oversight

Housing Authority of the City of Lakeland, Lakeland, Florida

Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-08-19.

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

               AUDIT REPORT




             HOUSING AUTHORITY OF THE

                    CITY OF LAKELAND

                LAKELAND, FLORIDA

                      2004-AT-1013

                     AUGUST 19, 2004



                OFFICE OF AUDIT, REGION 4
                    ATLANTA, GEORGIA




Table of Contents
                                                              Issue Date
                                                                      August 19, 2004
                                                              Audit Case Number
                                                                      2004-AT-1013




TO:           Karen Cato-Turner
              Director, Office of Public Housing, 4DPH

              Milan M. Ozdinec, Deputy Assistant Secretary,
              Office of Public Housing Investments, PI

              Margarita Maisonet
              Director, Departmental Enforcement Center, CV




FROM:         James D. McKay
              Regional Inspector General for Audit, 4AGA

SUBJECT:      Housing Authority of the City of Lakeland
              Lakeland, Florida

We reviewed the Housing Authority of the City of Lakeland's (Authority) administration of
housing development activities. We performed the review as a result of our audit of the
Department of Housing and Urban Development’s (HUD) oversight of Public Housing Agency
(PHA) development activities with related nonprofit entities. The primary objective of our
review was to determine whether the Authority diverted or pledged resources subject to an
Annual Contributions Contract (ACC) to the benefit of other entities without specific HUD
approval. This report includes one finding with recommendations for corrective action.

In accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us, for each
recommendation without a management decision, a status report on: (1) the corrective action
taken; (2) the proposed corrective action and the date to be completed; or (3) why action is
considered unnecessary. Additional status reports are required at 90 days and 120 days after
report issuance for any recommendation without a management decision. Also, please furnish us
copies of any correspondence or directives issued because of the audit.

We provided a copy of this report to the Authority.




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Management Memorandum



Should you or your staff have any questions, please contact me at (404) 331-3369 or Bill Glover,
Senior Auditor at (904) 232-1777, Extension 2160.




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Executive Summary
We reviewed the Authority’s administration of housing development activities. The primary
objective of our review was to determine whether the Authority diverted or pledged resources
subject to an ACC to the benefit of other entities without specific HUD approval.




 The Authority violated            We found the Authority paid at least $296,140 for
 HUD program                       ineligible expenses that were not authorized under its
 requirements                      Housing Opportunities for People Everywhere (HOPE VI)
                                   Grant. This included $270,437 for legal fees and $25,703
                                   for financial consultant fees. Also, the Authority failed to
                                   obtain timely repayment of $990,169 it advanced to the
                                   lead developer, The Communities Group (TCG). As of
                                   December 31, 2003, TCG still owed the Authority
                                   $704,542, which is at risk of nonpayment.                On
                                   January 23, 2004, the Authority issued a Notice of Default
                                   to TCG for failure to adequately perform. The Authority
                                   assumed the role of lead developer for the remaining
                                   phases. However, the Authority has not demonstrated the
                                   capacity to serve as lead developer. Thus, we question
                                   whether the Authority has the capacity to complete its
                                   HOPE VI Revitalization Plan. Also, the Authority and
                                   TCG are currently involved in legal disputes that could
                                   affect completion of the remaining phases. We are also
                                   concerned as to whether sufficient funds remain to
                                   complete all the remaining phases and whether they can be
                                   completed timely. Accordingly, successful completion of
                                   the remaining phases of the Revitalization Plan and the
                                   remaining $7.6 million of Grant funds are at risk.

                                   These actions occurred because the Authority did not have
                                   adequate controls to ensure Grant funds were spent only for
                                   eligible activities, the Authority did not timely enforce the
                                   terms of its Pre-Development Agreement with TCG, and
                                   because TCG failed to fulfill its responsibilities as specified
                                   in the Master Project Development Agreement,
                                   Pre-Development Agreement, and Lead Developer
                                   Agreement.




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Executive Summary



                          Our recommendations include:
 Recommendations
                          o      Requiring the Authority to repay $296,140 to its
                                 HOPE VI Grant for ineligible legal and financial
                                 consultant fees. Repayment should be from non-
                                 Federal funds;

                          o      Closely monitoring the Authority’s attempts to
                                 recover the remaining $704,542 of the $990,169
                                 due from TCG. Should the Authority fail to
                                 aggressively seek recovery, or should the Authority
                                 jeopardize its legal rights to recover the funds,
                                 require the Authority to repay the funds to its HOPE
                                 VI Grant from non-Federal funds;

                          o      Performing a comprehensive review of the
                                 Authority’s capacity and ensure the Authority takes
                                 appropriate measures to address any capacity issues to
                                 successfully complete activities in accordance with
                                 the Grant Agreement and Revitalization Plan. If your
                                 review determines the Authority has the capacity to
                                 function as the lead developer, issue formal written
                                 approval and take any other necessary steps to
                                 recognize the Authority as lead developer, in addition
                                 to its role as Grant Administrator.

                          o      Performing reviews of all drawdowns of HOPE VI
                                 funds until HUD determines the Authority has the
                                 capacity to successfully complete activities in
                                 accordance with the Grant Agreement and
                                 Revitalization Plan. If HUD determines the Authority
                                 does not have the capacity to complete the activities,
                                 terminate the Grant and recapture the remaining $7.6
                                 million, or current balance, of unused funds.

                          o      Taking appropriate administrative actions against
                                 TCG, its principals, and any known related entities,
                                 including possible debarment actions.




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                                                             Executive Summary



                        We discussed our review results with the Authority during
Auditee comments        our review and at an exit conference on July 15, 2004. We
                        provided a copy of the draft report to the Authority on
                        July 8, 2004, for their comments. The Authority provided
                        written comments on July 26, 2004, and generally
                        disagreed with the report. The complete text of the
                        Authority’s comments, along with our evaluation of the
                        comments can be found in Appendix B of this report.




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Table of Contents
Management Memorandum                                                                        i



Executive Summary                                                                          iii



Introduction                                                                                1



Finding
      At Least $296,140 Paid For Ineligible Expenses And Over $8.3 Million Of Grant
      Funds At Risk                                                                         5



Management Controls                                                                       17



Follow-Up On Prior Audits                                                                 19



Appendices
    A. Schedule of Questioned Costs and Funds Put to Better Use                           21

    B. Auditee Comments and OIG Evaluation                                                23

Abbreviations

ACC             Annual Contributions Contract
CFR             Code of Federal Regulations
HOPE VI         Housing Opportunities for People Everywhere
HUD             Department of Housing and Urban Development
LPHC            Lakeland-Polk Housing Corporation
LPHC2           Lakeland-Polk Housing Corporation 2




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Table of Contents


OIG            Office of Inspector General
OMB            Office of Management and Budget
PHA            Public Housing Agency
TCG            The Communities Group




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Introduction
The Authority was organized by the City of Lakeland in 1939 under Florida Law. The
Authority’s primary purpose is to provide low rent housing for qualified individuals in
accordance with the rules and regulations prescribed by HUD and other Federal Agencies.

A seven member Board of Commissioners governs the Authority. The Mayor of Lakeland
appointed the Commissioners with the approval of the Lakeland City Commission. The
Authority’s Board of Commissioners appointed the Executive Director. During our review
period, the Executive Director was Herbert Hernandez.

Title 24 of the Code of Federal Regulations (CFR) 941, Subpart F, authorizes PHAs to develop
public housing using a combination of private financing and public housing development funds.
These financing arrangements are commonly referred to as Mixed-Finance. Many potential
scenarios for ownership and transaction structures exist, ranging from the PHA or its partner(s)
holding no ownership interest, a partial ownership interest, or 100 percent ownership of the
public housing units. PHAs and/or their partner(s) may choose to enter into a partnership or other
contractual arrangement with a third-party entity for the development and/or ownership of the
units. The resulting developments may consist of 100 percent public housing units or a
combination of public and non-public housing units.

In August 1999, HUD awarded a $21,842,801 HOPE VI Revitalization Grant to the Authority.
The Grant was for the redevelopment of two obsolete public housing developments,
Washington Park Homes and Lake Ridge Homes consisting of a total of 380 units, and the
surrounding Paul A. Diggs neighborhood. On February 28, 2000, HUD approved the Authority’s
procurement of TCG as its Developer Partner. On April 28, 2000, the Authority and TCG
entered into a Lead Developer Agreement that provided various terms and conditions, including
the responsibilities and the scope of work TCG would provide. The scope of work included, but
was not limited to: implementation of the Revitalization Plan; detailed architectural and
environmental work; construction financing, marketing; construction; and development of
property management plan(s).

Under the HOPE VI Washington Ridge Revitalization Plan (Revitalization Plan), approved by
HUD on May 29, 2001, all 380 public housing units would be demolished and replaced with 478
rental and home ownership units. The Revitalization Plan was to be accomplished in 11 phases.
The original Revitalization Plan Budget included $21,842,801 of HOPE VI Grant funds and
$48,271,791 of non-HUD funds to complete all 11 phases. The non-HUD funds included funds
obtained from the syndication of Low Income Housing Tax Credits. HUD amended the
Authority's ACCs to include the terms and conditions of the Mixed-Finance arrangements.

As of December 31, 2003, the Authority had expended about $14.2 million of the Grant Funds,
leaving a balance of about $7.6 million. The Authority and TCG had completed construction of
only the first three phases, Dakota Park, Magnolia Pointe (Lake View Gardens), and Renaissance
at Washington Ridge. Occupancy of the rental units at Dakota Park and Renaissance at
Washington Ridge and attempted sale of home ownership units at Magnolia Pointe was ongoing.
Most of the remaining phases are in the early stages. In fact, no construction of units has started

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Introduction


at any of the other sites. The Dakota Park and Renaissance at Washington Ridge phases involved
Mixed-Finance arrangements that included Low Income Housing Tax Credits.

As lead developer, TCG had primary responsibility, along with the Authority, for development of
various phases in accordance with the Revitalization Plan. For several phases, the Authority was
the Co-Lead Developer and was to receive a portion of the developer fees. Two of the phases,
Dakota Park and Renaissance at Washington Ridge, involved owner entity partnerships. The
individual who owns and controls TCG also exercises controlling interest, directly and indirectly,
in both owner entity partnerships. These partnerships executed Regulatory and Operating
Agreements with the Authority covering a period of 40 years. Thus, TCG and its affiliated
partnerships not only played significant roles in ensuring the successful completion of the
Revitalization Plan, but also have continuing interests in the subsequent operation of the
developments. The Authority issued a Notice of Default and terminated its agreement with TCG
on January 23, 2004, for failure to adequately perform. TCG’s failure to adequately perform as
the lead developer not only hampered completion of the Revitalization Plan, but its relationships
and disputes with the Authority could affect future operations.

As Grant Administrator, the Authority was directly responsible for the overall management of the
Grant. It was responsible for ensuring funds were used only for approved expenses and was
responsible for protecting HUD’s interest. HUD Headquarters and the Miami, Florida, Office of
Public Housing were responsible for reviewing and approving various documents and for
providing technical assistance, oversight, and monitoring of the grant. The Miami, Florida,
Office of Public Housing performed annual monitoring reviews of the Authority's administration
of the Grant.



                                     The primary objective of our review was to determine
 Audit Objectives, Scope             whether the Authority diverted or pledged resources
 and Methodology                     subject to an ACC to the benefit of other entities without
                                     specific HUD approval. To accomplish our objective, we
                                     reviewed applicable HUD requirements and regulations,
                                     including the ACC, Title 24 CFR, Part 941, and the
                                     Authority's HOPE VI grant. We also reviewed Office of
                                     Management and Budget (OMB) Circular A-87,
                                     interviewed HUD and Authority staff, and reviewed
                                     various documents including financial statements, general
                                     ledgers, and minutes from Board of Commissioners
                                     meetings.

                                     The review generally covered the period from August 1,
                                     1999, to December 31, 2003. The review focused primarily
                                     on the Authority’s housing development activities under its
                                     HOPE VI Revitalization Plan. We performed our fieldwork
                                     at the Authority’s administrative offices located at 430
                                     South Hartsell Avenue, Lakeland, Florida. We conducted

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                                                              Introduction


                    our review in accordance with generally accepted
                    Government auditing standards. We performed the review
                    from September 2003 to March 2004.




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                                                                                           Finding


At Least $296,140 Paid For Ineligible Expenses
And Over $8.3 Million Of Grant Funds At Risk
The Authority paid at least $296,140 for ineligible expenses that were not authorized under the
Grant. This included $270,437 for legal fees and $25,703 for financial consultant fees. Also, the
Authority failed to obtain timely repayment of $990,169 it advanced to TCG. As of
December 31, 2003, TCG still owed the Authority $704,542, which is at risk of nonpayment. On
January 23, 2004, the Authority issued a Notice of Default to TCG for failure to adequately
perform. The Authority assumed the role of lead developer for the remaining phases. However,
the Authority has not demonstrated the capacity to serve as lead developer. Thus, we question
whether the Authority has the capacity to complete its HOPE VI Revitalization Plan. Also, the
Authority and TCG are currently involved in legal disputes that could affect completion of the
remaining phases. We are also concerned as to whether sufficient funds remain to complete all
the remaining phases and whether they can be completed timely. Accordingly, successful
completion of the remaining phases of the Revitalization Plan and the remaining $7.6 million of
Grant funds are at risk. These actions occurred because the Authority did not have adequate
controls to ensure Grant funds were spent only for eligible activities, the Authority did not timely
enforce the terms of its Pre-Development Agreement with TCG, and because TCG failed to
fulfill its responsibilities as specified in the Master Project Development Agreement,
Pre-Development Agreement, and Lead Developer Agreement.



                                      OMB Circular A-87 establishes principles for determining
 HUD requirements                     the allowable costs incurred by State, local, and federally
                                      recognized Indian tribal governments (governmental units)
                                      under grants, cost reimbursement contracts, and other
                                      agreements with the Federal Government. To be allowable
                                      under Federal awards, costs must be necessary and
                                      reasonable for proper and efficient performance and
                                      administration of Federal awards. A cost is reasonable if,
                                      in its nature and amount, it does not exceed that which
                                      would be incurred by a prudent person under the
                                      circumstances prevailing at the time the decision was made
                                      to incur the cost. The question of reasonableness is
                                      particularly important when governmental units or
                                      components are predominately federally funded.           In
                                      determining reasonableness of a given cost, consideration
                                      shall be given to whether the cost is of a type generally
                                      recognized as ordinary and necessary for the operation of
                                      the governmental unit or the performance of the Federal
                                      award. Costs must be net of all applicable credits.
                                      Applicable credits refer to those receipts or reductions of
                                      expenditures that offset or reduce expense items allocable

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Finding


                          to Federal award direct or indirect costs. To the extent that
                          such credits accruing to or received by the governmental
                          unit relate to allowable costs, they shall be credited to the
                          Federal award either as a cost reduction or cash refund, as
                          appropriate.

                          Both the Pre-Development Agreement and the Lead
                          Developer Agreement between the Authority and TCG
                          provided for advances of Grant funds to TCG for
                          pre-development costs. The Authority was to advance TCG
                          75 percent of eligible pre-development costs that TCG
                          incurred prior to the Mixed-Finance closing. TCG was
                          responsible for paying the remaining 25 percent of pre-
                          development costs. All amounts advanced to TCG were to
                          be considered a loan. TCG was required to either repay the
                          advances from proceeds received at the Mixed-Finance
                          closing or the Authority was to receive a credit (offset)
                          against its funding obligations for the project.

                          The Agreements between the Authority and TCG required
                          TCG to, among other things: (1) establish and implement
                          appropriate administrative and financial controls for the
                          design and construction of each development including
                          preparing financial reports and monthly progress reports;
                          (2) maintain an accounting system that is in compliance
                          with the requirements of the Grant; (3) repay advances for
                          pre-development costs when financing closed for each
                          project; (4) certify that all payments received to reimburse
                          third-party costs were actually paid; (5) not make any
                          expenditure or incur any obligation by or on behalf of the
                          Owner entity or the Authority involving a sum in excess of
                          $10,000 except as authorized pursuant to and specifically
                          set forth in contracts approved by the Authority; (6) not
                          assist in the preparation of tax credit applications in the
                          State of Florida, for any other entity other than the
                          Authority, and; (7) comply with all applicable laws,
                          ordinances, orders, rules, regulations and requirements of all
                          Federal, state, and municipal governments.

                          Title 24 CFR, Part 24, provides for Administrative
                          Sanctions. Administrative Sanctions include limited denials
                          of participation, suspensions, and debarments, which are
                          discretionary actions that may be taken to protect the public
                          interest.



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                                                                                  Finding


The Authority had multiple   In addition to being the Grant Administrator, the Authority
roles                        held other key roles pertaining to the development
                             activities. The Authority was the co-lead developer for
                             several phases, for which it was to be paid a portion of the
                             developer fees from non-grant funds. The Authority was
                             also a limited partner in the ownership entity for the
                             Renaissance at Washington Ridge phase. An entity
                             affiliated with TCG was the controlling General Partner of
                             this ownership entity. Because of its dual roles, the
                             Authority had multiple relationships with TCG - Grant
                             Administrator, co-lead developer, and partner in an
                             ownership entity. Further, the Authority helped establish
                             and fund Lakeland-Polk Housing Corporation (LPHC), an
                             affiliated non-profit entity. LPHC subsequently formed
                             Lakeland-Polk Housing Corporation 2 (LPHC 2), a for
                             profit corporation. LPHC 2 was a general partner in the
                             Dakota Park ownership entity. The Authority’s Executive
                             Director was also the Executive Director of LPHC and the
                             President of LPHC 2. LPHC and LPHC 2 relied almost
                             exclusively on the Authority for funding, accounting, and
                             management.

Ineligible legal and         The Revitalization Plan and Grant Agreement included
financial consultant fees    budgets that provided detailed line item expense amounts,
                             as well as the sources of funds to be used to pay the various
                             expenses. The budgets were updated throughout the
                             execution of the Revitalization Plan and became the basis
                             for controlling the Grant draws and disbursements. The
                             Authority was not authorized to pay any expenses that were
                             not specifically approved in the budgets. As Grant
                             Administrator, the Authority was responsible for ensuring
                             funds were used only for approved expenses and was
                             responsible for protecting HUD’s interest. The original
                             budget approved by HUD projected total legal fees of
                             $161,753 for all 11 phases that would be paid from Grant
                             funds. The budgets included other legal fees that were to
                             be paid using non-grant funds.

                             While the total HOPE VI Grant amount did not change, the
                             Authority submitted budget revisions that increased the
                             amounts for legal and consultant fees. The increases were
                             reflected on its HOPE VI Revitalization Grant Quarterly
                             Progress Reports. The Reports showed the current (latest
                             revised) HOPE VI budget amounts by line item. Although
                             HUD approved the budget revisions, which included
                             increases for legal fees and financial consultant fees, HUD

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Finding


                          may not have realized these were for the benefit of related
                          entities and not incurred by the Authority in its role as Grant
                          Administrator.

                          As of December 31, 2003, legal fees totaled $643,409.
                          Financial consultant fees totaled $137,960 as of
                          September 30, 2003. We began reviewing the bills to
                          determine eligibility. We reviewed legal expenses totaling
                          $209,013, or 32 percent, and financial consultant fees
                          totaling $39,995, or 28 percent. We then learned the
                          Authority, along with its legal counsel, had already
                          performed a review of the expenses. We verified the
                          validity and reliability of their review results by (1)
                          discussing the review with Authority personnel and
                          Authority legal counsel to gain an understanding of the
                          methodology and logic used for the review, (2) testing a
                          sample of the results by comparing them with our results,
                          and (3) reviewing the accounting records. We accepted the
                          Authority’s results as credible evidence directly related to
                          our audit objective.        Their review determined the
                          Authority paid $270,437 for legal fees and $25,703 for
                          financial consultant fees that should be reimbursed by the
                          owner/borrower entity.

                          The expenses were not pre-development expenses that were
                          to be paid by the Authority and later reimbursed. Rather,
                          the expenses were incurred for the benefit of the owner
                          entity partnerships. The expenses were to be paid from
                          non-grant funds. However, because of the Authority’s poor
                          accounting controls, it paid the expenses from Grant funds.
                          Further, the Authority had included the amounts in the
                          Quarterly Progress reports, which became the basis for
                          HUD’s approval of the revised amounts.                 The
                          documentation submitted to HUD, upon which it based its
                          approval of budget revisions, did not clearly distinguish
                          what the legal fees were for. However, they were not
                          attributable to the Grant, thus they are not in compliance
                          with OMB Circular A-87 requirements. The Authority
                          should repay the funds from non-Federal funds.

                          Further, legal fees and financial consultant fees have
                          continued to escalate during the past few months and will
                          likely see substantial increases due to ongoing mitigation
                          and potential litigation between the Authority and TCG. If
                          the Authority continues to expend additional funds for legal
                          and financial consultant fees, there will be less funds

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                                                                            Finding


                        available to pay other expenses necessary to complete all
                        phases. As such, it is imperative that HUD closely review
                        any such expenses to ensure not only that they are eligible
                        to be paid from Grant funds, but also to assess the impact
                        of the increased expenses on the overall budget.

TCG did not repay       The Mixed-Finance closing for the Renaissance at
$704,542 it owed the    Washington Ridge phase occurred on December 23, 2002.
Authority               At that time, the Authority had advanced $938,431 to TCG.
                        At the closing, TCG received about $2.2 million.
                        According to the Authority, TCG was to reimburse
                        $636,447 of the advances from the closing proceeds.

                        Although TCG received substantial funding at the
                        Mixed-Finance closing for the Renaissance at Washington
                        Ridge on December 23, 2002, the Authority did not
                        immediately require TCG to repay the advances. The
                        Authority was reluctant to force the issue until the projects
                        were completed because it was concerned that TCG would
                        suspend construction work. Although the Authority made
                        some attempts to get TCG to repay portions of the advances,
                        its efforts were untimely and inadequate. It did not take
                        actions to force repayment or initiate offsets until about
                        May 2003. Subsequently, TCG repaid $285,627 to the
                        Authority. However, TCG had not repaid the remaining
                        $704,542 as of December 31, 2003. Further, TCG has
                        disputed recent offsets of $652,804 made by the Authority,
                        thus the outcome is uncertain. In the past, even when TCG
                        agreed that it did owe a portion of the amounts advanced to
                        it, it claimed that it did not have funds to make repayments.
                        The ongoing disputes between the Authority and TCG and
                        TCG’s possible lack of funds, raise questions as to whether
                        TCG will repay the $704,542.

                        Also, TCG failed to pay some vendors. According to the
                        Lead Developer Agreement, TCG was to submit draw
                        requests to the Authority to pay amounts owed to vendors
                        for goods and services they provided. As TCG submitted
                        each draw request, it was required to provide supporting
                        documentation and certify that the Grant funds it received
                        would be used to pay the vendors. Further, each time TCG
                        submitted a draw request, it was required to certify that any
                        amounts previously received pursuant to draw requests had
                        been used to pay vendors.



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Finding


                               TCG requested funds for some expenses which the
                               Authority had already provided based on previous draw
                               requests. Even though the Authority had already provided
                               the funds, TCG did not pay some vendors. Subsequently,
                               the vendors informed the Authority that they had not been
                               paid. In order to prevent financial hardship to the vendors
                               and prevent possible work stoppage, in May 2003, the
                               Authority paid the vendors a total of $79,404 from its Grant
                               funds.    Recently, the Authority reclassified $27,666
                               (included in the total advances of $938,431 to TCG) as pre-
                               development advances leaving a balance of $51,738.

  Successful completion of     Successful completion of the remaining phases of the
  the revitalization plan is   Revitalization Plan is in jeopardy. HUD approval of the
  jeopardized                  Revitalization Plan was based largely on TCG serving as
                               the lead developer. Upon terminating TCG, the Authority
                               assumed responsibility as lead developer. For the two
                               current phases for which the Notice of Default relates, the
                               Authority had assumed duties that should have been
                               performed by TCG. However, we are not aware of any
                               experience the Authority has as a lead developer. Past
                               performance by the Authority as Grant Administrator and
                               co-lead developer does not, in itself, demonstrate the
                               capacity or ability of the Authority to successfully perform
                               all the functions of a lead developer.

                               As previously discussed, legal and consulting fees have
                               exceeded original budget amounts. Also, the Authority
                               advanced funds to TCG and made payments for which TCG
                               has not reimbursed the Authority. As such, Grant funds
                               originally budgeted for other items have been reduced. The
                               Authority has not demonstrated to HUD the source of funds
                               that will be used to cover budget shortfalls that may occur
                               as a result of the excess expenditures.

                               While the Authority notified HUD of many on-going
                               problems and issues with TCG, we do not believe HUD is
                               fully aware of all the potential issues facing the Authority
                               and the future phases under the Revitalization Plan. For
                               example, there are issues between the Authority and TCG
                               that involve the non-grant funded portion of the
                               Revitalization Plan that could have a significant negative
                               impact on the Authority.




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                         We are concerned the Authority may not be able to
                         successfully perform as lead developer. Further, we believe
                         the remaining $7.6 million of Grant funds are at
                         considerable risk of being spent without adequate assurance
                         of the successful completion of the remaining phases of the
                         Revitalization Plan.

HUD needs to perform a   HUD needs to perform a comprehensive review to assess
comprehensive review     the Authority’s capacity to perform as lead developer and
                         whether sufficient funds remain to timely complete the
                         Revitalization Plan. At a minimum, HUD should consider:

                         (1)      The latest HOPE VI Quarterly Progress Report for
                                  the period October 1, 2003, to December 31, 2003,
                                  showed that there might be difficulties ahead in
                                  completing the remaining phases within budget or
                                  on time. The Authority has already expended large
                                  amounts for legal, financial consultant, and
                                  architect and engineering fees for the remaining
                                  phases. For some of the remaining phases, the
                                  Progress Reports reflect that the amounts expended
                                  are already at the budgeted levels. Most of the
                                  remaining phases are in the early stages. In fact, no
                                  construction has started at any of the sites. We
                                  question whether the amounts spent are reasonable
                                  given the status of completion.        Further, the
                                  authority has indicated it plans to seek a 2-year
                                  extension to complete the HOPE VI Grant.

                         (2)      Cost overruns for legal, financial consultant, and
                                  architect and engineering fees on the three
                                  completed phases may have been inappropriately
                                  charged to the remaining phases. By charging any
                                  cost overruns for the completed phases to remaining
                                  phases, the Authority would not have to request
                                  additional budget changes or increases for the
                                  completed phases, thus avoiding drawing HUD’s
                                  attention to the costs overruns. However, if any
                                  cost overruns were charged to the remaining phases,
                                  there may not be sufficient HOPE VI funds to
                                  complete all phases.       Further, the Authority
                                  continues to incur legal fees as a result of its
                                  mitigation with TCG. The Authority has included a
                                  comment on its Quarterly Progress Report for the
                                  period October 1, 2003, to December 31, 2003, that

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                                   it needs more funds for legal fees. The Authority
                                   plans to either ask HUD for more funds for legal
                                   fees or for approval to reallocate within the existing
                                   budget expenses line items.

                          (3)      Pending mitigation and potential litigation with
                                   TCG may impact the Authority’s ability to focus on
                                   the remaining phases under the Revitalization Plan,
                                   and completing all remaining actions pertaining to
                                   the phases where construction is complete. For
                                   example, although construction was completed on
                                   the Magnolia Pointe home ownership phase in
                                   March 2003, the Authority has not sold any of the
                                   units.

                          (4)      Since there is no longer a set-aside of tax credits for
                                   non-profit organizations, the Authority may have
                                   difficulty obtaining additional Low Income Housing
                                   Tax Credits needed to complete remaining phases
                                   that involve Mixed-Finance arrangements. To date,
                                   the Authority has not been successful in obtaining
                                   additional Tax Credits, and is now considering
                                   other funding arrangements to raise funds necessary
                                   to supplement the HOPE VI Grant funds. Also,
                                   without HUD’s formal approval of the Authority as
                                   lead developer it is likely the Authority will
                                   experience increased difficulty in obtaining
                                   leveraged funding necessary for the completion of
                                   future phases.

                          (5)      The proposed settlement agreement between TCG
                                   and the Authority does not provide any
                                   reimbursement to the Authority by TCG for
                                   professional fees or other costs the Authority
                                   incurred because of TCG’s lack of performance. In
                                   fact, the agreement specifically provides that neither
                                   party will be responsible to the other for any
                                   professional fees with respect to the project or
                                   dispute resolution, including attorneys, accountants,
                                   or others. Further, the agreement seems to be
                                   primarily for the benefit of the two owner entity
                                   partnerships, not the Authority.




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                            In performing its assessment, HUD should also consider
                            any other factors that could negatively affect completion of
                            the remaining phases.

Increasing risk to Grant    The circumstances are further complicated by the on-going
funds already expended      mitigation and possible litigation between the Authority
                            and TCG.         As previously discussed, TCG holds a
                            controlling interest, directly or indirectly, in the owner
                            entity partnerships.         These partnerships executed
                            Regulatory and Operating Agreements with the Authority
                            covering a period of 40 years. As such, the Authority will
                            continue to have a business relationship with TCG or its
                            affiliates for 40 years. Due to the control that TCG and its
                            affiliated entities continue to exercise over the owner entity
                            partnerships, the unresolved issues and differences between
                            the Authority and TCG may adversely impact the Grant
                            funds that have already been invested. These conditions
                            may also hamper completion of the remaining phases, as
                            well as, lead to problems with the ownership entities
                            throughout the life of the Agreements. For example, the
                            Authority has already identified projected operating deficits
                            for both the Dakota Park and Renaissance at Washington
                            Ridge projects. Thus, the Authority intends to request a
                            reduction in the number of public housing units under the
                            Renaissance at Washington Ridge phase from 109 to 99
                            units, even though the HOPE VI funding was based on 109
                            units.

                            We believe HUD needs to closely review and monitor the
                            ongoing situation to ensure HUD’s interests and
                            investments continue to be protected to the fullest extent
                            possible.     We recommend HUD review the various
                            Agreements between the Authority, TCG, and its related
                            entities for any provisions that would allow HUD to remove
                            TCG and its affiliated entities from the owner entities.

TCG failed to fulfill its   The Authority’s Notice of Default letters included citations
responsibilities as lead    of numerous breaches of the various agreements. For
developer                   example, TCG obtained loans of $250,000 and $750,000 in
                            the name of the Owner Entity Partnerships without the
                            knowledge or approval of the Authority. Further, TCG
                            inappropriately pledged interests in the Revitalization Plan
                            projects as collateral for the loans during the time the loans
                            were outstanding. Although TCG repaid the loans, it did
                            not disclose them to HUD as part of the Evidentiary

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                             Documentation submitted to HUD for review in connection
                             with the Mixed-Finance closings.

                             Further, obtaining the loans to fund development costs
                             raises concerns about TCG’s financial capacity to meet its
                             financial obligations related to the developments. TCG’s
                             financial soundness and capacity were factors HUD
                             considered when it approved the Revitalization Plan and
                             approved TCG as the lead developer.

                             The problems with TCG have adversely impacted the
  HUD should impose
                             execution of the Grant and have had a negative impact on
  administrative sanctions
                             the Authority. We believe TCG’s failure to adequately
  against TCG
                             perform and its violation of the various agreements warrants
                             HUD imposing administrative sanctions. Such actions are
                             increasingly important to protect the Secretary’s interest
                             since TCG, its affiliates, and/or principals are the lead
                             developer for other developments with other PHAs.



Recommendations              We recommend the Director, Office of Public Housing:

                             1A.      Require the Authority to repay the $296,140 to its
                                      HOPE VI Grant for ineligible legal fees and
                                      financial consultant fees. Repayment should be
                                      from non-Federal funds.

                             1B.      Require the Authority to ensure that it properly
                                      allocates future legal and financial consultant fees
                                      and ensure the HOPE VI funds are used only for
                                      eligible expenses.

                             1C.      Closely review and scrutinize future legal fees and
                                      financial consultant fees on a continuing basis.

                             1D.      Closely monitor the Authority’s attempts to recover
                                      the remaining $704,542 due from TCG. Should the
                                      Authority fail to aggressively seek recovery, or
                                      should the Authority jeopardize its legal rights to
                                      recover the funds, require the Authority to repay the
                                      funds to its HOPE VI Grant from non-Federal
                                      funds.




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                    1E.      Perform a comprehensive review of the Authority’s
                             capacity and ensure the Authority takes appropriate
                             measures to address any capacity issues to
                             successfully complete activities in accordance with
                             the Grant Agreement and Revitalization Plan. If your
                             review determines the Authority has the capacity to
                             function as the lead developer, issue formal written
                             approval and take any other necessary steps to
                             recognize the Authority as lead developer, in addition
                             to its role as Grant Administrator.

                    1F.      Review the various Agreements between the
                             Authority, TCG, and its related entities for any
                             provisions that would allow HUD to remove TCG
                             and its affiliated entities from the owner entities.

                    1G.      Closely scrutinize the proposed settlement agreement
                             between TCG and the Authority to ensure HUD’s
                             interests are protected.

                    1H.      Monitor any actual settlement that occurs to ensure
                             funds are returned to the HOPE VI Grant as
                             appropriate.

                    1I.      Closely monitor any other HOPE VI Grants in your
                             jurisdiction that involve TCG or any of its affiliated
                             entities.

                    We recommend the Deputy Assistant Secretary, Office of
                    Public Housing Investments:

                    1J.      Perform reviews of all drawdowns of HOPE VI
                             funds until HUD determines the Authority has the
                             capacity to successfully complete activities in
                             accordance with the Grant Agreement and
                             Revitalization Plan. If HUD determines the Authority
                             does not have the capacity to complete the activities,
                             terminate the Grant and recapture the remaining $7.6
                             million, or current balance, of unused funds.




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                          We recommend the Director, Departmental Enforcement
                          Center:

                          1K.      Take appropriate administrative actions under Title 24
                                   CFR, Part 24 against TCG, its known affiliates, and
                                   their principals and take any other necessary steps to
                                   protect the interest of the Secretary.




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Management Controls
Management controls include the plan of the 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 systems for
measuring, reporting, and monitoring program performance.

We determined the following management controls were relevant to our audit objectives:

o      Compliance with Laws and Regulations – Policies and procedures that management has
       implemented to reasonably ensure that resources use is consistent with laws and
       regulations.

o      Safeguarding Resources – Policies and procedures that management has implemented to
       reasonably ensure that resources are safeguarded against waste, loss and misuse.

We assessed the relevant controls by:

o      Reviewing regulations and HUD policies and procedures governing HOPE VI
       Revitalization Grants;

o      Reviewing the HOPE VI Grant, the HOPE VI Revitalization Plan, Evidentiary
       Documentation submitted to HUD as part of the Mixed-Finance closings, and other
       documentation as appropriate;

o      Interviewing HUD and Authority officials and staff; and,

o      Reviewing Authority financial and accounting records and reports.

A significant weakness exists if management controls do not provide reasonable assurance that
resource use is consistent with laws, regulations and policies; that resources are safeguarded
against waste, loss and misuse; and that reliable data are obtained, maintained and fairly
disclosed.

Based on our audit, we identified the following significant weaknesses:

o      Compliance with Laws and Regulations - The Authority paid at least $296,140 for
       ineligible expenses.

o      Safeguarding Resources – Because the Authority did not timely enforce the terms of its
       Pre-Development Agreement with TCG, it placed $990,169 of its HOPE VI Grant funds
       at substantial risk.




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Follow-Up On Prior Audits
This is the first Office of Inspector General Audit of the Authority’s Housing Development
Activities. The NCT Group CPA’s, L.L.P. completed the most recent Independent Public
Accountant audit of the Authority’s financial statements for the 12-month period ended
December 31, 2002, and provided an unqualified opinion. There were no findings or reportable
conditions with relevance or impact to our audit objectives.




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                                                                                      Appendix A

Schedule of Questioned Costs
and Funds Put to Better Use

          Recommendation                                              Funds Put to
             Number                      Ineligible 1/                Better Use 2/

                  1A                     $ 296,140
                  1D                    $ $704,542
                  1J                                                  $ 7,600,000
        Total                            $ 1,000,682                  $ 7,600,000



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law, contract or Federal, State or local
     policies or regulations.

2/   Funds Put to Better Use are quantifiable savings that are anticipated to occur if an OiG
     recommendation is implemented resulting in reduced expenditures in subsequent period
     for the activities in question. Specifically, this includes costs not incurred, de-obligation
     of funds, withdrawal of interest, reductions in outlays, avoidance of unnecessary
     expenditures, loans and guarantees not made, and other savings.




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                                               Appendix B

Auditee Comments And OIG Evaluation
Ref to OIG Evaluation       Auditee Comments




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Comment 1




Comment 2




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Comment 3




Comment 4




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Comment 5




Comment 6




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Comment 7




Comment 8




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Comment 9




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Comment 10




Comment 11




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                         OIG Evaluation of Auditee Comments


Comment 1      The Authority’s comments acknowledge only some of the multiple roles it
               assumed. As discussed in our report, the Authority assumed other significant
               roles in addition to its role as Grant Administrator. These include co-lead
               developer and partner in one of the owner entity partnerships.        Also, the
               Authority claimed that it relied on HUD’s approval of revised budgets as
               authorization to charge increased professional fees to the Grant. The Authority
               continues to fail to recognize or acknowledge that expenses incurred for the
               benefit of related entities are not allowable under the grant. As stated in the
               report, we do not believe HUD realized these expenses were for the benefit of
               the related entities and not incurred by the Authority in its role as Grant
               Administrator.

               The Authority’s comment that each of the related entities had their own
               independent counsel is not totally accurate. For example, our review of LPHC
               and LPHC2 records showed that the Authority’s legal counsel also provided
               legal services for the two related entities. This same firm, or members of the
               firm, are recorded as the Registered Agents for the related entities. Both of these
               related entities relied almost exclusively on the Authority for funding,
               accounting, and management.

Comment 2      Both during our audit and at the exit conference, the Authority’s legal counsel
               (who is the recipient of a large portion of the legal fees we consider ineligible)
               attempted to emphasize the Authority’s role as lender. The Authority’s
               comments also discuss its role as a lender and seem to attempt to place the
               Authority on the same level as a bank. The Authority only loaned $2.2 million of
               Grant funds for the Renaissance project.

               We agree the Authority has a legal right to seek reimbursement of professional
               fees from the owner/borrower entity. The expenses were for the benefit of the
               owner/borrower entity. As such, it supports our assessment that the fees were
               not eligible Grant expenses. We believe the Authority not only had a right to
               seek reimbursement, but also an obligation to do so since the funds were spent
               for ineligible purposes.

               We do not agree that the complexity of mixed finance transactions justifies the
               level of professional fees incurred and paid by the Authority. We recognize these
               fees can be exacerbated where the developer is unable to effectively or
               efficiently carry out its responsibilities, and we recognize the Authority assumed
               additional responsibilities because of the lead developer’s lack of performance.
               However, we believe some of the responsibilities the Authority assumed



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              represent an expansion of the co-lead developer role beyond that originally
              envisioned. We agree the Authority should collect the costs associated with these
              additional duties and responsibilities from the developer. However, because the
              costs were ineligible and the Authority should not have paid them, the Authority
              should repay the funds to its Grant whether or not it collects them from the
              developer.

Comment 3     The Authority is incorrect in its statement that an in-dept examination of the legal
              and consulting fees did not occur, and in its statement in the Conclusion section that
              OIG did not comply with Government Auditing Standards (GAS). GAS does not
              require that we examine 100 percent of the bills to reach our conclusion. We
              initially examined a sample of the bills and interviewed key Authority personnel to
              determine how the Authority allocated the bills and charged them to the various
              projects and entities. At the time of our review, legal fees totaled $643,409 of
              which we examined bills totaling $209,013 or 32 percent. Financial consultant fees
              totaled $137,960 of which we examined $39,995, or 28 percent. We then learned
              the Authority along with its legal counsel and financial consultant had already
              performed a review of the fees. We verified the validity and reliability of the results
              of this detailed review by (1) discussing the review with Authority personnel and
              Authority legal counsel to gain an understanding of the methodology and logic used
              for the review, (2) testing a sample of the results by comparing them with our initial
              sample results, and (3) reviewing the accounting records.

              We accepted the Authority’s results as credible evidence directly related to our
              audit objective, which is an accepted GAS auditing technique. While the
              Authority used the resulting dollar amount from its detailed review as the basis
              for seeking reimbursement, we used the results to reach our conclusion
              concerning the eligibility of these fees.

Comment 4     HUD’s approval of budget revisions does not constitute a determination that the
              professional fees were eligible. HUD relies on the Grant Administrator to
              ensure expenses are eligible.

              To be allowable in accordance with OMB Circular A-87, costs must be net of all
              applicable credits. Applicable credits refer to those receipts or reductions of
              expenditures that offset or reduce expense items allocable to Federal award
              direct or indirect costs. To the extent that such credits accruing to or received by
              the governmental unit relate to allowable costs, they shall be credited to the
              Federal award either as a cost reduction or cash refund, as appropriate. The
              Authority states that it has the legal authority to seek reimbursement for




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               professional fees, and that it has taken action to seek reimbursement of
               $296,140, $270,437 for legal fees and $25,703 for financial consultant fees.
               Such a reimbursement constitutes the basis for an applicable credit discussed
               by OMB Circular A-87.

               Based on the Authority’s efforts to seek reimbursement, the Authority seems to
               agree that the expenses should not be borne by the Grant, but by the developer or
               the owner entity partnerships. We agree with the Authority on that issue.
               However, the Authority has not provided assurance that if it does receive
               reimbursement, it will return the funds to its Grant. Also, the Authority
               continues to fail to recognize that in its role as Grant Administrator it was
               responsible for ensuring funds were used only for authorized expenses.

Comment 5      The reimbursement the Authority is seeking is for expenditures it made as far
               back as December 2000. As stated in our report, the Authority did not have
               adequate controls, which resulted in the Authority paying the ineligible
               expenses. If the Authority had proper controls and accounting procedures in
               place, then the basis for the reimbursement would have been established much
               earlier.

               The Authority’s position that the entire $938,431 of predevelopment advances to
               TCG could have been treated as a construction loan between TCG and the
               Authority is moot. The Authority has not provided documentation to support
               that there was ever a construction loan between TCG and the Authority. The
               primary method for handling the advances, as provided in the Predevelopment
               Agreement was for the advances to be considered a loan (but not the
               construction loan discussed by the Authority) that would be repaid at the time of
               Mixed-Finance closing or credited to the Authority’s obligation to fund the
               project. The Authority’s suggestion that a construction loan could have been
               executed between TCG and the Authority to cover the outstanding advances has
               no bearing on what actually happened. The fact remains that the Authority did
               not take any of the possible actions provided in the Predevelopment Agreement
               in a timely manner. As such, the funds remain at risk.

Comment 6      We do not agree with the Authority’s position that the $652,804 was never at
               risk, or that the recent offset has fully satisfied this outstanding advance. The
               $652,804 was disbursed (advanced) for the specific purpose of paying the
               corresponding pre-development expenses. Disbursement of the funds resulted in
               the funds being outstanding and thus at potential risk at that point in time. Since
               the advances were allowable under the Predevelopment Agreement, the risk
               would have been considered minimal and acceptable if the Authority had
               adequately enforced the terms of the Predevelopment Agreement.



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            The Authority claims it made accounting entries and adjustments on its books to
            treat the $652,804 as an offset. However, the proposed settlement agreement
            between TCG and the Authority, does not clearly address the $652,804, or
            whether TCG is in agreement with the offset. We have other concerns with the
            settlement agreement, which we discuss in our Comment 10.

Comment 7   The Authority now claims the $51,738 it paid local vendors was paid from
            Section 8 administrative fees and that it has recouped funds in excess of this
            amount. This position is contrary to the explanations the Authority provided us
            during the audit. Upon our questioning the source of funds, the Authority’s
            Director of Operations and Finance told us, and confirmed in writing, that the
            Authority made the payments from HOPE VI funds. Further, according to its
            accounting records, the Authority charged the expenses to the HOPE VI grant.
            The Authority did not provide support for its claim that it has recouped funds in
            excess of the $51,738.

Comment 8    Our draft audit report recommended HUD perform a comprehensive review and
            make a determination as to the Authority’s capacity to function as lead
            developer. Thus, it is appropriate that the Authority provide detailed information
            to HUD for their review so that HUD can begin its assessment.

            We cannot attest to the Authority’s assertion that it has saved over $500,000 on
            two mentioned projects by its intervention. If the Authority played the de facto
            role of developer and construction manager because of the developer’s lack of
            performance, it should be compensated for its efforts with a developer’s fee to be
            paid from non-Federal funds. TCG should pay the Authority for any duties it
            had to undertake because of TCG’s failures.

            The Magnolia Point project was completed in March 2003, but the Authority has
            not sold any of the units. The Authority cites development of the project as an
            example of its capacity to serve as lead developer. We do not believe this is a
            successful development since the units have sat vacant for over 16 months.
            Since the units have not been sold, the Authority has forgone the expected sales
            revenue that was to be used for other phases of the Revitalization Plan. This
            delay has also deprived low and moderate-income families of the opportunity to
            purchase these affordable housing units at a time of historically low mortgage
            interest rates.




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Comment 9      The Authority provided several comments concerning completion of future
               phases of the Revitalization Plan. It claimed that all charges to future phases are
               appropriate, increased professional fees have not jeopardized completion of the
               Revitalization Plan, grant funds are not at risk, and a sufficient number of units
               will be completed to comply with regulatory requirements. As future phases
               were not in the scope of our audit, we did not reach any definite conclusions in
               our report. We included examples of areas of concern in the report based on the
               information available to us at that time and expressed our concerns and opinions
               for the purpose of advising HUD that it needs to consider the issues in its review.
               For example, the Authority argues that our draft report stated that the Authority
               had requested to reduce the number of units in Renaissance from 109 to 99. For
               clarification, we did not say that such a request had been made, only that the
               Authority intended to make the request, which the Authority recognizes in its
               comments. We did not perform an assessment as to what, if any, effect this might
               have on the Revitalization Plan. However, given this issue and the other concerns
               raised in the report, the significant amount of remaining unused HOPE VI funds,
               and the importance of the Authority’s Revitalization Plan for all interested parties,
               we believe it is imperative that HUD perform a comprehensive review to ensure the
               Authority can successfully complete the remaining phases. Hopefully, HUD’s
               assessment will resolve our concerns and the goals of the Revitalization Plan will be
               met. If not, HUD must protect its interest by terminating the Grant.

Comment 10     The Authority and TCG continue to attempt to resolve their disputes. After
               completion of our fieldwork, the Authority provided us a copy of a proposed
               settlement agreement. The Authority claims that once the settlement is
               completed all development costs will be paid in full and TCG will have paid in
               excess of $550,000 over and above those amounts paid prior to
               December 31, 2003. The Authority also claims there will be no impact on its
               ability to focus on future phases. First, we must emphasize that HUD has not
               approved the agreement, and as far as we are aware, no resolution has actually
               occurred. Thus, neither the Authority nor the OIG knows what, if any,
               settlement will actually occur. Further, the Authority inevitably will continue to
               have to focus resources, including funds for legal fees, to resolve the disputes
               until a settlement is approved. We did not perform a comprehensive review of
               the proposed agreement. However, based on our limited review, we are
               concerned that the agreement does not provide any reimbursement to the
               Authority by TCG for professional fees or other costs the Authority incurred
               because of TCG’s lack of performance. In fact, the agreement specifically
               provides that neither party will be responsible to the other for any professional
               fees with respect to the project or dispute resolution, including attorneys,
               accountants, or others. Further, the agreement seems to be primarily for the




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             benefit of the two owner entity partnerships, not the Authority. HUD should
             closely scrutinize the proposed agreement to ensure its interest is protected
             before granting approval. Further, HUD should monitor the actual settlement to
             ensure funds are returned to the HOPE VI Grant as appropriate. We added
             recommendations to the Finding to address these issues.

Comment 11   Our report accurately presents the facts we found during our review, are
             adequately supported, and represent valid conclusions and concerns. At no time
             were we unwilling to modify the findings if appropriate based on the Authority’s
             comments. The Authority did not provide any information at the exit conference
             that justified making changes to the report, which we communicated to them at
             that time. Conversely, had the Authority provided information warranting
             revisions at the exit conference, we would have communicated to them that we
             would make appropriate changes. We informed the Authority its complete
             written comments would be included as part of the final report as well as our
             responses to the comments. Inclusion of the Authority’s complete written
             comments in the final report is assurance that the reader has full knowledge of
             the Authority’s position.

             We reviewed the Authority’s written comments and made appropriate changes to
             the finding. For example, based on the Authority’s comments that we drew
             serious and reputation-damaging conclusions that were not supported as required
             GAS, we added additional clarification on our methodology. While we do
             believe the issues in the Finding are serious, we did not intend to damage the
             Authority’s reputation. We understand the Authority is in a difficult position
             because of TCG’s lack of performance. However, the fact remains that the
             events discussed in our report did occur and at least to some extent, could have
             been prevented or minimized if the Authority had taken appropriate steps sooner.
             The Authority knew, or should have known TCG was not adequately staffed, it
             did not pay its predevelopment loan after the closing, and it did not pay some
             vendors. The Authority should have taken quick action that might have helped
             mitigate some of the resulting difficulties.




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