspector General for Audit, at (404) 331-3369. We are providing a copy of this report to the City of
Hattiesburg.




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Management Memorandum




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Executive Summary
We completed an audit of the City of Hattiesburg’s CPD Programs. We reviewed the Community
Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) Programs. We
conducted the audit in response to a citizen’s complaint. Our objectives of the audit were to
determine whether the City: (1) complied with Federal laws, HUD regulations, and other
requirements; (2) had adequate controls to comply with the requirements; and (3) carried out its
activities in an efficient, effective, and economical manner.

We determined the City did not: (1) ensure funded activities met CDBG national objectives; (2)
properly administer its rehabilitation program; (3) follow proper procurement and contracting
procedures; (4) follow proper payroll administration procedures; and (5) establish and maintain
basic operating systems for proper management of its CDBG and Home Programs.


                                    The City of Hattiesburg spent $242,000 of CDBG funds on
 Our audit disclosed                activities that did not address a required national objective.
                                    The activities included a road improvement project for
                                    $175,000 and five grants to improve downtown commercial
                                    buildings totaling $67,000. The City did not demonstrate
                                    how the projects met a national objective. City Officials
                                    transferred funding from planned projects that met national
                                    objectives, without supporting the new activities’
                                    eligibility. Therefore, the funding may not have best served
                                    the interests of low and moderate-income persons as
                                    intended.

                                    The City did not ensure that the rehabilitated houses in its
                                    program complied with HUD and local health, safety, and
                                    building standards. In addition, the City selected one house
                                    that was not feasible for its housing program. For the 20
                                    houses inspected, we identified 54 work items that the
                                    contractors did not complete and 71 work items that the
                                    contractors completed in an unacceptable manner. We also
                                    identified 84 code or HUD Housing Quality Standards
                                    (HQS) violations that the City did not identify and include
                                    in its rehabilitation contracts. Of the 20 houses inspected,
                                    13 involved full rehabilitation and 7 involved emergency
                                    repairs (see Appendices B and C). The full rehabilitation
                                    deficiencies occurred because the City’s inspectors did not
                                    identify inferior or incomplete work when performing
                                    inspections. The emergency repairs deficiencies occurred
                                    because the City did not clearly define an emergency
                                    situation, thus repairs were inconsistent. Also, the City did
                                    not adequately document the urgency of emergency repairs.
                                    The City did not include the code/HQS violations in its
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Executive Summary

                    rehabilitation contracts because its inspectors were not
                    adequately trained to perform initial inspections and
                    prepare adequate work write-ups.         As a result, the
                    homeowners were not provided decent, safe, and sanitary
                    housing after the rehabilitation work was completed.

                    The City of Hattiesburg’s procurement practices did not
                    comply with Federal procurement and contracting
                    requirements or its own procurement policy. The City
                    improperly procured $2,916,831 of goods and services
                    without adequately documenting the procurements. The
                    contract deficiencies included: (1) improperly soliciting
                    and awarding contracts (2) awarding          sole source
                    procurements; (3) not performing independent cost
                    estimates or cost and price analyses; and (4) repeatedly
                    selecting the same contractor. The deficiencies occurred
                    because the City disregarded requirements and did not
                    properly monitor the CDBG and HOME Programs. As a
                    result, HUD lacked assurance that the City obtained goods
                    and services at the most advantageous terms.

                    The City did not maintain proper accounting controls over
                    its payroll function. The City used CDBG funds to pay the
                    salaries of an employee who did not provide services to its
                    CDBG Program and four interns whose positions were not
                    included in the CDBG budget. The City did not have
                    written procedures for reviewing and approving payroll
                    costs or documenting personnel decisions. As a result, the
                    City paid $11,535 for non-related program activities and
                    $13,019 for unbudgeted costs.

                    The City did not establish and maintain operating systems
                    to ensure its activities complied with the programs
                    regulations. The City did not correct deficiencies HUD
                    identified during its programs review. Also, the City did
                    not monitor its subrecipients to ensure they implemented
                    adequate systems for financial management. This occurred
                    because the City did not properly manage its programs or
                    have written procedures for monitoring subrecipients to
                    ensure they properly implemented the required financial
                    management systems. As a result of the City’s ineffective
                    programs management, there was no assurance that
                    subrecipients properly operated their programs and citizens
                    received the intended programs benefits.



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                                                        Executive Summary


                    We recommend that HUD require the City to reimburse the
                    CDBG Program for all ineligible costs and unsupported
                    costs, and develop and implement controls and procedures
                    to ensure proper administration of its programs. Also, the
                    City should correct all deficiencies and HQS violations and
                    submit a corrective action plan to correct the deficiencies
                    identified by HUD during its reviews.

                    We presented our findings to the City and HUD officials
                    during the audit. We provided a copy of the draft report to
                    the City and HUD’s Mississippi State Office on June 21,
                    2001. We discussed the report with the officials at the exit
                    conference on July 6, 2001. The City provided written
                    comments on August 9, 2001. The City’s comments are
                    summarized in the findings and included in their entirety as
                    Appendix G.




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Table of Contents

Management Memorandum                                                  i


Executive Summary                                                    iii


Introduction                                                          1


Findings

1   The City Spent $242,000 on Activities Not Addressing
    National CDBG Objectives                                          3


2    Homes Did Not Meet Standards                                     9


3    The City Did Not Follow Proper Procurement Requirements        21


4    Controls Over Payroll Were Inadequate                          27


5    Controls Over Programs Needed Improvement                      31



Management Controls                                                 35


Follow-Up On Prior Audits                                           37

Appendices
     A Schedule of Ineligible and Unsupported Costs                 39

     B Properties Inspected-Full Rehabilitation Program             41




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       C Properties Inspected-Emergency Rehabilitation Program                43

       D Inspection Deficiencies for Full Rehabilitation Grants               45

       E Inspection Deficiencies for Emergency Rehabilitation Grants          51

       F Selected Photographs                                                 53

       G Auditee Comments                                                     57

       H Distribution                                                         65


Abbreviations

CDBG       Community Development Block Grant
CFR        Code of Federal Regulations
CPD        Community Planning and Development
GFCI       Ground Fault Circuit Interrupter
HOME       HOME Investment Partnership
HQS        Housing Quality Standards
HUD        U.S. Department of Housing and Urban Development
OIG        Office of Inspector General
OMB        Office of Management Budget




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Introduction
The CDBG Program was established by Title I of the Housing and Community Development Act
of 1974 (Public Law 93-383). The program provides grants to States and local governments to
aid in the development of viable urban communities. Governments are to use grant funds to
provide decent housing and suitable living environments and to expand economic opportunities,
principally for persons of low and moderate-income.

To be eligible for funding, every CDBG funded project and activity must meet one of the
program’s three national objectives. Every activity, except program administration and planning,
must:

   •   Benefit low and moderate-income persons; or
   •   Aid in preventing or eliminating slums or blight; or
   •   Address a need with a particular urgency because existing conditions pose a serious and
         immediate threat to the health or welfare of the community.

The HOME Investment Partnership Program was created under Title II of the National
Affordable Housing Act of 1990. HOME was designed to strengthen public-private partnerships
to expand the supply of decent, safe, sanitary, and affordable housing to low and very low-
income families.

The City of Hattiesburg’s CPD Programs are administered by the City’s Urban Development
Department. From 1995 to 2000, the City’s CDBG and HOME annual allocations were as
follows.

                           YEAR        CDBG             HOME
                           1995        $1,049,000       $500,000
                           1996        $1,084,000       $404,000
                           1997        $1,068,000       $394,000
                           1998        $1,033,000       $422,000
                           1999        $1,038,000       $455,000
                           2000        $1,037,000       $455,000

The City of Hattiesburg is governed under a Mayor-Council form of government with a
councilperson representing the City’s five Wards. As a result of the March 2001 election, a new
administration had taken over. The Director of the Urban Development Department administers
the City’s CPD Programs. The City’s books and records are maintained at 200 Forest Street,
Hattiesburg, Mississippi.

HUD’s Mississippi State Office of Community Planning and Development in Jackson,
Mississippi, is responsible for overseeing the City’s administration of these programs.




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Introduction


                     The focus of our review was to determine if the City
 Audit Objectives,   complied with Federal laws, HUD regulations, and other
 Scope and           requirements in carrying out its CPD Programs. Our audit
 Methodology         objectives were to determine whether the City:

                            •   Complied with the CPD Program requirements,
                                    laws, and regulations;
                            •   Had adequate controls to ensure compliance
                                    with HUD regulations; and
                            •   Carried out its activities in an efficient,
                                effective,
                                    and economical manner.

                     To accomplish the objectives, we tested program activities
                     for compliance with program requirements. We interviewed
                     the complainant, HUD’s CPD Division officials, current
                     and former City employees, contractors, and homeowners.
                     We reviewed related City files and records; controls and
                     procedures over contracts awarded for fiscal years 1997
                     through April 2000; and general controls, including lines of
                     responsibility, duties, accounting systems and procedures.
                     We selected and tested items from January 1997 through
                     April 2000 based on expenditure amounts.

                     We performed detailed inspections for 20 of the 92 houses
                     rehabilitated in 1999 and 2000. Of the 20 houses inspected,
                     we selected 13 houses that were recently fully rehabilitated
                     and 7 houses that had emergency repairs completed, based
                     on the repair amount spent by year. The inspections were
                     performed to determine compliance with HUD’s HQS and
                     national and local building codes. We also made site visits
                     to other rehabilitated houses, the Weathersby Road
                     economic development project, and nine downtown
                     commercial facade improvement projects.

                     Our audit covered the period of 1997 through 2000. We
                     extended the audit coverage as appropriate. We performed
                     the audit field work from April through November 2000 in
                     accordance with generally accepted government auditing
                     standards.




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                                                                                    Finding 1


     The City Spent $242,000 on Activities Not
      Addressing National CDBG Objectives
The City of Hattiesburg spent $242,000 of CDBG funds on activities that did not address a
required national objective. The activities included a road improvement project for $175,000 and
five grants to improve downtown commercial buildings totaling $67,000. The City did not
demonstrate how the projects met a national objective. City officials transferred funding from
planned projects that met national objectives, without supporting the new activities’ eligibility.
Therefore, the funding may not have best served the interests of low and moderate-income
persons as intended.


                                     Title 24 of the Code of Federal Regulations (CFR), Part
 Criteria                            570.200 requires each grantee to maintain evidence that
                                     each of its assisted activities meets one of the program’s
                                     three national objectives. Specific documentation must be
                                     maintained as described in Part 570.506. These regulations
                                     require that each activity either:

                                             •   Benefit low and moderate-income persons; or
                                             •   Aid in the prevention or elimination of slums
                                                    or blight; or
                                             •   Meet other community development needs
                                                    having a particular urgency because existing
                                                    conditions pose a serious and immediate
                                                    threat to the health or welfare of the
                                                    community and other financial resources are
                                                    not available to meet such needs.

                                     Part 570.208(a)(4) provides criteria for determining
                                     whether a CDBG activity complies with national objectives
                                     when an activity is designed to create or retain permanent
                                     jobs. To qualify the recipient must document that at least
                                     51 percent of the jobs will be held by, or will be available
                                     to, low and moderate-income persons within 2 years from
                                     the time of CDBG assistance. Part 570.208(b) states that
                                     CDBG funds can be used to address slum and blight
                                     conditions provided: (1) the project is located in a
                                     designated slum and blight area that contains a substantial
                                     number of deteriorating buildings; and (2) activities address
                                     specific conditions which contribute to the area being
                                     designated a slum and blight area.



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Finding 1


                    On November 3, 1997, the City entered into a contract with
 Weathersby Road    a road paving company. The contract was to expand
 improvements       Weathersby Road to benefit a Lowe’s Improvement
                    Warehouse that was located nearby. However, the CDBG
                    funds were originally planned and budgeted for drainage
                    improvement in a targeted low income community.

                    The City reported in its 1998 Grantee Performance Report
                    that the street improvements made it possible for Lowe’s to
                    expand and relocate its Hattiesburg operations. One
                    hundred forty seven new jobs were to be created over a 2
                    year period, of which 125 jobs would benefit low and
                    moderate-income persons. The Mississippi Employment
                    Security Commission was to assist in assuring that first
                    consideration was given to low and moderate-income
                    persons.

                    The contractor completed the road improvements in May
                    1998. The City paid the contractor $227,741, which
                    included $175,000 of CDBG funds.               Therefore,
                    documentation was required to support that low and
                    moderate-income persons would hold at least 51 percent of
                    the jobs within 2 years from the time of the CDBG
                    assistance. The City did not maintain evidence supporting
                    that the activity met the national objective.

                    City Officials said that the road expansion was an economic
                    development project and it met the CDBG national
                    objective of jobs creation for low and moderate-income
                    persons. The City did not have any agreements or
                    documentation pertaining to the proposed jobs creation. A
                    Lowe’s representative said they did not maintain records
                    pertaining to jobs creation. The Lowe’s representative
                    provided documentation showing that during 1998 and
                    1999, they filled 37 positions, rather than the projected 147
                    new jobs. Further, the representative said that they could
                    not determine which of the 37 positions, if any, were newly
                    created and which were turnovers of existing positions.
                    Lowe’s documentation showed that of the 37 positions
                    filled, low and moderate-income persons filled 19.
                    However, the 19 positions were less than the 125 new jobs
                    promised to benefit low and moderate-income persons.




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                                                                      Finding 1

                       The City approved nine grants totaling $110,400 to
                       improve downtown commercial building facades. The
 Façade improvements   funds used for the downtown improvements were originally
                       planned and budgeted for the City’s Micro-Loan Program.
                       The Micro-Loan Program was to assist in the development
                       and redevelopment of Hattiesburg’s low and moderate-
                       income areas. The City did not fund any micro-loans.
                       Instead, it transferred all funds to the downtown facades
                       improvement without addressing how the activities would
                       meet national objectives. As of November 2000, the City
                       had disbursed $67,000 for five completed projects.

                       The City did not consider the national objectives when
                       awarding the grants. The City based the facade awards on a
                       first come-first serve basis, giving priority to projects
                       having a significant visual and economic impact and
                       showing dedication to preserving historic building integrity.
                       In addition to facade grants, the City offered the owners
                       other financial incentives including tax credits.

                       The City’s policy and procedure guidelines did not address
                       slum and blight conditions. The guidelines approved in
                       March 1999 by the City Council mentioned the facade
                       improvement activities. The improvements were scheduled
                       for funding under the 1996 Consolidated Plan. However,
                       the improvements were not included in a plan until fiscal
                       year 2000. In 2000, the City’s Consolidated Plan budgeted
                       $50,000 for facade improvement activities. The 2000
                       Consolidated Plan stated that these activities would address
                       national objectives by aiding in the prevention or
                       elimination of slums or blight.

                       We examined the project files and visited each of the nine
                       approved facade projects. The files did not address the
                       projects meeting a national objective. The properties were
                       not located in a designated slum and blight area that
                       contained a substantial number of deteriorating buildings.
                       The staff did not provide any documentation showing that
                       the properties were in such an area or that the projects
                       addressed specific conditions, which contributed to
                       designating downtown Hattiesburg a slum and blighted
                       area.




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Finding 1

                    The following downtown commercial buildings received
                    funding approval.

                     PROJECT                              ADDRESS             AWARD

                     Sack’s Outdoor Store            200 E. Pine Street        $15,000
                     Impressions in Stone            113 Newman Street         $10,000
                     Studio Properties LLC           101 East Front Street     $15,000
                     Landscape Studio                201 West Pine Street      $15,000
                     Forrest Paper Company           511 East Pine Street      $12,000
                     Subtotal of Grants for                                    $67,000
                       Completed Projects
                     Perma Coatings                  127 Market Street          $ 6,400
                     DJ’s Shuttle & Tours            101 Hardy Street          $12,000
                     Komp Equipment                  319 East Pine Street      $15,000
                     Phillips Law Office             33 Batson Street          $10,000
                     Subtotal of Grants Approved –                             $43,000
                       Projects Not Completed
                     Total of Grants Approved                                 $110,400

                    COMPLETED PROJECTS

                    Sack’s Outdoor Store – 200 East Pine Street - $15,000




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                                                                   Finding 1


                    Studio Properties LLC-101 East Front Street-$15,000




                    In summary, the City spent $242,000 on a road
                    improvement (economic development) project and five
                    grants for downtown improvement projects that did not
                    address any national objectives of the CDBG Program or
                    serve the interests of low and moderate-income persons.

                    Excerpts from the City of Hattiesburg’s comments on our
                    draft findings follow. Appendix G contains the complete
                    text of the comments.


                    The City generally agreed with the finding. “The City of
 Auditee Comments   Hattiesburg will document its files to show that 37 new
                    jobs were created and that 19 (51.4 percent) of those jobs
                    were filled by low- and moderate-income persons thus
                    establishing the eligibility of the Weathersby Road
                    improvements.

                    “…The City will determine if the downtown area, including
                    the improved facades, lies in an area already declared by the
                    City Council of the City of Hattiesburg to be a slum and
                    blighted area. If such designation has been established, it
                    will be provided to HUD. If the area has not been declared
                    a slum and blighted area, the City will extensively
                    document the existence of a number of conditions causing
                    the area to meet HUD and State of Mississippi criteria for
                    slum and blighted area designation and appropriate for
                    revitalization and improvement.




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Finding 1

                     “…The City of Hattiesburg will enhance its CDBG filing
                     system to include a detailed documentation of the eligibility
                     of each and every project activity.”


                     We believe the City’s action will strengthen controls over
 OIG Evaluation of   the CDBG funded activities.
 Auditee Comments


 Recommendations     We recommend that you require the City of Hattiesburg to:

                     1A.    Provide documentation to support that the $242,000
                            of CDBG funds spent for the projects met CDBG
                            national objectives or repay any unsupported costs
                            to the CDBG Program.

                     1B.    Establish and implement policies and procedures to
                            ensure proper documentation of the national
                            objectives for each activity funded with CDBG
                            funds.




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                                                                                       Finding 2


                 Homes Did Not Meet Standards
The City did not ensure that the rehabilitated houses in its program complied with HUD and local
health, safety, and building standards. In addition, the City selected one house that was not
feasible for its housing program. For the 20 houses inspected, we identified 54 work items that
the contractors did not complete and 71 work items that the contractors completed in an
unacceptable manner. We also identified 84 code or HUD HQS violations that the City did not
identify and include in its rehabilitation contracts. Of the 20 houses inspected, 13 involved full
rehabilitation and 7 involved emergency repairs (see Appendices B and C).

The full rehabilitation deficiencies occurred because the City’s inspectors did not identify inferior
or incomplete work when performing inspections. The emergency repairs deficiencies occurred
because the City did not clearly define an emergency situation, thus repairs were inconsistent.
Also, the City did not adequately document the urgency of emergency repairs. The City did not
include the code/HQS violations in it rehabilitation contracts because its inspectors were not
adequately trained to perform initial inspections and prepare adequate work write-ups.

As a result, the homeowners were not provided decent, safe, and sanitary housing after the
rehabilitation work was completed. The City did not meet its program objective of improving
housing conditions for low and moderate-income families and very low-income families.


                                      Title 24 CFR 85.36 (b)(2) states that grantees and
 Repair work must be                  subgrantees will maintain a contract administration system
 completed in an                      that ensures contractors perform in accordance with the
 acceptable manner                    terms, conditions, and specifications of their contracts or
                                      purchase orders.

                                      The City’s July 1999 CDBG/HOME Rehabilitation Grant
                                      Program Guidelines provide procedures for initial
                                      inspections to complete work write-ups for substandard
                                      conditions and subsequent inspections to assure work was
                                      completed in an acceptable manner. Work write-ups for
                                      each property should provide specific details on work to be
                                      completed.

                                      The City’s Guidelines specified that in the event of conflict,
   Rehabilitated                      Federal rule would prevail. Title 24 CFR 570.208
   properties must meet               (b)(1)(iv) states that at a minimum, the local definition for
   HQS and/or local                   this purpose must be such that buildings rendered
   codes                              substandard would also fail to meet HQS for the Section 8
                                      Housing Assistance Payments Existing Housing Program.
                                      In addition, the City’s Guidelines requires that each
                                      structure meet the requirements of the Housing Code,


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Finding 2

                        Building Code, Plumbing Code, Mechanical Code, Gas
                        Code, and National Electric Code.

                        The City received $1.5 million annually from 1995 to 2000
                        in combined CDBG and HOME Program funds. During
  CDBG/HOME             1998 and 1999, the City expended the following:
  expenditures
                         Year     CPD Funds      Activity                      Amount
                         1998       CDBG         fully rehab 20 houses         $346,525
                         1998       HOME         fully rehab 5 houses            96,481
                         1998       CDBG         emergency repairs 37 houses    163,992
                         1999       CDBG         fully rehab 4 houses           109,245
                         1999       HOME         fully rehab 9 houses           121,117
                         1999       CDBG         emergency repairs 56 houses    237,073

                        We inspected 20 houses that the City had or should have
                        performed its final inspections. We selected 13 houses that
 OIG inspections        were recently fully rehabilitated and 7 that had emergency
                        repairs made. We inspected the houses using HUD’s HQS
                        manual and local building codes and standards. We
                        identified the following deficiencies (see Appendices D and
                        E for the deficiencies of each property).

                        We identified 54 work items (48 full rehabilitation and 6
                        emergency) included in the rehabilitation contracts that the
 Contract work not
                        contractors did not complete. For example, the contractors
 completed              did not: (1) install a wheelchair ramp at the rear and
                        handrails on exterior steps; (2) replace rotted window trim
                        and soffitt; (3) install 200 AMP electrical service, a ground
                        fault circuit interrupter (GFCI) in the bath and kitchen
                        outlets, and a bath heat/vent light; (4) install kitchen cabinet
                        shelving; and (5) paint hallway walls, den walls, and
                        closets. Also, there were instances where contractors were
                        paid twice for work performed such as front porch decking
                        repair, front porch painting, rotten siding replacement, and
                        water heater repairs.

                        We identified 71 work items (66 full rehabilitation and 5
 Repairs completed in   emergency) where the contractor used inappropriate
 unacceptable manner    installation techniques or shoddy materials. For example,
                        the contractors did not properly: (1) remove flaking paint
                        and paint chips and provide adequate paint coverage for a
                        wheelchair ramp and exterior wood; (2) ensure adequate
                        ventilation for numerous gas heaters; (3) install vinyl
                        flooring and water heaters properly; (4) install GFCI outlets
                        and a main/wall switch; and (5) encase kitchen electrical
                        wiring in protective conduit and refinish kitchen cabinets.
                        In addition, the contractor inappropriately extended a sewer
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                                                                      Finding 2

                        vent pipe through the roof and installed drain pipes to the
                        sewer.

                        We identified 84 code or HQS violations (76 full rehab and
 Code/HQS violations    8 emergency) that the City did not identify during its
                        housing inspections. Therefore, the City did not include the
 not identified
                        violations in the contracts and the contractors did not
                        correct the deficiencies.     The deficiencies included
                        unrepaired/unpainted bedroom closets, inappropriate
                        paneling, kitchen cabinets not finished properly, doors
                        improperly trimmed or not weather tight, vinyl improperly
                        installed, smoke detector not installed, peeling paint,
                        exposed electrical wiring, GFCI outlets not installed, rotted
                        exterior wood/siding not replaced, seriously deteriorated
                        exterior windows, dwelling not connected to approved
                        sanitary sewer, toxic odor from opening to septic tank,
                        existing unvented space heater, and water heater vent pipe
                        not sealed.

                        The following provides examples of the deficiencies we
                        found at the houses inspected.
 Inspection of houses
                           33 Brady Road

                           The homeowner received a CDBG grant for $19,680,
                           including an initial contract for $17,270. The contract
                           included repairs to exterior plywood and roof; windows
                           replacement; gas furnace replacement; sewer line
                           installation; sheetrock repair/replacement and painting;
                           faucet, GFCI, and water heater installation; cabinet
                           painting; formica countertop installed; and carpet
                           installation. On November 10, 1999, the City’s
                           Housing Inspector performed an initial inspection and
                           repairs write-up.      The Inspector also made four
                           construction progress inspections between January 21
                           and February 16, 2000. The final inspection was
                           performed on February 23, 2000. Prior to the final
                           inspection, the City’s Land Development Code Division
                           also performed a final electrical inspection. However,
                           our July 25, 2000, inspection identified seven instances
                           where contract work was not completed and one
                           instance where the work was unacceptable. We also
                           noted 12 substandard conditions that were not included
                           in the contract.

                           The new kitchen fixture had exposed electrical wiring
                           (Figure 1). The kitchen vinyl was not properly trimmed
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Finding 2

                    (Figure 2). An opening to the septic tank was
                    hazardous and emitted toxic odors (Figure 3). Other
                    code/HQS violations not identified in the City’s
                    inspections included a switch not flush with the wall,
                    kitchen formica top improperly installed, no interior
                    access to the attic, bath GFCI outlet not installed, and
                    doors not weather tight.




                    Figure 1




                    Figure 2




                    Figure 3


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                                                               Finding 2


                    802 Atlanta Street

                    The homeowner received a CDBG grant for $21,078,
                    including an initial contract for $18,271. The contract
                    included repairs to exterior siding, roof, windows, and
                    deck; painting of interior and sheetrock/paneling
                    replacement; and installing new doors, vinyl
                    flooring/carpet, GFCI outlets, gas heaters, smoke
                    detectors, and       flex    lines    to    the    water
                    heater/stove/heater. On January 24, 2000, the City’s
                    Housing Inspector performed an initial inspection and
                    repairs write-up. The Inspector also made nine
                    progress construction inspections between March 20
                    and March 31, 2000, and two final inspections on
                    April 11, 2000. Prior to the final inspection, the City’s
                    Land Development Code Division also performed a
                    final electrical inspection. However, our July 27, 2000,
                    inspection identified two instances in which contract
                    work was not completed and six instances where work
                    was unacceptable. We also noted nine substandard
                    conditions that were not included in the contract.

                    The bedroom closet was not included in the repairs
                    (Figure 4). The closet had hazardous splintered
                    paneling, heavy water damage to the ceiling, a
                    hazardous gas piping used as a clothes rod, and portions
                    of the corners were open to the exterior. Other
                    code/HQS violations not identified in the City’s
                    inspections included additional electrical outlets needed
                    in the living room and bedroom, smoke detector needed
                    in the den, gutter required a downspout, exterior
                    electrical wiring required protective conduit, rotted
                    exterior wood needed replacing, and unvented gas
                    heaters were installed.




                    Figure 4
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                         Other examples of poor workmanship included a water
  Various other houses   heater missing a flue collar (Figure 5), peeling paint (Figure
  inspected              6), and vinyl improperly installed (Figure 7). Appendix F
                         contains additional photographs of deficiencies.




                            Figure 5




                            Figure 6




                             Figure 7



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                      The homeowner received a CDBG grant for $24,906,
 House not feasible   including an initial contract for $19,985. The contract
 for program          included electrical installation; replacing siding, back porch
                      sill, windows, rear steps, plywood and flooring for front
                      porch, ceiling tiles, and bathroom floor; back porch repairs;
                      leveling the house; interior painting; and vinyl, cabinet,
                      sink, vent hood and space heater installation. However, our
                      July 27, 2000, inspection identified 8 instances where
                      contract work was not completed and 12 instances where
                      work was unacceptable. We also noted seven substandard
                      conditions that were not included in the contract.

                      The deficiencies and substandard conditions included
                      plumbing vent pipes not extended through the roof, poor
                      installation of electrical wiring, non-mortared concrete
                      block piers, unvented and inappropriate sized space heaters,
                      interior doors in disrepair (Figure 8), rotted window sashes
                      and framework, and unrepaired holes in flooring (Figure 9).




                      Figure 8




                      Figure 9
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                        Section V.A. of the City’s Guidelines state that a house is
                        feasible for rehabilitation if the cost does not exceed 50
                        percent of the present day cost of new construction, based
                        on $45 per square foot. However, Section VII. C. limits the
                        rehabilitation assistance to $25,000.

                        If the deficiencies and additional substandard conditions
                        noted during our inspection were considered, the house
                        would have required an additional estimated $24,288 in
                        repairs to meet code/HQS requirements.         Thus, the
                        rehabilitation would have far exceeded the $25,000 limit.
                        Therefore, the City should not have included the house in
                        its rehabilitation program.

                        The City accepted inferior or incomplete work by the
 Code/HQS               contractors. The 54 incomplete contracted work items and
 requirements were      the 71 unacceptable work items we identified demonstrate
 not enforced           this. The number of fully rehabilitated houses completed by
                        the City dropped from 25 in 1998 to 13 in 1999. While
                        some of it is attributable to the City’s increased efforts on
                        emergency repairs, we believe the City may have sacrificed
                        quantity and quality due to limited staff. Currently, the City
                        has only three employees in its Urban Development
                        Community Development Division administering its
                        housing programs, which include full rehabilitation,
                        emergency      repairs,     neighborhood      improvements,
                        demolition, down payment assistance, and facade
                        improvements.

                        The City did not ensure its work write-ups included all
 Inspection work        necessary repairs. Based on our inspections, the 84
 write-ups inadequate   code/HQS deficiencies that were not included in the
                        rehabilitation contracts demonstrate the need for the City to
                        improve its initial inspections and work write-ups. The
                        inadequate write-ups and need for excessive change orders
                        creates opportunity for waste and abuse. The City’s Urban
                        Development staff acknowledged that prior work write-ups
                        lacked clarity and did not identify all necessary repairs.

                        The City’s HUD Housing Inspectors and code enforcement
 Inspectors need        employees did not receive adequate training to complete the
 additional training    write-ups or to perform adequate inspections. This was
                        particularly evident in the 84 code/HQS violations omitted
                        from rehabilitation contracts.        Former community
                        development employees performed most of the housing
                        inspections. Also, the City’s Land Development Code
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                         Division did not note deficiencies when it performed
                         inspections. For instance, contrary to the City’s Guidelines,
                         the “final word” on code compliance relating to mechanical
                         and electrical is the responsibility of the Code Division.
                         Although, our inspections disclosed instances where despite
                         the Code Division’s approval, a 200 AMP electrical service
                         was not installed, GFCI outlets were improperly or not
                         installed, electrical wiring was not placed in protective
                         conduit, unvented gas heaters were routinely accepted, and
                         water heaters were not appropriately repaired or replaced.

                         Section IX C. 3.b. of the City’s Guidelines indicates that
                         the HUD Housing Inspector shall insist upon quality
                         construction with high quality new materials.            The
                         Inspector shall not sign off on any inspection if inferior or
                         defective construction or materials exists.

                         The City did not clearly define and document emergency
  Emergencies were       situations. Section I of the City’s September 1999
  not clearly defined    Emergency Housing Repair Grant Program Guidelines
                         states that only repairs of an emergency nature will be
                         considered for approval. The guidelines define emergency
                         as work that is necessary to eliminate conditions
                         detrimental to health and safety. The emergency is to be
                         determined by the contractor and verified by the City’s
                         HUD Housing Inspector, Building Inspector, or Housing
                         Coordinator. Section IV states that the contractor’s work
                         write-up shall show all work necessary to correct the
                         emergency repairs identified.

                         However, based on our inspections, the City was
                         inconsistent when determining emergency situations. For
                         instance, the City addressed the replacement of space
                         heaters in one instance, but not in another where health and
                         safety was an issue. The inconsistency indicates the need to
                         more clearly define an emergency. Also, the City needs to
                         improve its documentation of the urgency of a repair.

                         During our review, the City began making plans to correct
 The City’s actions to
                         the cited deficiencies.      The City’s proposed actions
 address deficiencies    included re-inspecting the houses we inspected and
                         correcting the cited deficiencies, correcting the space heater
                         and sewer problems, ensuring that contractors correct the
                         unacceptable work, implementing a contractor debarment
                         policy, and determining necessary staff adjustments
                         including dismissal, reassignment, and hiring.

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                       Excerpts from the City of Hattiesburg’s comments on our
                       draft findings follow. Appendix G contains the complete
                       text of the comments.


                       The City generally agreed with the finding. “The City will
 Auditee Comments      temporarily suspend the housing rehabilitation program
                       pending a complete evaluation of the program, its
                       guidelines and procedures. Upon completion of the
                       evaluation, the City will make necessary changes to insure
                       that the program is implemented in accordance with the
                       local program guidelines, building and related codes, and
                       HUD rules and regulations governing housing rehabilitation
                       programs. Staff training will be a priority.”



   OIG Evaluation of   We believe the City’s action will strengthen controls over its
   Auditee Comments    housing program.




 Recommendations       We recommend you require the City of Hattiesburg to:

                       2A.    Correct all deficient, incomplete work and code/HQS
                              violations noted during our inspections. Any work
                              items noted as not completed or not completed in an
                              acceptable manner should be corrected at no further
                              costs to the program.

                       2B.    Re-inspect all houses completed since January 1998
                              that we did not inspect and correct any items that
                              were not completed or completed in an
                              unacceptable manner. Also, correct all code/HQS
                              violations that should have been included in the
                              work write-up, but were omitted. Any work items
                              noted as not completed or not completed in an
                              acceptable manner should be corrected at no further
                              costs to the program.

                       2C.    Remove any contractor unwilling to correct the
                              deficiencies identified during the inspections or
                              incapable of performing quality work.




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                    2D.   Improve the system for performing inspections by
                          providing adequate staff training for assigned
                          personnel.

                    2E.   Establish and implement policies and procedures to
                          ensure proper guidelines for defining and
                          documenting an emergency and to assign
                          responsibility of final approval for code compliance.

                    2F.   Ensure local codes are enforced and communicate
                          such enforcement to participating contractors.

                    2G.   Monitor future rehabilitation contracts to ensure
                          work is performed in accordance with standards and
                          specifications.

                    2H.   Repay the CDBG Program $24,906 for the
                          ineligible rehabilitation grant. Also, determine if
                          any other repairs were made to the 208 E. 5th Street
                          house from CDBG funds and, if so, repay the funds
                          to the CDBG Program.




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                                                                                    Finding 3


  The City Did Not Follow Proper Procurement
                Requirements
The City of Hattiesburg’s procurement practices did not comply with Federal procurement and
contracting requirements or its own procurement policy. The City improperly procured
$2,916,831 of goods and services without adequately documenting the procurements. The
contract deficiencies included: (1) improperly soliciting and awarding contracts; (2) awarding
sole source procurements; (3) not performing independent cost estimates or cost and price
analyses; and (4) repeatedly selecting the same contractor. The deficiencies occurred because the
City disregarded requirements and did not properly monitor the CDBG and HOME Programs.
As a result, HUD lacked assurance that the City obtained goods and services at the most
advantageous terms.


                                     Title 24 CFR 85.36 (b)(2) requires a contract administration
 Procurement                         system that ensures contractors perform according to terms,
 requirements                        conditions, and specifications of their contracts. Section
                                     (c)(1) states that all procurement transactions be conducted
                                     in a manner providing full and open competition, including
                                     prohibitions against placing unreasonable requirements on
                                     firms in order for them to qualify to do business and any
                                     arbitrary action in the procurement process. Section (b)(9)
                                     requires the grantees to maintain sufficient records to show
                                     the significant history of the procurement. The records
                                     shall document the rationale for the method of
                                     procurement, selection of contract type, contractor selection
                                     or rejection, and the basis for the cost or price. Section
                                     (f)(1) states that grantees and subgrantees must perform a
                                     cost or price analysis in connection with every procurement
                                     action. Section (b)(1) states that grantees and subgrantees
                                     should use their own procurement procedures that reflect
                                     applicable State and local laws and regulations, provided
                                     that procurements conform to applicable Federal law.

                                     The City’s February 21, 2000, Purchasing Manual requires
                                     written bids, initiated only by Purchasing Division staff
                                     members, for amounts from $1,500 to $10,000. For
                                     amounts over $10,000 purchases must be bid as required by
                                     state law, which in part requires advertising for competitive
                                     sealed bids once each week for 2 consecutive weeks and
                                     making the purchase from the lowest and best bidder.




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                       The City contracted services totaling $2,916,831 without
 Competitive           properly executing contracts or documenting a cost or price
 procedures were not   analysis. The services included full and emergency
 followed or           rehabilitation construction ($2,410,844), engineering
                       ($273,796), road paving ($222,741) and consultants
                       ($9,450).      Some of the emergency rehabilitation
                       construction and engineering services procurements were
                       sole source without competitive prices or proposals. The
                       City repeatedly obtained the same firm for its engineering
                       services and used the same small group of contractors from
                       1995 to 2000 for its rehabilitation construction services. As
                       a result of the City disregarding the procurement
                       procedures, it incorrectly obtained goods and services
                       without full and open competition.

                       The City did not have effective controls over its
 Rehabilitation        procurement and contracting for rehabilitation contractors
 construction          selected for homeowner grantees. From 1995 to 2000, the
 contracts             City spent $2,410,844 for home rehabilitation grants. The
                       grants consisted of $1,773,313 for 117 full rehabilitation
                       grants and $637,531 for 137 emergency rehabilitation
                       grants.     The City did not establish or implement
                       procurement and contracting procedures for compliance
                       with Federal regulations or its own requirements. Further,
                       the rehabilitated homes in our sample did not meet HUD
                       and local standards, as discussed in Finding 2.

                       The City did not allow homeowners to choose the
                       contractors to perform the rehabilitation work on their
                       houses.     The City required homeowners to use the
                       contractors it selected. However, the work performed by
                       the selected contractors was inadequate. For example, the
                       City paid a contractor $20,646 to rehabilitate a property that
                       resulted in poor workmanship. However, the City inspector
                       passed the property. One of the work items was the
                       construction of a porch (see photo below).




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                    The City’s Senior Planner stated that he was told the
                    contractor stole bricks to support the poorly constructed
                    porch. The Senior Planner forced the contractor to return
                    the bricks. However, the City did not take action against
                    the contractor and continued doing business with him.

                    The homeowners’ granddaughter, who signed most of the
                    grant documents for her grandmother, stated that she was
                    very unhappy with the quality of work performed. She
                    complained to City Officials and refused to sign the
                    $20,646 check for payment to the contractor. Therefore,
                    the City officials had the grandmother sign the check for
                    payment.

                    The City procured contractors for its full rehabilitation
                    program by soliciting bids from a small select group of
                    contractors, instead of advertising for bids, as required by
                    the procurement policy. The City’s practice was to reject
                    all bids that were not within 10 percent of the estimated
                    cost for rehabilitating the properties. This practice resulted
                    in the City awarding contracts to contractors bidding higher
                    than the low bidder and other bidders. After eliminating
                    bidders, the City routinely approved change orders to
                    increase the contract prices.

                    For example, the property pictured above was procured by
                    soliciting bid proposals instead of advertising for sealed
                    bids as required by the City’s procurement procedures.
                    The contractor who was awarded the contract was not the
                    low bidder. The selected bid was $20,141, but the lowest
                    bid was $19,434. The City’s files contained five bid
                    proposals as shown below.

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                          CONTRACTOR            BID AMOUNT PROPOSED
                              A                                $19,434
                               B                                20,141
                               C                                21,260
                              D                                 24,350
                               E                                No Bid

                        Contractor E said he submitted a proposal showing no bid,
                        because City Officials asked him to bid. He stated that he
                        could not properly remodel the property within the dollar
                        limits set by the City Inspector.

                        The City provided no basis or rationale for not
                        competitively awarding the emergency rehabilitation
                        contracts. We were informed that awards should have been
                        rotated among the bidders, but they were not. As a result,
                        the City incorrectly awarded contracts through non-
                        competitive procurement.

                        The City used the same engineering firm for two CDBG
 Engineering services   contracts. It paid the engineering firm $273,796 from
 contract               January 1998 to August 2000. Initially, the City used
                        qualification-based procurement procedures to obtain the
                        firm’s services and did not consider the price. The City
                        used sole source procurement procedures to award a second
                        contract to the same firm without advertising or seeking
                        proposals from other firms. The City did not provide a cost
                        or price analysis for the contracts to support the price
                        reasonableness or to justify awarding the second contract
                        without competition. The Director of Public Services
                        stated that as an engineer he was familiar with prices
                        charged for such services. Based on his knowledge and
                        guidelines from the engineering profession, he determined
                        that the contract prices were reasonable. However, he did
                        not document his determinations.

                        Although the method is prohibited by 24 CFR 85.36 (f)(4),
                        the City made the $273,796 payment on percentage of cost
                        method of compensation. Since the engineering firm was
                        responsible for determining and monitoring projects costs,
                        the percentage of cost basis used to compensate the firm
                        was susceptible to abuse.




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                                                                     Finding 3

                       On November 3, 1997, the City entered into a contract with
 Road paving           a road paving company. The executed contract did not
 contract              include a contract amount or reference any documents
                       identifying the contract amount. The Public Services
                       Department staff said that the $230,191 contract price was
                       shown in the proposal, which was part of the contract, and
                       it was not necessary to reference that document in the
                       contract itself. The contract did not include the required
                       provisions pertaining to records retention, Davis-Bacon
                       Act, or equal employment opportunity.

                       The City did not follow procurement requirements for
 Consulting services   consulting services contracts awarded sole source. In July
 contracts             1999, the City entered into a professional services
                       agreement with three consultants to design and administer a
                       survey and analyze survey data. The consultants did not
                       sign the service agreement.         Only the City Urban
                       Development Director’s signature was on the agreement.
                       The City agreed to pay a total fee of $9,450 as work was
                       completed. The billings and payments were based on the
                       percentage of budgeted hours completed, rather than
                       services completed, as specified in the agreement. The
                       City’s files did not document the reason for the sole source
                       award or a cost or price analysis. As a result, the City
                       awarded a non-binding and non-competitive contract
                       without justification. The City’s Senior Planner approved
                       the payment, but noted on the payment request that he had
                       not seen a contract supporting the payment.

                       Excerpts from the City of Hattiesburg’s comments on our
                       draft findings follow. Appendix G contains the complete
                       text of the comments.


                       The City generally agreed with the finding. “…The City
 Auditee Comments      will compile documentation to support a determination that
                       the Engineering and Consulting Services were reasonable
                       and necessary. To establish the reasonableness of fees, the
                       documentation will include, among other things, a
                       comparative analysis of engineering fees for similar
                       construction projects using the nationally accepted
                       standards of the National Society of Professional Engineers.
                       The costs of any engineering or consulting services that are
                       not documented to be reasonable and necessary will be
                       repaid to the CDBG Program.


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                     “…The City of Hattiesburg will review and evaluate its
                     existing procurement policies and make necessary changes
                     that will insure that all procurement of goods and services
                     will be in compliance with Title 24 CFR 85.36 and other
                     HUD requirements.

                     “…All Contractors who do not perform acceptable work or
                     will not correct unacceptable work will be subject to
                     debarment.”


                     We believe the City’s action will strengthen controls over the
 OIG Evaluation of   procurement operations.
 Auditee Comments


 Recommendations     We recommend that you require the City of Hattiesburg to:

                     3A.    Provide documentation to justify the reasonableness
                            and necessity of the engineering and consultant
                            services contracts.

                     3B.    Establish and implement policies and procedures on
                            procurement and contract administration to ensure
                            compliance with 24 CFR 85.36 and other HUD
                            requirements. At a minimum the policies and
                            procedures should ensure that: (1) sealed bidding is
                            used when appropriate; (2) the lowest responsible
                            bidder is selected; (3) full and open competition is
                            promoted; (4) invoices are not paid unless an
                            executed contract is properly in place; and (5) sole
                            source procurements are not awarded.

                     3C.    Consider debarring any contractor performing poor
                            quality work.




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                                                                                    Finding 4


        Controls Over Payroll Were Inadequate
The City did not maintain proper accounting controls over its payroll function. The City used
CDBG funds to pay the salaries of an employee who did not provide services to its CDBG
Program and four interns whose positions were not included in the CDBG budget. The City did
not have written procedures for reviewing and approving payroll costs, or documenting personnel
decisions. As a result, the City paid $ 11,535 for non-related program activities and $13,019 for
unbudgeted costs.


                                     Title 24 CFR part 570.502 requires each grantee to
 Financial management                implement a financial management system in conformity
 requirements                        with 24 CFR 85 and Office of Management Budget (OMB)
                                     Circular A-87. Section 85.20 (b)(3) requires each grantee
                                     to maintain effective control and accountability for all
                                     assets and to adequately safeguard all property and assure it
                                     is used for authorized purposes. Section 85.20 (b)(4)
                                     requires actual expenditures be compared to budgeted
                                     amounts.

                                     From September 1999 to March 2000, the City used
 Improper payroll                    $11,535 of CDBG funds to pay the salary of a Code
 paid                                Enforcement Inspector who never provided services to the
                                     CDBG Program. The City’s Accounting Department
                                     charged the salary based on information provided by the
                                     Personnel Department without requiring verification from
                                     the Urban Development Department. The Accounting
                                     Department provided the Urban Development Department
                                     quarterly salaries charged to the CDBG Program, but did
                                     not provide an itemization of salaries charged. Therefore,
                                     improper salaries charged to the CDBG Program were not
                                     detected.

                                     In addition, the City payroll records showed $13,019 of
                                     CDBG funds used to pay interns whose positions were not
                                     included in the CDBG budget as shown below.

                                           Hire Date            Position         Annual Rate
                                          7/6/99                Intern A             $ 2,083
                                          7/6/99                Intern B                 427
                                          7/7/99                Intern C               7,435
                                         11/1/99                Intern D               3,074
                                         Total                                       $13,019



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                      The City’s budget included an administrative assistant
                      position for $24,702. The position was not filled, which
                      resulted in a year-end surplus. Also, the City paid its
                      Community Development Specialist $2,789 less than the
                      authorized amount, creating another surplus. The surplus
                      from the positions offset the spending for the unbudgeted
                      intern positions. Therefore, the unauthorized spending
                      went undetected because overall payroll costs were within
                      the budget limits.

                      The City’s Senior Planner stated that he did not know how
                      the interns’ salaries were charged, and he was unaware of
                      any CDBG activities performed by the interns. The City
                      did not have procedures for reviewing and approving
                      payroll costs to ensure the actual expenditures compared to
                      the budgeted amounts. The City’s personnel or payroll
                      files did not justify payroll decisions. The personnel and
                      payroll officials could not explain the payroll deficiencies.
                      As a result, the City paid $24,554 of ineligible payroll
                      costs.

                      Excerpts from the City of Hattiesburg’s comments on our
                      draft findings follow. Appendix G contains the complete
                      text of the comments.


                      The City generally agreed with the finding. “The City will
   Auditee Comments   repay the CDBG Program $25,554 for payroll costs paid to
                      the Code Enforcement inspector and the four interns. The
                      City will review its Financial Management Systems and
                      establish and implement written policies and procedures to
                      ensure payroll records are accurately documented, reviewed
                      and approved.      The policy and procedures will be
                      developed in accordance with Title 24 CFR 85 and OMB
                      Circular A-87.”


                      We believe the City’s action will strengthen controls over
 OIG Evaluation of    its payroll function.
 Auditee Comments




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 Recommendations    We recommend that you require the City of Hattiesburg to:

                    4A.    Repay the CDBG Program $24,554 for the payroll
                           costs paid to the Code Enforcement Inspector and
                           for the intern positions.

                    4B.    Establish and implement policies and procedures to
                           ensure payroll records are accurately documented,
                           reviewed, and approved.




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                                                                                   Finding 5



 Controls Over Programs Needed Improvement
The City did not establish and maintain operating systems to ensure its activities complied with
the programs regulations. The City did not correct deficiencies HUD identified during its
programs review. Also, the City did not monitor its subrecipients to ensure they implemented
adequate systems for financial management. This occurred because the City did not properly
manage its programs or have written procedures for monitoring subrecipients to ensure they
properly implemented the required financial management systems. As a result of the City’s
ineffective programs management, there was no assurance that subrecipients properly operated
their programs and citizens received the intended benefits.


                                    Paragraph A (2)(a) of OMB Circular A-87 requires efficient
 Financial management               and effective administration of Federal awards through the
 requirements                       application of sound management practices. Title 24 CFR
                                    85.20(a)(3) requires grantees to maintain effective controls
                                    and accountability for all grantees and subgrantees cash and
                                    other assets. Grantees must adequately safeguard all such
                                    property.     Section 570.502 requires each grantee to
                                    implement a financial management system in conformity
                                    with 24 CFR Part 85 and OMB Circular A-87. Section
                                    85.20 (b)(3) requires that financial management systems
                                    effectively account for and control the use of program funds
                                    and other assets. Section 85.36 (b)(2) requires grantees and
                                    subgrantees to maintain a contract administration system,
                                    which ensures that contractors perform in accordance with
                                    the terms, conditions, and specifications of their contracts.
                                    Section 570.501(b) requires that subrecipients adopt and
                                    implement the same standards for financial management as
                                    grantees.

                                    HUD has documented a history of problems with the City’s
 HUD reviews                        administration of the CDBG and HOME Programs. HUD
                                    performed reviews from 1996 to 2000 and identified
                                    various deficiencies that the City has not corrected. For
                                    example, HUD cited that the City’s: (1) rehabilitated
                                    houses did not meet HQS; (2) internal control system over
                                    its procurement system was inadequate, (3) HOME
                                    Program needed improvement; and (4) program
                                    management needed improvement.




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                      The City’s Urban Development Director said that
                      management delegated the responsibility of implementing
                      the corrections to the staff, however the corrections were
                      not made. The Director said currently he uses action plans
                      and verifies that the required corrective actions were
                      completed for the deficiencies identified.

                      The City’s subrecipient agreement included a provision that
 Subrecipients were   the City would monitor them against goals and performance
 not monitored        standards. However, the City did not monitor its three
                      subrecipients. The City had four contracts involving the
                      three subrecipients. The contracts performance time frames
                      expired without the subrecipients accomplishing all of the
                      contractual tasks.      The City did not address the
                      subrecipients’ poor performance. Instead of monitoring the
                      subrecipients’ performance or even suspending or
                      terminating the contracts, the City chose not to monitor the
                      subrecipients.

                      The City did not have written procedures for monitoring
                      subrecipients to ensure they properly implemented their
                      contracts or the required financial management systems.
                      Therefore, the City did not assure the subrecipients had
                      established, or were maintaining, all records required by
                      Federal regulations. The City Officials said that they did
                      not monitor the subrecipients because they had not spent
                      much of the funds granted. The City should have realized
                      that the slow spending by subrecipients indicated possible
                      ineffective program administration. Therefore, the City
                      should have intensified, rather than reduce, the monitoring.
                      By not fulfilling its oversight responsibilities, neither the
                      City nor HUD had adequate assurance that subrecipients
                      were effectively accounting for and controlling the use of
                      program funds.

                                        *   *   *   *   *   *

                      In summary, the City did not effectively manage its CDBG
                      and HOME Programs or adequately monitor its
                      subrecipients to ensure that they were effectively
                      administering their contracts. As a result, the City’s
                      subrecipients were not effectively accomplishing the tasks
                      required by their contracts.




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                                                                   Finding 5

                     Excerpts from the City of Hattiesburg’s comments on our
                     draft findings follow. Appendix G contains the complete
                     text of the comments.


                     The City generally agreed with the finding. “…The City
 Auditee Comments    will undertake a comprehensive review of its financial
                     management systems, procedures for monitoring CHODOs
                     [Community Housing Development Organizations] and
                     sub-recipients, and procedures for responding to HUD’s
                     monitoring findings to insure that those monitoring findings
                     and those cited in the Audit Report will not be repeated.”


                     We believe the City’s action will strengthen controls over
 OIG Evaluation of   the program.
 Auditee Comments



 Recommendations     We recommend that you require the City of Hattiesburg to:

                     5A.    Establish and implement policies and procedures on
                            financial management systems to ensure compliance
                            with 24 CFR 85 and OMB Circular A-87.

                     5B.    Monitor the performance of its subrecipients to
                            ensure contractual agreements are completed.
                            Terminate the contracts of any subrecipient who
                            does not properly fulfill its contract requirements.

                     5C.    Submit a corrective action plan to correct the
                            deficiencies identified by HUD during its reviews.




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Management Controls
In planning and performing our audit, we considered the City’s management controls to determine
our audit procedures and not to provide assurance on the controls. Management is responsible for
establishing effective management controls to ensure that its goals are met.

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 include the systems for
measuring, reporting, and monitoring program performance.


We determined the following management control categories were relevant to our audit
objectives:

       Eligibility with program requirements.

       Procedures used to comply with laws and regulations to meet national objectives.

       Procedures used to ensure proper housing rehabilitation.

       Procurement and contracting.

       Procedures used to ensure expenditures for administering the programs were eligible.

       Management monitoring methods.

       Procedures used to monitor subrecipients of grants and loans.

We assessed controls in place. We obtained an understanding of the City’s procedures and
HUD’s requirements, assessed control risk, and performed various substantive tests of the
controls.

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

Based on our review, we believe the City had significant weaknesses in the management
controls. The specific weaknesses are discussed in the findings.




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Follow-Up On Prior Audits
This is the first Office of Inspector General audit of the City of Hattiesburg’s CDBG and Home
Programs.

Nicholson & Company, P.A., Certified Public Accountants, completed the last Independent
Auditor’s audit report for the fiscal year ended September 30, 1997. The report issued December
1, 1997, contained no findings or unresolved prior findings related to any Federally sponsored
program.




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                                                                                                      Appendix A


Schedule Of Ineligible and Unsupported Costs
                          Recommendation           Ineligible1     Unsupported2
                                   1A                                 $ 242,000
                                   2H                 $ 24,906
                                   4A                   24,554
                          Totals                      $ 49,460           $ 242,000




1
    Ineligible costs are not allowed by law, contract, HUD or local agency policies or regulations.
2
    Unsupported costs are not clearly eligible or ineligible but warrant being contested because of the lack of
    documentation supporting the need to incur such costs.
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                                                                                                        Appendix B


Properties Inspected – Full Rehabilitation Program
                                                                                                                                   CODE/HQS
                                                                        GRANT        GRANT          ITEMS NOT      ESTIMATED      VIOLATIONS   ESTIMATED         TOTAL
                                         INSPECTION DATES               REPAIR       WORK          COMPLETED/         ITEMS         NOT IN     VIOLATIONS      ESTIMATED
 PROPERTY ADDRESS                          GRANTEE     OIG              COSTS        ITEMS        UNACCEPTABLE         COST       CONTRACT        COST        REPAIR COST

FULL REHAB
802 ATLANTA STREET                      4/11/00        7/27/00            $21,078            61              2/6         $2,593        9             $1,847           $4,440
800 FAIRLIE STREET                      1/18/00        7/27/00             10,590            34              4/2          1,380        9              2,310            3,690
709 SHORT 9TH STREET                    4/27/00        7/28/00             22,832            70              1/6            880        1              1,330            2,210
518 McINNIS SPRINGS RD                                 7/31/00             12,793            68              5/5          1,168       5                 554            1,722
422 MOBILE STREET                       1/28/00        8/02/00             22,836            80              3/6            715        8                680            1,395
908 FLOWERS STREET                      5/26/00        8/02/00             24,571            66              2/9          1,645        2              1,575            3,220
423 BRADY ROAD                          1/31/00        7/25/00             22,243            53              1/4          2,619        4              7,181            9,800
433 BRADY ROAD                          2/23/00        7/25/00             19,680            74              7/1            740       12              3,065            3,805
418 E. 7TH STREET                       3/9/00         7/25/00             24,831            81              6/6          3,120        7              2,300            5,420
905 RIVER STREET                        4/3/00         7/26/00             23,815            75              2/2            890       4               1,550            2,440
710 SHORT 9TH STREET                    4/27/00        7/26/00             24,590            76              1/4          1,230        7              1,920            3,150
524 E. 6TH STREET                       5/4/00         7/26/00             24,224            93              6/3          2,465        1              2,090            4,555
208 E. 5TH STREET                       2/2/00         7/27/00             24,906            77             8/12          8,681        7             15,607           24,288
TOTALS                                                                   $278,989           908            48/66        $28,126        76           $42,009          $70,135

Note: Grantee inspection date represents the date shown on the certificate of final inspection.
If no date is shown, the final inspection was not documented in the file




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                                                                                       Appendix C


Properties Inspected – Emergency
Rehabilitation Program

                                                                                                      CODE/HQS
                                                                         ITEMS NOT     ITEMS         VIOLATIONS
                          INSPECTION DATES         REPAIR      WORK     COMPLETED/    NOT AN           NOT IN
PROPERTY ADDRESS          GRANTEE     OIG          COSTS       ITEMS   UNACCEPTABLE EMERGENCY        CONTRACT

17 COLLINS ROAD           10/18/99    7/31/00         $7,596       2            0/1             0             1
231 MAY AVENUE            05/04/00    7/31/00          5,965       8            0/0             2             2
106 N. 24TH AVENUE                    7/31/00          6,730       3            1/0             0             0
406 ASHFORD STREET        08/19/99    7/31/00          5,865      10            1/2             5             1
718 MCMINNIS SPRING RD    06/08/99    8/01/00          4,356       9            2/1             6             0
428 MLK DRIVE             10/18/99    8/01/00          5,920       7            2/1             3             1
1011 DEASON AVENUE        09/16/99    8/01/00          5,724       7            0/0             3             3

TOTALS                                               $42,156      46             6/5            19            8


Note: Grantee inspection date represents the date shown on the certificate of final inspection. If
no date is shown, the final inspection was not documented in the file.




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                                                                                   Appendix D


Inspection Deficiencies For Full Rehabilitation
Grants
Deficiency                                                                         1      2    3
802 Atlanta Street
Flaking paint and paint chips not removed                                                 X
Wheelchair ramp not installed at rear                                              X
Inadequate paint coverage on wheelchair ramp                                              X
Hallway walls not painted                                                          X
GFCI outlet not installed at sink                                                         X
Exterior front door not weather-stripped                                                  X
Defective cabinet drawer guide                                                            X
Additional electrical outlets needed in living room; bedroom                                   X
Water heater not enclosed                                                                      X
Bedroom closet not repaired; splintered paneling; wall not sealed; corner open                 X
to the exterior; ceiling heavily water damaged; hazardous piping for clothes rod
Smoke detector not installed in den                                                            X
Downspout for new gutter needed                                                                X
Sewer cleanout cap needed                                                                      X
Exterior electrical wiring not placed in protective conduit                                    X
Exterior porcelain fixture not replaced                                                        X
Rotted exterior wood not replaced                                                              X
Unvented gas heater                                                                       X

800 Fairlie Street
200 Amp electrical service not installed                                           X
New exterior wood not fully primed/painted                                                X
Kitchen wall cabinet hardware not installed                                        X
Repair of front porch decking duplicated                                           X
Rotted siding not replaced; joints not sealed before painting                                  X
Rear porch panel siding not exterior grade; not sealed and caulked                 X           X
Unvented space heater                                                                     X
Smoke detector needed in hallway                                                               X
GFCI outlet not installed at washer                                                            X
Hallway light fixture not installed                                                            X
GFCI outlets not installed at exterior                                                         X
Exterior electrical wiring not in protective conduit                                           X
Water heater vent pipe not sealed                                                              X
Burglar bars on front bedroom windows unacceptable                                             X


1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract
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Inspection Deficiencies For Full Rehabilitation Grants

Deficiency                                                                 1     2    3
709 Short 9th Street
Storm door closes improperly                                                     X
Front exterior door not weather tight                                      X
Bedroom number1 door closes improperly                                           X
Kitchen vinyl flooring torn                                                      X
Water heater discharge line improperly constructed                               X
Laundry room vinyl floor loose at seams                                          X
Unvented space heater                                                            X
Bathroom needs wall fixture/switch control at vanity/sink                             X

518 McInnis Springs Rd.
Doorbell not installed                                                     X
Water heater missing flue collar; discharge line improperly constructed          X
Kitchen vinyl poorly installed                                                   X
Kitchen cabinet shelving not installed                                     X
Kitchen cabinet door post not repaired                                           X
Kitchen cabinet plywood end piece not installed                            X
Formica edging missing at stove area                                       X
Bath ceiling paint peeling                                                       X
Bath GFCI outlet not installed                                             X
Bath vanity door post not repaired; door not installed to framework              X
Bath wall not repaired under sink                                                     X
Bath vanity shelving not painted                                                      X
Bedroom ceiling globe not replaced                                                    X
Hall paneling inappropriate width; improperly installed                               X
Bedroom window opens improperly                                                       X

422 Mobile Street
Some roof shingles not replaced; chimney flashing not properly installed         X
Rotted window trim not replaced                                            X
GFCI kitchen and bath outlets improperly installed                               X
Brick veneer not properly sealed                                                 X
Sewer vent pipe not extended through roof                                        X
Exterior door not weather tight at den/laundry room                              X    X
Heat/vent light unit not installed                                         X
Bedroom number1 baseboard not replaced/painted                             X


1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract




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Inspection Deficiencies For Full Rehabilitation Grants


Deficiency                                                                    1      2    3
422 Mobile Street
Vinyl flooring not sealed at tub                                                     X
Den panel wall not sealed at electrical box                                               X
Bath (half) without vent fan or window                                                    X
Bedroom (1st floor) wall switch omitted                                                   X
Kitchen windows have no locks                                                             X
Bedroom number 3 electrical outlet cover plate missing                                    X
Rear window brick sill cracked and not sealed                                             X
Kitchen cabinet interior side not painted                                                 X

908 Flowers Street
Rear exterior door not weather tight; will not latch                                 X
Laundry room storm door will not latch                                               X
Rear landing guardrail spindles irregularly spaced                                   X
Kitchen electrical wiring not placed in protective conduit                           X
Kitchen countertop delaminating                                                      X
Roof eave trim loose near gable peak                                                 X
Roof trim and drip edge missing at front gable                                       X
Door to hallway number 2 installed upside down; hardware omitted                     X
Smoke detector not installed                                                  X
Front porch painting duplicated                                               X
Water heater vent pipe not sealed                                                         X
Unvented space heaters                                                               X
Bedroom door poorly trimmed                                                               X

423 Brady Road
Exterior paint surfaces not prepared properly                                        X
Exterior steps require handrails on both sides                                X
Paint peeling in dining room/rear bedroom/utility room                               X
Kitchen cabinets improperly refinished                                               X
Unvented space heater                                                                X
Dining room exterior door not weather tight; will not latch                               X
Exterior windows seriously deteriorated; missing locks; missing sash cords;               X
sashes rotted; panes loose/broken
Utility room floor not sealed around pipes/baseboards                                     X
Dwelling not connected to approved sanitary sewer                                         X


1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract




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Inspection Deficiencies For Full Rehabilitation Grants

Deficiency                                                          1     2    3
433 Brady Road
Sewer line not properly capped; trench not backfilled               X     X
Den not painted and damaged ceiling tiles replaced                  X
Desk not stained/painted                                            X
GFCI not installed (1 of 2) in kitchen                              X
Kitchen cabinet new drawer not installed                            X
Bedroom number 1 closet not painted                                 X
Bedroom number 1 wall switch not flush with the wall                           X
Bathroom number 2 linen closet doors not installed                  X
Kitchen formica top improperly installed                                       X
Attic interior access not installed                                            X
Rear gable doors not secured                                                   X
Laundry room electrical outlet plate missing                                   X
Bath grab bar/soap dish not caulked/sealed                                     X
GFCI outlet not installed in bath                                              X
Kitchen vinyl not properly trimmed                                             X
Living room exterior door not weather tight; deadbolt inoperative              X
Foyer exterior door not weather tight                                          X
Open septic tank in carport area; toxic odors                                  X
Exposed electrical wiring at kitchen light fixture                             X

418 E. 7th Street
Paint chips not disposed of properly                                      X
Soffit not replaced (none on the house)                             X
Metal grating not installed                                         X
Main switch not installed                                                 X
GFCI outlets not installed in kitchen and bath                      X
Kitchen vinyl seam not sealed properly                                    X
Kitchen cabinets shelving not installed; protruding nails                 X
Bathroom number 1 water cutoff is inoperable                              X
Unvented space heaters                                                    X
Siding replacement duplicated                                       X
Water heater repairs duplicated                                     X
Drain line replacement and bathroom tie in duplicated               X
Hallway smoke detector needed                                                  X



1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract




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Inspection Deficiencies For Full Rehabilitation Grants

Deficiency                                                       1      2    3
418 E. 7th Street
Bedroom number 4 vinyl not replaced                                          X
Paint peeling in bedroom number 3                                            X
Kitchen stove burner is hazardous                                            X
Burglar bars unacceptable on bedroom windows                                 X
Exterior door double-key deadbolt locks unacceptable                         X
Electrical outlets in dining room inappropriate                              X

905 River Street
Turbines (non-existent) not painted                              X
Siding not repaired/painted                                             X
Unvented space heaters                                                  X
Roof edge installation duplicated                                X
Kitchen vinyl poorly repaired seam                                           X
Existing unvented space heater(s) not removed                                X
Kitchen vent hood installed too high                                         X
Electrical outlets in bedrooms number 2 and 3 inappropriate                  X

710 Short 9th Street                                                    X
Flaking paint and paint chips not removed                               X
Kitchen cabinet doors improperly installed                              X
Kitchen formica countertop not sealed
Smoke detector not installed                                     X
Unvented space heaters                                                  X
Existing unvented space heater not removed                                   X
Front exterior door not weather tight                                        X
Dining room floor not level                                                  X
Interior door at bedroom number 2 needs trimming                             X
Closets not painted                                                          X
Exterior electrical wiring improper; not in protective conduit               X
Porcelain fixture improper for exterior use                                  X

524 E. 6th Street
Knee brace at front porch overhang not repaired                  X
Windows (6) not enclosed                                         X
No certification for insulation                                         X
Cabinet door interior not stained                                X


1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract




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Inspection Deficiencies For Full Rehabilitation Grants

Deficiency                                                                1     2    3
524 E. 6th Street
Bathroom vinyl seam not sealed                                                  X
Sink top not secured to vanity                                                  X
Unvented space heaters; wrong size installed                              X
Smoke detector needed in bedroom number 2                                 X
No lock on gable door                                                     X
Eave vents not closed                                                                X

208 E. 5th Street
Siding not adequately sealed before painting                                    X
Electrical wiring not attached to joist; no cover plate on junction box         X
Barge rafter not replaced                                                 X
Broken window panes not replaced                                          X
Rear bath and kitchen not properly jacked and leveled                           X
Rear brick pier not properly repaired                                           X
Ceiling tiles not replaced                                                X
Bath linoleum floor has open seam                                               X
New heat, vent light unit not installed                                   X
Faucet handle improperly installed                                              X
Door does not close properly                                              X
Kitchen cabinetry does not meet code                                            X
Rear door not refurbished                                                 X
Back porch not properly jacked and leveled                                      X
Unvented space heaters                                                          X
Concrete blocks not mortared                                                    X
Boarding (1x6) not installed                                              X
Windows not trimmed                                                       X
No certification for insulation                                                 X
Heater repairs (flex lines) not specified                                       X
Electrical code deficiencies                                                         X
Areas need leveling                                                                  X
Smoke detectors needed in hallway                                                    X
Windows in disrepair                                                                 X
Exterior vent stack not extended through roof                                        X
Wood floor openings not repaired                                                     X
Water heater piping in disrepair; not enclosed                                       X



1 Work Not Completed
2 Unacceptable workmanship
3 Code/HQS violation not included in contract




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                                                                    Appendix E


Inspection Deficiencies For Emergency
Rehabilitation Grants
Deficiency                                                      1    2      3    4
17 Collins Road
Drain pipes to the sewer precariously installed                      X
Old septic tank should have been removed and hole filled                         X

231 May Avenue
Handicap ramp improperly constructed                                             X
Unvented gas space heaters with no flex-line and cutoff valve                    X
New supply lines to bath                                                    X
New gable vent                                                              X

106 N. 24th Ave.
New exterior wood not painted                                   X

406 Ashford St.
Install new faucet etc. in bathroom                                         X
Rebuild commode                                                             X
Install new faucets etc. in kitchen                                         X
Replace fascia board and paint                                              X
Wall switch improperly installed                                     X           X
200 amp electrical service not installed                        X
Exterior siding not repaired and sealed                              X
Water heater needed replacement                                             X

718 McInnis Spring Rd.
Reroof house                                                                X
Replace boots on plumbing stacks                                            X
Repair tub handle                                               X           X
Repair exterior front faucet                                                X
Repair exterior back faucet                                                 X
Repair washing machine pipe, vent etc.                                      X
120 linear feet of sewer line not installed                     X
New sewer line exposed to potential damage                           X



1 Work not completed
2 Unacceptable workmanship
3 Not an emergency
4 Code/HQS violation not included in contract


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Inspection Deficiencies For Emergency Rehabilitation Grants

Deficiency                                                               1   2     3    4
428 MLK Drive
200 amp electrical service, mast, weatherhead, and panel not installed   X         X
Bath switch and GFCI outlet improperly installed                             X
Smoke detector not installed                                             X         X
Water heater needed replacement                                                         X
Light fixtures installed                                                           X

1011 Deason Ave.
New gas heaters not vented                                                         X    X
Install smoke detectors (one not installed)                                        X    X
Install new light fixtures                                                         X
Water heater improperly vented                                                          X




1 Work not completed
2 Unacceptable workmanship
3 Not an emergency
4 Code/HQS violation not included in contract




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                                                                              Appendix F


Selected Photographs




     428 Martin Luther King Drive

Water heater was red tagged by the gas company because emergency repairs were in progress.
This is a health and safety violation.




     428 Martin Luther King Drive

The installation of a new bathroom wall switch and GFCI outlet had substandard workmanship.


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Selected Photographs




231 May Avenue

Unvented gas space heater in the bedroom should have been included in emergency repairs. This
is a health and safety violation.




518 McInnis Springs Road

Kitchen vinyl flooring was poorly installed and trimmed at cabinet base area.



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Selected Photographs




                                       208 E.5th Street

Defective wood trim and sill not replaced before painting. Vent pipe was not extended through
the roof. Therefore, sewer gas escapes through the opening.




                                       208 E.5th Street

Rotted window sashes and framework.

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                              Appendix G


Auditee Comments




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                                                                               Appendix H


Distribution
Director, Community Planning and Development Division, 4GD
Secretary, S
Deputy Secretary, SD (Room 10100)
Chief of Staff, S (Room 10000)
Assistant Secretary for Administration, S (Room 10110)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room 10120)
Deputy Assistant Secretary, Office of Public Affairs, S, (Room 10132)
Deputy Assistant Secretary for Administrative Services, Office of the Executive Secretariat, AX
    (Room 10139)
Deputy Assistant Secretary for Intergovernmental Relations,
Acting Deputy Chief of Staff, S (Room 10226)
Deputy Chief of Staff for Policy, S (Room 10226)
Deputy Chief of Staff for Programs, S (Room 10226)
Special Counsel to the Secretary, S (Room 10234)
Senior Advisor to the Secretary, S
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S (Room 10220)
General Counsel, C (Room 10214)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Office of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E (Room 5100)
Director, Office of Departmental Equal Employment Opportunity, U
Chief Procurement Officer, N (Room 5184)
Assistant Secretary for Public and Indian Housing, P (Room 4100)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Office of the Chief Financial Officer, F (Room 2202)
Chief Information Officer, Q (Room 3152)
Acting Director, HUD Enforcement Center, V, 1250 Maryland Avenue, SW, Suite 200
Acting 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
Inspector General, G (Room 8256)




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Distribution


Secretary's Representative, 4AS
State Coordinator, Mississippi State Office, 4GS
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)
Stanley Czerwinski, Associate Director, Resources, Community, and Economic Development
   Division, U.S. GAO, 441 G Street N.W., Room 2T23, Washington DC 20548
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
Armando Falcon, Director, Office of Federal Housing Enterprise Oversight, O, 1700 G Street, NW,
  Room 4011, Washington, DC 20552




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