oversight

Congressionally Requested Audit of the Outreach and Technical Assistance Grants and Intermediary Technical Assistance Grants awarded to the Florida Housing Coalition, Inc. Tallahassee, Florida

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-09-27.

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

                                                    U.S. Department of Housing and Urban Development
                                                    Region IV Office of the Inspector General
                                                    Office of Audit
                                                    Richard B. Russell Federal Building
                                                    75 Spring Street, SW, Room 330
                                                    Atlanta, GA 30303-3388
                                                    (404) 331-3369




September 27, 2002                                         MEMORANDUM NO.
                                                           2002-AT-1809


MEMORANDUM FOR:              Charles H. Williams, Director, HUD’s Office of Multifamily
                               Housing Assistance Restructuring, HY



FROM:         Nancy H. Cooper
              Regional Inspector General for Audit, Region 4, 4AGA


SUBJECT:      Congressionally Requested Audit of the
              Outreach and Technical Assistance Grants and
              Intermediary Technical Assistance Grants awarded to the
              Florida Housing Coalition, Inc.,
              Tallahassee, Florida

                                     INTRODUCTION

We completed an audit of the two Outreach and Technical Assistance Grants and four
Intermediary Technical Assistance Grants awarded to the Florida Housing Coalition, Inc.
(Grantee). The overall objective of the review was to determine if the Grantee used Section 514
grant funds for only eligible activities as identified in the grant agreements and HUD
requirements.

Section 1303 of the 2002 Defense Appropriation Act (Public Law 107-117) requires the
Department of Housing and Urban Development (HUD) Office of Inspector General to audit all
activities funded by Section 514 of the Multifamily Assisted Housing Reform and Affordability
Act of 1997 (MAHRA). The directive would include the OTAG and ITAG administered by the
Office of Multifamily Housing Assistance Restructuring (OMHAR). Consistent with the
Congressional directive, we reviewed the eligibility of costs with particular emphasis on
identifying ineligible lobbying activities.

                              METHODOLOGY AND SCOPE

In conducting the audit, we reviewed the Grantee’s accounting records and interviewed
responsible staff. We also reviewed the requirements in MAHRA, the OTAG Notice of Fund
Availability, the OTAG grant agreement, HUD’s requirements for grant agreements for
nonprofit entities, and Office of Management and Budget’s guidance on the allowability of costs
for nonprofit grantees.



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The audit covered transactions and grant activity that occurred during the period October 1998
through May 2002. We performed the fieldwork at the Grantee’s offices located at 1367 E.
Lafayette Street, Suite C, Tallahassee, Florida, 32301 during June 2002. We conducted the audit
in accordance with Generally Accepted Government Auditing Standards.


                                        BACKGROUND

MAHRA established OMHAR within HUD. Utilizing the authority and guidelines under
MAHRA, OMHAR’s responsibility included the administration of the Mark-to-Market Program,
which included the award, and oversight of the Section 514 Outreach and Training Assistance
and Intermediary Technical Assistance Grants. The objective of the Mark-to-Market Program
was to reduce rents to market levels and restructure existing debt to levels supportable by these
reduced rents for thousands of privately owned multifamily properties with federally insured
mortgages and rent subsidies.         OMHAR worked with property owners, Participating
Administrative Entities, tenants, lenders, and others to further the objectives of MAHRA.

Congress recognized, in Section 514 of MAHRA, that tenants of the project, residents of the
neighborhood, the local government, and other parties would be affected by the Mark-to-Market
Program. Accordingly, Section 514 of MAHRA authorized the Secretary to provide up to $10
million annually ($40 million total) for resident participation, for the period 1998 through 2001.
The Secretary authorized $40 million and HUD staff awarded about $26.6 million to 38 grantees
(a total for 81 grants awarded). Section 514 of MAHRA required that the Secretary establish
procedures to provide an opportunity for tenants of the project and other affected parties to
participate effectively and on a timely basis in the restructuring process established by MAHRA.
Section 514 required the procedures to take into account the need to provide tenants of the
project and other affected parties timely notice of proposed restructuring actions and appropriate
access to relevant information about restructuring activities. Eligible projects are generally
defined as HUD insured or held multifamily projects receiving project based rental assistance.
Congress specifically prohibited using Section 514 grant funds for lobbing members of
Congress.

HUD issued a Notice of Fund Availability in fiscal year 1998 and a second in fiscal year 2000 to
provide opportunities for nonprofit organizations to participate in the Section 514 programs.
HUD provided two types of grants - ITAG and OTAG. The Notice of Fund Availability for the
ITAG states that the program provides technical assistance grants through Intermediaries to sub-
recipients consisting of: (1) resident groups or tenant affiliated community-based nonprofit
organizations in properties that are eligible under the Mark-to-Market program to help tenants
participate meaningfully in the Mark-to-Market process, and have input into and set priorities for
project repairs; or (2) public entities to carry out Mark-to-Market related activities for Mark-to-
Market-eligible projects throughout its jurisdiction. The OTAG Notices of Fund Availability
state that the purpose of the OTAG program is to provide technical assistance to tenants of
eligible Mark-to-Market properties so that the tenants can (1) participate meaningfully in the
Mark-to-Market program, and (2) affect decisions about the future of their housing.




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OMHAR also issued a December 3, 1999, memorandum authorizing the use of OTAG and ITAG
funds to assist at-risk projects. OMHAR identified these as non-Mark-to-Market projects where
the owners were opting out of the HUD assistance or prepaying the mortgages.

HUD’s regulations at 24 Code of Federal Regulations (CFR) Part 84 contain the uniform
administrative requirements for grants between HUD and nonprofit organizations. The
regulations (24 CFR 84.27) require that nonprofit Grantees utilize the Office of Management and
Budget (OMB) Circular A-122, Cost Principles for Non-Profit Organizations in determining the
allowability of costs incurred. OMB Circular A-122 outlines specific guidelines for allowability
of charging salaries and related benefits to the grants and the records needed to support those
salaries. For indirect costs charged to the grant, the Circular establishes restrictions for indirect
costs, and specific methods and record keeping requirements to support the allocation of costs.

The Circular also establishes the unallowability of costs associated with Federal and state
lobbying activates. Simply stated, the use of federal funds for any lobby activity is unallowable.
OMB Circular A-122 identifies some examples of unallowable lobbying activities. These
include any attempt to influence an elected official or any Government official or employee
(Direct Lobbying) or any attempt to influence the enactment or modification of any actual or
pending legislation by propaganda, demonstrations, fundraising drives, letter writing, or urging
members of the general public either for or against the legislation (Grassroots Lobbying).

The Grantee received two separate OTAGs. HUD awarded the first grant1 in fiscal year 1998 in
the amount of $110,000. HUD awarded the second grant2 in fiscal year 2000 in the amount of
$416,500. Funding under both grants was for a period of 3 years. Only $240,967 of the second
grant has been authorized. The Grantee submitted vouchers to OMHAR for reimbursement of
expenditures. As of May 31, 2002, the Grantee had requested and received reimbursements
totaling $110,000 under the 1998 OTAG. For the 2000 OTAG, the Grantee had requested and
received reimbursements totaling $107,963. Additional expenditures in the amount of $16,580
had been incurred during April and May 2002 but no reimbursement request had been submitted.

In addition to the OTAG funds, the Grantee received four ITAGs awarded through the Low
Income Housing Fund (an intermediary grantee). Each of these ITAGs was awarded in the
amount of $20,000. As of May 31, 2002, the Grantee had requested and received
reimbursements totaling $53,643 under the ITAGs. The Grantee also received non-federal funds
including state grants, private foundation grants, donations, dues, fees, interest income and
miscellaneous funds.

The Grantee’s financial statements were audited by a Certified Public Accountant for each of the
years ending December 31, 1998, December 31, 1999, December 31, 2000, and December 31,
2001. The CPA provided an unqualified opinion for each of the years and included OMB
Circular A-133 disclosures.




1
     FFOT98005FL
2
     FFOT00010FL

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                                  RESULTS OF REVIEW

We did not identify any ineligible lobbying activities. The Grantee used the OTAG and ITAG
funds for only eligible activities and maintained accounting system records and documentation
that complied with OMB Circulars A-122 and A-110. We found no material reportable
conditions.

We appreciate the courtesies and assistance extended by Grantee personnel during our review.

If you have any questions, please contact James D. McKay, Assistant Regional Inspector General
for Audit, at (404) 331-3369.




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                                                                            Appendix A
                        DISTRIBUTION OUTSIDE OF HUD

Executive Director, Florida Housing Coalition, Inc., Tallahassee, Florida

The Honorable Barbara A. Mikulski
Chair, Subcommittee on Veteran Affairs, HUD and Independent Agencies

The Honorable Christopher S. Bond
Ranking Member, Subcommittee on Veterans Affairs, HUD and Independent Agencies

Sharon Pinkerton, Senior Advisor
Subcommittee on Criminal Justice, Drug Policy & Human Resources

Stanley Czerwinski, Director
Housing and Telecommunications Issues

Steve Redburn, Chief Housing Branch
Office of Management and Budget

Linda Halliday (52P)
Department of Veterans Affairs

William Withrow (52KC)
Department of Veterans Affairs
OIG Audit Operations Division

The Honorable Joseph Lieberman
Chairman, Committee on Government Affairs

The Honorable Fred Thompson
Ranking Member, Committee on Governmental Affairs

The Honorable Dan Burton
Chairman, Committee on Government Reform

The Honorable Henry A. Waxman
Ranking Member, Committee on Government Reform

Andy Cochran
House Committee on Financial Services

Clinton C. Jones, Senior Counsel
Committee on Financial Services

Jennifer Miller
Professional Staff, House Committee on Appropriations



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