U. S. Department of Housing and Urban Development
Office of the Inspector General for Audit
New York/New Jersey
26 Federal Plaza, Room 3430
New York, New York 10278-0068
September 23, 2002 MEMORANDUM NO:
2002-NY-1803
MEMORANDUM FOR: Charles H. Williams, Director HUD’s Office of Multifamily
Housing Assistance Restructuring, HY
FROM: Alexander C. Malloy, Regional Inspector General for Audit, 2AGA
SUBJECT: New York State Tenant and Neighborhood Information Service
Outreach and Technical Assistance1 and Public Entity Grants
New York, New York
INTRODUCTION
We completed an audit of the New York State Tenant and Neighborhood Information
Service’s (herein referred to as Grantee) Outreach and Technical Assistance Grants
(OTAG) and Public Entity Grants (PEG). We performed the review at the direction of
Congress.2 The primary objective of our review was to determine whether the Grantee
expended grant funds for only eligible activities as identified in the OTAG/PEG
agreements and in accordance with U.S. Department of Housing and Urban Development
(HUD) and other Federal requirements to further the Mark-to-Market Program. Also, the
review was conducted to determine whether the Grantee used grant funds to pay expenses
associated with lobbying activities. Federal regulations specifically prohibit the use of
grant funds for lobbying activities.
METHODOLOGY AND SCOPE
To accomplish our objectives, we interviewed members of the Grantee’s staff who are
responsible for the administration of OTAG/PEG funded activities. Also, we reviewed
the Grantee’s accounting records, and other documents that support the expenditures of
1
OTAG Nos. FFOT98020NY and FFOT00030NY
2
The 2002 Defense Appropriation Act (Public Law 107-17) Section 1303 requires the U.S. Department of
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 OTAG and PEG funds. This included review of the Grantee’s monthly board minutes,
telephone records and employee timesheets for events that would indicate lobbying
activities. Additionally, we reviewed the requirements in the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (MAHRA), the Notice of Fund
Availability, the OTAG/PEG agreements, and the Office of Management and Budget’s
(OMB) guidance on allowable cost for nonprofit grantees. We tested $93,019.92 or 22
percent of the Grantee’s total OTAG expenditures of $424,107.84 that were incurred
during the period we reviewed. Regarding the PEGs, we reviewed 100 percent of costs,
totaling $84,574 that were incurred with PEG funds during the review period.
The audit covered the period between January 1, 1998, and April 30, 2002. The audit
period was extended, as appropriate, to meet our objectives. The audit fieldwork was
conducted during the months of June and July 2002. We conducted the audit in
accordance with Generally Accepted Government Auditing Standards.
BACKGROUND
The 2002 Defense Appropriation Act (Public Law 107-17) Section 1303 requires the U.S.
Department of Housing and Urban Development, Office of Inspector General to audit all
activities funded by Section 514 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997. The directive includes the Outreach and Technical Assistance
Grants (OTAG) and Intermediary Technical Assistance Grants (ITAG) administered by
the Office of Multifamily Assistance Restructuring.
The Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA)
established the Office of Multifamily Housing Assistance Restructuring (OMHAR)
within HUD. Utilizing the authority and guidelines under the MAHRA, OMHAR’s
responsibility includes the administration of the Mark-to-Market Program, which
includes the awarding and oversight of the Section 514 Outreach and Technical
Assistance and Intermediary Technical Assistance Grants. The objective of the Mark-to-
Market Program is to reduce rents to market levels and restructure existing debt to levels
supportable by reduced rents for thousands of privately owned multifamily properties
with federally insured mortgages and rent subsidies. Congress recognized, in Section 514
of the MAHRA, that the Mark-to-Market program would affect tenants of the project,
residents of the neighborhood, the local government, and other parties; accordingly,
Section 514 of the MAHRA authorized the Secretary to provide up to $10 million
annually ($40 million in total) for resident participation, for the period 1998 through
2001.
HUD issued NOFAs in Fiscal Years 1998 and 2000, to provide opportunities for
nonprofit organizations to participate in the Section 514 programs. Through these
NOFAs, HUD provided two types of grants. The Intermediary Technical Assistance
Grant (ITAG) and the Outreach and Technical Assistance Grants (OTAG). The ITAG
program provides technical assistance grants through intermediaries to sub-recipients to
include tenant affiliated community-based nonprofit organizations in properties that are
2
eligible under the Mark-to-Market program to help tenants participate meaningfully in
the Mark-to-Market process. These ITAG grantees use Section 514 funds to provide
Public Entity Grants (PEG) to sub-recipients, including OTAG grantees, and other public
entities. The OTAG program provides technical assistance to tenants of eligible Mark-to-
Market properties so that the tenants can participate meaningfully in the Mark-to-Market
Program, and affect decisions about the future of their housing.
New York State Tenant and Neighborhood Information Service
New York State Tenant and Neighborhood Information Service (Grantee) is a statewide
501(c)(3) organization, which was incorporated in 1993, and is dedicated to helping
tenants preserve and improve their housing. It provides residents of New York State’s
rent-regulated, public housing and Section 8 buildings with the educational, organizing
skills, and technical assistance to address system wide and specific housing concerns.
The Grantee received two OTAGs, as shown below:
Fiscal Year Grant Number Amount
1998 FFOT98020NY $350,000
2000 FFOT00030NY $400,000
At the time of our review, the Grantee had fully expended its Fiscal Year 1998 OTAG
funds, and $74,107.00 of its Fiscal Year 2000 OTAG funds. For the period reviewed, we
noted that the Grantee was not required to have an independent audit conducted in
accordance with OMB Circular A-133, since they did not expend federal funds in excess
of $300,000. However, an Independent Auditor's Report for the Grantee's fiscal years
ending March 31, 2001 and March 31, 2000, was performed. The report contained no
findings. We also noted that the Grantee did not receive any on-site monitoring from
HUD’s Office of Multifamily Housing Assistance Restructuring. Nevertheless, the
Grantee identified a total of 143 projects that qualified for assistance under its OTAGs.
The Grantee also received a total of five Section 514 Public Entity Grants (PEG) during
our audit period. All five PEGs, each for $20,000, were received from the Intermediary
Technical Assistance Grantee (ITAG) “Georgetown University” doing business as the
“National Center for Tenant Ownership”. To date, the Grantee has expended $84,574 of
the PEG funds.
In addition to the HUD grants, the Grantee obtained funds from non-Federal sources.
During the period reviewed, the Grantee received grants totaling $968,000 from public
and private foundations.
RESULTS OF REVIEW
The results of our review disclosed that the Grantee generally administered the
OTAG/PEG Programs in accordance with HUD requirements, and used grant funds only
3
for eligible activities to further the Mark-to-Market Program. In addition, we did not find
any instances were the Grantee expended grant funds on lobbying activities.
We appreciate the courtesies and assistance extended by the personnel of the New York
State Tenants and Neighborhood Information Service during our review.
Should you or you staff have any questions, please contact me or Edgar Moore, Assistant
Regional Inspector General for Audit, at (212) 264-8000, extension 3976.
MANAGEMENT CONTROLS
In planning and performing our audit, we considered the management controls relevant to
the Grantee’s Section 514 programs to determine our audit procedures, not to provide
assurance on the controls. Management controls include the plan of organization,
methods, and procedures adopted by management to ensure that its goals are met.
Management controls include the processes for planning, organizing, directing, and
controlling program operations. They include the systems for measuring, reporting, and
monitoring program performance.
We determined that the following management controls were relevant to our audit
objectives:
• Controls Over Allocating of Costs and Reporting of Activities
• Controls over Cash Receipts and Cash Disbursements
• Controls over Payroll
It is a significant weakness if management controls do not provide reasonable assurance
that the process for planning, organizing, directing, and controlling program operations
will meet an organization’s objectives.
For the period reviewed our testing did not disclose any management controls
weaknesses in the above areas.
4
Appendix A
Distribution
OUTSIDE OF HUD
Executive Director, New York State Tenant & Neighborhood Information Service,
The Honorable Joseph Lieberman
Chairman, Committee on Governmental Affairs
The Honorable Fred Thompson
Ranking Member, Committee on Governmental Affairs
Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice,
Drug Policy & Human Resources
Andy Cochran
House Committee on Financial Services
Clinton C. Jones, Senior Counsel
Committee on Financial Services, U.S. House of Representatives
Kay Gibbs
Committee on Financial Services
Stanley Czerwinski, Director
Housing and Telecommunications Issues, US General Accounting Office
Steve Redburn, Chief Housing Branch
Office of Management and Budget
Linda Halliday
Department of Veterans Affairs, Office of Inspector General
William Withrow
Department of Veteran Affairs, OIG Audit Operations Division
George Reeb
Assistant Inspector General for Health Care Financing Audits
The Honorable Dan Burton
Chairman, Committee on Government Reform, U.S. House of Representatives
5
Appendix A
Distribution
The Honorable Henry A. Waxman
Ranking Member, Committee on Governmental Reform, U.S. House of Representatives
The Honorable Barbara A. Mikulski
Chairperson, Subcommittee on Veterans, Housing and Urban Development and
Independent Agencies
6
New York State Tenant and Neighborhood Information Service, Outreach and Technical Assistance and Public Entity Grants, New York, New York
Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-09-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)