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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2001-AT-1006 Page ii
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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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Executive Summary
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2001-AT-1006 Page vi
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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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Finding 2
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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Finding 2
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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Finding 2
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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Finding 2
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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Finding 2
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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Finding 2
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 2
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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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Finding 3
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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Finding 3
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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Finding 3
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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Finding 3
“…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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Finding 4
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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Finding 4
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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Finding 5
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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Management Controls
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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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Follow-Up On Prior Audits
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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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Schedule Of Ineligible And Unsupported 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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Properties Inspected – Emergency Rehabilitation Program
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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.
2001-AT-1006 Page 54
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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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Selected Photographs
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Appendix G
Auditee Comments
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Auditee Comments
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Auditee Comments
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Auditee Comments
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Auditee Comments
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Auditee Comments
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Auditee Comments
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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
2001-AT-1006 Page 66
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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)