AUDIT REPORT
SAN FRANCISCO HOUSING AUTHORITY
SAN FRANCISCO, CALIFORNIA
FORCE ACCOUNT MODERNIZATION
ACTIVITIES
COMPREHENSIVE GRANT PROGRAM
2001-SF-1001
March 30, 2001
OFFICE OF AUDIT, PACIFIC/HAWAII DISTRICT
SAN FRANCISCO, CALIFORNIA
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Issue Date
March 30, 2001
Audit Case Number
2001-SF-1001
TO: Gloria J. Cousar
Acting General Deputy Assistant Secretary
Office of Public and Indian Housing, P
SIGNED
FROM: Mimi Y. Lee
District Inspector General for Audit, 9AGA
SUBJECT: San Francisco Housing Authority
Force Account Modernization Activities
San Francisco, California
We conducted an audit of the San Francisco Housing Authority’s force account modernization
activities under the Comprehensive Grant Program. We identified serious problems with the
program’s effectiveness and with the related recording and tracking of assets and expenditures.
This report contains two findings and applicable recommendations to improve the effectiveness
of the program.
Within 60 days, please furnish us a status report on the corrective action taken, the proposed
corrective action and the date to be completed, or why the action is not considered necessary for
each recommendation. Also, please furnish us with copies of any correspondence issued because
of the audit.
If you or you staff have any questions, please contact Mark Pierce, Assistant District Inspector
General for Audit, or myself at (415) 436-8101.
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Management Memorandum
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2001-SF-1001 Page ii
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Executive Summary
We reviewed selected aspects of the San Francisco Housing Authority’s (SFHA’s) force account
modernization activities under the Comprehensive Grant Program (CGP), generally covering the
period January 1997 to June 30, 1999. We initiated the audit to address concerns expressed by
the Director of Public Housing at the U.S. Department of Housing and Urban Development
(HUD) office in San Francisco.
The objective of our review was to determine if the SFHA could improve its effectiveness of
operations and compliance with federal requirements. Specifically, we determined whether the
SFHA force account activities (1) operated effectively within HUD requirements and (2)
included proper records for CGP assets and expenditures. We identified serious problems
relating to both the force account operations and the record maintenance, requiring HUD’s
immediate attention to set the proper tone and perspective for improvements.
The Housing Authority Was The SFHA modernization activities were not cost effective.
Not Operating The Force In addition, insufficient construction records were
Account Programs maintained to accurately identify and assess all
Effectively modernization work performed, and there were indications
of poor workmanship. Also, the program did not
sufficiently emphasize high priority modernization, and
some of the low priority work performed cannot be
adequately maintained by the SFHA. These problems
primarily occurred due to inadequate management. As a
result, the level of potential modernization available under
the grant funds has been reduced. The SFHA’s neglect of
high priority work resulted in emergency conditions
requiring additional HUD funding. Finally, poor record
maintenance made it impossible for inspectors to fully
assess all the modernization performed.
We identified $18,186,844 of possibly excessive force
account costs on the Clementina, Potrero Annex, and
Sunnydale developments. However, due to deficient SFHA
records, all modernization costs could not be estimated
accurately. Nevertheless, we were able to establish
$184,161 of excessive costs at the Clementina housing
development, where the SFHA recorded costs that
exceeded HUD Office of the Inspector General (OIG)
estimates of what it should have cost for a contractor to
perform the work.
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Executive Summary
The Housing Authority Was The SFHA did not adequately record and track its assets
Not Maintaining Adequate and expenditures. The general ledger recording was
Records Over Assets and inadequate to fully assess CGP force account expenditures.
Expenditures Expenditures were charged or moved to incorrect project
accounts making the general ledger unreliable. The SFHA
also did not consistently follow required procedures over
the generation of its purchase orders relating to force
account work. In addition, the inventory system over CGP
purchased equipment was insufficient to accurately track all
items. Finally, the SFHA was charging ineligible payroll to
the CGP grant, while not maintaining adequate
documentation to substantiate additional payroll attributed
to the grants. These problems occurred because the SFHA
did not develop sufficient procedures and controls, or was
not following existing procedures. As a result, there was
inadequate information to assure that all assets were
accounted for and all expenditures were being legitimately
used for CGP activities. In addition, $98,102 of ineligible
and $73,210 of inadequately supported maintenance
expenses were charged to the CGP, with additional
amounts possible in other periods.
Auditee Comments We provided the SFHA with a draft audit report and
obtained its written comments. We also discussed the audit
results with the SFHA’s senior management on March 26,
2001 and received subsequent correspondence on March
28, 2001. Due to the voluminous nature of attachements
included with the response, these additional documents
were not included in this report. In addition, the
subsequent correspondence was not included in the report,
although its contents were reviewed and considered. These
documents are available upon request.
In general, the SFHA disagreed with the reports
conclusions and recommendations. It believed that issues
raised in the draft report were unfounded and misleading. It
also believed some audit conclusions did not adequately
consider all relevant factors.
We considered the SFHA’s comments and made revisions
to the report when appropriate. Nevertheless, our
conclusions did not change significantly. The SFHA did
not provide sufficient substantive evidence to warrant
changes to our recommendations. Each finding
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Executive Summary
summarizes the SFHA’s comments and our evaluation.
Recommendations The findings include recommendations to avoid the
continuance of the above problems and to lessen their
effects. The more significant recommendations call for
HUD to require the SFHA to terminate the use of force
account for comprehensive modernization; stop using force
account for non-routine maintenance until the SFHA can
demonstrate that it is cost effective; require new procedures
and controls to be put in place over record maintenance in
the general ledger, inventory, and purchase order system;
and return ineligible and excessive costs of $282,263.
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Executive Summary
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Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Findings
1 The In-House Force Account Modernization Programs
Were Not Operating Effectively 7
2 The SFHA Was Not Adequately Recording and Tracking
Assets and Expenditures Under the CGP 57
Management Controls 81
Follow Up On Prior Audit Reports 83
Appendices
A Schedule of Questioned Costs 85
B Auditee Comments 87
C Distribution 107
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Abbreviations
ACC Annual Contributions Contract
CCS Creative Computer Solutions
CFR Code of Federal Regulations
CGP Comprehensive Grant Program
CIAP Comprehensive Improvement Assistance Program
HQS Housing Quality Standards
HUD U.S. Department of Housing and Urban Development
LBP Lead Based Paint
LOCCS Line of Credit Control System
MIS Management Information System
MOH Mayor’s Office of Housing
OHA Oakland Housing Authority
OIG HUD Office of the Inspector General
PHMAP Public Housing Management Assessment Program
PO Purchase Order
SFHA San Francisco Housing Authority
SLUG San Francisco League of Urban Gardeners
TARC HUD Troubled Agency Recovery Center
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Introduction
The major HUD programs funding the SFHA include Section 8 rental assistance, operating
subsidy, modernization, HOPE VI, and drug elimination. Under Section 8, the SFHA subsidizes
the cost of low-income families in privately owned housing. Operating subsidies, based on a
regulatory formula, are provided to help the SFHA offset operating deficits in the maintenance
and operation of the low-income housing it owns. The modernization program pays for capital
improvements and related management improvements at the public housing developments.
HOPE VI grants provide funds for innovative mixed-income housing to remedy the problem of
distressed developments. Drug elimination grants are for addressing drug-related crime and its
associated problems in and around public housing developments.
The Authority Was Created The San Francisco board of supervisors established the
In 1938 Housing Authority of the City and County of San
Francisco, commonly known as the San Francisco Housing
Authority, in 1938. The city mayor appoints the members
to the SFHA’s governing body known as the board of
commissioners.
In 1940, the SFHA opened the city’s first low-income
housing development for 188 families. The SFHA has
grown to include about 40 developments with a total of
nearly 6,000 housing units. Also, since the 1974 inception
of the Section 8 program, the number of low-income
families with subsidized rents at privately owned housing
has risen to approximately 5,500.
For the fiscal year ended in 1997, the SFHA expended $128
million. Its largest programs consisted of Section 8 ($51
million), low-income housing operations ($33 million),
modernization ($24 million), HOPE VI new development
($16 million), and drug elimination ($2.8 million).
HUD Assumed Temporary The SFHA was much criticized for its perceived lack of
Control Of The Authority In competent leadership, physical decay of its housing, poor
March 1996 performance in collecting rent, and the high level of crime
existing at its housing developments. As a result, in March
1996, the city’s newly elected mayor announced the firing
of the SFHA’s commissioners and executive director. The
mayor invited HUD to temporarily run the SFHA and
reorganize it, recruit new management, and establish new
policies and procedures.
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Introduction
As a result, HUD sent a recovery team (consisting of HUD
officials, consultants, and employees from other housing
agencies) to assess the SFHA’s operations and develop
strategies to deal with the problems. This phase was
concluded in November 1996. HUD contracted to fill
several key management positions to continue the recovery
efforts.
The City Regained Control In As part of the recovery effort, the acting HUD Assistant
September 1997 Secretary for Public and Indian Housing functioned as the
board of commissioners. In July 1997, the mayor appointed
new board members, and in September 1997, HUD turned
control over to the newly formed board.
At the time of our audit, the SFHA’s executive director
began working at the SFHA in November 1996, on loan
from the Cuyahoga Metropolitan Housing Authority to
serve as the acting executive director. The SFHA board of
commissioners hired him on a permanent basis in
November 1997.
SFHA Modernization Force The SFHA’s modernization program is funded under the
Account Program CGP. Since fiscal year 1992, HUD has allocated CGP
funds to the SFHA to fund its modernization efforts and
other improvements. Prior to the CGP, the SFHA had been
receiving funds under a similar program, the
Comprehensive Improvement Assistance Program (CIAP).
The CIAP and CGP grant programs allow, under certain
restrictions, housing authorities the option of using their
own in-house labor “force account” to perform
modernization work, as opposed to independent
contractors.
In 1996, the SFHA was performing modernization using a
force account program. HUD’s San Francisco Office of
Public Housing instructed the SFHA to terminate all force
account activity on May 29, 1996. This decision was
reached because it was believed the force account program
was not cost effective, there was mismanagement, and the
quality of work was questionable. These observations are
similar to the conclusions presented in this audit report
covering subsequent modernization activities.
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Introduction
By May 1997, HUD had allowed the SFHA to reinitiate its
force account program. The program was split into two
parts, the Family Sweep program and the Senior Sweep
Program, performing modernization activities, respectively,
on family and senior developments.
The Sweeps programs performed varying levels of
modernization on 21 senior development and 20 family
developments.
Upon resumption of the force account program in 1997,
there were still CIAP funds available from the 1991 grant
allocations. In addition, there were funds available under
each subsequent year allocation of the CGP grant.
Additional CGP funds were granted for 1997 and 1998.
Between January 1997 and June 15, 1999, the SFHA had
withdrawn approximately $98.6 million from the CIAP and
CGP grants.
The City of San Francisco was not given formal control
over the SFHA until September 1997. Force account
activity had already been reinitiated by the Acting
Executive Director. This included activity at three of the
SFHA’s developments within the scope of our review:
Sunnydale, Potrero Annex, and Clementina. At Sunnydale,
$3,007,507 of the total expenditures related to force
account had already been spent by September 1997. This
represents 17% of the $17,821,923 in total expenditures
and encumbrances identified by the SFHA as of June 21,
1999. However, none of the amounts incurred related to
the disability access work, which was the primary focus of
our review. In addition, at Potrero Annex, the SFHA had
already incurred $65,206 (less than 1%) of the total
$6,225,711 in force account costs. Finally, at Clementina,
the SFHA had already incurred $55,508 (5%) of the total
$1,057,943 in force account costs.
Audit Objective And Scope The audit was initiated as part of our local audit plan based
on input from the Director of Public Housing at HUD’s San
Francisco office. The Director expressed concerns about
sole source and non-competitive contracting, circumvention
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Introduction
of waiting list policies, use of Section 8 reserves, and a
request for a large release of CGP money. She also
expressed specific concerns with consulting contracts.
Most areas of concern were reviewed and reported under a
separate audit report. Our audit report number 00-SF-201-
1001 issued in March 2000 covered the Public Housing
Management Assessment Program (PHMAP), operating
subsidy housing-unit-months-availability, contracting
procedures, hiring and compensation procedures, and
Section 8 receivables.
For this report, our audit objective was to determine if the
SFHA effectively operated its force account modernization
program in compliance with federal requirements. The
audit generally covered the period of January 1, 1997 to
June 30, 1999. We performed audit field work
intermittently from June 1999 to October 2000.
The primary methodologies for the audit included:
✓ Considerations of the SFHA’s management control
structure and the assessments of risk.
✓ Interviews of various SFHA employees and HUD
officials acquainted with the SFHA.
✓ Reviews of documentation related to the 1990 to 1998
CIAP and CGP grant programs, including planning
documentation, procedures, and records on work
performed.
✓ Reviews of force account modernization costs,
including accounts payable, warehouse inventory
draws, and payroll costs.
✓ On-site inspections of three sampled SFHA
developments, including review of construction
documentation and actual costs, to determine the
reasonableness of the modernization costs. Overall,
these three developments represented 36% of the total
CGP expenditures of $69,270,842 for force account
modernization as identified by the SFHA as of June
1999. These represented the largest and third largest
Family Sweep developments, and the largest Senior
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Introduction
Sweep development. We chose them to maximize audit
coverage of expenditures and review the most recently
performed modernization.
✓ Comparisons of actual modernization costs to the costs
of modernization performed by other entities.
✓ Reviews of inventory maintenance procedures and
records, including on-site tests of sample inventory
items.
We conducted the audit in accordance with generally
accepted government auditing standards.
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Introduction
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2001-SF-1001 Page 6
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Finding 1
The In-House Force Account Programs Were
Not Operating Effectively
The SFHA force account programs were not cost effective. In addition, insufficient
construction records were maintained to fully identify and assess all modernization work
performed, and there was evidence of poor workmanship. Also, the program did not
sufficiently emphasize high priority modernization, and some of the low priority work
performed cannot be adequately maintained by the SFHA. These problems primarily
occurred due to inadequate management. As a result, the level of potential modernization
available under the grant funds has been reduced. The SFHA’s neglect of high priority
work has resulted in emergency conditions requiring additional HUD funding. Finally,
poor record maintenance made it impossible for inspectors to fully assess all the
modernization performed.
We identified $18,186,844 of possibly excessive force account costs on the Clementina,
Potrero Annex, and Sunnydale developments. However, due to deficient SFHA records,
not all modernization costs could be estimated accurately. Nevertheless, we were able to
establish $184,161 of excessive costs at the Clementina housing development, where the
SFHA recorded costs that exceeded HUD OIG estimates of what it should have cost for a
contractor to perform the work.
Various Criteria Govern HUD Handbook 7485.3G, The Comprehensive Grant
Force Account Activity Program, states that a housing authority may undertake the
modernization activities using force account labor, but only
where specifically approved by HUD. The HUD field
office shall approve the use of force account labor only
where it is cost-effective and appropriate to the scope and
type of physical improvements, and the housing authority
has the capacity to serve as its own main contractor while
still providing an adequate level of routine maintenance
during force account activity.
CGP improvements and replacements need to ensure the
long-term physical and social viability of the development
at a reasonable cost. The guidebook also requires a
physical needs assessment to be prepared and submitted to
HUD ranking the priority of required modernization work.
HUD Handbook 7417.1 Rev-1, Public Housing
Development, identifies the types of documentation and
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Finding 1
records required for contractors during a major
development project. When the interior of a structure is to
be gutted with structural modifications, complete drawings
and details are required, similar to new construction. The
drawings must clearly define the rehabilitation and
replacement. Construction specifications call for
describing the work to be done by each of the applicable
trades, including a description of the scope of work,
workmanship, materials, and equipment. It shall also
include specific instructions for coordinating with other
trades and descriptions of work not clearly evident from the
drawings. The housing authority shall maintain records of
delays in obtaining labor and materials, precipitation, and
other causes for delays. Finally, the housing authority shall
periodically take photographs to illustrate the progress of
the construction work.
For work performed under contract, the handbook specifies
a warranty period of at least 365 calendar days from the
date specified on the certification of completion, or such
longer period otherwise specified in the contract. The
handbook requires construction contracts to be prepared to
include Form HUD 5370. This form requires the contractor
to provide at least a year warranty ensuring work performed
conforms to contract requirements and is free of any defect
in equipment, materials, or workmanship. The contractor
shall remedy, at the contractor’s expense, any failure to
conform, or any defect.
HUD Handbook 7460.8 Rev-1, Procurement, Section 6-10
Contract Modifications, requires modernization contractors
to maintain detailed documents for change orders,
describing the proposed changes, references to drawing,
prices for the work, time estimates, breakdowns of costs for
material and labor, and any changes to the architectural
drawings.
The SFHA Annual Contributions Contract (ACC) states
that the mission of the housing authority is to operate each
project solely for the purpose of providing decent, safe, and
sanitary, housing for eligible families.
Title 24 of the Code of Federal Regulations (CFR) Section
882.109 defines housing quality standards (HQS) condition
requirements for housing units.
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Finding 1
The Force Account The SFHA began force account work around February 1997
Justification Submitted to without obtaining HUD’s required advance approval, which
HUD Was Inaccurate was not granted until May 1997. Subsequently, on January
15, 1998, HUD’s Office of Public Housing required the
SFHA to supply information to demonstrate the force
account program was cost-effective or HUD would
withhold 1997 CGP funds. The SFHA responded to HUD
on July 28, 1998. We found the SFHA’s response
inaccurate, with the resulting erroneous conclusion force
account was cost effective in comparison to contracting.
The SFHA made three cost comparisons to justify its
conclusion that force account was cost effective. This
included comparing its Family Sweep comprehensive
modernization work at Potrero Annex to similar work
performed by contractors for the San Francisco City
Mayor’s Office of Housing (MOH), and comparing the cost
of Senior Sweep costs for disability access conversion at
several developments to comprehensive modernization
performed by contractors for the MOH. Finally, lead based
paint work performed at a Family Sweep development was
compared to a contractor’s cost to do the work at the same
development.
The letter stated, “The average cost per unit for the Family
Sweep work completed at Potrero Annex and roofing work
that is construction is $78,500. By contrast, the average
cost per unit of substantial rehabilitation projects funded by
the Mayor’s Office of Housing and done by private
contractors ranges from $80,878 to $168,537. The most
comparable family project, 2300 Van Ness which has 2 to 4
bedroom apartments, costs an average of $168,537 per
unit.”
In addition, the letter compared the MOH contractor costs
to its Senior Sweep costs. The SFHA claimed “total gut
rehabilitation of studio units funded through the Mayor’s
Office of Housing costs between $80,878 and $104,621.”
This cost was compared to the Senior Sweep average per
unit cost of $41,243 performed on several different
buildings, not including roofing, waterproofing, and
elevator modernization.
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Finding 1
The figures SFHA recorded in its general ledger were
Force Account Costs Higher significantly higher than the force account costs reported to
Than Reported to HUD HUD. This included the costs for the Family Sweep
development Potrero Annex and the Senior Sweep
modernization
Our review of the Potrero Annex cost as of June 30, 1999,
showed the actual average cost per unit was approximately
$113,841. This amount represented the construction costs
charged to dwelling structure and site improvement
accounts in the general ledger for Potrero Annex. The
actual cost was 145% of the $78,500 reported costs by the
SFHA to HUD. The SFHA could not demonstrate how it
calculated the $78,500 reported in the July 1998
justification letter. The actual cost in the general ledger
around July 1998 was approximately $3,709,641, or
$123,655 per unit. In addition, projecting this $35,341
($113,841 - $78,500) per unit difference to all 137 Potrero
Annex units planned for renovation, results in an actual
modernization cost $4,841,717 higher than reported to
HUD. For the 57 units actually complete as of June 30,
1999, the modernization cost was $2,014,437 higher.
The Senior Sweep modernization costs were also higher
than reported to HUD. Senior Sweep work included the
modernization of 90 units in 17 housing developments by
converting them to 504 disability access. (The SFHA
designated modernization to make buildings and units
accessible to the handicapped as “504” work.) The SFHA
had identified a cost of $41,243 per unit for the Senior
Sweep units modernized. However, general ledger
disability access 504 costs were $48,488 per unit on
average, not including roofing and other unrelated common
area work. The costs ranged from $18,913 to $96,233 per
unit, varying between housing developments. The average
cost was $7,245 (17.5%) higher per unit than the applicable
cost shown in the letter. Projected to all 90 units, the
difference would represent additional costs of $652,050.
The Senior Sweep work was still in-progress as of June 30,
1999, so additional costs would still be incurred.
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Finding 1
MOH per unit construction costs were significantly lower
The Mayor’s Office of
than the SFHA reported. This included the costs for 2300
Housing Costs Were Lower
Van Ness, Lyric, and Apollo. This occurred because the
Than Reported to HUD
SFHA included unrelated costs not applicable to its cost
comparisons.
The SFHA reported $168,537 as the average cost per unit
for 2300 Van Ness. This figure included the purchase of
the property, financing costs, and reserves. These costs
were not comparable to the SFHA modernization work
since the SFHA already owned the property and had no
financial cost. The CGP funded the SFHA force account
work so no borrowing was required. The contract
construction costs for 2300 Van Ness were only
approximately $55,651 average per unit, based on
information provided by the Mayor’s Office of Housing.
The actual MOH construction costs of $55,651 were less
than one-third the MOH costs $168,537 the SFHA reported
to HUD.
Similarly, the actual construction costs of Apollo and Lyric
were $41,782 and $47,837 per unit respectively, versus the
$80,878 to $104,621 reported by the SFHA. The actual
costs were approximately half of the amount reported to
HUD in the justification letter.
We cannot rely on the SFHA’s assessment over the lead
Lead Based Paint Costs
based paint (LBP) work because the cost reported by the
Could Not Be Confirmed
SFHA for its own work could not be confirmed, and
problems had been previously noted by HUD with the LBP
work in question.
The SFHA compared its costs for LBP hazard abatement to
the costs charged by a contractor to perform the work at the
same development. The SFHA listed its costs to perform
LBP costs at $281,568, or $841 per unit. This was lower
than the contractor cost of $1,709 per unit.
However, the SFHA was not able to demonstrate how it
arrived at its unit cost of $841 per unit, or produce
information to verify these amounts were accurate. The
June 1999 balances in the general ledger did not support the
SFHA’s figures. Further, it is not certain whether the
current general ledger balance represents the true LBP cost
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Finding 1
at the development, or whether costs were distributed to
non-LBP accounts.
In addition, a HUD inspection showed problems with the
quality and controls over some of the SFHA’s force account
LBP work. These issues were reported in a June 13, 1997
letter from HUD. HUD had performed an on-site LBP
review and noted poor quality of LBP work and inaccurate
records at different developments worked on by the force
account, including Potrero Terrace. The SFHA was unable
to provide documentation demonstrating how these issues
were resolved to ensure a sufficient level of quality.
No Analysis of Other The letter submitted to HUD provided no information to
Types of Modernization show whether other types of activities performed by the
Activities force account were cost effective. For example:
• The letter provides no evidence the SFHA force
account was more effective in performing
landscaping then a contractor. Since the SFHA
spent several million dollars to perform landscaping
work, an analysis to determine whether it could do
quality work at a lower cost should have been
performed.
• The letter also does not analyze any of the non-
routine maintenance tasks the SFHA was
performing. The non-routine maintenance work
generally consisted of various tasks performed on
unit interiors, such as interior painting, floor tile
replacement, shower tiles, etc. A significant
majority of the funding spent at Clementina and
Sunnydale consisted of this type of activity.
Force Account Costs We attempted to determine whether the SFHA force
Exceeded Cost to Have a account costs were reasonable by comparing SFHA costs to
Contractor Perform the OIG inspector estimates of what costs should have been for
Work a contractor to perform the work. In addition, we compared
the actual SFHA costs to actual MOH and OHA
modernization costs, both performed by contractors. In
each case, the SFHA force account costs appeared
excessive.
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Finding 1
Force Account Costs Were We were unable to verify all costs for work performed on
Excessive and Questionable the Family and Senior Sweep developments due to the
Based On OIG Inspections SFHA’s deficient records. The OIG inspectors’ estimates
of costs to perform the work were generally significantly
lower than the actual costs incurred by the Sweep
programs. We were able to compare estimated to actual
Senior Sweep costs for two activities. Although Senior
Sweep HQS non-routine maintenance work did not appear
excessive, common space modernization was. However,
other comprehensive modernization and non-routine
maintenance costs could not be determined due to the lack
of available documentation on modernization work
performed. As a result, the SFHA modernization costs
were excessive by $184,1611 and $18,186,844 was
questionable.
We attempted to verify whether the SFHA’s force account
costs to perform modernization work were reasonable. The
OIG sent its inspectors on-site to three sample
developments to develop cost estimates for modernization
work performed. We also requested documentation from
the SFHA specifically identifying the modernization work
actually performed on each unit. However, there was
inadequate documentation available to adequately assess
the Family Sweep costs. The Senior Sweep records were
inadequate for only one of three areas reviewed.
The Sweeps programs were primarily performing work of
differing scope on different units and developments. In
some instances, the Sweeps programs were performing
comprehensive ‘gut’ modernization on units. This type of
work generally involved significant construction work that
included the repair or replacement of all interior items,
where tenants had to vacate the unit during the
modernization. We expected the same level of construction
documentation for this type of work a contractor would
maintain if contracted by the SFHA. These records should
detail what work was to be performed and identify changes
in scope though change orders.
1
The total excessive amount was $191,132. However, approximately $6,971 of the excessive amount was incurred
prior to September 1997, before HUD formally returned control of the SFHA to the City of San Francisco appointed
board of commissioners.
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Finding 1
The Sweeps programs were also performing non-routine
maintenance work on unit interiors that was not complete
and mainly involved addressing housing quality standards
violations within the units. The scope of work was not
always consistent between units. Maintenance employees
could ordinarily have performed several of these work
items. These items were also designated in the CIAP
handbook as being non-routine maintenance related, such
as replacing sinks, appliances, plumbing fixtures and
equipment, wall tile, interior painting, space heating
equipment, minor electrical, minor replacement of floors,
etc. In general, tenants did not vacate the units when this
non-routine maintenance was performed. At a minimum,
the SFHA should have recorded which work items were
performed in each unit, and the scope or quantity of the
work, using a work order.
We selected the Sunnydale, Potrero Annex, and Clementina
developments for inspection. The work reviewed at
Sunnydale included comprehensive interior modernization
on disability access units in four buildings and non-routine
maintenance type modernization performed on 28 other
buildings. At Potrero Annex, modernization was done on
nine buildings while another building was in process of
modernization during the inspection. At Clementina, there
were two high-rise buildings with common area work in
progress, 10 units converted for disability access, and 266
units with various non-routine maintenance.
Sunnydale
There were inadequate construction records to properly
assess all the cost of work performed at Sunnydale. The
costs that could be estimated were substantially below the
actual cost in the Sunnydale general ledger accounts. It was
not certain whether this actually demonstrated excessive
Family Sweep costs. As a result, $13,358,264 attributed to
Sunnydale HQS accounts and $801,093 attributed to
Sunnydale (504) accounts are questionable.
The OIG inspectors reviewed the interior work in 12 of the
28 units that received comprehensive modernization when
four buildings were converted to disability access. This
included all 11 units converted to disability access. The
inspectors also reviewed the interior work in 19 of the 248
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units that received selective non-routine maintenance
modernization.
The Family Sweep program maintained no records to
identify interior non-routine maintenance work performed
on the 28 buildings. The only information available was a
generalized listing of work that would be done on an as
needed basis. The types of work that may have been
performed included floor tile, interior painting, wall tile in
bathrooms, new plumbing fixtures, wall heater, hot water
heaters, and electrical fixtures. Each unit inspected had
different amounts of work performed. Units had tile or
paint in different areas. The extent of bathroom work was
not certain, and some buildings did not have new heaters
installed yet. There were no work orders or other
documentation showing work done to each unit. As a
result, the OIG inspectors were unable to accurately
estimate work performed.
Four buildings received comprehensive modernization to
convert 11 of the 28 units for disability access. The
modernization included a reconfiguration of the building
units to make a portion of the units accessible to the
disabled. The SFHA included the costs attributed to the
non-disability access units within these buildings into the
same general ledger HQS accounts as the non-routine
maintenance work. The comprehensive modernization
costs could not be distinguished or separated from the non-
routine maintenance costs. The Family Sweep department
had not separately tracked the costs of the two different
types of work. The OIG inspectors were unable to assess
the costs without inspecting every unit at Sunnydale. Also,
due to the lack of records concerning what had been
performed, the OIG inspector could not prepare accurate
estimates. Since accurate estimates could not be prepared
for this modernization and compared to actual costs, the
entire $13,222,789 attributed to the HQS accounts as of
June 21, 1999, along with $135,475 of June 1999 payroll
charged the following month, was questionable.
The SFHA did attribute the costs of performing the
disability access 504 work on the 11 units into separate
general ledger accounts. The average per unit costs in the
accounts, as of June 30, 1999, was $99,370. However, the
SFHA did not have plans showing how and where new
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plumbing and electrical were placed into the buildings for
the unit conversions. There was no information to show
where and if concrete sawcutting, coring, or grading had
been performed, or how ceilings were filled when staircases
were removed from the building’s design. As a result, the
OIG inspector could not provide accurate cost estimates for
this work either.
The general ledger cost was close to the original SFHA
estimates for the planned disability access work: $94,088
average per unit. However, there were no breakdowns
available to show the basis of this estimate. Also, cost
breakdowns for the Sunnydale ‘mothball’ units did not
include all work items planned for the 504 units.
The costs that the OIG inspector could confirm as
performed, with any degree of certainty based on the
information available, should not have exceeded $291,973,
or $26,543 average per unit (including an adjustment of
25% added to OIG base estimate figures for overhead,
general conditions, and mobilization). However, this
estimate cannot be accurately compared to the actual costs
since all work possibly performed could not be assessed.
As a result, the $801,093 difference between the SFHA
actual costs $1,093,066 and the OIG estimate of $291,973
is questionable.
Potrero Annex
The OIG modernization cost estimates were substantially
below the actual cost in the Potrero Annex general ledger
accounts; however, there were inadequate construction
records to accurately assess all the work performed at
Potrero Annex. As a result, $3,865,018 of the Potrero
Annex cost attributed to the HQS account was
questionable.
At Potrero Annex, the OIG inspected 29 of the 57 units
completed by the force account. Nine buildings had been
completed at the time and one was underway. The OIG
inspectors attempted to estimate costs for all the interior
modernization work performed at the development, based
on review of the SFHA estimates and plans, and an on-site
inspection. However, there was inadequate documentation
available to demonstrate the actual level of drywall
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replacement, wood frame replacement, and floor repair.
The OIG estimated the confirmable work at $1,344,015, or
$22,780 average per unit (adjusted 25% for overhead
costs).
In addition, the general ledger cost of $5,209,033, or per
unit average of $88,289, for HQS work included interior
and exterior work performed on the development as of
June 29, 1999. The HQS accounts did not include costs for
lead based paint abatement, roofing, exterior paint, and
some electrical costs allocated to different accounts in the
general ledger.
The SFHA had prepared initial plan estimates by August
1998 for the work at Potrero Annex. The interior costs
ranged from $31,045 for one-bedroom units to $83,946 for
five bedroom units. Based on the units actually
modernized, the average cost would have been $44,199 per
unit. Plans also listed balcony costs of approximately
$2,480. These costs were also charged to HQS accounts.
However, no description was provided indicating what
exactly was going to be done to the balconies. In addition,
there were no change orders to identify how the planned
HQS work went from $46,680 to the actual $88,289
average per unit. It is not certain how the scope of work
changed between the initial plans and the actual work
performed.
The SFHA cannot distinguish the different costs for
different work items within the HQS account. The Family
Sweep department had not separately tracked these costs.
Therefore, the SFHA cannot separate the exterior work
costs in the general ledger from interior work, including
items such as balcony repairs. It also cannot identify what
its costs were to perform one interior work item, such as
painting, versus another interior work item, such as
plumbing. As a result, the OIG estimate could not confirm
the propriety of all costs in the SFHA’s general ledger. The
$3,865,018 difference between the Potrero Annex HQS
costs $5,209,033 and the OIG estimate $1,344,015 was
questionable.
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Clementina
Due to the inadequacy of SFHA records, we also could not
arrive at a conclusive estimate of work performed for the
disability-access units at Clementina. However, we were
able to generate estimates for common space and HQS non-
routine maintenance. While the non-routine unit
maintenance actual cost did not appear excessive, the
common area work was not cost-effective. As a result,
$184,161 appeared excessive and $162,469 was
questionable.
The OIG inspected 32 of the 266 Clementina units that had
non-routine maintenance, reviewed common area work
identified during the inspection, and inspected all ten
disability access (504) units. The Senior Sweep department
maintained work orders for non-routine maintenance
performed on the Clementina units. As a result, the OIG
was able to prepare estimates. The actual general ledger
costs of $364,240 were comparable to the OIG estimates.
Nevertheless, the actual costs for common space work were
excessive compared to the OIG estimates. The common
space work was still in-progress during the OIG
inspections. The common space work as of the inspection
was estimated at $100,099, including a 20% adjustment for
overhead. This amount was significantly below the
$291,231 in the general ledger. (We removed $73,431
from the actual general ledger balance for comparison
purposes because these costs such as for furniture were not
included in the OIG estimate.) Based on the estimates of
the OIG inspector, it appears that the SFHA overspent
$191,132. Of this amount, $6,971 was incurred by the
SFHA prior to September 1997.
The actual costs for disability access work appeared
excessive compared to the OIG estimates; however, an
accurate comparison could not be made. The OIG estimate,
adjusted 20% for overhead and including another 20%
allowance for appliances and ‘buffet cabinets’, was
$157,527 for the 10 disability access units and public
restrooms converted to disability access. This was far
below the actual cost in the general ledger of $329,040 as
of June 30, 1999.
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Due to the lack of SFHA documentation, the OIG
inspectors could not produce estimates for all work items
charged to the general ledger account. As a result, we
could not confirm additional SFHA costs. The level of
plumbing, electrical, and asbestos work performed in each
unit was not certain due to the lack of documentation
identifying what exactly was performed to complete these
items. In addition, the Senior Sweep staff stated asbestos
had been removed from unspecified flooring areas within
units. However, we could not identify any hazard
abatement costs in the general ledger detail reports.
Finally, the general ledger included expenses for common
area doorknobs, an item not assessed by the OIG inspectors.
The materials costs were confirmed to invoices as $9,044,
but the associated labor cost was unknown. As a result, the
difference of $162,469 was questionable, representing the
difference between the general ledger costs and the OIG
estimate, less the doorknob material costs.
MOH Modernization Costs As previously mentioned, the SFHA used MOH
Were Lower than SFHA modernization costs to justify its use of force account.
Force Account Costs However, the SFHA misrepresented both the MOH costs
and its own costs. The actual MOH contractor costs were
lower than the force account costs to perform similar work.
The MOH used contractors to perform its modernization.
The actual SFHA Potrero Annex modernization costs were
approximately $113,841 per unit for the 57 units completed
as of June 30, 1999. The MOH performed similar
modernization to a development at 2300 Van Ness. The
MOH contract cost to perform the modernization was
approximately $55,651 average per unit. The average size
of the 2300 Van Ness units modernized, 2.4 bedrooms, was
fairly close to the 2.6 average bedrooms for units completed
by the force account at Potrero Annex. The SFHA force
account was over double the cost of the MOH to perform
similar work.
Similarly, the average cost to modernize a Sunnydale
disability access a 504 unit was $99,370. The average size
of the 11 units modernized was 1.9 bedrooms, smaller than
the average 2300 Van Ness unit. However, the force
account cost were $43,719 per unit higher than the MOH
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2300 Van Ness costs. This difference totals $480,909 for
all 11 units converted.
Force Account Costs The SFHA force account Family Sweep costs also appeared
Excessive Compared to excessive when compared to similar work performed by
Oakland Housing Authority contractors for the Oakland Housing Authority (OHA),
Contract Costs even after locality rate adjustments were considered. We
compared the costs of modernization work performed at
Potrero Annex to comprehensive modernization performed
at two OHA developments, Peralta and Campbell. Based
on this comparison, $2,244,301 of the Potrero Annex
modernization was questionable compared to the total
recorded force account costs of $6,529,825.
We reviewed the costs associated with comprehensive
modernization performed by contractors on OHA
developments, selecting two developments that had work
done similar to that performed by the SFHA at Potrero
Annex: Campbell and Peralta developments. These
developments were composed of scattered site dwellings
and the work had been performed between 1998 and 2000.
We reviewed records to identify the scope and costs of the
modernization, interviewed key OHA staff, and visited the
development sites.
OHA - Campbell
An independent contractor performed the phase II
comprehensive modernization on 77 Campbell units
between March 1998 and November 1999. The scattered
site development was built in 1936. The comprehensive
modernization work included, but not limited to, gutting
units, installing all new mechanical systems, hazard
abatement, converting and replacing the roofs, converting
units for new entry and laundry areas, landscaping, and
exterior fencing. Units were two to three bedrooms and
averaged 900 square feet.
The average per unit cost was $83,085, including costs
relating to the modernization in addition to the contract and
change orders identified by the OHA. For comparison
purposes, we removed construction costs unrelated to the
work performed at Potrero Annex, such as: fencing,
drainage, landscaping, play areas, and the related overhead
and profit for those items. This dropped per-unit costs
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down to approximately $74,677. In addition, removing the
costs attributable to the roof conversion and replacement
would further reduce the cost down to $69,007 per unit.
Roofing costs were eliminated for comparison purposes
because contractors performed the SFHA roofing.
OHA – Peralta
Modernization was performed on 140 units, starting around
May 1998. At the time of our review in July 2000, the
work was 99.9% completed. The scattered site
development required comprehensive modernization.
Work included unit gutting, landscaping, roof conversion,
hazard abatement, structural upgrading, unit layout, exterior
reconfiguration, exterior wall rebuilding, new utilities,
drainage, and new mechanical systems. The units were one
to three bedrooms and approximately 600 to 900 square
feet. The average size of units at the development was 1.77
bedrooms.
The average per unit cost was $74,236, including additional
costs identified by the OHA in addition to the contract and
change orders. We removed costs unrelated to the SFHA
modernization, such as: landscaping, drainage, and exterior
fencing. This dropped the unit costs down to around
$66,033. In addition, removing the costs attributable to the
roof conversion and replacement would further reduce the
costs to $56,945 per unit.
Locality Rate Adjustment
We noted that for comparison purposes the San Francisco
construction rates are higher than the Oakland rates, despite
the two cities’ close proximity. We reviewed local
construction cost index information to determine whether a
factor should be applied to the OHA modernization to make
it more comparable to the SFHA work.
The Saylor construction cost index for 1999 listed that the
construction rates for Oakland were 5% lower than the San
Francisco rates. The Saylor cost index used San Francisco
rates as its base for determining costs, and appeared to be a
reliable cost index guide. We adjusted the Campbell and
Peralta rates by 5% to more accurately compare the OHA
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costs to the SFHA. Campbell was adjusted to $72,639 and
Peralta $59,942 average per unit for comparison purposes.
SFHA – Potrero Annex
Potrero Annex average per unit cost was $113,841 as of
June 30, 1999. At this point, 57 units were completed in 9
buildings and one building was under way. The SFHA
could not identify the level of completion of the work on
the in-progress building. Based on our site review, we
allowed credit for approximately 2 units completed, since
Family Sweep could not arrive at a figure. We also
included Potrero Annex cabinet costs of $26,597 the SFHA
attributed to the wrong project, noted during a disbursement
review. The average size of the first 57 units completed
was 2.6 bedrooms. Based on discussions with the Family
Sweep personnel and review of consultant reports, the
Potrero Annex units averaged no more than 900 square feet.
Comprehensive modernization work at Potrero Annex
included hazard abatement, roof replacement, and interior
and exterior repairs. A contractor replaced the roof, and the
general ledger reported this cost. Since the purpose of our
review was to analyze force account related costs, the
roofing costs were removed for comparison purposes. The
resulting average per unit cost would be reduced to
$110,675.
Even after the OHA contract costs for modernization were
Potrero Annex Costs Higher
adjusted for the difference in locality rates, they were still
Than Campbell
significantly lower than the SFHA rates. The Peralta costs
were lower than the Campbell costs because the average
unit size was smaller. As a result, we will only consider the
Campbell unit costs in comparison to the Potrero Annex
costs. After adjusting for these factors, we concluded the
Potrero Annex cost was approximately 152% of the
Campbell per unit costs, or higher by $38,036 per unit.
The SFHA attributed its increased cost to more dry-rot
work. However, there were insufficient records to
document the extent of the dry-rot work. The OHA work
did include dry-rot repairs. This work was evidenced by
detailed change orders, which documented additional work,
the reasons requiring the additional work, and often
included a photograph to justify the additional work. We
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were not presented with sufficient information to suggest
the SFHA had to correct significantly more dry-rot than the
OHA. As a result, we could not accept the SFHA’s
argument.
The difference between the Potrero Annex costs and the
Campbell costs was 34.37% of the total Potrero Annex
costs. Applying this rate to the total Potrero Annex costs
(less roofing) would result in possible overspending of
$2,244,301.
The Family Sweep Did The Family Sweep progress reports were inadequate in
Not Maintain Adequate contrast to those produced by the Senior Sweep program.
Progress Records The Family Sweep department did not emphasize tracking
its work performed. As a result, that department was
unable to identify the level of completion on work in
progress.
Partially responding to our request, the Family Sweep
department prepared one incomplete progress report from
July 2, 1999. The progress report only listed the three main
sites in-progress. The report did not show the status of
other Family Sweep developments. The report did not list
any information about units in progress, when programs
started, or their duration. The Family Sweep progress
report misreported the number of units complete at Potrero
Annex at 62. On-site inspection and review of the SFHA’s
unit completion report showed that there were only 57 units
actually complete. The Family Sweep department could
not identify the level of completion on the in-progress
Potrero Annex building as of June 1999.
The only other progress report the Family Sweeps
department could provide had been produced on
September 15, 1999 using untimely data from December 4,
1998. According to Family Sweep management, this report
was prepared for HUD. The SFHA was not tracking
progress for its own use to assist with the management of
the program.
The reports did not have the same level of information
available on the Senior Sweep progress report reviewed.
The Senior Sweep report kept track of the number of non-
routine maintenance modernization work orders
outstanding and complete, work dates, status or level of
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completion of modernization at the different developments,
and the identification of costs.
The SFHA Was Not The SFHA did not obtain or perform adequate inspections
Adequately Inspecting of its modernization work. The SFHA was exempt from
Work obtaining permits and inspections from the City of San
Francisco. As a result, the SFHA had its own inspectors
perform all inspections over force account work. The
primary Family Sweep inspector did not appear fully
qualified to properly review the extensive modernization
work.
No City Permits and The SFHA obtained a legal determination from the City of
Inspections Required For San Francisco stating that the SFHA did not have to obtain
Force Account Modernization city permits and inspections for in-house work. This was
documented in a May 17, 1995 letter between the Deputy
City Attorney and the Director of the Department of
Building Inspections. Based on this letter, the SFHA has
not been obtaining permits and inspections for its force
account work. HUD was notified of the inapplicability of
permits in August 1999, as part of a response to a HUD
TARC (Troubled Agency Recovery Center) review.
Family Sweep Inspector Not Since city inspectors are not required, the SFHA used its
Adequately Qualified to Review own inspectors to review force account work. This
All Modernization Work included all comprehensive modernization work, electrical
work, unit gutting, plumbing replacement, carpentry,
flooring, and painting performed by the force account. The
primary inspector was not independent or qualified to
oversee the modernization work.
The SFHA Family Sweep program had only one inspector
sign-off that units were complete at Potrero Annex and
Sunnydale. This inspector was under the supervision of the
Family Sweep managers. We believe this compromised his
independence in objectively reviewing the work performed,
which was also the responsibility of the same Family
Sweep managers.
We reviewed the personnel file of the Family Sweep
inspector. The SFHA employed the inspector previously to
inspect heating systems and boiler repairs. There was no
information available to show he had sufficient experience
to ensure all the different modernization crafts were
conducted to code requirements. In addition, he did not
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have the same level of expertise as City of San Francisco
inspectors, who would normally inspect construction in the
city.
We obtained information relating to the requirements for
the City of San Francisco’s inspection positions. The
plumbing and electrical inspectors for the City of San
Francisco require completion of an apprenticeship and four
years of journeyman experience in their field. In addition,
they must have been responsible for a major construction
project in the field during one of those years. Building
inspectors require four years of journeyman level work that
includes construction and inspection experience, and one
year in charge of a major building construction project.
There is no information available to demonstrate that the
Family Sweep inspector had comparable experience,
including apprenticeships and journeyman level experience
in each field, combined with being in charge of a major
construction project.
The HUD OIG inspectors reported conditions with
Housing Quality Standards completed units that showed problems with the Family
Deficiencies Noted During Sweep force account workmanship and recording. These
Inspections problems appeared directly related to the inadequate
inspections, therefore, the quality of work not reviewed is
open to question.
We performed on-site inspections of the Sunnydale and
Potrero Annex developments between August and October
1999. The objective of the OIG inspectors was to assess
the cost of work performed at the development, and not to
perform a HQS review. However, our inspectors noted
problems with the force account work. These problems
showed all needed modernization work was either not done
or not performed adequately. Since an actual HQS
inspection was not performed, the OIG inspectors advised
us that there might be additional conditions or problems not
identified and recorded during the he review. The
following schedule lists problems identified during the
inspection.
Development Unit # Problem
Sunnydale 230 Pocket door inoperable, missing grab bar, unfinished
window
Sunnydale 1502 Excessively peeling paint and damaged sills
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Development Unit # Problem
Sunnydale 1620 Bath fans not working
Sunnydale 1752 Improperly installed water heater vent
Sunnydale 1759 Water heater not working adequately (T)
Sunnydale 1806 Exposed wiring, improperly installed water heater
Sunnydale 1807 Improperly installed water heater, space heater vent
not adequately sealed
Sunnydale 1827 Damaged flooring
Sunnydale 1868 Problems with water heater vent and interior paint
Sunnydale 1555 GFI outlet not grounded, sink leaking, water heater
strap and sink pipe insulation inadequately installed
Sunnydale 1551- Excessive pooling of water outside building
1565
Sunnydale Building Sidewalk in front of building led to drop-off
26E
Potrero Annex 1 Windows of occupied unit boarded up, laundry
facilities not operable
Potrero Annex 5 Laundry facilities not operable
Potrero Annex 9 Improperly installed closet light, laundry facilities
not operable
Potrero Annex 19 Vent covers missing
Potrero Annex 23 Inadequate exterior door weather stripping, vent
covers missing
Potrero Annex 35 Laundry facilities not operable
Potrero Annex 53 Vent covers missing
Potrero Annex 57 Vent covers missing, laundry facilities not operable
(T)
Potrero Annex 59 Vent covers missing
Potrero Annex 61 Vent covers missing
Potrero Annex 85 Leak in ceiling (T), unfinished door missing lockset
Potrero Annex 97 Window boarded on occupied unit
Potrero Annex 853 Ceiling damaged where closet tracks removed
Potrero Annex 855 Ceiling damaged where closet tracks removed (T)
Potrero Annex 879 Staircase floor covering falling apart
Potrero Annex 901 Ceiling leaks (T), and vent covers missing
Potrero Annex 909 Bath wall had water damage, vent covers missing
Potrero Annex 911 Vent covers missing
Potrero Annex 915 Leak in ceiling (T) and vent covers missing
(T): Based on Tenant complaint, accuracy of issue not confirmed.
In addition, during an October 1999 inspection of
Sunnydale building 28F, we observed minor work in
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progress to make units ready for occupancy. However, the
final inspection reports had already listed the entire
building as complete. The inspection reports had been
signed-off by the Family Sweep inspector on June 15, 1999.
The following picture gives an example of the uncompleted
work.
Photo of 220 Hahn Street bathroom, demonstrating bathroom of
unit was not complete even though reported as complete on final
inspection report. Additional work was in progress at the time of
the inspection.
In addition, the SFHA still had not placed permanent railing
outside the building along the disability access ramps, even
though the unit was occupied.
Due to the problems noted, there is no assurance other force
account work was performed adequately. Since an HQS
review was not conducted, there is no assurance units
inspected do not have additional problems. Units not
inspected may have similar problems that could affect the
health and safety of the residents. In addition, some
modernization, such as work within walls, can no longer be
checked to determine if it conformed with local codes.
However, there was also no information to suggest this
work did not meet local code requirements.
Emphasis On Low-Priority The SFHA emphasized several lower priority
Modernization Delayed Work modernization work items over more serious items. This
On Emergency Situations resulted in conditions at several SFHA developments
claimed to have become emergency conditions, requiring
additional HUD funding to correct the problems within a
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year. In addition, some of this lower priority work, which
cost over $2.5 million to perform, was not adequately
maintained by the SFHA.
The SFHA submitted a physical needs assessment, HUD
Form 52832, to HUD on June 10, 1997. This form rated
the urgency of need of the different types of modernization
required by the SFHA for the Sunnydale development. The
SFHA reported conversion of units to disability access as a
number one priority. Roofing repairs and replacement were
a number two priority item, estimated to cost $1,800,000 at
the time. The lowest items on the urgency scale were
landscaping, irrigation, and office space modification.
Adequate funding was available to address the high priority
work items. At the re-initiation of the force account
program in 1997, the SFHA had accumulated over $69
million of CIAP and CGP funding from the 1991 CIAP
grant, and the 1992 to 1997 CGP grants.
At the time the HUD Form 52832 was prepared, the
landscaping was actually already under way, despite its low
priority. The landscaping began in February 19972 under
the San Francisco League of Urban Gardeners (SLUG),
before the force account work started in 1997. In August
1997, the SFHA began charging force account payroll to
landscaping accounts before lead based paint abatement
began in October 1997 and exterior painting began in
December 1997. Payroll was not attributed to disability
access work until March 1998.
Between 1997 and June 21, 1999, the SFHA spent
$2,565,013 on landscaping at Sunnydale. During this
period, only one roof was replaced at the development out
of the 92 buildings. The cost ultimately attributed to the
landscaping exceeded the SFHA’s original estimate of $1.8
million to replace the roofing. Likewise, at Potrero
Terrace, the SFHA had spent $1,620,538 of CGP funds for
landscaping work, instead of replacing roofing.
The SFHA also did low priority office space work before
roofing. Newspaper articles reported Sunnydale office/
2
HUD did not formally turn over formal control of the SFHA to City of San Francisco appointed board of
commissioners until September 1997.
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community center renovations were performed by March
1998.
In addition, critical roofing needs were not emphasized at
senior developments. At Clementina, the SFHA was
performing modernization on units and common area
interiors. By June 21, 1999, the SFHA had spent $669,930
and encumbered $58,972 on this work. This included
interior painting, floor replacement, lighting replacement,
etc. HUD inspections of Woodside Gardens, 2698
California Street, and John F. Kennedy Towers showed the
SFHA was emphasizing common areas interior work as
opposed to roof replacement.
Force account management stated it was the Executive
Director’s decision to perform the exterior landscaping and
other low priority work first. The rationale was to make
tenants proud to live at the developments and show the
SFHA cared.
Emergency Grant
While the landscaping was in progress, the SFHA was
asking for additional Emergency Grant Funds to perform
roofing and waterproofing work. The first request was
made in March 1998 and another in September 1998. A
final request was made in June 1999. This included
Sunnydale, Potrero Terrace, and Clementina. Between the
initial requests for additional funds and the final request,
over a year later, no significant work was performed using
available CGP funding to address the emergency
conditions.
The Emergency Grant Fund requirements contained in 24
CFR 968 designate that funds may not be provided if they
are available under the CGP. The emergency work has to
present an immediate threat to the health or safety of the
residents.
Part of the SFHA’s justification for having the roofing and
waterproofing performed was the threat to interior
rehabilitation performed at the developments. The SFHA
stated that since 1996 it had invested $94 million in CGP
funding. The objective of the emergency request was to
finance emergency infrastructure work and protect its $94
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million investment in the most critical capital
improvements while meeting minimum life safety standards
and thwart unsanitary and unhealthy conditions.
However, by June 1999, the SFHA had fully drawn down
the available funding left under the two CIAP grants, and
the 1992 to 1996 CGP grants. There was approximately
$3.5 million available in the 1997 and 1998 CGP grant. At
this point, there were insufficient funds for the emergency
work.
HUD subsequently accepted the SFHA’s request, and was
to provide $22 million of emergency funding, of which
$14,794,004 was for roofing replacements and $3,031,592
for other waterproofing. Overall, roofing and
waterproofing costs were available to 19 developments: 8
family and 11 senior developments. These costs included
$3,043,000 for Sunnydale, $2,500,000 for Potrero Terrace,
and $1,179,000 to Clementina for roofing and
waterproofing.
There is no conflict under the grant requirements to install
new landscaping and perform other modernization to
improve the cosmetic appearance of the developments.
However, it was not prudent to perform cosmetic work
instead of high priority items considered emergency
conditions threatening the health and welfare of the tenants.
There was also no assurance that HUD would provide
additional funds, and the roofing and waterproofing should
have been corrected before tenants and interior
modernization were put at risk. If the SFHA had
emphasized roofing and waterproofing as opposed to
landscaping or common area interior modernization using
its CGP and CIAP funds, the need for emergency grant
funds may not have been warranted and certainly would
have been significantly reduced. In addition, tenants would
not have been put at risk of living in units with inadequate
roofing and waterproofing.
The SFHA did not adequately maintain some of the
Significant Modernization modernization work, despite its having been performed in
Work Was Not Maintained preference to emergency work. Newly installed sprinkler
systems were not used fully, which resulted in the death of
wide sections of recently planted lawns. These issues
apparently occurred due to the lack of management
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planning over potential problems. These practices
jeopardized up to $4,185,551 of landscaping.
Landscaping at Sunnydale and Potrero Terrace included
installation of new sprinkler systems and lawns throughout.
The OIG inspected Sunnydale landscaping in August 1999.
We observed most of the lawns had died. In some areas, it
was difficult to discern where the new landscaping had
been since it was in such bad condition. Only the areas
close to the community center/office building were
maintained. The SFHA blamed the poor condition of the
lawns on tenant abuse.
Dying lawns outside Sunnydale buildings that were not being
watered despite the installation of an underground sprinkler
system.
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Sunnydale lawns
In addition, a site visit in July 2000 showed most of the
lawns at Potrero Terrance had died. At Sunnydale, the
SFHA had resorted to hoses to water the lawns in several
areas.
Central Service Maintenance confirmed that there was a
tenant abuse problem, with tenants damaging sprinkler
heads. The sprinkler system often lost pressure. As a
result, lawns were watered manually. However, without
sufficient maintenance staff for this purpose, the SFHA
could not maintain much of the landscaping. Staff also
stated the force account workers may have installed the
wrong type of sprinkler system, which was not vandal
resistant.
The SFHA did not sufficiently assess and plan for the
potential difficulty of maintaining the landscaping. The
expensive sprinkler system was not fully used, representing
CGP funds that may have been better spent elsewhere.
Much of the landscaping may be unrecoverable at this point
without replanting. If the SFHA was unable to maintain the
landscaping, then it should not have been installed. If the
purpose of putting in the landscaping was to make the
tenants proud to live at the developments and show the
SFHA cared, then this benefit was temporary.
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Family Sweep Management We believe the principal cause of the noted conditions was
Inadequate that Family Sweep management was not qualified to
operate a comprehensive modernization program,
particularly one with force account. This includes the
General Manager, Assistant General Manager, the
Construction Project Manager, and possibly the Assistant
Construction Project Manager. This apparently occurred
because the SFHA did not emphasize obtaining qualified
management.
General Manager
As described in our March 2000 report, we had earlier
reviewed the SFHA hiring practices. We had found the
General Manager of the Family Sweep program not
qualified to head the force account program. He lacked
sufficient educational background and did not have the
necessary experience.
Due to problems noted with the modernization program,
particularly with the Family Sweep program, we
ascertained the prior construction and management
experience of other key Family Sweep personnel.
Assistant General Manager / Principal Administrative
Planner
The Assistant General Manager of the Family Sweep
program did not appear qualified to run a comprehensive
modernization program. In addition, we do not believe she
was qualified to receive the initial planning position prior to
her Assistant General Manager role. She did not have
experience in construction work, planning, or record
maintenance relating to comprehensive modernization
programs.
The Assistant General Manager previously worked for the
SFHA in a secretarial position as an Office Manager and
then briefly as an accountant for eight months. The
individual then was moved to the newly created Family
Sweep Principal Administrative Planner position in April
1997. This position was eliminated and her title was
changed to the newly created Family Sweep Assistant
General Manager position in April 1999.
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The duties of the Assistant General Manager included:
• Conducting on-site review of construction activities;
• Ensuring compliance with craft performance
standards;
• Monitoring work progress;
• Ensuring work is completed correctly and in a
timely manner;
• Exercising functional supervision over construction
foremen, consultants, professional, technical,
administrative, and clerical personnel;
• Providing supervision and direction to trades and
crafts forepersons;
• Assigning work activities and projects; evaluating
work performance, and
• Reviewing personnel training needs.
The individual became Assistant General Manager on
April 12, 1999, before the position description was
finalized on April 19, 1999. As of November 2000, she
still held this position. The Assistant General Manager
position required an associates degree matching her actual
educational background. The position also required four
years of experience in construction, budget development,
administration, and rehabilitation. The individual had no
prior construction experience or experience managing a
modernization program. She also informed us that she
lacked education and training in the construction field. The
only related experience was as a Family Sweep Principal
Planner, a position she did not appear qualified for either.
The Principal Administrative Planner position for the
Family Sweep program required someone with a thorough,
experience-based understanding of the principles associated
with the development and implementation of residential
modernization and reconstruction projects, including the
development and administration of modernization budgets,
local state and federal laws, and techniques for preparing
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funding applications. The position also required a
bachelors degree from an accredited college.
There was no information available in her personnel file to
establish she met the experience requirement. The only
college degree listed on the résumé was from Heald
Business College. Only Associate degrees are available at
the college.
Construction Project Manager
The Construction Project Manager, primarily in-charge of
the on-site modernization work at Potrero Terrace and
Annex, also did not meet the qualifications to manage a
comprehensive modernization project. Discussions with
the Construction Project Manager and review of his
personnel file showed he had no prior experience in
construction or modernization work. His education
background had been in political science and law. Between
1990 and 1996, he was an assistant to the San Francisco
mayor. The SFHA initially hired him as the executive
assistant in July 1996. The individual stated he did not
seek the Construction Project Manager position, but was
assigned to the role in August 1997. The individual told us
he had no previous construction knowledge, so he
attempted to learn as much as he could on the job.
Assistant Construction Project Manager
Finally, it is not evident the Assistant Construction Project
Manager met all qualifications. He was primarily in charge
of the extensive Sunnydale modernization.
The Assistant Construction Project Manager position
required a thorough understanding of modernization
construction programs, including advance principles and
practices of purchasing, inventory control, equipment
management, supervision, personnel management, and
budgeting. Applicant should have a bachelors degree with
work in architectural design, construction engineering,
public administration, or related fields. He should also
have two years of responsible experience in public facilities
construction, including one year of supervisory experience.
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The individual’s personnel file showed he had an education
in construction inspection and accounting, although a
bachelors degree was not evident. He had primarily
worked as an ironworker, so he did have some experience
in the construction field. He became an inspector for the
SFHA in 1990. The only training reported in his file was
for a two-day course in Uniform Plumbing Code in 1994.
There was no indication he was adequately experienced in
supervising a comprehensive modernization program.
SFHA Provided Unreliable The SFHA obtained its own cost study from its consultant
Estimates to Counter OIG Hanscomb to counter our claim costs were excessive. The
Claims costs listed on these reports tended to support the SFHA’s
high cost of force account modernization. However, we
noted several problems with the estimates. When
questionable items are removed, such as estimates for work
performed subsequent to the period reviewed, they no
longer supported the high cost estimates
Per Unit Cost
The Hanscomb estimate for the Family Sweep
developments included all costs to modernize the buildings,
except for roofing work not performed by force account.
Hanscomb’s estimate for Potrero Annex was $113,164 per
unit. This included two buildings in addition to the nine
buildings completed by June 30, 1999. This estimate
amount was somewhat higher than the Potrero Annex
general ledger costs of $110,675 average per unit. Without
further review, the estimate would appear to justify the use
of force account at Potrero Annex, but not Sunnydale.
The estimated Sunnydale per unit cost for the 11 units
converted to disability access was $90,558. This was lower
than unit costs in the general ledger of $99,370, despite the
inclusion of profit and subcontractor cost in the estimate.
The estimate for Clementina Senior Sweep only centered
on the actual interior unit modernization, not including any
common areas of the high-rise buildings or non-routine
maintenance work. The estimated Clementina per unit cost
for the 10 units modernized for disability access was
reported as $36,102. As described earlier, the Clementina
disability access general ledger account lumped the unit
conversion with disability access work performed on
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common areas throughout the development. The common
area work was not assessed by Hanscomb, and the actual
costs for common area work cannot be separated from the
unit cost in the general ledger. As of June 30, 1999, the
total force account related cost attributed to the Clementina
disability access 504 accounts was $329,040, or $32,904
per unit. On its face, the estimate would appear to justify
the use of force account at Clementina.
Discussions with a Hanscomb representative in charge of
Consultant Not Provided
the estimate preparation showed the SFHA did not allow
Sufficient Information or
sufficient time to put together accurate estimates. The firm
Time To Prepare Estimates
did not have an opportunity to visit the Clementina
development, and site visits to Potrero Annex and
Sunnydale were brief. Hanscomb stated it only entered one
unit at each Family Sweep development. Hanscomb also
stated insufficient documentation was provided to
demonstrate all work the SFHA had performed at the
developments. As a result, the consultant had to mainly
rely on the building diagrams, the verbal assertions of the
SFHA, and make assumptions concerning the level of work
performed. According to Hanscomb, the SFHA was given
the benefit of the doubt on any questionable items. Based
on these limitions, we do not believe a complete and
objective assessment of the SFHA modernization costs
could be made.
Due to the limited time available, Hanscomb used year
Rates Applied By
2000 prices for Sunnydale and Potrero Annex and ‘de-
Consultant Were Not
escalated’ them down to 1998 prices. This de-escalation
Consistent
rate was loosely based on documentation showing changes
in construction prices in the area over the last two years.
The year 2000 prices were divided by 1.09 to arrive at the
de-escalated 1998 prices. We believe the use of actual
1998 documented rates, possibly obtained from a
documented rate index, would have been more reliable.
On the other hand, Clementina prices were not de-
escalated. Hanscomb informed us the price rates used were
what was believed to be the actual 1998 rates, with no
additional conversion necessary. Hanscomb determined
each price rate based on documented rates and then
individually adjusted each price based on its memory and
judgment of 1998 market conditions.
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However, the construction rates applied to the two family
projects did not consistently match the rates applied to the
Clementina senior development. In several cases, the
Clementina rates were the same as the family rates prior to
de-escalation, indicating that the Clementina rates also
should have been de-escalated and that the estimate
provided overstates Clementina costs.
The following are examples of differences in price rates we
identified by comparing the senior Clementina estimate to
the family Potrero Annex and Sunnydale rates after the de-
escalation rate was applied:
Work Item Senior Rates Family Rates Family Differences
(before de- Rates (de- (Senior less
escalation) escalated) de-escalated
Family)
Interior Walls $7 / SF $7 / SF $6.24 / SF $0.76 / SF
Ceramic Wall $10 / SF $10 / SF 9.17 / SF $0.83 / SF
Tile
Cabinets $200 / LF $200 / LF $183.49 / $16.51 / LF
Install base & $125 base & $125 LF base & base &
/ LF wall / LF wall $114.68 / $10.32 / LF
LF wall wall
Interior Door $500 Each $500 Each $458.72 $41.28 Each
Each
Cabinet Demo $6.50 / LF $10 / LF $9.17 / LF $(2.67) / LF
Int. Door $50 Each $50 Each $45.87 Each $4.13 Each
Demo
Interior $1 / SF $3.50 / SF $3.21 / SF $(2.21) / SF
Painting ceiling & ceiling & $1 ceiling & Ceiling &
wall / SF wall $0.92 / SF $0.08 / SF
wall wall
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Consultant’s Estimate Hanscomb included factors in the estimate that would not
Included Unreasonable be reflected in the SFHA general ledger. We eliminated
Factors these items to the extent practical to make the estimate
comparable to the general ledger amounts. Once the
additional factors were removed, the estimate costs were
below the recorded general ledger costs.
According to a HANCOMB representative, the estimates
included subcontractor profit and overhead of
approximately 10%, along with SFHA profit of 10% for
Family Sweep and 4% for Senior Sweep. These costs
would not be applicable to the SFHA actual costs for force
account modernization.
Hanscomb also included a significant additional factor of
16.5% on top of its estimate as additional costs to hire
residents to perform force account work. Hanscomb’s
percentage was based on the assumption labor represented
70% of the modernization costs. The SFHA required 25%
of its work force to be comprised of residents. Therefore,
Hanscomb computed approximately 25% of 70% would be
17.5% (0.25 x 0.70 = 0.175). Hanscomb adjusted the 17.5%
to 16.5% unexplainably. This 16.5% resident factor was
then added on top of the total modernization costs on the
Clementina, Sunnydale, and Potrero Annex estimates,
significantly increasing the overall cost estimate.
Hanscomb stated it assumed the residents hired would be
100% inefficient from a productivity standpoint. The
consultant could provide no evidence to demonstrate this
was reasonable.
OIG inspectors had never heard of such a rate being
included in a cost estimate. We also believe unskilled
residents should be hired at lower apprentice rates. Only
skilled residents should be hired at journeyman rates, and if
they cannot perform its craft adequately, they should not be
used. In addition, Clementina did not have residents
performing the modernization work, so no resident rates
would be applicable.
The adjusted estimate per unit costs would be significantly
lower if contractor profit, contractor overhead, SFHA
profit, and SFHA resident hiring costs were eliminated
from the modernization costs. The resulting per unit
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average cost was lower than the general ledger costs
reported by the SFHA.
The following schedule shows the overall estimated cost
would be significantly reduced if the disputed cost factors
were removed from the estimates. If the subcontractor,
profit, and resident hiring cost factors were eliminated from
Hanscomb’s estimates, the Sunnydale per unit cost estimate
would be reduced from $90,558 to $64,362, Potrero Annex
would be reduced from $113,164 to $80,429, and
Clementina would be reduced from $36,102 to $26,857 per
unit.
Adjusted Sunnydale Potrero Annex Clementina
Hanscomb 504 Per Unit Per Unit Per Unit
Estimate Total Cost Total Cost Total Cost
Original Hanscomb $90,558 $113,164 $36,102
Total Costs
Total after Remove $98,708 $123,348 N/A
De-escalation Factor
Remove SFHA $ 7,897 $ 9,868 $ 1,337
Profit
Remove Change in $ 2,694 $ 3,367 $ 304
General Conditions
and Overhead (1)
Remove Change in $ 352 $ 440 $ 149
Mobilization (1)
Remove Resident $10,965 $13,702 $ 4,642
Hiring
Remove Sub- $ 6,645 $ 8,304 $ 2,813
contractor Profit and
Overhead
Adjusted Total Costs $70,155 $87,667 $26,857
De-escalated Costs $64,362 $80,429 N/A
(1) Amount represents difference between the original Hanscomb
figures and the adjusted figures after subcontractor and
resident hiring costs were removed. Adjusted calculations
based on rates reported by Hanscomb.
The Hanscomb report also appears unreliable because there
Significant Inaccuracies were inaccuracies on work performed, including work not
Detected on Consultant’s actually done, questionable work, inaccurate quantities, and
Estimates assumptions on work performed.
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The Clementina estimate included material costs for
‘furring’ the units ($30,994) and raising balconies ($1,887).
The furring and balcony raising was not done. According
to Hanscomb, the furring assumed drywall and wood
framing over the outer concrete wall of each unit. There
were no such walls in any units we inspected. The Senior
Sweep department and our observations also confirmed
balconies were not raised.
The cabinet cost Hanscomb attributed to the disability
access units did not take into account the fact that the base
cabinets, listed as 8 linear feet per unit, were smaller than
anticipated: the area beneath the sink was primarily empty
space to allow wheelchair access. The representative
acknowledged more accurate cost figures could have been
provided if actual cabinet configuration and measurements
were known.
The SFHA had instructed Hanscomb to cost out the
replacement of wood balconies at Potrero Annex. As a
result, the Hanscomb estimate for Potrero Annex included
costs for balcony deck, balustrade, and stair replacement
($451,020 de-escalated to $413,780, not including related
overhead). However, our on-site review in September 1999
and re-visit in September 2000 showed the deck had not
been replaced, and the repair work was indeterminable. In
addition, the estimate included the cost to replace balcony
deck stairs on building A-3 (de-escalated amount of
$2,698). On-site observation showed there were no stairs
leading to the deck. A resident living in one of the A-3
units stated there never were any stairs. The tenant had
requested the SFHA to install them, and he believed the
balcony deck had only been repainted.
The SFHA also instructed Hanscomb to cost out the
replacement of all interior walls at Potrero Annex. As a
result, the Potrero Annex estimate included substantial
costs to replace all interior walls within each building,
including the wooden frames (de-escalated to $273,583).
This is not an accurate assessment. In September 1999, we
observed interior wall frames repaired only in certain areas
and were not fully demolished and replaced. New electrical
was already being run through the walls, making any future
wall removal highly unlikely. In addition, not all interior
drywall was actually removed as Hanscomb had priced out.
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After reviewing photographs of the work, the Hanscomb
representative agreed not all interior walls were removed.
Photo of Potrero Annex building with modernization in-progress.
Photo showed that section of interior wall drywall cut out to install new
electrical, as opposed to complete demolition.
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Photo of Potrero Annex building with modernization in-
progress. Photo showed only section of interior drywall
removed and replaced.
Hanscomb also assumed ceramic tiles were placed on the
bathroom floors at Sunnydale, and carpet in the bedrooms.
Our unit inspections did not reveal carpet in any units or
ceramic tiles on any bathroom floors. The Hanscomb
representative said this was probably an error on its part.
The Hanscomb unit measurements and quantity reported
exceeded those identified during OIG on-site review and
review of building plans. There were significant
questionable quantity differences for vinyl floor tile,
interior paint, countertop size, receptacles, kitchen hoods,
doors, appliances, and additional items. It appears that
Hanscomb used plans for a Potrero Annex ‘A’ type
building with five small units, instead of the actual plans
for two large five-bedroom units occupying the entire
building. This exaggerated the number of appliances and
fixtures, and resulted in Hanscomb estimating those units
as costing $251,246 each. Finally, Hanscomb provided a
cost for intercoms in the family units that were not
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installed. These items appear to have overestimated
Potrero Annex costs by $411,407, or $5,714 per unit.
Similarly, the Hanscomb estimate for Sunnydale also
overestimated the quantity of outlets, switches, smoke
detectors, plumbing rough-in, and ceramic tiles. Overall,
these items added an additional $27,133, or $2,467 per unit.
Additional questionable costs related to Hanscomb making
assumptions and overly relying on the SFHA’s
representations concerning the level of modernization work
performed at all three developments. This included
assumptions on miscellaneous coring, miscellaneous
demolition, hazard abatement, door fill-in, staircases, saw
cutting, coring, electrical, plumbing, joists, and floors.
Hanscomb applied lump-sum estimates that were not based
on knowledge of the extent of actual work performed.
Hanscomb’s Clementina asbestos abatement estimate
included cost for acoustical ceiling and complete tile floor
removal totaling $18,700. Based on discussions with the
SFHA, only selected areas of the floor tile had been
removed and the locations could not be identified since
they were undocumented. There was also no acoustical
ceiling to remove. In addition, actual coring and additional
demolition was not known.
Hanscomb estimated the asbestos abatement for all floors
in the Sunnydale units. A document obtained from the
Family Sweep department concerning work completed at
Sunnydale, however, only reported one of the 504 disability
access units had asbestos work.
The Sunnydale estimate included a very large allowance for
saw cutting on six of the disability access conversion units
in three buildings, totaling $60,000 ($55,046 de-escalated).
Meanwhile, five other disability access units in a different
building had only $2,600 ($2,385 de-escalated) for saw
cutting combined. Hanscomb could not explain the size of
the allowances, and the representative affirmed this might
have been an error.
The total questionable cost included in the Hanscomb
estimates totaled $22,945 for Sunnydale, $26,309 for
Potrero Annex, $9,332 for Clementina. If questionable
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items were removed from the Hanscomb estimates, they
would be significantly lower as listed in the following
chart.
Removal of Questionable Costs From Estimate
Adjusted Estimate Sunnydale Potrero Annex Clementina
504 Per Unit Per Unit Per Unit
Total Cost Total Cost Total Cost
Total Direct $66,453 $83,042 $28,131
Modernization Costs
(1)
Interior Wall - $(4,142) $(1,891)
Demolition and
Installation
Furring - - $(3,099)
Infill Exterior Walls $(818) - -
Balconies - $(6,264) $(189)
Asbestos $(2,066) - $(1,870)
Sheet Vinyl at Stairs - $(150) -
Repair Wood Flooring - $(2,729) -
Base Cabinets $(2,573) - $(1,600)
Floor joists - $(5,205) -
Stair Work $(6,732) - -
Scrabble Floor $(245) - -
Sawcutting Allowance $(5,691) $(489) -
Overestimated Quantity $(2,689) $(6,228) -
Floor Demolition $(313) $(420) $(183)
Stucco wall Pod $(682)
Coring Allowance $(909) - $(250)
Misc. Demo $(909) - $(250)
Total Questionable $(22,945) $(26,309) $(9,332)
Direct Cost Less $43,508 $56,733 $18,800
Questioned Cost
Less 10% Sub- $ 4,351 $5,673 $1,880
contractor Profit &
Overhead (2)
Total Direct Less $39,157 $51,060 $16,920
Subcontractor costs
Include Mobilization $ 783 $ 1,021 $ 338
(2)
Include SFHA General $ 5,991 $7,812 $ 690
Conditions and
Overhead (2)
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Adjusted Estimate Sunnydale Potrero Annex Clementina
504 Per Unit Per Unit Per Unit
Total Cost Total Cost Total Cost
Total Costs $45,931 $59,893 $17,948
De-escalate Costs (2) $42,138 $54,948 N/A
Original Hanscomb $90,558 $113,164 $36,102
Estimate
Difference $(48,420) $(58,216) $(18,154)
(1) Direct costs only, no resident hiring, overhead, or profit
included. See prior chart on page 39 above to reconcile direct
costs to Hanscomb total estimate costs.
(2) Computations based on rates reported by Hanscomb.
The adjusted estimate amounts are far below actual costs in
the general ledger. However, due to the lack of information
indicating the level of work actually performed, the true
cost to modernize the units at the three developments
remains uncertain.
Additional Cost Estimates Additional estimates were provided by the SFHA for
Were Unreliable modernization work performed at Clementina. However,
these estimates could not be accurately compared to the
actual costs incurred up to June 30, 1999, the cut-off date of
our scope.
The SFHA provided additional estimate information related
to common areas work performed at Clementina. This
included a cost projection for planned 504 common space
modernization prepared by a consultant in 1998 and an
estimate of non-504 common space modernization prepared
by a different consultant on August 31, 2000. These
estimates included costs for work not yet performed as of
OIG inspections and these costs were not included in the
recorded costs as of June 1999 that were used in our cost
analysis. During the OIG September 1999 and November
1999 on-site inspections, the SFHA had only partially
completed the common area flooring. Likewise, the
common area disability access bathrooms were not all
complete, and carpet had not been laid in the social room.
The consultant’s estimates provided costs for all work
items completed. Other items described in the estimates
had not been claimed during the inspection as having been
accomplished, such as a concrete floor-slab, installing
plastic laminate on wall, and lowering light switches and
fire alarm pull stations. In fact, the Senior Sweep progress
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report from August 4, 1999 showed Clementina common
area work was only 50% complete, with painting, flooring,
and lighting still in progress. In addition, 504 public space
work was only 10% complete. As a result, we cannot rely
on any listings that would claim all work as being
completed by our cut off date of June 30, 1999.
Auditee Comments The SFHA disagreed with our conclusions and
recommendations. We have summarized its response
below into 11 issues. The SFHA also discussed other
issues during the March 26, 2001 exit conference and in
subsequent correspondence.
(1) It believed the OIG misrepresented information
presented in the July 28, 1998 cost justification letter
provided to HUD. It stated the OIG misrepresented the
costs to convert a senior disability access unit, and OIG
data was not substantiated by the general ledger. The SFHA
response stated the letter did not address and justify each
type of work to be performed by force account, since the
SFHA was only trying to show work that could be
completed.
The SFHA also did not agree with warrantee issues
identified by the OIG.
(2) The SFHA asserted the MOH costs were higher than the
SFHA modernization cost when considering average square
foot costs. It stated the use of per unit modernization costs
was not an accurate method for determining costs, and
square footage methods were preferable. It also asserted
other benefits, such as the employment of residents, were a
significant part of the force account program the OIG did
not consider. When these factors were all considered, the
use of force account was justifiable.
(3) Similarly, the SFHA expressed problems with the OHA
analysis. The SFHA did not believe the OIG comparison of
OHA units to its Potrero Annex modernization was valid.
It stated the average per unit size was 106 feet larger than
an OHA Campbell unit. As a result, force account costs at
Potrero Annex should be higher.
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(4) The SFHA also believed the Senior Sweep force
account work was reasonable. The SFHA referenced an
insurance estimate to repair one fire-damaged unit at
Clementina, and compared it with average unit cost. Since
the actual costs were lower than the insurance estimate, the
force account work was cost effective.
(5) The SFHA stated it maintained a sufficient level of
documentation on how it spent the force account funds and
the work performed. The SFHA stated it was not required
to maintain a specific level of progress reports, and it
maintained sufficient documents. It added that a force
account checklist was established in January 2000, which
provided progress information.
(6) Regarding the inspection process, the SFHA believed it
did not have to obtain city inspections. The SFHA also
argued its inspectors were independent and had sufficient
experience. The independence problem was resolved by
reassigning the inspectors to the Modernization department
in August 1999. The response cited the SFHA had three
qualified inspectors and provided information on their
backgrounds and additional training obtained.
(7) The SFHA beleived unit deficiencies identified in the
report should be considered maintenance problems and not
modernization issues. It pointed out three examples where
the modernization work was completed a significant period
before problems were identified by the OIG.
(8) The SFHA stated emergency conditions existed at its
developments for some time, before it started using
resources for other improvements. It stated it weighed
resolving the emergency conditions compared to
performing other improvements, such as landscaping. It
believed the other improvements would raise the quality of
life for the residents. It excused not addressing the
emergency conditions by stating available CGP funds were
not adequate to resolve the emergency work and all other
priority needs of its public housing stock.
(9) The SFHA stated there were sprinkler problems, but
they were resolved and landscaping is now healthy.
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(10) The SFHA believed the Family Sweep managers were
qualified.
(11) The SFHA stated the OIG did not provide enough time
to provide accurate cost estimates. The SFHA referenced
statements made by Hanscomb. The SFHA points out
Hanscomb asserted differences in unit rates between the
Family and Senior Sweep was due to difficult working
conditions at Clementina, which would increase costs.
Hanscomb also provided some additional information
related to discrepancies in estimate rates.
OIG Evaluation of Our evaluation of the SFHA’s comments parallels the 11
SFHA’s Response SFHA issues.
(1) We considered the SFHA’s position, and removed the
warrantee issue from the audit report.
Senior Sweep costs were taken from the general ledger and
Senior Sweep progress report data. We were aware
disability access conversion cost for 504 units included unit
modernization and additional 504 work performed on
common spaces. However, the SFHA did not separate the
504 unit work from the 504 common area work in either the
general ledger or any other documentation. Back up was
not available to demonstrate how the SFHA calculated the
figures in the July 1998 letter. We have not been presented
with support to suggest our comparison was invalid, a more
accurate determination was possible, or that the figures in
the letter did not include common area work.
When the letter was issued to HUD, the SFHA had already
begun the use of force account, including landscaping
work, and was not simply referencing possible
modernization.
(2) The initial cost comparison provided by the SFHA to
HUD in the July 28, 1998 letter, compared per unit cost of
modernization work performed by the MOH to the SFHA
force account. The OIG review showed the figures
presented to HUD were inaccurate, misrepresenting the
MOH costs as being higher than the SFHA costs. Instead
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of addressing this fact in the response, the SFHA stated the
average cost per square foot should be used instead. The
OIG used per unit costs comparisons to remain consistent
to these unit cost comparisons.
The SFHA averaged the three MOH projects and compared
this figure to the average square footage costs of three
SFHA developments. We do not believe it is appropriate to
compare the figures in this manner, because they do not
provide a reliable cost comparison. Our OIG inspector
stated square footage cost of modernizing smaller units
should not be compared directly to dramatically larger
units. This is because the smaller units can have higher
relative costs since the same number of expensive fixtures
and plumbing are placed into a smaller overall space. As a
result, the studios of Apollo and Lyric should not be
directly compared to the larger units of Potrero Annex.
However, 2300 Van Ness units were similar to Potrero
Annex. The SFHA Potrero Annex square foot costs of
$113.16 are still significantly higher than the MOH Van
Ness costs of $70.46.
The Clementina per square foot costs appeared low
compared to the MOH costs to modernize similar units at
Apollo and Lyric. However, a direct comparison of these is
not reliable. This is why we did not include this
comparison into the audit report. The MOH modernization
costs included complete renovation throughout the
buildings, including seismic upgrades, roof replacement,
upgrades to sprinkler systems, window replacement, the
installation of an elevator at Apollo, etc. On the other
hand, the Clementina cost presented show the cost to
modernize the interior of the ten disability access units and
partially completed disability access work on common
areas. As a result, the rates were not comparable because
the scope of work was significantly different.
The SFHA stated other benefits of force account should be
reviewed, such as resident employment. We did not look
into this area, and therefore cannot provide an opinion on
the actual benefits obtained, or whether they could have
been more effectively conducted through contractors.
Nevertheless, the SFHA did not identify what extra costs
were attributable to using resident as workers or explain
why their use would necessarily increase costs significantly.
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(3) The OHA units were reasonably close in size to the
Potrero Annex units. If we use the square footages
provided in the response, Potrero Annex units would be an
average of 106 square feet or 12% larger than Campbell.
However, if we use data provided on the Hanscomb
estimates, the average per unit size of the completed
Potrero Annex units was 945 square feet, only 45 feet larger
than the average unit size identified by the OHA. In either
case, the increase in size does not justify the SFHA’s high
modernization costs, which were approximately 150% the
OHA costs.
(4) The SFHA did not provide detail of how the insurance
estimate was calculated, the scope of work identified by the
insurance carrier, or the modernization work done earlier
on the unit. As a result, we cannot rely on this estimate as
justification for the use of force account.
(5) The level of documentation over the work performed by
the force account was inadequate for the OIG inspectors to
determine the full extent of all modernization, so cost
estimates could be produced and accurately compared to
actual costs. The SFHA’s cost tracking methods did not
allow for sufficient analysis to determine whether the force
account was operating cost effectively. This information
would have been beneficial for the SFHA’s own needs
assessments, program monitoring, cost analysis, and
budgeting.
The other documents identified in the response by the
SFHA did not provide sufficient information for the Family
Sweep program to adequately track the level of completion.
The fact that Senior Sweep maintained more extensive data
showed the two programs were not consistent, and also
demonstrated the information could have been developed
for the Family Sweep program if it chose to establish a
system to do so.
The type of information listed on the checklist does not
appear to be any more useful than the final inspection
reports. The checklist does not identify percentages of
completion or the scope of modernization. In addition,
since only a blank version of the checklist was included as
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support to the response, we have no evidence these
documents were used.
(6) We considered the SFHA’s position, and removed the
issue concerning inspections from the City of San Francisco
from the audit report.
While Family Sweep inspectors may have been reassigned
to the Modernization department to add to their
independence, all completion reports prepared for the work
reviewed at Sunnydale and Potrero Annex were signed off
when the inspector was still under the Family Sweep
program. In addition, since the manager of the Senior
Sweep program also became the head of the Modernization
department, the inspectors were still reporting to the
management in charge of the force account work. Finally,
no information was provided to show the three inspectors
identified by the SFHA were the inspectors actually
reviewing the force account work. The information was
inconsistent with that of the inspector who signed off on the
inspection reports we examined.
(7) The SFHA has a valid point relating to the unit
deficiencies. We reviewed completion reports provided by
the SFHA and agree several of the items listed in the OIG
audit report do appear likely to be maintenance related
issues. We adjusted the report accordingly. However,
since there were still a number of problems related to the
force account work, our overall opinion has not changed.
(8) We were not presented with any information to show
the conditions were already emergencies as asserted by the
SFHA. In addition, the SFHA’s argument did not provide a
reasonable explanation for not addressing emergency
conditions. If emergency conditions existed while
resources were limited, then it was not reasonable to first
address other non-emergency needs of the projects. The
SFHA should have tried to resolve known emergencies
immediately with available funding, as opposed to allowing
the health and safety of residents to be threatened.
Resolving emergency conditions quickly would also
prevent further deterioration and increased costs of repairs,
such as from leaking roofs.
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(9) There was no information available to show sprinkler
systems problems were resolved or can be fully utilized in
the future. The irrigation system and condition of the lawns
were observed at several points over the course of our
review. Of course, in March, after months of rain, the area
should green on its own. However, if the sprinkler system
is not maintained during the dry months of the year, the
landscaping will degrade.
(10) Overall, the Family Sweep Management did not have
sufficient experience over construction and implementation
of an extensive modernization program.
The Assistant General manager now lists 14 year of
experience with a private sector general contractor.
However, we were previously informed this related to the
fact that the manager’s husband was a general contractor.
There is no certainty of what experience may have been
gained. In addition, a previous résumé in the manager’s file
did not identify prior experience with a contractor. It also
showed the position at the Alabama Power Company was
as an office representative / account clerk, where she
assisted the office manager.
Whether or not the SFHA required the Construction Project
Manager position to have experience in construction, the
employee had no experience or training in this area, making
his appointment questionable. It is not clear how a
background in political science aided in the on-site
management of a comprehensive modernization
construction project. The employee stated he had to learn
about construction while on the job.
The SFHA claimed an additional five years of experience
for the Assistant Construction Project Manager, the nature
of which was not specified on the employee’s resume. As a
result, we have no information this provided additional
experience that would make the employee more qualified.
(11) The SFHA’s argument does not change the fact that
inaccurate estimates were provided to our office to justify
high force account costs. The OIG did not require the
SFHA to obtain costs estimates from its consultant,
Hanscomb. The SFHA had opportunity to produce
estimates at any time it chose, either before or during the
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course of the audit. The force account management only
volunteered to have this done after results were discussed.
We informed the SFHA we would review any information
presented, but needed it before we concluded our review
and prepared the draft report. The SFHA was told it would
also have an opportunity to provide information as part of
its response to the draft audit. The SFHA’s consultants,
Hanscomb, produced the Clementina estimate on August
15, 2000, five days after Senior Sweep issues were initially
discussed with the SFHA. The estimates for Family Sweep
developments were provided by September 1, 2000,
approximately two weeks after the issues were discussed
with the SFHA. The SFHA never mentioned the
information could be subject to significant error due to the
short timeframe in which the information was generated.
We discussed the estimates with Hanscomb, and only then
determined it could have provided more detailed and
accurate information if additional time had been available.
Although the reasons Hanscomb identified for the
discrepancies may be reasonable, the actual reason still
appears to be due to an error. We spoke to one of the OIG
inspectors and she agreed the types of conditions identified
by Hanscomb could result in increased cost. However, we
noted the difference in costs matches the de-escalation rate
listed on the estimates for the Potrero Annex and
Sunnydale. In addition, when we inquired into an example
of how Hanscomb determined its Clementina costs, the
representative did not mention any additional conditions or
factors.
We accept Hanscomb’s position on the fixture rough-in and
have made appropriate changes to the audit report finding.
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Recommendations As described in the Prior Audits section of this report, a
previous OIG audit raised concerns over key SFHA staff,
including Family Sweep management. Three personnel
hiring practices recommendations from that audit remain
open because HUD does not yet have assurance that the
SFHA has successfully implemented them. While the full
implementation of those recommendations will partly
address the problems described in the current report,
additional actions are necessary.
We recommend the Assistant Secretary for Public and Indian
Housing require the SFHA to:
1A. Terminate the use of force account for
comprehensive modernization work and obtain
independent contractors, selected through required
procurement practices, to complete remaining
comprehensive modernization.
1B. Terminate non-routine maintenance until it can
sufficiently justify the use of force account
employees is more effective than contracting out the
non-routine maintenance. If practical, require the
SFHA to obtain bids from independent contractors
as part of its analysis.
1C. Obtain qualified management for any force account
activity allowed to continue.
1D. Establish procedures to ensure adequate record
maintenance over modernization activities,
including detailed specifications of work actually
performed at the developments.
1E. Reassess the priority of modernization work
remaining to be performed, and ensure that high
priority items are consistently addressed before low
priority improvements.
1F. Establish maintenance procedures to ensure that the
CGP funded landscaping is adequately maintained,
and the sprinkler system is operational.
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1G. Correct the HQS violations and problems noted
during the OIG inspections.
1H. Ensure SFHA Modernization department has fully
qualified and trained inspectors review all aspects of
force account modernization. In addition, require
the SFHA modernization department to have its
inspectors re-inspect buildings and units
modernized by the force account program to ensure
work was adequately performed. The
modernization inspectors should be independent
from the force account program.
1I. Return the $184,161 of excessive modernization
funds to the CGP, to be used for future
modernization.
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The SFHA Was Not Adequate Recording and
Tracking Assets and Expenditures Under the
CGP
The SFHA did not adequately record and track its assets and expenditures. The general
ledger recording was inadequate to accurately assess CGP force account expenditures.
Expenditures were charged or moved to incorrect project accounts making the general
ledger unreliable. The SFHA also did not consistently follow adequate procedures over the
generation of its purchase orders relating to force account work. In addition, the inventory
system over CGP purchased equipment was insufficient to track all items. Finally, the
SFHA was charging ineligible payroll to the CGP grant, while not maintaining adequate
documentation to substantiate additional payroll attributed to the grants. These problems
occurred because the SFHA did not develop sufficient procedures and controls, or did not
follow established procedures. As a result, there was inadequate information to assure that
that all assets were accounted for and all expenditures were legitimate for CGP activities.
In addition, $98,102 of ineligible and $73,210 of inadequately supported maintenance
expenses were charged to the CGP, with possibly additional amounts in other periods.
HUD’s ACC with the SFHA required the SFHA to
Various Rules Govern
maintain records to identify the source and application of
Recording and Accounting
funds in such a manner as to allow HUD to determine that
Requirements
all funds have been expended in accordance with each
specific program regulation and requirement. The SFHA
must maintain complete and accurate books of account for
the projects of the SFHA in such a manner as to permit the
preparation of statements and reports in accordance with
HUD requirements, and to permit timely and effective
audit. Books and records of the SFHA shall be maintained
in such a manner as will at all times show the operating
receipts, expenditures, and reserves for the project separate
and distinct from all other projects under the ACC.
Title 24 of the CFR, Section 85, Standards for Financial
Management Systems, requires grantees to maintain records
that adequately identify the source and application of funds
provided for financial-assisted activities. Unit cost
information should be developed whenever appropriate.
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HUD Guidebook 7485.3G, Comprehensive Grant Program,
requires force account labor costs for carrying out physical
improvements to be charged to the appropriate
development account for hard costs.
HUD Handbook 7460.8 Rev 1, Procurement, states that
small purchases up to $25,0003 may use simplified
procedures, such as purchase orders. The housing authority
shall maintain proper records of its small purchases. It is
crucial that the purchase order clearly specify the purchased
items, services, and the terms and conditions of the
purchase.
24 CFR Sub-Section 84.34 includes standards for property
management for equipment acquired with Federal funds.
These standards require:
(1) Equipment records shall be maintained accurately and
shall include the following information: a description of the
equipment; manufacturer’s serial number, model number,
federal stock number, national stock number, or other
identification number; source of the equipment, including
the award number; whether title vests in the recipient or the
federal government; acquisition date and cost; information
from which one can calculate the percentage of federal
participation in the cost of the equipment; location and
condition of the equipment and the date the information
was reported; unit acquisition cost; and ultimate disposition
data, including date of disposal and sales price or the
method used to determine current fair market value where a
recipient compensates HUD for its share.
(2) A physical inventory of equipment shall be taken and
the results reconciled with the equipment records at least
once every two years. Differences between quantities
determined by the physical inspection and those shown in
the accounting records shall be investigated to determine
the causes of the difference. The recipient shall, in
connection with the inventory, verify the existence, current
utilization, and continued need for the equipment.
3
The current small purchase threshold has been increased to $100,000 under 24 CFR 85.36.
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SFHA Policies Over The SFHA Policies and Procedures also contain
Inventory requirements for the maintenance of the inventory system.
This includes an assignment of individuals’ responsible for
inventory. SFHA procedures hold the manager of each
project/location responsible for the assets at the location,
including any unexplained discrepancies. The manager will
also be responsible for monthly inventory reconciliation.
In addition, the Fixed Asset Accountant has several
inventory responsibilities. They include:
• Reconciling the Fixed Assets subsidiary ledger to the
general ledger,
• Arranging and conducting periodic fixed assets counts,
and
• Tag control.
The managers of each project/location also hold additional
responsibility for inventory items. These responsibilities
include:
• Ensuring that all assets received are appropriately
tagged,
• Reconciling fixed assets listing received from the Fixed
Assets Accountant on a quarterly basis, and
• Documenting all transaction (receipts, transfer and
disposals) of Fixed Assets on a transaction basis and
transmission of the information to the Fixed Assets
Accountant.
The Warehouse Manager also has inventory responsibilities
that include:
• Preparing and distributing tags for new assets/assets
transferred from inventory,
• Transferring of inventory to fixed assets, and
• Preparing fixed assets documentation and the
transmission thereof to the Fixed Assets Accountant.
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According to the SFHA policies and procedures, dwelling
personal property includes ranges, refrigerators, washers,
and dryers, is always capitalized no matter the cost of the
item. All capitalized and expendable equipment items are
to be assigned an inventory number and tagged at time of
receipt or transfer from inventory. According to these
policies, all equipment costing at least $100 should have a
tag number.
The SFHA policies and procedures also include
information on periodic inventory counts:
• Periodic inventory counts will be conducted under the
supervision of the Fixed Assets Accountant,
• The assets counted will be compared to the assets on
hand per the fixed assets system,
• The development/department manager will be
responsible for explaining any discrepancies, and
• Records will be maintained related to discrepancies by
respective departments.
CGP Criteria on Ineligible HUD CGP Guidebook 7485.3G, states that non-routine
Costs maintenance is an allowable expense, but routine
maintenance is not.
Inadequate General Ledger The SFHA had an inadequate general ledger tracking and
Reporting reporting system over its CGP expenditures. The system
did not accurately identify, track, and report all force
account modernization expenditures. The SFHA had
difficulty producing reports, transfers were arbitrarily made
to match budget, general ledger descriptions were
inadequate, and allocations to accounts were inconsistent
and some could not be adequately justified. Expenditures
could be reviewed on an individual basis to determine what
they were. However, with the numerous lump sum
transfers, it was difficult to determine what account the
amount eventually ended up in. As a result, there was no
assurance that all expenditures were properly accounted for
and classified in the general ledger. In addition,
management did not have adequate financial information to
oversee activities.
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Comprehensive General Ledger The SFHA Finance department was not able to produce
Reports Not Generated In Timely general ledger reports from its system that would show
Manner comprehensive detail concerning force account
expenditures charged to CGP accounts. We had to obtain
this information from Management Information System
(MIS) department, which resulted in considerable delays
and limitations on the number of developments that could
be reviewed.
We requested the Finance department to provide
comprehensive general ledger reports detailing CGP
expenditures. This included listing expenditures attributed
to all CGP grants for all projects between October 1996 and
June 1999. The Finance department did not have
hardcopies of the documentation available. Finance stated
it would have to spend considerable time generating this
documentation from its system, producing a separate report
for each account number for each fiscal year requested,
possibly requiring a month of intensive effort. This
information would also not include related vendor names,
invoice numbers, check numbers, and purchase order
information. These reports would need to be produced on
an individual basis for each transaction.
As a result, we requested SFHA’s MIS computer
department to provide the necessary data. It took a week
for the department to provide the data for a single
development. A subsequent request for additional data
resulted in over a four-month wait for documentation,
between November 1999 and March 2000. The data files
provided also required extensive adjustment to provide
accurate expenditure information. As a result, we could
only review general ledger information for three sample
projects.
General Ledger Descriptions of The SFHA entered inadequate descriptions in the general
Expenditures Inadequate ledger to describe the purposes of CGP expenditures. In
many cases, the only way to sufficiently identify the
expenditure was through examination of supporting
documents of individual transactions. As a result, we have
no assurance that ineligible expenditures were not charged
to the grants, without an unreasonably extensive effort to
check each material transaction.
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We reviewed general ledger reports the Finance department
could produce and determined they would be inadequate to
assess force account expenditures. As mentioned above,
the reports did not include vendor names, invoice numbers,
check numbers, or purchase order numbers. Many
disbursements from accounts payable did not provide
detailed descriptions of the expenditures. This included
line item descriptions such as “TRANSFER CLOSED PO
11”, “3/26/98 8/18/98 3/25/”, “4WV x 12” (4 X 12
OVAL)”, “PROVIDE PURCHASE ORDE[R]”, “Request
to increase p”, “UNFORSEEN CONSTRUCTIO[N] (sic).”
(Note: PO stands for purchase order). Items obtained from
the SFHA inventory warehouse did not include a
description, but did list either a claim or warehouse
identification number. Finally, material general ledger
transfers between accounts often only included vague
descriptions such as “ADJ OVERAGE ADJ LINE ITEM
OVERAGE” or “RECLASS BUDG RECLASS EXPS;
BUDGET” (sic). Each line item would have to be checked
individually in the system to obtain the additional
information. There were over 11,000 expenditure and
transfer debits and credits under the Sunnydale CGP
accounts alone. No other reports available from the
SFHA’s general ledger system could provide the
comprehensive data needed.
Information provided by MIS was more comprehensive.
Invoice, check, vendor name, and other information could
be linked to the line item expenditures in the database.
However, the descriptions of the expenditures were still
inadequate to review expenditures.
Transfers and Allocations The general ledger included many large transfers of funds
Make General Ledger between CGP funds and accounts, made primarily to move
Unreliable expenditures where funds had been budgeted. In addition,
allocations of expenditures to projects were not always
consistent or reliable. As a result, there is no assurance that
general ledger accounts for CGP modernization reflect
accurate costs.
The SFHA Finance department was responsible for
establishing the account numbers in the general ledger. The
account numbers distinguished the fund, the type of work
the expenditure was applicable to, whether it was labor or
materials, and the applicable project. The force account
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departments were responsible for identifying which account
an expenditure was attributable to before being entered into
the system.
Finance prepared transfers so actual expenditures would
match its budget. We noted for a single project, Sunnydale,
there were 131 non-payroll related transfers between
Sunnydale general ledger CGP accounts totaling $18.2
million, between May 31, 1997 and July 31, 1999. Finance
stated these transfers were primarily expenditures entered
into the general ledger in excess of the amount budgeted for
the account. It would then transfer the overage either to a
different general ledger account under the same fund or to
another CGP fund. These lump sum transfers could not be
matched to specific expenditures in the general ledger.
Finance further stated it did not have the ability to charge
expenditures to the next CGP grant fund timely, when the
current grant fund budget is fully expended. This occurred
because it was difficult for Finance to track and determine
the actual expenditures amount balances under a line item.
In some instances, Finance transferred amounts back if too
much had been transferred earlier.
As a result, costs were not consistently charged to the
correct accounts, and were often transferred to accounts that
did not incur expenditure. Transfers included moving
funds between labor and materials accounts. Finance could
not substantiate whether transfer amounts were actually
labor or materials. These transfers make the designation of
labor and material accounts useless and reduce the
effectiveness of budgeting. Budgeted amounts cannot be
adequately compared to actual costs if actuals are moved
within the general ledger to reflect budget. Overall, we
identified transfers of $5,238,176 between Sunnydale
general ledger accounts that appeared to misrepresent the
expenditures, as listed in the following schedule.
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Transferred From Transferred To Amount
Lead Abatement general HQS Labor $47,104
Landscaping Materials Landscaping Labor $34,399
Exterior Painting Labor Exterior Painting Materials $17,942
HQS Labor Administrative Salaries $47,104
504 Materials 504 General $2,590
HQS Materials HQS Labor $349,245
Landscaping Materials Landscaping General $102,718
HQS Labor HQS General $905,188
Landscaping Labor Landscaping General $534,083
504 General 504 Labor $38,526
HQS General HQS Labor $1,326,946
HQS General HQS Materials $1,828,852
Landscaping General Landscaping Materials $3,480
TOTAL: $5,238,176
The SFHA was also attributing significant expenditures to
general CGP accounts with no project designated, called
‘PHA-Wide’ accounts. These amounts were then
transferred to the individual projects at a later point in time
instead of initially recording the expenditures under the
project account in question.
We identified two significant allocations of expenditures
from the ‘PHA-Wide’ accounts to projects that were not
based on where the expenses were actually incurred. In one
instance, $601,413 was allocated evenly to four different
Family Sweep developments. Finance could not produce
information to establish whether all the expenses actually
pertained specifically to these projects in the ratio applied.
In another case, $160,228 was allocated to various family
and senior developments based on its budget percentages
for the year. In the latter case, the expenditures could not
be identified by Finance within a reasonable timeframe to
determine whether they were overhead or direct
construction expenses that had not been tracked by the
SFHA to specific developments.
There were 69 allocations to the senior projects from the
‘PHA-Wide’ accounts for force account expenditures
between January 1997 and July 1999. These expenditures
totaled $403,922 and included various materials for force
account work, and were not simply overhead. Although the
Senior Sweep department apparently tracked these
expenditures individually, it was not readily apparent, based
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on invoice review, whether they all were actually applicable
to the projects transferred. While it was not practical to
review all 14,000 debit and credit entries in the PHA-Wide
accounts, we noted no instances of any amounts having
been allocated to an incorrect development. Nevertheless,
the result of these transfers to the senior projects’ general
ledger accounts was lack of detailed descriptions of
purchases. The accounts only showed the transfer entries
for these expenditures and did not specifically identify the
individual expenditures.
The SFHA did not have the ability to fully identify the
Method of Recording Costs
actual costs of different modernization work items.
Insufficient To Identify
Finance did not track expenditures to this level of detail and
Costs of Different Activities
neither did the Family and Senior Sweep programs. This
makes it difficult for the SFHA to assess the costs of
different crafts and determine whether it was performing
work in a cost effective manner.
At Sunnydale, the cost of non-routine maintenance could
not be separated from the cost of performing
comprehensive modernization on non-504 units. It was
impossible to determine what work was attributed to these
accounts. At Potrero Annex, work performed to
rehabilitate the exterior balconies cannot be separated from
the interior work or other exterior work performed. Thus,
management could not compare its actual costs directly to
the planned costs.
The Senior Sweep program also could not separate the
costs of work performed on disability access work on
common areas from disability access work performed
directly to the units. In addition, the Senior Sweep progress
report significantly misreported the cost of its work
performed on Clementina 504 disability access units.
Senior Sweeps had not been able to distinguish its own 504
costs from work charged to the accounts from prior periods.
This prior period work was performed on other units by the
previous modernization program, and was not
representative of Senior Sweep costs or activity. These
additional costs would significantly increase and
misrepresent the overall modernization costs of the Senior
Sweep program. As a result, it is not certain whether
progress reports accurately reflected modernization.
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The SFHA was not consistently following established
SFHA Was Not purchase order procedures relating to its force account
Consistently Following expenditures charged to the CGP. Force account purchase
Proper Purchase Order orders were frequently prepared after the expenses were
Procedures incurred and invoices were submitted by the vendor. In
addition, the purchase orders did not consistently identify
items purchased and the quantity. Some invoices were also
not charged to the correct purchase order. This occurred
because there were inadequate controls to assure that
Procurement and Finance knew and approved of purchases
before they were incurred.
Purchase Orders Prepared A significant number of purchase orders were prepared
After Invoices Received after the expenditures had been incurred and invoices were
submitted to the SFHA. Nine of 21 purchase orders
reviewed for force account materials had an invoice date
earlier than the purchase order. The differences ranged
from several days to several months.
Descriptions on the purchase orders were inadequate.
Purchase Order Descriptions Twenty-one of 34 purchase orders reviewed had inadequate
Inadequate descriptions of the items and quantity to be purchased.
They included descriptions such as “Transfer Closed
PO#11442”, “Increase encumbrance to PO 7321 for
flooring materials and supplies”, “Increase encumbrance to
open PO 6867”, and “Open purchase order for electrical
materials and supplies for Sunnydale.” These purchase
orders did not identify item purchased, the individual
prices, or the quantities.
In addition, the project reported on the purchase order was
Invoices Applied To not always consistent with the project reported on the
Incorrect Purchase Orders invoice. We selected a sample of 10 invoices where the
applicable development was reported on the document.
Two of the purchase orders attached and referenced in
writing on the invoice specified they had been created for a
different development. In one case, invoice number 5640
for Sunnydale was attached to purchase order number 8225
for Westbrook. In the other instance, a Potrero Annex
invoice was attached to Alice Griffith purchase order
12635.
These problems occurred because SFHA policies did not
prevent the creation of ‘open’ orders identifying specific
items purchased. These purchase orders often had arbitrary
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set amounts, under which force account staff could
purchase whatever materials required. However, the force
account frequently purchased more materials than the
purchase order allowed, which was apparently not
recognized until the invoices were submitted to the SFHA.
As a result, another purchase order would be generated to
cover the expense, after the fact.
The SFHA Did Not Have an The SFHA did not maintain an adequate inventory system
Adequate Inventory System to allow for the accurate tracking and recording of SFHA
equipment and supplies. The SFHA did not consistently
track and update all items, perform inventory counts, or
maintain logs for supplies and equipment stored on-site.
The SFHA did not place an emphasis on tracking and
confirming assets. As a result, there was no assurance that
equipment and other materials were all accounted for and
were used for CGP activities.
The SFHA implemented its present Creative Computer
Solutions (CCS) system in 1995. According to the Finance
department, it considered the fixed asset element of the
system to be unimportant and did not implement it. In
addition, the SFHA maintained a manual system that did
not have accurate information.
Appliance inventory listings did not have accurate
Appliance Inventory Reports
information. A significant number of identification
Inaccurate
numbers listed on the reports did not match the actual items
in the units We selected 61 appliances from the
Sunnydale, Potrero Terrace, Pine Street, and Valencia
developments for on-site inspections. Eighteen of 52
appliances did not match the appliances actually in the
units. We could not confirm the remaining nine appliances
because the identification numbers could not be observed.
There was some confusion among the SFHA departments
as to which department could provide the most accurate
inventory information. Property managers believed the
warehouse had the information. The warehouse department
stated the information was all submitted to Finance for
record maintenance. Finance believed the Customer
Service department may have had more accurate
information. However, Customer Service was unable to
generate the information because it had not been entered
into the computer system.
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We attempted to locate a sample of equipment that should
All Equipment Could Not Be
have been tracked through the SFHA’s inventory system.
Confirmed
This included Family and Senior Sweep force account
equipment and some additional Modernization, Finance,
and Central Service items charged to the CGP grant.
Equipment logs from the force account programs were
insufficient to adequately confirm items. We generally
sampled expensive items reported in the CGP general
ledger accounts, such as vehicles, computers, tractors, and
other equipment and attempted to obtain identification
numbers to track the items and then check the items on-site.
However, due to the SFHA’s inadequate inventory system,
all equipment could not be confirmed.
Assets were not consistently tagged for tracking. We did
note all 35 vehicles checked had fleet numbers assigned to
them, and we were able to obtain the vehicles’ serial
numbers. However, several other assets examined during
our sample inspection did not have a tag number or the tag
number could not be confirmed.
There was also inconsistency between SFHA practice and
written procedures. SFHA policy required the tagging of
all items costing over $100. However, the Finance office
advised that only items of $500 or more were tagged and
tracked. Based on items within our sample, of the 164
other assets sampled that should have been tagged, costing
$129,768, 128 items had no tag number. These untagged
sample items had a cost of $88,833.
We confirmed a sample of eight tagged items of equipment
costing $75,579 and 11 vehicles from the SFHA records to
the items on-site. All vehicles were located and accounted
for. Of the remaining non-vehicle items, three items
totaling $12,109 could not be adequately confirmed on-site.
This included computers totaling $5,273 and one $6,836
electric bender.
We noted a material exception relating to Finance
department computer equipment charged to the CGP. Of
three laptop computers purchased by the SFHA, only one
could be located. The Executive Office had ordered the
computers and their location was unknown. The employee
initially assigned to the computers no longer worked for the
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SFHA. The Executive Office was unable to provide any
additional information concerning where the two computers
totaling $5,273 computers were located.
An electric bender did not match to inventory information
available. The electric bender observed on-site had
different identification numbers than shown by the Finance
department. The Family Sweep department stated the
vendor had replaced the item. The vendor did confirm a
replacement. Nevertheless, neither the vendor nor the
Family Sweep department could provide information
indicating the identification number of the new item. Thus,
there is not assurance additional electric benders were not
purchased, which might account for the item on hand.
The SFHA did not sufficiently identify and track equipment
Insufficient Force Account because it was not consistently applying established
Inventory Practices inventory procedures. The SFHA was not taking regular
physical inventory to confirm recorded assets to actual
items on hand. In addition, the Sweeps programs were not
adequately generating or updating their inventory lists. The
information presented on the lists was also insufficient.
These issues arose because the SFHA placed little priority
over tracking and confirming inventory records over its
assets and equipment, so there was no assurance items
purchased had been accounted.
The SFHA written inventory procedures required project
managers to perform monthly inventory reconciliations, and
department managers to reconcile with the Fixed Asset
Accountant on a quarterly basis. In addition, SFHA
procedures required periodic inventory counts under the
supervision of the Fixed Assets Accountant, but do not
specify the frequency. However, 24 CFR Sub-Section
84.34 required a physical inspection and reconciliation of
equipment inventory every two years.
We requested tools and equipment inventory listings from
the Senior and Family Sweep departments on two
occasions. Updated listings were not available from either
office when new listings were later requested the following
year. This demonstrated the Senior Sweep department
performed no inventory tracking for at least eight months.
Likewise, there was no tracking performed by the Family
Sweep department for at least ten months.
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There was no consistency between the Family and Senior
Sweep vehicle listings. In general, the list prepared by the
Senior Sweep department provided more information than
the Family Sweep list. The Family Sweep list was updated
based on our request for inventory information. However,
it still did not provide an identification number for one of
its vehicles. The list did not contain the same useful
information as the Senior Sweep list, such as the vehicles
license plate number, make, model, year, or mileage.
Updated vehicle lists were later requested before our on-site
confirmation. The Family Sweep did not prepare or supply
updated vehicle listings.
Both Sweeps’ equipment lists were incomplete and did not
have enough information available to track the expenditure.
The Family Sweep list contained 320 items, of which 126
had no identification number. In addition, 288 of the items
did not specify which employee the item was assigned.
Likewise, the Senior Sweep equipment list contained 147
items, of which 77 had inadequate identification. The lists
did not include the price of the items; therefore, one cannot
determine whether the items required a SFHA assigned tag
number. These items are not traceable to the general ledger
due to lack of the vendor name, invoice number, or the
purchase order number. There was no distinction between
which items were obtained from the warehouse and which
were purchased directly.
The Senior Sweep equipment inventories were prepared by
the foremen in-charge of each department, who were also
responsible for the items in question. The equipment
listings were prepared specifically based on our request for
inventory information. The Senior Sweep department
stated that old equipment lists were not maintained.
There was no information on the Family Sweep report to
establish when and if a physical inventory was performed to
confirm items on hand. Family Sweep department had no
documented inventory procedures available when
requested. The Family Sweep department said inventory
lists were created as part of surprise inspections performed
approximately every two months. However, the department
did not provide subsequent listings when requested to
confirm this process actually occurred.
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There was no evidence to show the force account
departments were performing quarterly inventory
reconciliations with the Fixed Asset Accountant. Sweeps
staff stated they did not take a physical inventory to
compare tools and equipment on hand to the items
purchased to determine if discrepancies exist, or confirm
whether these items were officially disposed or retired.
There were also no comparisons to previously generated
lists to identify discrepancies.
Inadequate Tracking of On- The SFHA also did not maintain logs over its force account
Site Materials and Supplies materials and supplies stored at the project sites. During
site visits, we noted storage containers used to keep various
materials and equipment for the force account programs. In
addition, at the Sunnydale development, large amounts of
materials and supplies were stored in an entire building.
Items observed in the Sunnydale storage area included
water heaters, sinks, plumbing accessories, wall heaters,
etc. The number of items in storage was not certain.
Photo of Sunnydale storage building showing a small
portion of the supplies maintained, including sinks and wall
heaters.
The Family Sweep department initially informed us that
logs were maintained on-site to show materials going in
and out of the storage areas. However, Sunnydale could
not provide these logs requested in August 1999. The
Assistant Construction Project Manager stated that an
employee had maintained a log until she left in March
1999. The logs she maintained were missing and no
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subsequent logs had been kept. A Family Sweep staff
member also advised that logs for items in storage at
Potrero Hill were not maintained
Due to the inadequate accounting and inventory records as
well as physical inventories, the SFHA has no assurance
that important assets were properly used or had not been
misappropriated.
The SFHA charged routine maintenance costs to the CGP
Lack of Controls Over grant, despite the CGP guidelines making routine
Maintenance Cost Charged maintenance ineligible. In addition, inadequate records
to Grant were maintained to designate why the Maintenance
employees charged to the CGP changed over time. A lack
of procedures and controls over which employees should be
charged to the grants resulted in ineligible costs of $98,102
and unsupported costs of $73,210.
The CGP guidebook criteria only allowed non-routine
maintenance or more comprehensive modernization to be
charged to the grant. Routine maintenance was specifically
disallowed.
We identified several Central Service Maintenance
employees charged to the CGP. Between October 1, 1998
and September 30, 1999, the SFHA charged $552,716 to
the CGP grant for 24 Maintenance employees, 18 of which
were painters. The number of employees varied from
month to month as shown in the following table.
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Month Central Service Payroll Amount
Employees to
CGP
October 1998 15 $63,740
November 1998 7 $32,468
December 1998 15 $65,786
January 1999 13 $94,687
February 1999 13 $66,648
March 1999 14 $69,064
April 1999 1 $1,797
May 1999 0 $0
June 1999 5 $2,935
July 1999 10 $65,136
August 1999 12 $68,082
September 1999 5 $22,372
TOTAL: $552,716
The SFHA Finance department was unable to provide
information why these persons were charged to the grant,
and why the employees changed from month to month.
The Central Service department stated that persons charged
to the grant should perform non-routine maintenance on
long outstanding work orders. However, Central Service
was also unable to explain why the persons charged varied
from month to month. In addition, Central Service did not
believe some staff charged to the grants performed non-
routine maintenance.
Payroll records for a sample of five employees showed they
had previously worked for the force account program, and
were transferred to the Central Service Maintenance
department. Nevertheless, their payroll continued to be
charged the CGP.
Review of work orders for the 18 Maintenance painters
Ineligible Costs of $98,102 charged to the CGP showed three were primarily working
Charged to CGP on standard interior painting of vacant units with work
orders outstanding for less than 30 days. Other
Maintenance employees who assisted to complete many of
the same work orders were not charged to the CGP. The
total payroll for these three employees charged to the CGP
was $98,102 for fiscal year 1999.
Finance did not know who was supposed to be charged to
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the grant, and Central Service did not know who was
actually being charged to the grant.
We did not have sufficient time available to review
additional fiscal years and confirm that only non-routine
maintenance cost were charged to the CGP grants.
Likewise, insufficient time was available to confirm
$73,210 of questionable payroll costs for additional Central
Service staff charged to the CGP. This included four of the
Central Service painters charged to the CGP during the
year, but not during the sample periods reviewed. Their
contested payroll charged to the CGP was $42,009 for that
year. We also did not have sufficient time to confirm the
five Central Service laborers and a Central Service
administrative clerk charged to the CGP in fiscal year 1999.
The total cost of these additional employees was $31,201,
and they were not charged to the grant on a consistent basis.
It was not readily evident what activities the Maintenance
laborers and administrative clerk were performing that were
non-routine maintenance related. As a result, there is no
assurance that routine maintenance costs were not charged
in other periods and for other employees not reviewed.
Auditee Comments The SFHA indicated general disagreement with our
conclusions and recommendations. We have summarized
its response below into four issues.
(1) The SFHA did not agree with the OIG conclusions on
the general ledger and other force account tracking
documentation, although it did agree the general ledger
system had limitations. It stated the Senior Sweep program
was able to adequately distinguish and separate work
performed in prior periods. It argued all expenses could be
tracked to documentation, and its general ledger accounting
system was therefore sufficiently maintained. Timely
manually prepared project reports were generated for each
development to show detailed actual expenditures. In
addition, it stated cumulative project expenditures were not
transferred in lump sums to balance budgets, but were
merely period or fungible charges brought forward for
budgeted line items. The SFHA also believed its system
for tracking expenditures was adequate because it produced
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project reports for cumulative expenditures. It stated the
reports requested from MIS were duplication of data
available through documents referenced in the general
ledger. In addition, the SFHA excused problems with
general ledger descriptions by noting they were prepared by
various staff with different writing abilities. Project
expenditures were not moved from one project to another in
the general ledger unless a journal entry explaining the
correcting adjustment was prepared. It also compared its
method for charging funds to a first-in, first-out system.
Finally, the SFHA proposed implementing additional
tracking through general ledger account numbers.
(2) The SFHA accepted that procurement procedures
should be followed in all cases, in advance of purchases. It
stated it would provide future procurement training to staff.
However, the SFHA excused other issues identified in the
OIG finding. The SFHA did note HUD Handbook 7460.8
Rev-1 has an outdated $25,000 threshold on small
purchases, since 24 CFR Part 85.36 changed it to $100,000.
In addition, the SFHA stated purchases may have to be
made that do not follow required procurement practices due
to construction job conditions. It also concluded instances
of actual purchases exceeding the purchase order amount
were isolated.
(3) The SFHA did not agree with the OIG position over the
inventory. It argued enough information was available to
confirm the electric bender as part of the inventory review.
It also stated the issue of Family Sweep not maintaining
sufficient vehicle inventory data was unclear since they
accounted for all vehicles. In addition, it concluded Family
Sweep did maintain adequate inventory documentation.
Nevertheless, Family Sweep stopped maintaining inventory
on site and will only obtain materials for jobs in progress.
(4) The SFHA appeared to argue the maintenance
employees charged to the CGP were all working on eligible
work orders. It questioned how we were able to arrive at
ineligible and unsupported costs amounts if its records were
inadequate. In subsequent correspondence, the SFHA
stated it may have charged employees to the wrong account
and would perform a reconciliation.
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OIG Evaluation of Our evaluation of the SFHA’s comments parallels the four
SFHA’s Response issues.
(1) The Director of Modernization was able to separate
costs from prior periods in the disability access accounts,
since the ledger entries were dated. However, this
distinction was not made until August 2000 after further
cost analysis. Progress reports previously provided by the
Senior Sweep program incorrectly included this prior
period costs in determining its per unit cost of Senior
Sweep modernizing units.
We did not question the SFHA’s ability to track a general
ledger line item expense to a hardcopy purchase order or
invoice. The issue with the general ledger system was that
information could not be presented in a manner to
sufficiently evaluate the force account costs. The response
referred to timely manually prepared project reports
generated for each development to show detailed actual
expenditures. However, no examples were provided.
We agree the SFHA had reports showing the cumulative
total expenditures. However, these reports do not identify
what individual expenditures made up the totals.
We had no argument that the expenditures were fungible
and could be charged to the subsequent CGP funds in the
general ledger. However, Finance staff could not
adequately determine when CGP fund limits had been
reached. Overcharged amounts then had to be moved in
lump sums to subsequent grants, and these entries did not
designate which individual expenditures were included. In
addition, amounts were transferred to project accounts
based on questionable allocation methods. The general
ledger descriptions were also inadequate to consistently
determine why the transfers had been made. This made it
difficult to determine which expenditures were applicable
to the different accounts.
The staffs’ writing abilities was not a valid excuse for a
lack of information that should have been available in the
general ledger.
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It was also not clear what the SFHA meant when it stated
the reports requested from MIS were duplication of data
available through documents referenced in the general
ledger. The general ledger referenced invoices and
purchase orders. We agree these documents were available.
However, to determine exactly what the SFHA had been
purchasing, a review of general ledger line item expenditure
detail was necessary. The SFHA was unable to produce
this type of data in a reasonable fashion.
The SFHA proposed increased tracking of expenditures.
This should be helpful as long as it does not lead to an
increased level of transfers between accounts, making the
general ledger more difficult to review. Currently, it is not
clear whether the SFHA’s application of this method would
allow for significant improvement in its ability to track
costs.
(2) We agree the HUD handbook does not reflect the higher
threshold. We have added a footnote to the report
regarding this fact. However, this amount has no bearing
on the audit conclusions.
The problem with the open purchase order system was that
the instances when purchases exceeded purchase order
amounts did not appear isolated since a significant number
of purchase orders were prepared after the invoice dates. In
addition, if managers of force account programs are
allowed to make purchases without following procurement
procedures, there is no assurance this will not become
common practice. Finally, the practice of not identifying
materials to be purchased violates the requirements of HUD
Handbook 7460.8, requiring records over small purchases
to clearly specify items purchased on the purchase order.
(3) The SFHA did not accept it had a problem with its
inventory system. The fact that the electric bender’s serial
number in available records was not adjusted, and support
of its replacement was not maintained, was an example of a
control problem with the inventory recording system.
Even though the Family Sweep program was able to
account for all sample vehicles inspected, a control problem
still existed relating to the tracking of vehicles because
records were incomplete and not updated. Inadequate
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controls may lead to the misuse of assets purchased with
CGP funds.
The SFHA was not able to show Family Sweep maintained
logs for storage areas on site, since none of these records
could be provided. While the new practice of not storing
materials on project sites makes control easier, we have not
confirmed how this practice is followed. Inventory records
are still necessary to track items to the site locations.
(4) We did not disallow any costs relating to central service
employees performing non-routine maintenance activities.
The employees cited were performing routine maintenance
activities during the periods in question.
We did not question the SFHA’s ability to track where
employee payroll was charged. However, records
identifying reasons the employees were charged to the CGP
were unavailable. While the SFHA provided a list of work
orders charged to the CGP grant as part of its response,
none of these were involved with the 45 sample work
orders reviewed.
Recommendations We recommend the Assistant Secretary for Public and Indian
Housing require the SFHA to:
2A. Update its accounting software so that Finance can
adequately monitor force account related costs in the
general ledger and produce comprehensive detailed
reports in a timely manner.
2B. Implement procedures to ensure that costs are
adequately reported in the general ledger (via
description), including the quantity if multiple items
are purchased.
2C. Implement procedures and controls to ensure that
transfers are no longer made to incorrect accounts,
simply to match budget.
2D. Develop procedures and controls relating to
purchase order generation to ensure purchase orders
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are prepared before expenditures are made, and
sufficiently identify the items and quantities to be
purchased.
2E. Consistently record the applicable project on each
invoice, and charge direct cost expenditures directly
to the project accounts instead of to ‘PHA-Wide’
accounts. Also, require the SFHA to establish
controls to ensure invoices and purchase orders are
properly charged to the correct project account
numbers.
2F. Develop procedures to ensure allocations from
general accounts to project accounts are performed
in a consistent manner, as close to actual as
possible. The reasons and basis for the allocation
method used should be documented. In addition,
only actual indirect overhead costs,
indistinguishable between developments, should be
charged to the ‘PHA-wide’ accounts.
2G. Implement the inventory procedures required in its
own policies and procedures manual, requiring the
tagging and tracking of inventory and the
implementation of a computerized fixed asset
system.
2H. Maintain complete logs over on-site inventory of
materials and supplies for any continuing force
account program. These logs should be compared
with purchase and use information on a routine
basis to ensure accurate accounting over all items.
2I. Perform periodic physical inventory counts over
equipment and appliances and reconcile back to
fixed asset records no less than every two years.
2J. Develop procedures relating to charging non-routine
maintenance to the CGP grant, including the
identification of the employees.
2K. Return the ineligible routine maintenance payroll
costs of $98,102 to the CGP grant.
2L. Provide support for $73,210 in questionable Central
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Service payroll to demonstrate that these
expenditures were allowable activity.
2M. Identify all central service employees charged to the
CGP grants during fiscal year 1998 and 2000.
Provide documentation to support the charges were
for allowable activity.
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Management Controls
In planning and performing the audit, we considered the management control systems used by the
SFHA to determine the audit procedures and not to provide assurance on management control.
Management control is the process effected by an entity’s board, management, and other
personnel, designed to provide reasonable assurance for achieving program operations objectives,
validity and reliability of data, compliance with applicable laws and regulations, and
safeguarding resources.
Relevant Management The following control systems were relevant to the audit
Controls Were Considered objective:
• Force account management and reporting,
• General ledger system reporting,
• Equipment and appliance inventory recording, tracking,
and maintenance,
• Employee hiring practices, and
• Purchase order generation
We obtained an understanding of the control structure for
the above systems and determined the risk exposure to
design audit procedures. We concluded the audit would be
performed more efficiently by doing substantive tests
without reliance on management control due to the SFHA’s
control environment. Therefore, we did not necessarily
make a complete assessment of control design or determine
whether all policies and procedures had been placed in
operation.
Significant Weaknesses Were A significant weakness exists if management control does
Noted not give reasonable assurance that control objectives are
met. We observed significant weaknesses with general
ledger maintenance (Finding 2), employee hiring practices
(Finding 1), purchase order generation (Finding 2), force
account management and record maintenance (Finding 1),
and inventory system (Finding 2).
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Follow Up On Prior Audit Reports
The HUD OIG previously audited the SFHA’s contracting procedures, Public Housing
Management Assessment Program (PHMAP), operating subsidy housing-unit-months-available,
contracting procedures, hiring and compensation, and Section 8 receivables programs for the
period of March 1, 1996 to September 30, 1999. The audit report (number 00-SF-201-1001) was
issued March 31, 2000.
The Prior Report Contained In the area of hiring and compensation, that audit raised
Similar Issues similar issues to those problems identified in this report.
The SFHA selected employees without considering other
candidates, their qualifications were questionable, and they
were overcompensated. Specifically, the OIG found the
General Manager of the Family Sweep program was not
qualified to head the force account program. He also did
not meet the educational requirement and did not have the
necessary prior experience for the position.
The prior audit’s recommendations for the above issues are
Prior Recommendations
still open. These include recommendations:
Remain Open
2B. Closely monitor the SFHA’s employment and
personnel practices until there is confidence that the
use of sound methods are in effect and will continue.
2C. Have an independent, HUD-approved expert in
personnel classification and compensation review
the qualifications and salaries of the questioned
personnel.
2D. As a result of recommendation 2C, require the
SFHA to reimburse its federal programs for all
excessive salaries.
HUD has received and evaluated the results of an expert’s
review of personnel activities and has tentatively identified
amounts to be returned. OIG is currently evaluating these
matters.
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Prior Audit Reports
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Appendix A
Schedule of Questioned Costs
ISSUE INELIGIBLE UNNECESSARY/ UNSUPPORTED
A/ UNREASONABLE C/
B/
Finding 1 -- Clementina Common Area $184,1614
Costs
Finding 2 – Routine Maintenance $98,102 $73,210
Charged to CGP
A/ Ineligible amounts are those that are questioned because of an alleged violation of a
provision of a law, regulation, contract, grant, cooperative agreement, or other agreement
or document governing the use of funds, or are otherwise prohibited.
B/ Unnecessary amounts are those not generally recognized as ordinary, prudent, relevant, or
necessary within established practices. Unreasonable amounts exceed those that would
be incurred by the ordinarily prudent person in the conduct of a competitive business.
Costs must be necessary and reasonable to be eligible under federal cost principles.
C/ Unsupported amounts are those whose eligibility or reasonableness cannot be clearly
determined during the audit since they were not supported by adequate documentation or
due to other circumstances. Under federal cost principles, a cost must be adequately
supported to be eligible.
4
The total unreasonable amount was $191,132. However, approximately $6,971 of the unreasonable amount was
incurred prior to September 1997, when HUD formally returned control over the SFHA to the City of San Francisco
appointed Board of Commissioners.
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Appendix A
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Appendix B
Auditee Comments
AUDITEE COMMENTS TO DRAFT REPORT - SAN FRANCISCO
HOUSING AUTHORITY FORCE ACCOUNT MODERNIZATION
PROGRAM
This response is the Auditee Comments for the EXECUTIVE SUMMARY and should
be incorporated into the HUD-OIG report in full and as submitted.
EXECUTIVE SUMMARY
The OIG concludes in its draft report that the SFHA use of in-house force account construction
was not cost effective or managed effectively. The SFHA disagrees with this conclusion for the
following reasons:
§ The result of the SFHA’s analysis indicates that the average cost per square foot for the
SFHA force account work was $101.67 per square foot while the average cost per square
foot for the MOH/IG work was $103.60 per square foot or, in other words, the cost of the
MOH/IG work was 1.9% higher than the work performed by the SFHA, as follows:
Number Total Total Cost
of Hard Average Per
Units Costs Square Square
Development Figures Furnished by IG Feet Feet
MOH / IG OUTSIDE
2300 Van Ness 22 $1,300,000 * 18,449 $70.46
Apollo 80 $3,342,560 24,895 $134.27
Lyric 58 $2,774,546 26,157 $106.07
MOH / IG Outside Average $103.60
SFHA
Potrero Annex 57 $6,488,937 57,342 $113.16
Clementina 10 $329,040 4,210 $78.16
Sunnydale 11 $1,093,066 9,614 $113.70
SFHA Average $101.67
SFHA Average $101.67
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IG Outside Average $103.60
Difference -$1.93
Percent -1.9%
Variance
Therefore, this would demonstrate that the SFHA force account work was cost effective
and economically beneficial while meeting Congressional mandates to build economic self
sufficiency for public housing residents in an effort to move public housing residents from
Welfare to Work. Indeed, since, as the IG notes, the SFHA spent approximately $18.2
million on Clemintina, Potrero and Sunnydale, the SFHA accomplished 1.9% or
$345,550.00 more in improvements than the IG comparators would have accomplished.
§ The OIG analysis of construction costs for SFHA force account work compared SFHA
average per unit costs against average per unit costs of rehabilitation work performed
through the Mayor’s Office on Housing (MOH).
§ The square footage of SFHA units are generally larger than the units rehabilitated by MOH.
§ As a result, a comparison of average unit costs resulted in higher costs for SFHA units and
inaccurate conclusions on the part of the auditor.
§ Industry standard in real estate for construction estimates, appraisals, etc. is to utilize square
footage and not general unit numbers to take into account variances in unit sizes.
§ The SFHA converted the numbers used by the OIG to average costs per square foot to make
an accurate comparison between the work performed by the SFHA and that performed by
MOH.
Notwithstanding the fact that the SFHA force account work was performed at a lower average
cost per square foot than the comparator used by the IG, it is the position of the SFHA that
additional cost savings were realized by the SFHA and the public in general by using SFHA
residents to perform the work which were not taken into account in this audit. The use of force
account provided employment opportunities for residents of public housing that would not
otherwise have been available through the use of contractors. Well over 600 public housing
residents have gained experience in skilled crafts through force account and other SFHA efforts.
Some residents of the SFHA’s family developments, and especially the Big 4 of Sunnydale,
Potrero Hill, Alice Griffith, and Hunters Point, are economically challenged, single mothers who
receive public assistance, or residents who may have had contact with the criminal justice
system. By employing SFHA residents in this manner, the SFHA instills hope, pride and
direction in its residents potentially avoiding costs associated with populations at risk such as the
following:
$25,600 The cost to the State of California to house
one person in prison for one year
$20,000 The cost for the federal government to
house one person in prison for one year
$10,000-12,000 The cost to move a person from welfare to
work in California
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$5,000 The cost to provide job training to one
person in California
We would suggest that the employment opportunities provided to SFHA residents through our
force account labor force were extremely effective in providing high quality work experience, a
superior work product, meeting the needs of residents, and avoiding public and victim costs
associated with crime.
In addition, SFHA force account work accounted for the following:
§ Establishment of in-house force account labor force to immediately address the bricks and
mortar and quality of life needs of residents
§ Modernized 22 Senior and Disabled High Rise buildings or 2,025 units
§ 315 units modified for handicap accessibility through March 2001
§ 721 units of public housing modernized using CIAP and CGP funds
§ 82 units off line for over 5 years brought back on to rent rolls to serve those on the SFHA
waiting list of 14,700 households
Work items performed by SFHA force account labor included, but is not limited to the following:
§ Plumbing/Irrigation Systems
§ Heating
§ Electrical
§ Heating Systems
§ Waterproofing
§ Roofing
§ Elevator Upgrades
§ Common Area Renovation and Renewal
§ Security Interior/Exterior Lighting
§ Handicap Accessible Units
§ Landscaping and Tree Pruning
§ Interior Lead Based Paint (LBP) Abatement/Stabilization
§ Exterior Painting/Exterior LBP Abatement/Stabilization
§ Asbestos Removal
§ Housing Quality Standards (HQS) Repairs
§ Playgrounds
§ Childcare Center Interior Design, Painting and Layout
The draft audit further suggests that the SFHA failed to maintain adequate records over assets
and expenditures. A reading of the draft audit report makes clear that the criticism of the
auditors is more directly related to their opinion as to whether or not data could be retrieved in
the manner they requested. This is particularly true given that many of the reports requested by
the auditors were specialized requiring the SFHA to write programs to customize its data in the
form requested by the auditor. While it may be the opinion of the auditor that our records were
cumbersome, not user friendly or awkward, the fact remains that appropriate documentation was
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and is maintained by the SFHA in accordance with HUD Financial Management Guidelines and
Generally Accepted Accounting Standards. The issue of convenience does not meet the standard
of a finding and boils down to a subjective personal standard.
However, the computer system currently utilized by the SFHA for financial recording and
tracking can be improved. We will continue to work on those improvements and seek technical
assistance from HUD to assist us in improving our data systems. And finally, the current CCS
software is dated and should be updated. However, this is a resource issue and not a regulatory
issue.
AUDITEE COMMENTS TO DRAFT REPORT - SAN FRANCISCO
HOUSING AUTHORITY FORCE ACCOUNT MODERNIZATION
PROGRAM
This entire response is the Auditee Comments for Finding 1 and should be incorporated
into the HUD-OIG report in full and as submitted.
General Comments to Audit Report
The SFHA is deeply disappointed that your office has continued this audit after informing the
SFHA that your audits were complete. As you may know, your audits of the SFHA began in
1998. Your office issued draft reports in January and February 2000 with the final draft dated
February 24, 2000. As a result of these drafts, the SFHA provided comprehensive responses
refuting the alleged findings and asking your staff to withdraw them. During this review and
comment process, the SFHA was informed verbally and in writing that we had been provided
with all the findings. In fact, Mr. Mark Pierce's letter dated February 15, 2000 states "This is the
fourth of four findings we anticipate for the audit report". (Tab 1) On March 13, 2000, Mr.
Sululagi Palega, Sr., President of the SFHA Board of Commissioners sent a letter to your
predecessor, Mr. Robert Velasco expressing great concerns about the draft audit report. Mr.
Palega followed up on March 27, 2000 with a letter to Mr. Harold Lucas, the Assistant Secretary
for Public and Indian Housing and included a copy of his March 13, 2000 letter.
On March 31, 2000 your office issued Report 00-SF-201-1001. Shortly thereafter, we were
informed that the audit was NOT over and that your auditors would be returning to
continue their review of the SFHA's force account modernization program. Since all audits
began at about the same time, and since your staff informed us that all findings had been
provided to us, we believe that the audit of force account and modernization may be
retaliatory because of the SFHA's vigorous and comprehensive response to your earlier
findings. This reaction by your office is regrettable.
This draft report is presented by the HUD-OIG, after nearly 30 months of inspections from the
inception of the audit to the delivery of this draft (August 1998 to February 2001). The audit
report covers generally the recovery effort of the SFHA from January 1997 to June 30, 1999. It
should be noted that effective September 30, 1999 and immediately after the conclusion of this
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audit period, the SFHA was designated by HUD as a “High Performing” public housing
authority under the Public Housing Assessment System (PHAS).
By way of putting the period of time covered by this audit in context and perspective, it is
important to note that at the time HUD began the recovery effort at the SFHA and continuing
through the return the San Francisco Housing Authority to local control, HUD, the new Board of
Commissioners and Acting Executive Director were confronted with severe, pervasive and long-
standing problems typified by the following:
§ Physical decay of housing units
§ High levels of crime
§ Asbestos and lead in housing units affecting families and children
§ Housing units and common areas not accessible to the those with disabilities
§ The average age of housing in the Big 4 was nearly 50 years old
§ Decades of neglect
§ Excessive insurance claims and insurance premiums
§ Potential for cancellation of insurance due to lead based paint liability
§ The leadership of the organization had been decimated by the recovery effort
As a result of the above, HUD and ultimately the newly appointed Board of Commissioners and
Acting Executive Director were confronted with continuing exigent conditions that required
immediate, bold, and broad based corrective action.
Corrective actions taken included:
§ Establishment of in-house force account labor force to immediately address the
bricks and mortar and quality of life needs of residents
§ Modernized 22 Senior and Disabled High Rise buildings
§ 315 units modified for handicap accessibility through March 2001
§ 721Units of public housing modernized using CIAP and CGP funds
§ 82 Units off line for over 5 years brought back on to rent rolls to serve those of the
SFHA waiting list of 14,700 households
§ 217,000 Work Orders processed
§ Removal of the severely troubled housing authority designation under the HUD
Recovery Team with a PHMAP troubled score of 50.7 to a High Performing
housing authority for fiscal year 1999
§ Reduction in insurance claims
ü Slips, trips and falls claims reduced from average of 58 per year (1995-98) to
average of 11 (1998-00)
ü Reduction in all claims from average of 162 per year (1995-98) to average of 46
(1998-00)
ü Reduction in insurance premiums from 41% increase (1996-97) to 10% decrease
(1998-99)
§ Well over 600 public housing residents employed in good jobs
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The chronology below also adds a perspective and context to the issues affecting the SFHA over
the past decade. As stated in your draft report, the audit generally covers the period January 1997
to June 30, 1999.
1995-to FYE 1997 SFHA determined by HUD to be a troubled housing authority with a
PHMAP score of 50.7.
May 1996- Sept 1997 Mayor Brown asks HUD to take over operation of the SFHA. HUD
responds by sending in a recovery team to run the agency on a day-to-day
basis.
1992-1997 The SFHA accumulates nearly $69,000,000 in unspent CIAP and
Comprehensive Grant Program funds while public housing residents are
living with lead based paint, asbestos, and generally substandard living
conditions.
April 1997 SFHA requests approval from HUD to establish its force account program.
(Under HUD’s control)
September 1997 SFHA is returned to local control.
July/August 1998 Second request to HUD for approval to establish its force account
program.
In preparing this draft audit report the auditors attempted to limit their analysis to pure monetary
costs and disregards benefits. While the SFHA may not agree with this analysis, this audit report
demonstrates the failure of HUD to integrate the multitude of requirements imposed on public
housing authorities into its Audit Guidebooks and Handbooks. By Congressional mandate and
ultimately HUD Regulation, housing authorities are not only required to manage and maintain
rental property but also:
§ Move residents from Welfare to Work.
§ Reduce crime.
§ Provide employment training to its residents.
§ Abate lead and asbestos.
An audit which does not take into consideration and integrate these additional requirements
imposed on housing authorities can not help but result in a one dimensional analysis resulting
in skewed conclusions. The Board and management of the SFHA must balance its institutional
needs with the human needs of its resident population and apply its best judgment to achieving
this balance.
SFHA RESPONSE TO OIG INTRODUCTION
The introduction in your draft report may need some clarification to prevent any
misunderstanding regarding the status of the SFHA between November 1996 and September
1997. The introduction states, in part,
"… HUD sent a recovery team (consisting of HUD officials, consultants, and employees
from other housing agencies) to assess the SFHA's operations and develop strategies to
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deal with the problems. This phase was concluded in November 1996 [emphasis
added]. HUD contracted to fill several key management positions to continue the
recovery efforts."
As you know, HUD continued to run the SFHA from March of 1996 until September 1997 when
the agency was returned to local control. (Tab 2).
SFHA RESPONSE TO FINDING 1
THE SFHA IN-HOUSE FORCE ACCOUNT PROGRAMS OPERATED EFFECTIVELY
TO REDUCE COSTS, PROVIDE RESIDENT EMPLOYMENT, AND RESPOND
RAPIDLY TO REQUIRED CONSTRUCTION NEEDS RESULTING IN MASSIVE
IMPROVEMENTS TO THE QUALITY OF LIFE FOR SFHA RESIDENTS
OIG Finding: The Force Account Justification Submitted to HUD Was Inaccurate
The auditor incorrectly asserts that the force account justification was inaccurate. Upon review,
the SFHA has the following response:
G The auditor misinterpreted the letter that made this request. A clear reading of the SFHA
letter of July 28, 1998, Subject: Force Account Cost Effectiveness (Tab 3), shows that the
letter is discussing the use of force account for work such as HQS, modification of units and
common spaces for handicap accessibility, lead based paint stabilization and abatement, and
exterior painting. The SFHA letter goes on to state, among other things, that there are no
warranty benefits available for this specific type of work. This statement was not intended
as a generalized comment covering all construction work as apparently inferred by the
auditor. Clearly the SFHA did and does require warranties on construction work performed
by contractors.
G The OIG misrepresents the cost for force account to convert a fully wheel chair accessible
unit. The SFHA explained to the auditors several times that the costs in the general ledger
(GL) included all costs including modification of public space. In the face of this
information, the auditor simply took the costs and divided by the number of units to arrive at
a figure. By using this rudimentary calculation, the OIG concluded that the cost for Senior
Sweep to convert a 504 unit ranged between $18,931 and $96,233. The OIG then averages
these incorrect costs per unit and comes up with a figure that is $7,245 higher then the
Authority’s calculated costs. The OIG then uses this erroneous figure and multiplies it by 90
to fabricate additional costs of $652,000. This is not substantiated by the current general
ledger, which includes all completed work.
G The auditor does not consider the improvements to common and public spaces in his costs.
By making this simple calculation, the OIG did not take into account the Court Settlement
Agreement that required the Authority to provide modifications for accessibility throughout
the public spaces in all 22 senior/disabled buildings.
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G The OIG auditor attacks figures in the July 28 letter, by comparing costs of projects
completed by the Mayor's Office of Housing (MOH) to SFHA costs. Upon further research,
and using the OIG's adjusted MOH construction costs, the SFHA documented the following
(Tab 4):
§ 2300 Van Ness hard costs $70.46 per square foot.
§ Apollo hard costs $134.27 per square foot.
§ Lyric hard costs $106.07 per square foot
§ MOH average cost per square foot $ 103.60.
§ Clementina average cost per square foot $78.15 (25% below MOH average).
G The OIG raises the issue of warranties at least twice. We note the following:
§ The HUD CGP Guidebook, 7485 G, allows the use of force account labor for
modernization work with HUD approval provided it is cost effective, appropriate
given the type of work to be done, and the PHA has the capacity to serve as its own
contractor. This guidebook does not state that a warranty is required when force
account is used.
§ It is not clear how in-house, force account labor could provide a warranty. The use of
force account is tantamount to being "self-insured."
§ If HUD required a warranty for force account work, it is evident that housing
authorities would not be able to use force account under any circumstances.
G The auditor concludes that the July 28, 1998 letter to HUD did not comprehensively address
all work eventually performed by force account labor.
§ The intent of the letter submitted to HUD was to outline general work that could be
completed by force account rather than to detail every single construction related job that
might be performed.
§ Through the force account landscaping work the SFHA was able to hire many residents to
participate in the program. Although the benefits of hiring residents may not be apparent
in developing a cost/benefit analysis, crime and vandalism were greatly reduced at the
developments that were landscaped. This was a direct cost benefit to the Authority. It
also improved the quality of life for our residents, those who were working, and those
who were affected by the reduction of crime.
§ From December 1996 to July 1999, Senior Sweep reported 1209 HQS work orders
completed at Clementina. The reported expenditures for HQS work orders are $446,121,
which is $369 per work order. The use of force account labor allowed the SFHA to
rapidly address resident's needs and improve the quality of their lives. This capability to
deliver a very rapid response is an intangible that may not be apparent in making a cost
estimate.
OIG Finding: Force Account Costs Exceeded Cost to Have a Contractor Perform theWork
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G The auditor states that the SFHA did not have records sufficient to allow the OIG inspectors
to adequately develop cost estimates for work performed.
G Each of the developments covered by the OIG report had a work plan that set forth the work
to be done. The assigned construction inspector makes a daily record of the work performed.
All costs are submitted to finance. These records were available, and in many cases reviewed
by the OIG auditors and inspectors.
G The SFHA is not aware of a HUD regulation that requires the costs for modernization or
HQS to be reported in the detail that the auditors seem to imply in their report.
G As indicated above, the costs for Clementina were 25% per square foot below the average
adjusted cost of work performed for the MOH by outside contractors (see Tab 5).
G The OIG opines that the development at 2300 Van Ness is "fairly close" to the units at
Potrero Annex. The former development was modernized under contract by the MOH and
the latter by SFHA force account workers. The MOH completed three developments with
square foot costs ranging from Van Ness at $70.46 to Apollo at $134.27 per square foot with
an average of $103.60 per square foot. The auditor does not explain his reasons for choosing
the "fairly close" Van Ness development as a basis for comparison rather than the more
expensive Apollo or the average cost (see Tab 4).
G In September 1999, the SFHA obtained an estimate from our insurance carrier to repair Unit
610 at 320 Clementina. This estimate was $44,818 to repair the unit (Tab 5). The insurance
carrier had no motivation to inflate their estimate. It should be noted that Senior Sweep's
average cost per unit of $32,450 was significantly below the independent estimate by the
insurance carrier.
G Using the average cost per square foot for all MOH developments, and the square footage of
the Potrero Annex units, i.e., 1,006 square feet per unit, the average cost per square foot is
$113, which compares favorably to the MOH average cost per square foot.
G The OIG auditor also uses the Oakland Housing Authority (OHA) as a basis for comparison.
The developments chosen have units that are considerably smaller than those at Potrero
Annex (OHA-Campbell at an average of 900 square feet; OHA-Peralta at 600-900 square
feet; Potrero Annex at 1006 square feet). Because of the size differences, the OIG uses only
the Campbell development, but does not appear to factor in the appreciable difference in
square footage between the Campbell units and the Potrero Annex units.
G The SFHA informed the auditor that part of the costs for Potrero Annex were attributable to
dry rot, termite damage, and the need to install additional electrical transformers. However,
this information is "dismissed" by the auditor. The SFHA has provided photographs that
clearly show the extensive damage to these buildings. (Tab 6 )
G The auditor, after constructing a spurious argument that the SFHA costs are much higher than
either the MOH or OHA then extrapolates this simplistic number over all modernization
work done by force account personnel and concludes that the SFHA may have overspent
approximately 50% of all modernization expenditures. Therefore, the conclusions of the
auditor are grossly overstated, inflated, misleading and inaccurate.
OIG Finding: The Family Sweep Did Not Maintain Adequate Progress Records
G The basis for this alleged "finding" is not clear since the level of records suggested by the
OIG do not appear to be required. The work to be performed is set forth in an approved
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workplan, the inspectors keep records of daily progress, time sheets record the personnel
working on a specific project, materials are charged to a specific project, and all costs are
recorded in the general ledger.
G The auditor states that Senior Sweep keeps better records than Family Sweep without
explaining the significance of this comment.
G Since January 2000, Modernization has established a Force Account Construction Checklist
and sets up a project file for each force account project, whether Senior or Family Sweep
(Tab 7).
OIG Finding: The SFHA Was Not Adequately Inspecting Work
G The SFHA inspectors are at sites daily and record work done daily.
G The auditor spells out the entire rationale for the SFHA not obtaining building permits
from the City and County of San Francisco (CCSF) for work performed by force account.
The auditor mentions the 1995 legal opinion from the City Attorney and the concurrence of
the Director of the Department of Building Inspections that the SFHA is exempt from
obtaining building permits for in-house construction (Tab 8). However, the auditor
discussed the matter with the Director of Building Inspections who apparently opined that
the SFHA "should" actually be obtaining permits, in spite of a legal opinion to the contrary.
G The auditor, based on nothing more than his opinion, "agrees" that the SFHA should be
obtaining building permits.
G The SFHA previously identified that its inspectors needed additional professional training
and has been providing this training. In addition, in August 1999 the inspectors were
reassigned out of Family Sweep to the Modernization Department to enhance their
independence. The auditor details the experience required by the CCSF for its building
inspectors but does not specify how these requirements might apply to the SFHA inspectors.
We note that the three (3) inspectors assigned to Modernization include:
§ One Certified Building Inspector (ICBO Certificate number 0847382-10 issued
January 23, 1999).
§ One Inspector with 17 functional inspection and construction seminars combined with
continuing education leading to ICBO certification.
§ One inspector with 11 functional inspection and construction seminars combined with
continuing education leading to ICBO certification.
OIG Finding: Housing Quality Standards Deficiencies Noted During Inspections
G The OIG lists 40 properties at Sunnydale and Potrero Annex that had some type of problem,
e.g., broken window, bath fan cover missing, damaged floor tile, smoke detector missing.
The auditor states that their inspectors were in the units between August and October 1999
and concludes, based on their inspection, that "…all modernization work was either not done
or not performed adequately." In fact, this entire portion of the report is replete with
suppositions, assumptions and unsupported statements. We believe many of the problems
noted are attributable to the time difference between the completion of the work by Family
Sweep and the inspection by the OIG. However, the OIG inspector does not even address the
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possibility that the work was completed and of high quality, but damaged after installation.
An examination of SFHA records would have shown that the unit at 1502 Sunnydale which
had a damaged electrical outlet, excessively peeling paint, missing smoke detector, damaged
tile, sills, and doors was completed in December 1997, two full years prior to the OIG
inspection. Likewise, the unit at 1868 Sunnydale which reportedly had problems with the
switch coverplate, water heater vent, and interior paint was completed in May 1998 while the
unit at 1605 Sunnydale with a missing smoke detector was completed in February 1998. The
problems noted by the OIG inpsector are mostly typical maintenance problems that are
routinely identified on HQS inspections and corrected by Maintenance crews, not force
account.
OIG Finding: Emphasis On Low-Priority Modernization Lead [sic] to Emergency Situations
G Emergency conditions existed for some time and were not created by performing lower
priority work items.
G Given the emergency conditions, SFHA exercised legitimate business discretion to weigh
when the emergency work items could be completed with available funds against improving
the quality of life for the residents.
G The SFHA was performing significant modernization work at two of its most troubled
developments, e.g., Sunnydale and Potrero Terrace. These developments are nearly 60 years
old and needed massive amounts of attention to raise the quality of life for the residents. The
SFHA determined that exterior improvements such as landscaping would have a very
positive impact on the overall quality of life for the residents. The SFHA leadership believed
that landscaping and common area improvements would result in an overall decrease in
maintenance costs and actively encourage residents to take pride in their homes.
G There is no connection between the CIAP and CGP expenditures and the request for
emergency funding. Normal CGP would not be adequate to take care of the known
emergency work and all the other priority needs relating to our 50 public housing sites
scattered throughout the city.
G According to the SFHA’s 5-year plan the immediate total capital need of the agency is $449.8
M. Clearly, neither the normal CGP allocation nor a modest infusion of emergency funds
would fulfill this large need.
G HUD approved the emergency funds after long and careful scrutiny. It is clear that HUD
believed the need for emergency funds was urgent.
G The auditor clearly states that the SFHA leadership was empowered to determine the
priority of work to be performed. However, the auditor concludes that in his opinion, such
a decision by the SFHA "…was not prudent." This is pure opinion contrary to regulatory
empowerment of SFHA management and is not appropriate for inclusion in an audit report.
G A statement is attributed to the Executive Director regarding doing landscaping and other low
priority work. However, the auditor never asked the Executive Director if he made such a
decision, or if so, the rationale or context.
G The SFHA disagrees with the comments and conclusions of the auditor. The actions of the
SFHA were a valid exercise of management discretion, particularly in light of the long delays
in making capital improvements.
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OIG Finding: Significant Modernization Work Was Not Maintained
G The SFHA agrees that problems developed in maintaining the landscaping at Sunnydale and
Potrero Terrace. The sprinkler systems were damaged and required frequent maintenance.
The SFHA resorted to hand watering in selected areas and while the irrigation system was
repaired to maintain the landscaping and most of the landscaping installed by force account is
not an issue. There may be selected areas where the condition of the grass is a problem for a
variety of reasons. However, suggesting that all landscaping is ruined is misleading and
inaccurate. Photographs taken in March 2001 clearly show healthy landscaping at the
developments in question. (Tab 9 )
OIG Finding: Family Sweep Management Inadequate
G General Manager Family Sweep. The SFHA previously submitted voluminous information
regarding the General Manager of Family Sweep and believes this employee is fully qualified
for the position.
G Assistant General Manager/Principal Administrative Planner of Family Sweep. At the time of
the on site audit, this employee's personnel file was incomplete. As the auditor points out,
the employee has an Associate's degree in accounting. In addition, the employee has
continued to take college courses. The employee's other relevant experience is as follows:
G 14 years experience with a private sector general contractor. The employee was
responsible for scheduling, estimating, payroll records, soliciting vendors, tracking
jobs, attending local boards and commissions when projects were on their agendas,
and meeting with local officials.
G 3 years experience with a power company that provided experience in scheduling,
work orders, dispatch of work crews, adjustments of bills, negotiations with unions,
handling customer complaints and reporting incoming payments.
G 1997 to 1999 - SFHA as a Principal Administrative Planner. Responsible for budget
reports, job estimates, scheduling, attendance at meetings relating to projects, public
presentations to residents.
G 1999 to Present - SFHA as the Assistant General Manager of Family Sweep. This
position requires any combination of education, experience, and training that would
likely provide the required knowledge and skills to accomplish the duties of the
position. Examples of qualifying include AA degree in business administration,
finance or cost estimating and four (4) years of increasingly responsible experience in
construction, budget development, administration and rehabilitation management.
G At the time the employee entered the Assistant General Manager of Family Sweep
position, she possessed an AA in the appropriate field and had at least 20 years of
construction related experience. This individual met the minimum qualifications for
this position.
G The auditor comments that the employee was assigned to the position on April 12,
1999 while the position description was not signed until April 19. In this case, the
Classification Specialist had completed work on the job description and had
determined the salary schedule number. Since this action involved a promotion, it
was made effective on April 12 at the start of a pay period. The employee is in this
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position on a temporary promotion, which under SFHA policies does not have to be
advertised. (Tab 10)
G Construction Project Manager. The individual in this position has left the SFHA. The
position requires a Bachelor's degree in fields that include public administration and five (5)
years of administrative experience in public facilities construction and rehabilitation,
including three (3) years of supervisory experience. This employee had a Bachelor's degree
in Political Science. In addition, the employee had extensive public sector experience
including one (1) year as Executive Assistant at the SFHA. He also had over two (2) years of
significant financial management experience. The position does not require hands on
construction experience, but "administrative experience" in public facilities construction.
The SFHA determined that the totality of this employee's education and experience met the
minimum qualifications for this position. (Tab 11)
G Assistant Construction Project Manager. The individual in this position has left the SFHA.
This position requires any combination of experience and training that likely would provide
the required knowledge and skills to perform. The qualifications could include a Bachelor's
degree in a field related to construction or public administration, two (2) years of increasingly
responsible administrative experience in public facilities construction and rehabilitation and
one (1) year of supervisory experience. The employee's resume shows a certificate in
accounting from a business school and two (2) years at university. In addition, the resume
shows two (2) years of college with a major in construction inspection. The employee had
more than five (5) years in construction as an ironworker that included interpreting blueprints
and specifications. In addition, the employee had over one (1) year as an engineering
technician in the construction field. A summary statement from the employee claims an
additional five (5) years in the construction field, including managing projects, analyzing
materials and writing reports. It is clear this employee met the minimum qualifications for
this position at the time of his appointment. (Tab 12)
OIG Finding: SFHA Provided Unreliable Estimates to Counter OIG Claims
G The SFHA was not provided with an adequate opportunity or sufficient time to provide
independent and professional cost estimates.
G This finding by the HUD-OIG fits the classic definition of chutzpah, i.e., the child who kills
his parents and asks the court for mercy because he is an orphan. In this case, the HUD-OIG
presented the SFHA with various calculations arrived at during the year they had conducted
their audit. These calculations were not consistent with SFHA estimates and experience.
The SFHA employed an independent firm, Hanscomb, to perform a cost study. However,
such work takes time. The auditor gave the SFHA about two weeks to have the consultant
prepare a report for extensive work done at three developments. When the consultant was
not able to complete its work in the unreasonably short time, the auditor characterized the
work as "unreliable". The time limits were set by the OIG, not the SFHA. The chronology
below sets forth the time sequence for some of the audit site visits and other activities. The
dates are established by e-mail (Tab 13):
§ Aug. 2, 1999 Auditor to visit the SFHA's Egbert Street Office for data
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§ Sept. 16, 1999 Auditor's message that they will perform additional unit inspections at
Potrero Annex and Clementina "next week"
§ Sept. 22, 1999 Auditors will visit Clementina
§ Oct. 18, 1999 Auditor reviewing work orders for Clementina
§ Nov.9&10, 1999 Auditor to visit Egbert St. Office for data
§ Aug. 15, 2000 Auditor meets with SFHA staff on draft findings
§ Aug. 30, 2000 Auditor states by e-mail that SFHA provide any documentation,
including the Hanscomb estimates for Sunnydale and Potrero Annex by Friday,
September 1, 2000 or the documentation might not be considered before the draft
report is issued
§ Feb. 2, 2001 Draft report issued
G The issues raised by the OIG regarding the reliability, quality and thoroughness of
Hanscomb's cost estimates are directly related to the auditor's insistence that the
information they were producing be provided within an unrealistic timeframe.
G Hanscomb estimates that they would need between 6-8 weeks to properly evaluate and
prepare cost estimates for the three developments but they were given approximately one
week based on the OIG's unreasonable deadline.
G Hanscomb was contacted regarding the OIG's findings and offered the following insights:
§ We agree with OIG on using the documented 1998 rates if given more time to research
historical costs. OIG is questioning the methodology. Both methods are correct depending
on the availability of time. Since Potrero Annex and Sunnydale are bigger projects and
require more time to prepare the cost estimates than Clemetina, we favored the de-
escalation approach since it is a faster approach.
§ Inconsistencies in the unit rates can be explained by the fact that no two jobs are the
same. In general, the OIG is saying that the Clementina rates used are higher than Potrero
Annex and Sunnydale after de-escalation. This is true because it is easier to work in a
building that was totally gutted out with no concerns for occupied units above and below.
In addition both Potrero Annex and Sunnydale are easily accessible from the street
compared to Clementina which has ten units spread throughout the entire twelve stories.
This requires more mobilization between units and material management from the
staging area on the ground floor by an elevator to the upper floors. Other factors include
restrictive working hours and noise considerations.
§ In reference to the unit rate sample the OIG used, the rates for toilet, lavatory and kitchen
sink need to include rough-in costs at $366.97 for each fixture. This would make the
difference between Clementina and Potrero Annex smaller. The cabinet demolition for
Clementina should be higher than $6.50/lf, an oversight on our part. The interior painting
to the ceiling for Potrero Annex at $3.21/sf includes gypsumboard ceiling and is not
comparable to the $1/sf for painting only costs for Clementina.
Recommendations
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Auditee Comments
The SFHA believes the issues raised in this draft report are unfounded and the resulting
recommendations unnecessary. These recommendations by the IG have no basis or merit, are
unfounded, misleading and without quantitative substantiation.
AUDITEE COMMENTS TO DRAFT REPORT - SAN FRANCISCO HOUSING
AUTHORITY FORCE ACCOUNT MODERNIZATION PROGRAM - FINDING 2
This response is the Auditee Comments for Finding 2 for the Executive Summary and
should be incorporated into the HUD-OIG report and the Executive Summary previously
submitted with Finding 1. These comments should be reported in full and as submitted.
AUDITEE COMMENTS REGARDING FINDING 2
This entire response is the Auditee Comments for Finding 2 and should be incorporated
into the HUD-OIG report in full and as submitted.
THE SFHA MAINTAINED SYSTEMS THAT PROPERLY TRACKED AND
RECORDED COMPREHENSIVE GRANT FUND ASSETS AND EXPENDITURES
OIG Finding: Various Rules Govern Recording and Accounting Requirements
G The SFHA concurs the auditor cited a variety of regulations.
G With regard to HUD Handbook 7460.8 Rev 1, Procurement, we note that this handbook is
dated January 14, 1994 and does have a $25,000 limit on small purchases. However,
according to 24 CFR Part 85.36 (d)(1), "Small purchase procedures are those relatively
simple and informal procurement methods for securing services, supplies, or other property
that do not cost more than the simplified acquisition threshold fixed at 41 USC 403 (11)
(currently set at $100,000)." (Tab 1) This provision has been in place for several years.
OIG Finding: Inadequate General Ledger Reporting
G The gist of this finding appears to be that the auditor was inconvenienced because the
automated system maintained in the Finance Department was not able to instantly create all
the reports the auditor requested within the time period requested by the auditor. However, it
is clear from the draft report that the information was supplied or could have been supplied
from available records or systems, therefore this finding is inappropriate for inclusion in an
OIG audit report.
G While the OIG, in its subjective opinion, may find reviewing the GL to determine line item
charges inconvenient and time consuming, SFHA GL determinations conform to HUD
financial guidelines and generally accepted accounting principles (GAAP).
G The OIG incorrectly states that, “Senior Sweeps [sic] had not been able to distinguish its
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Auditee Comments
own 504 costs from work charged to the accounts from prior periods.” The General Ledger
gives the dates of all charges to line items. The previous modernization program had spent
approximately $200,000 and these amounts were properly recorded and easy to distinguish.
G The SFHA’s Creative Computer Solutions (CCS) (now Emphasys Computer Solutions
(ECS)) software does not have a true relational database engine to provide the type of CGP
general ledger (GL) reporting capabilities described by the auditors. There is no drop-down
or ad hoc reporting feature in the GL module to display transaction details directly from the
Payroll, Purchasing or Work Order modules. CCS has the largest installed base and is in use
at over 150 PHAs. While other systems are being looked at by the SFHA and other PHAs,
capital funds to upgrade or replace CCS are in short supply and any replacement vendor
would have to be able to provide seamless interaction between the legacy system and the desk
top PC and have a true relational data base. However, despite the limitations of CCS, the
recording and reporting of all transactions can be tracked from the GL down to each hard
document in accordance with HUD financial guidelines and GAAP. A GL transaction detail
report has account and reference numbers on every entry for tracking purposes, and timely
manually prepared project reports are generated for each development that shows detailed
actual expenditures against budgeted line items.
G The “lump sum transfers” referred to are merely period or fungible charges brought forward
for budgeted line items. Cumulative project expenditures are not arbitrarily transferred in
lump sums to merely balance budgeted line items as asserted by the OIG.
G The MIS department can extract detailed project expenditure reports by reading and writing
directly from data files with the use of its Editor programming tool, but this process can be
time consuming and limited, as the auditors discovered. Hard copies of manually prepared
budget to actual project expenditure reports were kept back to the 1996 period, but GL
reports were not run because they were not routinely used by SFHA staff.
G All transaction details for labor, materials, equipment, supplies, and outside services
expenditures are identified through a GL transaction report by account and reference number.
The hard copy documentation behind every transaction is maintained in Accounts Payable,
Payroll, Purchasing, and the Central Warehouse. This is of necessity a manual system, but
project reports for cumulative expenditures to work and budget line items are regularly
prepared and distributed to both program and project managers.
G The reports the auditor requested from MIS were a duplication of the data available from
hard copy documents referenced in the GL. For clarification purposes, MIS does not get
involved with expenditure adjustments. Journal entries are made by Finance only after
properly justified and documented reasons are received from program and project managers.
G The GL, Accounts Payable and Purchasing module description fields were designed by CCS
for a one line display. Users whose writing abilities vary greatly prepare these descriptions.
The auditors could have examined the supporting documents to determine that there are
ample details of all labor, material and outside service expenditures properly charged to
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Auditee Comments
HUD-approved CGP work and budget line items. Since this audit went on for nearly 30
months, the auditors could have wisely invested their time in reviewing available
documentation.
G The SFHA did not transfer funds between CGP accounts to move expenditures where funds
had been budgeted. Current HUD guidelines (Tab 2) on fungibility allows the SFHA “to
substitute any work item from the latest approved Five-Year Action Plan to any previously
approved CGP Annual Statement and to move work items among approved modernization
budgets without prior HUD approval.” The SFHA was dealing with CGP funds from several
years and wanted to ensure that the oldest grant funds were spent first. HUD-approved work
and budget line items for specific projects were moved from period to period, while formal
budget revisions were submitted to move funds from project to project. No project
expenditures were moved from one project to another in the GL unless a journal entry
explaining the correcting adjustment was prepared.
G The auditor discusses 131 nonpayroll transfers of funds for Sunnydale totaling $18.2 M. and
includes a table showing various fund transfers from one account to another totaling $5.2 M.
The auditor concludes that Finance could not reliably charge costs to the correct accounts. As
was explained to the auditor, force account project work is typically budgeted and carries
over for more than one CGP year. Expenditures are charged to the oldest grant year first and
are moved forward to the next one within the same budget and work line item. This is
similar to a first-in, first-out (FIFO) system for inventory purposes, which is a commonly
accepted accounting standard and practice. GL transaction details can be matched to the
original source documents by looking at the reference numbers. The so called “lump sum
transfers” mentioned by the auditor can be accurately matched to the GL based on current
practices. There are no misrepresentations of expenditures as alleged by the auditor. (Tab 3)
G To enhance the SFHA's ability to track expenditures, the Modernization & Construction
Department along with the Finance Department have come up with a budget tracking
procedure for all of Force Account Job Files. The account number will be identified with the
type of work, the development and the unit. We are starting this process with Comprehensive
Grant 2000.
OIG Finding: SFHA Was Not Consistently Following Proper Purchase Order Procedures
G The draft report states that purchase orders are "frequently" prepared after the expense has
been incurred. The selection of imprecise and general language by the auditor makes it
impossible for the SFHA or users of the report to determine the magnitude of the alleged
problem, if any.
G The SFHA concurs that procurement procedures should be followed in all cases. However,
construction projects, by their nature, contain some uncertainty regarding the amounts of
supplies and materials required for the job. In some cases, force account personnel may have
been in the midst of a job and discovered an unanticipated need for additional supplies or
materials. These officials may have opted to make the purchase quickly rather than have high
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Auditee Comments
cost craft personnel with no materials to continue their work. This would appear to be a
prudent exercise of discretion to avoid down time and ensure timely project completion. Any
expenditures would clearly be small purchases under simplified processes and would be
quickly corrected by preparing the appropriate documents for approval.
G The SFHA concurs that all procurement steps should be completed in advance of purchases.
In this regard, the recently updated contracting and procurement policies and procedures
(adopted January 2001) (Tab 4) directs staff to follow the proper procurement processes. In
addition, the Executive Director issued a reminder on Unauthorized Obligations of Funds on
February 9, 2000. (Tab 5) The SFHA will provide training to all staff on proper procurement
procedures to ensure a complete understanding by all.
G The auditor comments that SFHA policies did not prohibit the creation of "open" orders. We
are not aware of any regulatory basis for such a prohibition. The SFHA has about 12 open
purchase orders. The intent of establishing these open orders is to assure the accessibility to
a single vendor, e.g., Home Depot that can provide the necessary supplies and materials when
they are needed for jobs in progress. Under these limited circumstances, the use of an open
purchase order is prudent since the alternative would be to stop work until supplies and
materials could be procured on an individual basis. The total amount of any open order is
well within the HUD definition for a small purchase. The use of these types of orders is an
alternative to the use of a SFHA credit card for small purchases as might be done by a federal
agency.
G Under an open order, the individual items are not identified in the purchase order, but are
specified on the invoice and are identified to a specific project or development. While the
SFHA attempts to closely monitor the use of these open orders, there may be isolated
instances where the amounts purchased exceeded the amount of the purchase order requiring
that the purchase order be increased. Additional safeguards are included in the revised
SFHA Procurement Policies and will be covered by future procurement training.
OIG Finding: The SFHA Did Not Have an Adequate Inventory System
G The auditor offers an unsubstantiated opinion that the SFHA did not place an emphasis on
tracking and confirming assets.
G One finding by the OIG is that an electric bender did not match the inventory information
available. The bender on site had a different identification number than shown on the SFHA
inventory. However, the auditor was told that the original machine was defective and the
vendor replaced it under the warranty. In fact, the auditor confirmed this information with
the vendor. In spite of all this information, the auditor supposed that additional benders
might have been purchased, thereby explaining the bender with the different identification
number. The SFHA hereby certifies there is only one bender.
G The auditor found an inconsistency between Senior and Family Sweep Departments with
regard to the quality of their vehicle inventory lists and rated the Senior Sweep list as
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superior. However, since the auditor concedes that Family Sweep was able to account for all
their vehicles the relevance of this comment is unclear.
G The OIG also states that equipment lists for Senior and Family Sweep were incomplete and
did not provide enough information to track expenditures. However, the type of equipment is
not identified. We would note that construction equipment is subject to hard, daily use in the
field and inventory tags could be knocked off.
G The auditor states, "We did not review any Senior Sweep storage areas. However, Senior
Sweep informed us no logs or records were maintained over materials stored on-site."
Senior Sweep informed the auditor that it does not maintain any inventory on site and
that is the reason no logs or records are maintained. Senior Sweep draws necessary
materials from the SFHA warehouse and only takes to the site the materials it needs for the
job, e.g., paint when painting is required. Family Sweep did maintain an inventory of
supplies and materials in storage containers. However, this practice has been discontinued.
Family and Senior Sweep not draw supplies and materials from the warehouse only for jobs
in progress.
G The SFHA set up a Management Analyst position in August 2000 to establish inventory
control systems.
OIG Finding: Lack of Controls Over Maintenance Cost [sic] Charged to Grant
G The SFHA is aware that routine maintenance is ineligible to be charged against CGP and it
did not do so. The SFHA assigned six (6) Laborers and eighteen (18) Painters to the
Maintenance Department to handle work orders that were deferred for the modernization
program. Under the PHMAP guidelines, “Referral to next year’s modernization program is
acceptable only when there are less than three months remaining in the current fiscal year
when the inspection is conducted.” (Tab 6) Additionally, PHMAP guidelines, component
#1, Section A, item 2.b, clearly states “Deferred for modernization work order. Maintenance
work being completed under a modernization program is not included. This encompasses
any work that is combined with similar work and scheduled to be completed within the
current or following year if there are less than three months remaining before the PHA’s FYE
when the work order was generated under the PHA's modernization program or other capital
improvement program. This work is included in the modernization budget or program
budget rather than the PHA's operating budget.” (Tab 7) All work orders assigned and
charged to CGP were those generated with less than three months remaining in the SFHA's
current fiscal year which is October 1 to September 30. (Tab 8)
G The SFHA assigned force account employees to the Director of Maintenance for supervision
while they were performing deferred maintenance. We are not aware of any regulation that
prohibits such a supervisory arrangement. The auditor opines that there was a lack of
procedures, controls, and records, yet he was able to allege that personnel charges resulted in
"ineligible costs" of $98,102 and "unsupported costs" of $73,210. These are very precise
numbers for a system with "inadequate records."
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Auditee Comments
G The auditor contends that three (3) Maintenance employees were improperly charged to CGP
even though they were allegedly primarily working on standard interior painting of vacant
units with work orders outstanding for less than 30 days. The auditor does not further
identify the employees, work orders, or development (s). The SFHA properly assigned and
charged work orders to either maintenance or CGP. It is possible the auditor associated
individual employees with a funding source for the entire period without comparing
employee names against the pay periods and corresponding fund charges in the payroll
register.
G Inexplicably, the auditor states that he did not have sufficient time to confirm what he
describes as "questionable payroll costs" for CGP staff supervised by Maintenance. We note
that the site visits with the Central Service staff were approximately 16 hours. Contrary to a
statement in the draft report, the SFHA staff responded to all questions raised by the Auditor.
We believe the auditor may have been confused by associating names of the individual
employees with funding source during the entire period being reviewed, rather than
comparing employee names against pay periods and corresponding fund charges in the
payroll register. During the midst of the audit, the primary auditor introduced a second
auditor and told Central Service staff that she would continue and conclude the audit. She
did not contact Central Service staff after the initial introduction.
OIG Recommendations:
The SFHA believes the issues raised by this draft report are generally unfounded and the
resulting recommendations unnecessary. However, the SFHA has two comments regarding the
recommendations, as follows:
1. The SFHA will continue to review the potential to upgrade its software. This is a serious
resource question because of the amount of capital funds and staff time required.
2. The SFHA will continue to monitor its processes to make them as responsive and user
friendly as possible.
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Appendix C
Distribution
Acting General Deputy Assistant Secretary, Office of Public and Indian Housing, HUD
Director, Office of Public Housing, California State Office, HUD
Director, Troubled Agency Recovery Center, Memphis Area Office, HUD
Office of Comptroller, Texas State Office, HUD
Secretary, HUD
Acting Deputy Secretary, HUD
Deputy Secretary, Special Assistant, HUD
Chief of Staff, HUD
Office of Administration, HUD
Assistant Secretary for Congressional and Intergovernmental Relations, HUD
Deputy Assistant Secretary, Office of Public Affairs, HUD
Administrative Services, Office of the Executive Secretariat, HUD
Acting Deputy Assistant Secretary for Intergovernmental Relations, HUD
Acting Deputy Chief of Staff, HUD
Deputy Chief of Staff for Programs, HUD
Deputy Chief of Staff for Policy, HUD
Special Counsel to the Secretary, HUD
Senior Advisor to the Secretary, HUD
Special Assistant for Inter-Faith Community Outreach, HUD
General Counsel, HUD
Assistant Secretary for Housing/Federal Housing Commissioner, HUD
Assistant Secretary for Policy Development and Research, HUD
Assistant Secretary for Community Planning and Development, HUD
Assistant Deputy Secretary for Field Policy and Management, HUD
Office of Government National Mortgage Association, HUD
Assistant Secretary for Fair Housing and Equal Opportunity, HUD
Director, Office of Departmental Equal Employment Opportunity, HUD
Chief Procurement Officer, HUD
Director, Office of Departmental Operations and Coordination, HUD
Office of the Chief Financial Officer, HUD
Office of the Chief Information Officer, HUD
Director, Enforcement Center, HUD
Director, Real Estate Assessment Center, HUD
Director, Office of Multifamily Assistance Restructuring, HUD
Acting Secretary’s Representatives, HUD
Headquarters Officials for Public and Indian Housing, HUD
Audit Liaison Office for Public and Indian Housing, HUD
Acquisition Librarian, HUD
Director, Office of Federal Housing Enterprise Oversight
Subcommittee on General Oversight and Investigations, U.S. House of Representatives
Director, Housing and Community Development Issue Area, U.S. General Accounting Office
Chief, Housing Branch, Office of Management and Budget
Chairman, Committee on Governmental Affairs, U.S. Senate
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Distribution
Ranking Member, Committee on Governmental Affairs, U.S. Senate
Chairman, Committee on Government Reform, U.S. House of Representatives
Ranking Member, Committee on Government Reform, U.S. House of Representatives
San Francisco Housing Authority
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San Francisco Housing Authority, Force Account Modernization Activities, Comprehensive Grant Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-03-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)