oversight

Congressionally Requested Audit of Section 514 Outreach and Training Assistance Grant Awarded to HOME Line; Minneapolis, Minnesota Grant Number FFOT00044MN

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-09-24.

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

                                             U.S. Department of Housing and Urban Development
                                             Office of Inspector General for Audit, Region V
                                             Ralph H. Metcalfe Federal Building
                                             77 West Jackson Boulevard, Suite 2646
                                             Chicago, Illinois 60604-3507

                                             Phone (312) 353-7832 Fax (312) 353-8866
                                             Internet http//www.hud.gov/oig/oigindex.html




                                                                             AUDIT MEMORANDUM
                                                                                     2002-CH-1803

September 24, 2002

MEMORANDUM FOR: Charles H. Williams, Director of Multifamily Housing Assistance
                  Restructuring, HY



FROM:         Heath Wolfe, Regional Inspector General for Audit, Region V

SUBJECT:      Congressionally Requested Audit of Section 514 Outreach and Training
              Assistance Grant Awarded to HOME Line; Minneapolis, Minnesota; Grant
              Number FFOT00044MN

                                      INTRODUCTION

We completed an audit of HOME Line’s Section 514 Outreach and Training Assistance Grant
awarded under the Multifamily Assisted Housing Reform and Affordability Act of 1997. The
objectives of the audit were to determine whether HOME Line had: management controls in
place to ensure that Section 514 Grant funds were used for eligible activities; and expended the
Grant funds for any lobbying activities.

                              METHODOLOGY AND SCOPE

We reviewed HOME Line’s policies and procedures as they pertained to our audit objectives for
the period January 1, 2000 through June 30, 2002. We accomplished the objectives by reviewing
and evaluating HOME Line’s: management controls over the Outreach and Training Assistance
Grant; reliability of computer-processed data; organizational structure; Board of Directors’
meeting minutes; property files; and the method used for allocating costs. In addition, we
reviewed bank statements, cancelled checks, and cash receipts and disbursements journals. We
tested 36 of the 37 financial transactions totaling $140,594 and all 21 properties that HOME Line
charged to the Grant. We also reviewed staff time sheets for hours charged to the Grant
compared to their actual hours worked.
                                                                      Audit Memorandum


We reviewed HOME Line’s records, and HUD’s records and files for HOME Line. We
interviewed HOME Line’s staff and key staff from HUD’s Office of Multifamily Housing
Assistance Restructuring. We performed our on-site audit work between July and August
2002. We conducted the audit in accordance with Generally Accepted Government
Auditing Standards.

                                    BACKGROUND

The Multifamily Assisted Housing Reform and Affordability Act of 1997 authorized
HUD’s Secretary to establish procedures to provide an opportunity for tenants of projects
and other affected parties to participate effectively and on a timely basis in the
restructuring process established by the Act. Section 514(f)(3)(A) of Multifamily
Assisted Housing Reform and Affordability Act of 1997 states in part that the Secretary
may make obligations to tenant groups, nonprofit organizations, and public entities for
building the capacity of tenant organizations for technical assistance in furthering any of
the purposes of the Act and for tenant services.

The Multifamily Assisted Housing Reform and Affordability Act of 1997 established
HUD’s Office of Multifamily Housing Assistance Restructuring to administer the Mark-
to-Market Program. The Office of Multifamily Housing Assistance Restructuring works
with property owners, participating administrative entities, tenants, lenders, and others
with a stake in the future of affordable housing.

HUD issued Notices of Funding Availability in Fiscal Years 1998 and 2000 to provide
opportunities for nonprofit organizations to participate in the Section 514 Grants
program. HUD provided two types of Grants—the Intermediary Technical Assistance
Grant and the Outreach and Training Assistance Grant. The Notice of Funding
Availability for the Intermediary Technical Assistance Grant program states that the
program provides funds 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
eligible projects throughout its jurisdiction. The Notices of Funding Availability for the
Outreach and Training Assistance Grant program states that the program is to provide
technical assistance to tenants of eligible Mark-to-Market properties so that tenants can:
(1) participate meaningfully in the Mark-to-Market Program; and (2) affect decisions
about the future of their housing.

HOME Line is a non-profit tenant advocacy organization. HOME Line began in 1992 as
a program of the Community Action Agency operating in suburban Hennepin County,
which is located near Minneapolis, Minnesota. HOME Line became an independent
entity in 1999 and its Executive Director is Charlie Warner. HOME Line is located at
3455 Bloomington Avenue South, Minneapolis, Minnesota.




                                          Page 2                              2002-CH-1803
                                                                      Audit Memorandum


There are about 127 properties with approximately 12,500 units providing affordable
housing for some of the State of Minnesota's lowest income households. The 20-year
Section 8 Program contracts on these properties began to expire or will expire over the
next few years. Most of these properties are owned by for-profit businesses and have few
incentives to renew their Section 8 contracts. These owners may opt-out of the Section 8
Program and rent their units at market rates or choose to sell the properties. The Outreach
and Training Assistance Grant program provides for outreach and training in the area of
those properties with expiring Section 8 Program contracts in which rents are above the
fair market rent, and therefore eligible for the Mark-to-Market Program.

The Outreach and Training Assistance Grant Agreement for Fiscal Years 2000 and 2001,
between HOME Line and HUD, for $450,000 was signed on January 9, 2001. On March
18, 2002, HUD’s Office of Multifamily Housing Assistance Restructuring notified the
Coalition that the authorized amount for the Grant was reduced from $450,000 to
$310,000. As of June 30, 2002, HOME Line expended $82,051 of the Fiscal Years 2000
and 2001 Grant. The first financial audit of HOME Line’s Grant was in process as
required by Office of Management Budget Circular A-133 as of August 30, 2002.

                                RESULTS OF REVIEW

We found no material reportable conditions based upon our audit objectives. HOME
Line properly managed the Outreach and Training Assistance Grant and assured that
Grant funds were generally used for eligible purposes. HOME Line had adequate
controls in place to preclude paying lobbying expenses with Grant monies. An in-house
system was developed by HOME Line to track employees’ time spent on each activity,
including lobbying. Home Line set up its accounting system to identify each grant with
an account number, thus enabling reports detailing how funds were spent.
We discussed our audit results with the key staff from HUD’s Office of Multifamily
Housing Assistance Restructuring on September 20, 2002. A copy of this memorandum
was provided to HOME Line’s Executive Director. We appreciate the courtesies and
assistance extended by HOME Line’s personnel during our audit.

Should you or your staff have any questions, please have them contact Thomas Towers,
Assistant Regional Inspector General for Audit, at (313) 226-6280 extension 8062 or me
at (312) 353-7832.




                                        Page 3                               2002-CH-1803
                                                                          Appendix A

Distribution Outside Of HUD
The Honorable Barbara A. Mikulski, Chairperson, Subcommittee on Veterans Affairs,
       HUD, and Independent Agencies, 709 Hart Senate Office Building, United States
       Senate, Washington, DC 20510
The Honorable Christopher S. Bond, Ranking Member, Subcommittee on Veterans
       Affairs, HUD, and Independent Agencies, 274 Russell Senate Office Building,
       United States Senate, Washington, DC 20510
The Honorable Joseph Lieberman, Chairman, Committee on Government Affairs, 706
       Hart Senate Office Building., United States Senate, Washington, DC 20510
The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs,
       340 Dirksen Senate Office Building, United States Senate, Washington, DC
       20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185
       Rayburn Building, House of Representatives, Washington, DC 20515
The Honorable Henry A. Waxman, Ranking Member, Committee on Government
       Reform, 2204 Rayburn Building., House of Representatives, Washington, DC
       20515
Andy Cochran, Committee on Financial Services, 2129 Rayburn House Office Building,
       United States House of Representatives, Washington DC 20515
Clinton C. Jones, Senior Counsel, Committee on Financial Services, B303 Rayburn
       Building, United States House of Representatives, Washington DC 20515
Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice, Drug Policy &
       Human Resources, B373 Rayburn House Office Building, United States Housing
       of Representatives, Washington, DC 20515
Stanley Czerwinski, Director, Housing and Telecommunications Issues, United States
       General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC
       20548
Steve Redburn, Chief of Housing Branch, Office of Management and Budget, 725 17th
       Street, NW, Room 9226, New Executive Office Building, Washington, DC 20503
Linda Halliday (52P), Department of Veterans Affairs, Office of Inspector General, 810
       Vermont Avenue, NW, Washington, DC 20420
William Withrow (52KC), Department of Veterans Affairs, Office of Inspector General
       Audit Operations Division, 1100 Main, Room 1330, Kansas City, Missouri
       64105-2112
Kay Gibbs, Committee on Financial Services, 2129 Rayburn House Office Building,
       United States House of Representatives, Washington DC 20515
George Reeb, Assistant Inspector General for Health Care Financing Audits
Charlie Warner, Executive Director of HOME Line




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