oversight

Audit of Milford, CT, Housing Authority's Capital Fund Program, Development Grants for Scattered Sites, Section 8 Voucher Program, and Specific Administrative Policies and Procedures

Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-04-25.

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

                                                                 Issue Date
                                                                              April 25, 2005
                                                                 Audit Report Number
                                                                              2005-BO-1003




TO:         Donna J. Ayala, Director, Office of Public Housing, 1APH


FROM:
            John Dvorak, Regional Inspector General for Audit, 1AGA


SUBJECT: Audit of Milford, CT, Housing Authority’s Capital Fund Program, Development
           Grants for Scattered Sites, Section 8 Voucher Program, and Specific
           Administrative Policies and Procedures

                                   HIGHLIGHTS

 What We Audited and Why

             As part of our annual plan, we audited the Milford Housing Authority (Authority)
             of the City of Milford, CT, to determine whether the Authority’s Capital Fund
             program was operating in an effective and efficient manner and in compliance
             with its U.S. Department of Housing and Urban Development (HUD) Annual
             Contributions Contract, applicable laws, and contractual requirements. Our initial
             survey results identified additional risk areas. Therefore, we expanded the scope
             of our audit to include the Authority’s public housing development grants for
             scattered sites, Section 8 Voucher program, and specific administrative policies
             and procedures.

             The audit was conducted between June 2003 and February 2004 and covered the
             period January 1, 2000, through December 31, 2003. When appropriate, the audit
             was extended to include other periods.

             We conducted our audit in accordance with generally accepted government
             auditing standards.
What We Found


         Our audit identified eight findings, resulting in questioned costs and opportunities
         for funds to be put to better use totaling $1,525,796 (see appendix A). We
         determined that the Authority failed to:

            •   Address exigent health and safety issues at its Foran Towers project;

            •   Manage its Harrison Avenue Renovation Project in an effective and
                efficient manner;

            •   Use development funds for scattered site units on necessary and needed
                expenditures, maintain an inventory for the prematurely replaced or newly
                purchased scattered site equipment, and comply with Section 504
                handicapped requirements for the development of scattered site units;

            •   Comply with Federal requirements and its own contracts for legal services
                incurred;

            •   Implement adequate management controls and procedures over Section 8
                inspections;

            •   Lease-up Section 8 units at an acceptable rate;

            •   Comply with HUD procurement regulations and its own procurement
                policy; and

            •   Obtain the required HUD approval for the Executive Director’s 5-year
                employment contract and establish performance measurements and
                execute performance evaluations for the Executive Director, properly
                charge HUD programs for personal use of the Executive Director’s
                automobile, comply with requirements for executive sessions, and
                perform employee evaluations for staff.

         The above conditions occurred because the Executive Director and Board of
         Commissioners failed to establish policies and management controls necessary to
         comply with the Annual Contributions Contract. As a result, the Authority did
         not provide safe, decent, and affordable housing for many families, made
         questionable expenditures, and lost opportunities to put funds to better use.




                                          2
What We Recommend


         We recommend that the Authority:

            •   Prioritize the repair and/or replacement of the brick façade and sanitary
                piping at Foran Towers using available operating reserves and Capital
                Funds;

            •   Reimburse the Scattered Site Development fund $135,824 from
                nonfederal funds for the premature replacement of kitchen appliances,
                kitchen cabinets and countertops, furnaces, and roofs;

            •   Comply with the Section 504 handicapped-accessible regulations covering
                the development of scattered sites;

            •   Reimburse its applicable programs from nonfederal funds for the
                ineligible legal costs and develop adequate management controls over
                legal expenditures, including the requirement to obtain the concurrence of
                HUD’s Regional Counsel before incurring any legal costs related to
                matters involving litigation;

            •   Reimburse HUD $26,280 from nonfederal funds for the Section 8
                administrative fees collected by the Authority when its Section 8 program
                units did not meet housing quality standards;

            •   Implement an effective system to ensure all outstanding housing quality
                standards deficiencies are monitored and corrected within the required
                time. This will result in future housing assistance payments being put to
                better use than the $280,628 paid for substandard housing;

            •   Submit a monitoring plan to ensure they use all available Section 8
                funding;

            •   Implement controls to ensure it complies with HUD regulations and its
                own procurement policy in awarding competitive and noncompetitive
                contracts;

            •   Submit the Executive Director’s current contract for HUD approval and
                establish specific goals and measurements to evaluate the Executive
                Director’s performance; and

            •   Reimburse its applicable programs from nonfederal funds $25,347 for the
                Executive Director’s personal use of vehicle.

                                          3
           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.


Auditee’s Response


           We held an exit conference with the Milford Housing Authority (Authority) on
           January 20 and 21, 2005. We provided the Authority our discussion draft report
           during the exit conference.

           On January 27, 2005, we requested the Authority to provide comments on our
           draft audit findings by February 11, 2005. At the Authority’s request, we
           provided an 11-day extension for submission of comments. The Authority’s
           written response to the draft report was received on February 22, 2005.

           The Authority disagreed with the majority of the findings and recommendations,
           and provided only limited additional factual data over what had been provided
           during the course of the audit to support their disagreement. However, we
           withdrew two recommendations related to Finding 2 and modified several others
           based on the factual data provided in the response. In addition, the Authority has
           taken corrective action on several recommendations that should correct the cited
           deficiencies. We included the complete text of the Authority’s response, and our
           comments to the Authority’s response in appendix B of this report. The Authority
           also submitted approximately 250 exhibits with their response, but the exhibits
           added little support for the responses. The exhibits were not included as part of
           this report, and will be available to HUD upon request and to the public through a
           freedom of information request.




                                            4
                              TABLE OF CONTENTS

Background and Objectives                                                                6

Results of Audit
        Finding 1: Authority Failed To Address Exigent Health and Safety Issues at       7
                   Foran Towers
        Finding 2: The Authority Failed To Manage Its Harrison Avenue Renovation         12
                   Project in an Effective and Efficient Manner
        Finding 3: The Authority’s Use of Development Funds Was Unnecessary and          16
                   Wasteful
        Finding 4: The Authority Failed To Comply with Federal Requirements and Its      20
                   Own Contracts for Legal Services
        Finding 5: The Authority Lacked Adequate Management Controls and                 28
                   Procedures Over Section 8 Inspections
        Finding 6: The Authority Failed To Lease Section 8 Units at an Acceptable Rate   35
        Finding 7: The Authority Failed To Comply with HUD Procurement                   39
                   Regulations and its Own Procurement Policy
        Finding 8: The Authority Had Deficiencies in Several Administrative Policies     46
                   and Procedures

Scope and Methodology                                                                    53

Internal Controls                                                                        56

Follow-up on Prior Audits                                                                57

Appendixes
   A.   Schedule of Questioned Costs and Funds To Be Put to Better Use                   58
   B.   Auditee Comments and OIG’s Evaluation                                            59
   C.   Schedule of Premature Replacements for Scattered Sites                           112
   D.   Schedule of Federal Subsidies Expended for Substandard Housing                   114
   E.   Schedule of Questioned Administrative Fees the Authority                         116
        Received To Manage Substandard Housing




                                               5
                     BACKGROUND AND OBJECTIVES

The Milford Housing Authority (Authority) of the City of Milford, CT, was created in
accordance with Section 8-40 of the Connecticut General Statutes to provide low-income public
housing for qualified individuals. The Authority contracted with the Federal Government, acting
through the U.S. Department of Housing and Urban Development (HUD), for financial
assistance for low-income public housing pursuant to the United States Housing Act of 1937, as
amended.

The Authority also contracted with the State of Connecticut Department of Economic and
Community Development for the financial assistance of housing projects for the elderly through
capital grants and/or loans pursuant to Sections 8-70 and 8-114a of the Connecticut General
Statutes.

At the completion of our audit fieldwork, the Authority owned 313 units of Federal low-income
housing and administered a regional Section 8 program with 266 units. The Authority’s main
office is located at 75 DeMaio Drive, Milford, CT. The daily operations are managed by the
Executive Director, who was appointed by a five member Board of Commissioners. The Board
of Commissioners was appointed by the City’s Mayor. The Authority has a staff of 11
employees. Revenue for fiscal year 2003, the last period for which audit financial statements
were available, was $5.3 million.

Since fiscal year 2000, HUD’s Capital Fund program has provided annual funding to public
housing authorities. The funds provide for capital and management activities, including
modernization, correcting physical deficiencies, financing, and development of public housing.
The Capital Fund grants are awarded noncompetitively and are based on a formula that considers
the existing and future modernization needs of a public housing authority.

The Authority applied for and received two grants from HUD for $1,696,950 and $1,835,900 to
develop scattered site low-income public housing in Milford, CT. Efforts to develop the housing
with these grants was rejected in 1995 by the Authority’s Board of Commissioners. This action
resulted in lawsuits filed by the U.S. Department of Justice and the National Association for the
Advancement of Colored People in the fall of 1998. Subsequently, a Settlement Agreement was
reached between the parties whereby the Authority agreed to develop up to 28 units of low-
income public housing over the course of 3 years. HUD agreed to consolidate the development
grants into one development program (CT26-P030-009-91F) for $3,532,850. In addition,
$254,241 of 1998 Capital Grant Program funds were reallocated for development purposes for a
total budget of $3,787,091.

Our overall audit objective was to determine whether the Authority was operating its Capital
Fund, Development Fund, and Section 8 Voucher programs in an effective and efficient manner
and in compliance with HUD regulations, applicable laws, and contractual requirements. We
also reviewed specific administrative policies and procedures at the Authority.


                                                6
    RESULTS OF AUDIT

                   Finding 1: The Authority Failed To Address Exigent Health
                   and Safety Issues at Foran Towers

                    The Authority failed to address exigent health and safety issues at the Foran
                    Towers development 1, as required by the Annual Contributions Contract. We
                    identified $838,000 in funds that should be put to better use by reallocating the
                    funds from the Authority’s Harrison Avenue development 2 to Foran Towers,
                    which continues to have a more urgent and immediate need.

                    These conditions occurred because the Authority’s Executive Director and Board
                    of Commissioners gave the Harrison Avenue Phase III renovations priority over
                    Foran Towers. The Executive Director and the Authority’s General Legal
                    Counsel continually asserted to HUD officials that the Authority had a binding
                    contract for Phase III of Harrison Avenue at a cost of $838,000. However, the
                    Authority had removed Phase III work from the contract and was in dispute as to
                    the contract credit amount. They also stated that it would cause serious legal
                    problems and cost the Authority a great deal of money if it attempted to break its
                    contract. They further stated that the New Haven, CT, Legal Assistance Branch
                    of the National Association for the Advancement of Colored People would likely
                    sue the Authority if program funds were reallocated from Harrison Avenue to
                    Foran Towers. We found no evidence to support their claims. As a result, the
                    elderly tenants at Foran Towers were exposed to unsafe and unsanitary conditions
                    since 1999.

HUD Requirements



                    The Annual Contributions Contract requires the Authority to operate each project in
                    a manner that promotes serviceability, efficiency, economy, and stability. The
                    Annual Contributions Contract states in part that the Housing Authority shall at all
                    times develop and operate each project solely for the purpose of providing decent,
                    safe, and sanitary housing.

                    The health and safety concerns at Foran Towers include a damaged brick façade
                    on the building’s exterior and the poor condition of sanitary piping. Both are
                    considered to be emergency repair items and a potential threat to human life. In
                    addition, the roof and windows need replacement.

1
    The Foran Towers development is a housing project for the elderly.
2
    The Harrison Avenue development is a family housing project.
                                                           7
Harrison Avenue Renovation
Contract



             On November 2, 2001, the Authority awarded a contract for $2,340,000 to
             complete renovations of 45 family units at its Harrison Avenue development. The
             contract was divided into three phases. Phases I and II were for the renovation of
             25 units, and Phase III was for the renovation of the remaining 20 units.


The Authority Failed To
Properly Deduct Phase III



             The Authority’s General Legal Counsel established a two-step process to issue a
             notice to proceed with the construction because the Authority did not have
             sufficient funds to complete the entire project. The Authority requested HUD
             approval to issue bonds by pledging future Capital Fund program grants as
             collateral. The two step-process was intended to provide the Authority with time
             to deduct Phase III and its $838,000 cost if HUD did not approve the issuance of
             bonds. The last date on which the Authority could exercise the deduct option
             without penalty was February 28, 2002. If the bonds were approved, there would
             be a second step, meaning a notice to proceed for Phase III would be issued.
             HUD did not approve the bonds, and the Authority failed to exercise the option to
             deduct Phase III in writing before the expiration date.

             The Authority’s General Legal Counsel stated that he notified the contractor by
             telephone, leaving a voicemail on February 28, 2002, that the Authority was
             exercising the option to deduct Phase III. However, the contractor disputed this
             assertion. This resulted in a contract dispute for $91,938 and legal costs incurred
             by both parties. Although the dispute was settled in favor of the Authority we
             maintain that had the Authority exercised the option in writing by February 28,
             2002, there would have been no dispute (see finding 2).

             We asked the Executive Director to explain his involvement in notifying the
             contractor that the Authority would not be going forward with Phase III. The
             Executive Director did not respond to our inquiries.




                                              8
Serious Health and Safety
Issues at Foran Towers not
Addressed


             Serious health and safety issues at Foran Towers were not addressed. The
             Authority must prioritize repairs at Foran Towers before considering renovations
             at other projects. There are serious health and safety issues at Foran Towers such
             as a damaged brick façade and poor sanitary piping that have not been properly
             addressed by the Authority. Based on the Real Estate Assessment Center’s
             inspections dating back to 1999 and four engineering studies, the poor condition
             of the brick façade is considered to be a major concern, and at least three of the
             engineering studies showed that the conditions were a threat to human life. In
             addition to a chain link fence installed as a result of the first engineering study,
             the U.S. Army Corps of Engineers (Corps) determined that the front of Foran
             Towers was an area of particular concern. As an interim measure, the Corps
             requested that a protective canopy be installed along the front of the building to
             protect residents and visitors. The Corps stated that this measure was intended as
             only a temporary solution since the condition of the brick façade would continue
             to deteriorate, suggesting that permanent replacement or repairs be completed as
             soon as possible. The following photograph of Foran Towers shows the
             protective canopy and fencing.




             The most recent engineering study, completed on February 11, 2004,
             recommended that additional safety measures be initiated within the next 12
             months. This study estimated costs to correct the overall masonry construction
             deficiencies, including window replacement, ranging from $829,615 to

                                               9
              $1,171,200. The study did not evaluate the condition of the building’s sanitary
              piping. However, a previous engineering study estimated the cost of replacing the
              piping at $134,200.

              HUD officials have repeatedly requested that the serious health and safety issues
              at Foran Towers be addressed. The Authority has continually asserted the lack of
              funds due to a binding contract for Harrison Avenue renovations. However, as
              stated above, the Authority removed Phase III work from the contract in 2002 but
              is in dispute as to the contract credit amount (see finding 2). As a result, the
              elderly tenants at Foran Towers were exposed to unsafe and unsanitary
              conditions.

              Since Phase III is no longer an option, the $838,000 set aside for Phase III could
              realistically be used for repairs at Foran Towers. In a letter, dated March 27,
              2003, the Director of the New England Office of Public Housing informed the
              Authority that in addition to Capital Funds, funding sources for Foran Towers
              could include operating reserves, excess Section 8 administrative fees, and other
              unrestricted cash.


Available Funds of $1,234,595


              To determine Operating Reserves available for Foran Towers, we used an analysis
              of the availability of operating reserves performed by the Authority's Fee
              Accountant and updated information from the Independent Public Accountant’s
              report for fiscal year 2003. According to our analysis, the Authority would have
              approximately $388,373 for general purposes as of December 31, 2003.

              As of December 31, 2003, the Authority had $1,321,387 in unexpended Capital
              Funds program funds. The estimated amount required to complete Phases I and II
              at Harrison Avenue was $475,165. As a result, available Capital Funds were
              estimated to be $846,222 ($1,321,387 minus $475,165). Therefore, the Authority
              had a total of $1,234,595 ($388,373 plus $846,222) available to make necessary
              repairs at Foran Towers.


 Conclusion



              The Authority’s Executive Director and Board of Commissioners prioritized the
              Harrison Avenue Phase III renovations over the more urgent needs at Foran
              Towers. The Executive Director misled HUD by asserting that the Authority had
              a binding contract for Phase III and by indicating that the National Association for
              the Advancement of Colored People would sue the Authority if funds were
                                               10
          reallocated from Harrison Avenue to Foran Towers. As a result of the current
          conditions at Foran Towers, the project’s elderly tenants are exposed to unsafe
          and unsanitary conditions.




Recommendations



          We recommend that HUD’s Director of Public Housing, Boston Regional Office,
          assure that the Authority:

          1A. Prioritize the repair and/or replacement of the brick façade and sanitary
              piping at Foran Towers, using available operating reserves and Capital
              Funds. If the available Authority funding is exhausted, the Authority may
              apply for emergency funding.




                                          11
           Finding 2: The Authority Failed To Manage Its Harrison
           Avenue Renovation Project in an Effective and Efficient
           Manner

           The Authority did not adequately address important matters related to construction
           activities at its Harrison Avenue development in an effective and efficient manner.
           The Authority failed to:

               •   Provide timely written notification to a construction company hired for
                   Harrison Avenue renovations of its decision to deduct Phase III (costing
                   $838,000) from the contract,

               •   Ensure the timely completion for Phases I and II of Harrison Avenue
                   renovations, and

               •   Repair and reoccupy vacant units for Phase III at Harrison Avenue.

           These problems occurred because the Executive Director did not make timely
           decisions and the Board of Commissioners failed to monitor the Executive
           Director’s actions. In addition, because there were significant delays in completing
           the construction work at Harrison Avenue, individuals were deprived of housing.


Phase I and II Not Completed
in a Timely Manner


           The Authority failed to ensure that Phases I and II for Harrison Avenue were
           completed in a timely manner. According to the contract, allowing 324 days for
           completion, Phases I and II should have been completed by January 15, 2003.
           Change orders added 164 days, resulting in a revised completion date of May 19,
           2003. However, Phases I and II were not completed until February of 2004.

           We determined that the large number of change orders, a total of 16, and the
           Executive Director’s failure to make decisions and approve change orders in a
           timely fashion contributed to the delays. It took the Authority an average of 43
           days to approve change orders once the construction company submitted its final
           change order proposals even though the construction company had already
           worked out the change orders with the Authority’s Modernization Coordinator
           and Architect.

           The Architect and the construction company stated that the Executive Director had
           difficulty approving change orders. For example, the project’s laundry room was
           redesigned three times, and the Executive Director was slow to decide on interior
                                            12
           doors and tub surrounds for bathroom renovations. Both the Architect and the
           Authority’s Modernization Consultant stated that the construction company incurred
           staffing problems due to the Authority’s failure to make timely decisions.

           We used the Architect’s analysis, which showed a completion date of May 19,
           2003, to project lost rental income of $55,390 for unoccupied units from May 19,
           2003, through January 31, 2004. In addition to the lost rental income, there were
           lost housing opportunities for individuals on the Authority’s waiting list, which
           consisted of 175 applicants.

The Authority Failed To Ensure
Completion of Work



           We found no evidence that the Authority aggressively monitored construction
           progress, quantified delays, or took appropriate action to complete Phases I and II
           on schedule even though the contract contained a liquidating damages clause for
           contractor-caused delays. The construction company reported in the Construction
           Minutes as early as August 16, 2002, that the work was behind schedule.
           However, the Authority took no action.

           We asked the Executive Director what measures he took to ensure that the
           construction company completed Phase I and II renovations in a timely manner and
           requested any letters, e-mails, or other evidence to show the actions taken. The
           Executive Director has not responded to our request.


 Vacant Units Not Rehabilitated
 and Reoccupied


           Once the Authority made the decision to deduct Phase III from the contract in
           April 2002 (see finding 1), it should have immediately planned to rehabilitate and
           reoccupy the vacant units. In a February 15, 2002, letter to HUD headquarters,
           the Executive Director stated that the last 20 units (Phase III) of family housing
           would not be available for reoccupancy due to noncompliance with uniform
           physical condition standards—unless HUD approved the bond issuance. The
           Executive Director further stated that there would be insufficient funds to bring
           the units into compliance with uniform physical condition standards for a very
           long time, if ever.

           We determined that the Authority could have renovated most of the units at
           minimal cost. The Authority could have used $20,330 in lost rental income to
           fund these repairs. In addition to the lost rental income from the vacant units,

                                            13
             families are being deprived of needed housing. The Authority has approximately
             175 families on its waiting list.

             Currently, 13 of the 20 units in Phase III remain unoccupied. Inspections
             performed by the Authority’s Work Maintenance Supervisor in October 2003
             showed that 9 of the 13 unoccupied units in Phase III could be brought up to
             uniform physical condition standards for the estimated cost of $19,200. The nine
             units include 156B, 156C, 156D, 158A, 158C, 162A, 162B, 162C, and 164A.
             The Office of Inspector General (OIG) and the local HUD Office of Public
             Housing inspected the units in December 2003 and concurred that the units did
             not require extensive rehabilitation and could be brought on line at minimal cost.

Vacant Units in Unsanitary
Condition

             The remaining four unoccupied units in Phase III will require more extensive
             work. However, the Authority should make every effort to bring these units on
             line. Although the Authority may not be able to make immediate repairs to those
             units, it should clean them. An example of the units’ current condition follows
             (Unit 162D).




Conclusion



             The Executive Director’s failure to make timely decisions and the Board of
             Commissioners’ failure to monitor the Executive Director’s actions regarding
             construction activities at Harrison Avenue led to a serious dispute with the
                                               14
          construction contractor. Also, the significant delays in completing the
          construction work in Phases I and II and the Authority’s failure to occupy units
          initially designated for rehabilitation in Phase III deprived individuals of housing.


Recommendation



          We recommend that HUD’s Director of Public Housing, Boston Regional Office,
          assure that the Authority:

          2A.    Rehabilitate and prepare vacant units in Phase III at Harrison Avenue for
                 occupancy.




                                           15
           Finding 3: The Authority’s Use of Development Funds Was
           Unnecessary and Wasteful

           The Authority used $135,824 of development funds on unnecessary and
           premature replacement of equipment and other items at its scattered site
           properties. The Authority also failed to maintain an inventory of the newly
           purchased or replaced equipment that included new stoves, refrigerators and
           furnaces. HUD requires a cost-benefit analysis whenever early replacement of
           equipment is planned as cited in Public Housing Modernization Standards
           Handbook 7485.2, REV-1, Section 1-4. Weak management controls allowed the
           Authority to purchase and replace appliances, kitchen cabinets, furnaces, and roof
           tiles prematurely. Weak management controls also resulted in the Authority’s
           failure to maintain an inventory for the newly purchased and prematurely replaced
           equipment. Without an inventory of new equipment, the Authority has no
           accounting of what it owns and cannot readily plan its future maintenance needs
           or determine the disposal of the replaced equipment. The Authority’s failure to
           manage the scattered site program in an economical and efficient manner has
           resulted in fewer development funds being available for other public housing
           needs. In addition, the Authority did not resell any of the equipment they
           replaced that was saleable and reusable.

           The Authority also did not provide a handicapped-assessable unit required under
           Section 504 of the Rehabilitation Act, and by the Settlement Agreement between
           the Authority, the U.S. Department of Justice and the National Association for the
           Advancement of Colored People. The Authority’s Executive Director said that he
           was unaware of requirements specified in the Settlement Agreement for the
           scattered sites. As a result, handicapped individuals were denied access to a
           handicap accessible unit.

Eight Properties Acquired



           The Authority acquired eight properties containing 18 units. As of January 2004,
           16 units had been rehabilitated and reoccupied.



Milford Housing Authority
Replaced All Appliances and
Made Unnecessary Renovations


           The Authority replaced kitchen appliances, refrigerators, ranges, kitchen cabinets,
           and countertops regardless of their physical condition (see appendix C). In
                                           16
           addition, the Authority replaced furnaces at five properties and roof tiles at one
           property without consideration of the physical condition of the items. Our review
           of the Appraiser’s reports and the Architect’s existing condition reviews,
           performed for each of the properties, showed that it was not necessary to replace
           these items.
           The Architect and the Authority’s Consultant stated that the Authority decided to
           replace all ranges with electric stoves and to replace all refrigerators regardless of
           their condition. The Architect stated that the Authority’s Executive Director
           preferred gas heat furnaces to oil. Therefore, if the scattered site unit’s furnace
           used oil, it was converted to gas regardless of the condition of the furnace. We
           determined that for at least three properties, the furnaces were only 2 years old
           and were in good physical condition, yet they were replaced.
           The Authority was unable to provide the cost benefit analysis as required by
           HUD’s Public Housing Modernization Standards Handbook 7485.2, REV-1,
           Section 1-4, concerning premature replacement. Accordingly, we questioned the
           cost (see appendix C) of premature replacement as unnecessary and wasteful.
           The Authority’s management decisions have resulted in less funding being
           available for other housing needs.


Lack of Inventory for Scrapped
Appliances and Furnaces

           The Authority did not maintain an inventory of scattered site equipment, such as
           stoves and refrigerators that were either discarded or purchased. The construction
           company estimated that approximately 50 percent of the refrigerators and stoves
           and 25 percent of the cabinets that were discarded were in good condition.
           Furthermore, the contractor stated that his construction company was not required
           to maintain an inventory of scrapped or replacement items. The Authority
           claimed to have relied upon the Architect, the Consultant, and Clerk of Works to
           make disposal determinations on the replaced items. However, the Authority’s
           senior management could not provide documentation to support the delegation of
           authority.
           The Authority is not performing one of its critical functions, which is to safeguard
           its assets. As a result, it received no money on record when it disposed of its
           excess equipment that was saleable and/or reusable. In addition, without an
           inventory of new equipment, the Authority has no accounting of what it owns, nor
           can it plan for future maintenance.




                                             17
The Authority Failed To Modify
Units for Handicapped
Accessibility


              The Authority did not comply with 24 Code of Federal Regulations, part 8.23b,
              which requires that a minimum of 5 percent of the units be handicapped
              accessible. Based on this requirement, at least one of the scattered site units
              should have been made handicapped accessible. According to the Architect’s
              update in May 2001 and our inspection of the property, no modifications were
              made to make these units handicapped accessible.
              The Authority’s Executive Director claimed to be unaware of the Section 504-
              handicapped accessibility requirements. The Authority’s plan for the
              development of scattered site units stated that the Authority intended to satisfy the
              Section 504 requirement that 5 percent of all newly developed, acquired, or
              rehabilitated units be accessible or adaptable to accommodate mobility impaired
              individuals. Furthermore, the Settlement Agreement stated that the Authority’s
              subsidized housing units would comply with the Fair Housing Act, Section 504 of
              the Rehabilitation Act, and HUD’s accessibility guidelines set forth in 24 Code of
              Federal Regulations, parts 40 and 100.205. We determined that the Authority did
              not comply with these requirements. As a result, handicapped individuals were
              denied access to a handicap accessible unit.


 Conclusion



              The Authority’s use of development funds for scattered site properties was
              unnecessary and wasteful. Management did not properly monitor the purchase
              and replacement of items acquired for the scattered sites and failed to maintain an
              inventory for prematurely replaced or newly purchased scattered site equipment.
              The Authority’s failure to manage the Scattered Site program in an economical
              and efficient manner resulted in fewer development funds being available for its
              public housing needs. In addition, handicapped individuals were denied access to
              the scattered site units because the Authority did not provide a handicapped-
              assessable unit as required by the Settlement Agreement.




                                               18
Recommendations



          We recommend that HUD’s Director of Public Housing, Boston Regional Office,
          assure that the Authority:

          3A. Reimburse $135,824 to its Scattered Site Development program from
              nonfederal funds for the premature replacement of kitchen appliances,
              kitchen cabinets and countertops, furnaces, and roofs.
          3B. Update and maintain an inventory of scattered site equipment including the
              date of purchase, cost, serial number and useful life.
          3C. Comply with the handicapped-accessible Section 504 regulations required
              by the Settlement Agreement.




                                         19
            Finding 4: The Authority Failed To Comply with Federal
            Requirements and Its Own Contracts for Legal Services

            The Authority did not comply with Federal requirements and its own contracts for
            legal services and incurred questionable costs of $219,717 ($215,982 in ineligible
            costs and $3,735 in unsupported costs) as follows:

            •   Litigation services were procured without the required HUD Regional Counsel
                concurrence;
            •   Payments for legal services were improperly made to defend against a lawsuit
                that the Authority erroneously thought HUD might bring against it;
            •   Separate payments were made to the Authority’s General Legal Counsel for
                services already included and paid for in his annual retainer contracts;
            •   Payments for legal services were not supported by sufficient documentation to
                justify the reasonableness of the costs; and
            •   The Authority failed to follow proper procedures in procuring legal counsel (see
                Finding 7).

            These violations of HUD requirements and Federal cost principles occurred because
            the Executive Director, the Board of Commissioners, and the General Legal Counsel
            disregarded Federal regulations and contractual requirements. In addition, the Board
            of Commissioners failed to exercise its leadership and oversight of the Executive
            Director’s actions and establish adequate management controls over legal
            expenditures. As a result, the Authority had fewer funds available for safe, decent,
            and affordable housing. A summary of legal costs paid and questioned follows:


                Type of Legal
                  Expense         Amount Paid         Ineligible     Unsupported      Total
              General Counsel        $168,673            $100,266                   $100,266
              Special Counsel         119,451             115,716            $3,735 119,451
                          Total      $288,124            $215,982            $3,735 $219,717


Ineligible Costs of $100,266
Paid to General Counsel


            For the period October 1, 2000, through December 11, 2003, the Authority
            incurred $168,673 in costs for the General Legal Counsel. We questioned
            $100,266 of these costs as ineligible because the services performed were already
            included and paid for in the General Legal Counsel’s annual retainer contract.


                                             20
General Legal Counsel
Contract Provisions



           The Authority’s contract for the General Legal Counsel recognized HUD
           regulations and contained provisions governing the conditions and process for the
           General Legal Counsel to follow to request and obtain payment for extraordinary
           services and services beyond the scope of those included in the $7,500 per year
           retainer contract.

           The General Legal Counsel’s retainer contract stated in part that the General
           Legal Counsel was to represent the Authority in matters in connection with the
           business of the Authority and the conduct of its affairs and the management of its
           properties and construction projects. The scope of services to be provided are
           outlined under item 2 of the General Legal Counsel’s contract.

           The General Legal Counsel’s contract further provides: “said attorney shall,
           whenever he is of the opinion that any certain matter of litigation exceeds the
           scope of the legal services contemplated by section 2.j or is extraordinary and
           beyond the scope of Paragraph 2. of this Agreement, he is to prepare a proposal
           for additional fees and submit the proposal and supporting documentation to the
           Authority.” The contract further states that the Authority will immediately submit
           the request to the HUD Regional Office for approval before execution and
           payment of any fees. In the event that there is a question of whether litigation or
           other matters are considered extraordinary or extra services, the contract provides
           that HUD’s Regional Counsel will make a final determination on the matter.

           Based on our review of General Legal Counsel invoices, we identified $100,266
           of ineligible charges. We determined that the retainer already covered the
           services provided. For example, the Authority made numerous payments for
           union and personnel related matters, which are covered in the retainer under
           “specific services,” described there as “advice and assistance provided to
           members and employees of the Authority with respect to Authority business” and
           “rendering legal advice with regard to union grievances on behalf of employees of
           the Authority.” Another example of charges that related to advising and assisting
           the Authority regarding Authority business, also covered in the retainer, pertains
           to various meetings and telephone conferences regarding project renovations.

           We found no evidence that the General Legal Counsel prepared and submitted
           proposals for extraordinary services except for the implementation of the
           Scattered Sites Settlement Agreement. We took no exception to those costs as
           shown in the schedule below.



                                           21
            We calculated our questioned costs by deducting charges pertaining to the
            General Legal Counsel’s separate contract for implementation of the Settlement
            Agreement, annual retainers, and amounts charged to State accounts from the
            General Legal Counsel’s total charges.

            The following table summarizes the calculation for determining the ineligible
            costs.

                           Schedule of Ineligible Legal Costs
                         Total charges                $168,673
                         Less Settlement Agreement (34,749)
                         Less retainer                  (28,767)
                         Less State charges              (4,891)
                         Ineligible costs             $100,266

            As a result of paying these ineligible costs, the Authority had fewer funds
            available to provide safe, decent, affordable housing.

Ineligible Costs of $115,716 and
Unsupported Costs of $3,735


            The Authority hired Special Legal Counsel when litigation matters arose for
            which its General Legal Counsel did not have the expertise. The Authority
            incurred a total of $119,451 for services incurred by the Special Legal Counsel
            from October 22, 2002, through December 31, 2003. Of the $119,451, $115,716
            was for ineligible costs, and the remaining $3,735 was for unsupported costs. The
            following table lists the use of the funds and whether the use was for ineligible or
            unsupported costs.

                  Schedule of Questioned Special Legal Counsel Costs
                   Use of Funds   Ineligible Unsupported Total
                 Foran Towers        $25,287                  $25,287
                 Employee lawsuit     86,688                   86,688
                 Contract dispute      3,741                    3,741
                 Labor relations                      3,735     3,735
                 Grand Totals      $115,716          $3,735 $119,451




                                             22
Public Housing Authority Shall
Not Defend Against Litigation
Without Written HUD
Concurrence


            HUD’s Litigation Handbook, 1530.1, REV-4, requires that a public housing
            authority not initiate or defend litigation, other than routine eviction actions,
            without obtaining the prior written concurrence of HUD’s Regional Counsel. In
            addition, the public housing authority must receive the Regional Counsel’s
            concurrence before expending program funds for the Authority’s defense.

            The Handbook also requires that the Regional Counsel not approve the
            expenditure of program funds for a public housing authority’s defense if he or she
            finds that the Authority has clearly violated HUD requirements or is otherwise at
            fault. HUD policy and Federal cost principles as established by the Office of
            Management and Budget do not permit a public housing authority to use project
            or program funds to pay the costs of litigation against HUD.


Milford Housing Authority
Must Send Copy of Litigation
Complaint to HUD Regional
Counsel



            HUD requires that a public housing authority engaged in litigation promptly send
            a copy of the complaint to the Regional Counsel. An authority that is threatened
            with litigation must also promptly notify HUD’s Regional Counsel of the name,
            title, and address of the complainant; the nature of the complaint; and a factual
            statement of the authority’s involvement in the subject of the complaint.
            Threatened litigation includes any communication, oral or written, announcing an
            intention to institute litigation against an authority or other HUD-assisted
            recipient.

            Office of Management and Budget Circular A-87 states that 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. It further provides that a cost is reasonable if it is
            recognized as ordinary and necessary for the performance of a Federal award and
            if the entity acted with prudence, considering its responsibilities to its employees,
            the taxpayers, and the Federal Government.

            The OIG Program Integrity Bulletin dictates that Commissioners are responsible
            for the actions and decisions made by the Executive Director to ensure that the

                                             23
            public housing authority is properly managed and is acting legally and with
            integrity.


Health and Safety Deficiencies
Reported at Foran Towers


            The Authority paid its Special Legal Counsel $25,287 to serve as counsel to
            protect the Authority and its Commissioners and staff against a possible lawsuit
            from the New Haven, CT, Legal Assistance Branch of the National Association
            for the Advancement of Colored People and against HUD, related to a
            controversy involving the proposal to reallocate funds from Harrison Avenue to
            Foran Towers. The Special Legal Counsel made the statement that HUD
            preferred that the Authority address health and safety deficiencies at Foran
            Towers before completing renovations at Harrison Avenue. The Executive
            Director expressed concern that the New Haven, CT, Legal Assistance Branch of
            the National Association for the Advancement of Colored People would likely sue
            the Authority if funds were reallocated from Harrison Avenue to Foran Towers.
            In a March 11, 2003, letter, addressed to the Authority’s Board of Commissioners,
            the Special Legal Counsel stated, in part, that it was retained by the Authority to
            provide advice and counsel with respect to the Harrison Avenue and Foran
            Towers properties.

Use of Federal Funds for
Litigation Against HUD Not an
Allowable Cost


            We determined that there was no immediate threat of a lawsuit from the National
            Association for the Advancement of Colored People. The Authority’s belief that
            the Association might initiate litigation if the Authority did not complete the
            Harrison Avenue development on schedule was based solely on a newspaper
            article in which an attorney from New Haven Legal Assistance indicated concern
            about the completion of the project. However, the belief about possible litigation
            was misguided and contrary to the facts known at the time. On March 10, 2003,
            the Litigation Director at New Haven Legal Assistance informed the Executive
            Director that she did not represent the Greater New Haven Branch of the National
            Association for the Advancement of Colored People regarding the current dispute
            over Foran Towers and Harrison Avenue and did not have any authority to sue on
            behalf of the Association or anyone else. Consequently, there was no reasonable
            basis on which to use Federal funds to hire outside litigation counsel to defend the
            Authority against a threatened lawsuit.

            As previously stated, using Federal funds for the costs of litigation against HUD
            are not an allowable legal cost. The Special Legal Counsel’s statement that HUD

                                             24
            claimed the Authority was diverting money from Foran Towers toward the
            Harrison Avenue rehabilitation was not accurate. While HUD’s Regional
            Director made known his concerns that the Authority was not properly protecting
            the safety of the elderly tenants at Foran Towers, HUD never threatened to sue the
            Authority and never alleged that the Authority had improperly diverted funds
            from Foran Towers.

Milford Housing Authority
Defended Against Litigation
Without HUD Concurrence


            The Executive Director incurred an additional $86,688 for the Special Legal
            Counsel to defend the Authority in a Federal “whistle blower” lawsuit involving a
            former employee of the Authority without obtaining prior written concurrence
            from HUD’s Regional Counsel. We considered these costs to be ineligible. The
            Executive Director failed to inform the Regional Counsel regarding the litigation
            between the Authority and the former employee and did not promptly send
            pertinent documents, such as the complaint in the case, along with the anticipated
            defenses and pleadings filed to the Regional Counsel. The Authority did not
            submit the required information until being instructed to do so by the Regional
            Counsel on April 3, 2003. This was approximately 5 months after the Authority
            began receiving services pertaining to this lawsuit.

            OIG asked the General Legal Counsel why the Authority expended funds for
            litigation without concurrence of the Regional Counsel. The General Legal Counsel
            responded that he did not hire the Special Legal Counsel but, rather, advised the
            Authority that he could not provide the required expertise since he did not have
            litigation experience.

            In a letter dated, March 19, 2003, the Regional Counsel requested that the
            Authority submit a copy of the legal service contract between the Authority and
            its Special Legal Counsel, along with a description of the scope of services for
            which the firm was hired, a detailed account of the procurement methods used in
            selecting the Special Legal Counsel, and any Board of Commissioners resolutions
            regarding such procurement. The Regional Counsel also requested an accounting
            of how much the Authority had paid the Special Legal Counsel, what funds were
            being used, and copies of any bills from the firm. The Authority failed to comply
            with the Regional Counsel’s request that this documentation be provided within a
            specified timeframe. Pursuant to part A, section 15B, of the Annual
            Contributions Contract between the Authority and HUD, the Authority is required
            to provide HUD with any program-related information and at such times as HUD
            requires. After repeated requests by the Regional Counsel, the Authority
            provided information that was not sufficient.



                                            25
           On November 13, 2003, the Board of Commissioners authorized the Executive
           Director to negotiate and enter into a retainer agreement to engage the services of
           the Special Legal Counsel to provide construction litigation services for the
           Harrison Avenue Project. There is no evidence that the Authority received the
           Regional Counsel’s concurrence before the use of $3,741 in program funds.
           Therefore, we determined that the $3,741 incurred was ineligible.

Law Firm Hired To Clarify
Bargaining Agreement


           We classified $3,735 as unsupported for Special Legal Counsel to represent the
           Authority in matters related to union negotiations with its staff. The Special
           Legal Counsel was hired specifically to assist the Authority in clarifying the
           bargaining unit makeup, including three employee members.

           The Authority’s contracted Human Resources Consultant indicated that he would
           have the capability of performing a portion of the services related to union
           negotiations provided by the Special Legal Counsel. The Consultant stated that
           he routinely competes against attorneys for these types of services he provides to
           other housing authorities. Since the Human Resources Consultant was already on
           retainer, there may have been a duplication of services. Therefore, we classified
           the $3,735 in legal services as unsupported, pending receipt of further
           documentation.

Board of Commissioners Failed
To Monitor Executive Director


           There is no evidence that the Authority’s Board of Commissioners questioned any
           of these legal services. The Board of Commissioners is responsible for the review
           and approval of the Authority’s payments. A disbursement report with a listing of
           all checks is submitted to the Board of Commissioners monthly for approval.
           Certain Members of the Board of Commissioners said that they were not aware of
           the requirement that HUD’s Regional Counsel’s concurrence was required before
           a public housing authority expended program funds for its legal defense. The
           record demonstrates that the Board of Commissioners routinely approved legal
           bills, which were submitted by the Executive Director on behalf of the General
           Legal Counsel and Special Legal Counsel, without any question or concern about
           the necessity of the services provided or the reasonableness of the costs for those
           services.

           As a result of incurring questionable legal costs, the Authority has fewer funds
           available for safe, decent, and affordable housing.



                                            26
Conclusion



             The Authority’s Executive Director and General Counsel disregarded Federal
             regulations and contractual requirements pertaining to legal expenditures. In
             addition, the Board of Commissioners failed to exercise its leadership and oversight
             of the Executive Director’s actions and establish adequate management controls
             over legal expenditures. This resulted in questioned costs of $219,717 with fewer
             funds available to provide safe, decent, and affordable housing for individuals.




Recommendations



             We recommend that HUD’s Director of Public Housing, Boston Regional Office,
             assure that the Authority:

             4A. Reimburse $115,716 to its public housing program from nonfederal funds for
                 the ineligible payments made to its Special Legal Counsel.

             4B. Reimburse $100,266 to its public housing program from nonfederal funds for
                 the ineligible payments made to its General Legal Counsel.

             4C. Provide documentation to support the $3,735 of unsupported legal costs. If
                 documentation cannot be provided, the Authority should reimburse its public
                 housing program the appropriate amount from nonfederal funds.

             4D. Implement procedures and controls to ensure that its procurement of legal
                 expenditures is performed in accordance with Federal requirements.




                                              27
           Finding 5: The Authority Lacked Adequate Management
           Controls and Procedures Over Section 8 Inspections

           The Milford Housing Authority did not have adequate procedures and controls in
           place for Section 8 Inspections. The Authority failed to ensure that:

               •   Housing quality standards deficiencies were corrected in a timely manner;

               •   Quality control procedures were implemented to verify the reliability of
                   inspection reports;

               •   Section 8 inspection reports, including failure notification letters, were
                   maintained in Milford Housing Authority files; and

               •   All units were inspected to verify that they were decent, safe, and sanitary.

           These conditions occurred because the Executive Director failed to monitor the
           Section 8 Inspector hired to perform Section 8 inspections, and did not ensure that
           the Section 8 program was adequately staffed and properly supervised. Also, the
           Authority’s failure to establish proper abatement procedures and require prompt
           corrective actions for cited violations provided landlords with little incentive to
           correct deficiencies. As a result, Federal funds were used for housing that was not
           decent, safe, and sanitary. A total of $280,628 (see appendix D) in Federal
           subsidies was expended for 63 substandard housing units. Therefore, we
           questioned $26,280 (see appendix E) in administrative fees the Authority billed
           HUD to manage these substandard units.


Goal of Section 8 Program To
Provide Safe and Sanitary
Housing


           The goal of the Section 8 program is to provide decent, safe, and sanitary housing
           at affordable cost to lower income families. HUD regulations set basic housing
           quality standards that all units must meet. The primary objective of these
           standards is to protect tenants receiving assistance under the program by
           guaranteeing a basic level of acceptable housing.




                                             28
HUD Required Prompt and
Vigorous Action To Correct
Housing Quality Standards


            Public housing authorities must inspect each unit before occupancy, at least
            annually, and at other times as needed to ensure the minimum standards are met.
            Quality control inspections must be conducted to ensure that the inspection
            program provides an accurate assessment of housing conditions. HUD requires
            that public housing authorities implement a system to promptly identify units for
            which deficiencies have not been corrected within required timeframes. Exigent
            or life-threatening violations must be corrected within 24 hours, and other defects
            must be corrected within 30 calendar days. Potential sanctions to force corrective
            action include abatement of rent and/or termination of assistance to the family.
            To ensure proper program management, HUD may reduce or offset any
            administrative fee to the public housing authority if it fails to adequately perform
            its administrative responsibilities.


Milford Housing Authority
Outsourced Inspection Services


            On March 14, 2001, the Authority entered into an agreement with a private
            Section 8 Inspector to perform its Section 8 inspections. The Section 8 Inspector
            agreed to (1) perform annual inspections, (2) document inspection results on the
            Inspector’s web site, (3) inform tenants and landlords of any housing quality
            standards violations, (4) perform follow-up inspections as needed, and (5) provide
            the Authority completed inspection reports and abatement lists for units that failed
            to meet the housing quality standards.

Serious Deficiencies Not
Corrected in a Timely Manner
for 70 Section 8 Units


            We reviewed a total of 159 failed inspections identified on the private Inspector’s
            web site, covering a 27-month period from October 2001 through December
            2003. We observed that 114 of the 159 inspections clearly showed that dwelling
            units failed to meet the housing quality standards. Our review showed that 70 of
            the 114 had serious and life-threatening deficiencies that were not corrected in a
            timely manner. Of the 70 failures,




                                             29
                •   32 failed due to missing, inoperable, or improperly installed smoke
                    detectors, and
                •   38 failed for serious deficiencies including infestation, serious structural
                    damage, electrical hazards, and furnace flues in disrepair - a carbon
                    monoxide hazard.

            It took an average of 146 days before the Section 8 Inspector confirmed that
            serious and life-threatening violations were corrected. The Authority’s average of
            146 days for corrective action is contrary to HUD’s requirements that exigent or
            life-threatening deficiencies be corrected within 24 hours and other housing
            quality standards deficiencies be corrected within 30 days. A total of 15 units out
            of the 114 with outstanding housing quality standards deficiencies that were not
            repaired within the required time remained uncorrected as of December 31, 2003.



Serious Water Leak Left
Uncorrected Led to Collapse of
Roof


            The Authority’s failure to take aggressive action to correct deficiencies had severe
            consequences. For example, the failure to correct a water leak in one unit eventually
            resulted in the roof collapsing on the property 1 year later. The unit failed inspection
            for the water leak on September 19, 2001. Inspection reports from April 15 and
            May 31 of 2002 showed that the water leakage had become more severe with
            evidence of sheetrock falling from the ceiling. On September 5, 2002, the Section 8
            Inspector reported a large hole in the ceiling caused by rain coming through the roof
            of the building. However, the Authority did not abate the subsidy payment until
            October 1, 2002, approximately 13 months after the deficiency was first observed.
            On October 12, 2002, the roof of the property collapsed while three of the four units
            were occupied. The City of Milford’s Building Inspector attributed the collapse to
            extensive water damage.


Milford Housing Authority
Failed To Adequately Monitor
Inspections


            We determined that these deficiencies went uncorrected because the Authority did
            not properly monitor the Section 8 Inspector to ensure that he performed the
            duties required by his contract. The Authority did not receive inspection reports
            and abatement lists on a consistent basis.


                                              30
Inspection Reports Not
Maintained



            The Independent Public Accountant reported in its annual audited financial
            statements for fiscal years 2001 to 2003 that the Authority’s Section 8 inspection
            files were not properly maintained because many inspection reports were missing
            from the files. Our review of the Authority’s files showed that the Authority
            retained inspection reports for only 123 of the 159 failed inspections we reviewed.
            The Authority’s visibility of inspection reports was further limited because the
            Section 8 Inspector also did not update his web site and post completed inspections
            on a consistent basis.


Section 8 Inspector Failed Units
for Minor Deficiencies


            The Authority’s employees informed the Executive Director that the Section 8
            Inspector was failing units for minor or non-housing quality standards deficiencies.
            As a result, the Authority’s Section 8 Coordinator was reluctant to take action on
            reported failures. Our review confirmed the Coordinator’s concerns and showed
            that 45 of the 123 inspections on file cited questionable housing quality standards
            deficiencies. For example, the Section 8 Inspector failed one unit based solely on
            the fact that there were unregistered vehicles in the building’s parking lot and the
            front lobby was missing tiles. Also, the Section 8 Inspector failed two units because
            the shower required recaulking.


Quality Controls Were Not
Implemented for Inspections



            The Authority failed to perform quality assurance Inspections, as required by HUD,
            pertaining to the 123 inspection reports on file. The Section 8 Coordinator stated
            that she received little assistance and direction from the Executive Director,
            particularly regarding her responsibilities for conducting quality assurance
            inspections. During our review of Section 8 files, we observed that some quality
            assurance inspections were contained in the files. However, there was no evidence
            that the Authority maintained a record of the quality assurance inspections
            performed or used the results to ensure that inspections were conducted in
            accordance with HUD’s requirements.


                                             31
Abatement Procedures Not
Implemented for Uncorrected
Deficiencies


            The Authority did not implement rent abatement procedures for landlords that
            failed to correct deficiencies within timeframes established by HUD. This
            occurred primarily because the Authority did not have an effective tracking
            system to monitor deficiencies. The current Section 8 Coordinator stated that she
            relied on the Section 8 Inspector to track deficiencies and ensure they were
            corrected. The current Section 8 Coordinator and the former Section 8 Manager
            also stated that the Section 8 Inspector failed to provide abatement reports on a
            consistent basis. The Section 8 Inspector confirmed that the reports were not
            always provided and did not send reports for a few months starting in July of
            2003.

            The Section 8 Coordinator said that she did not rely on the failure notifications to
            enforce housing quality standards because she had little confidence in the Section 8
            Inspector’s performance. Also, because she questioned the quality of the
            inspections, she was reluctant to abate payments even when the Section 8 Inspector
            provided abatement reports. The Authority abated only two payments during the
            period of June 2002 through December of 2003.


$280,628 in Housing Assistance
Payments Required Abatement



            We identified 391 subsidy payments for 63 housing units that required abatement.
            Payments totaling $282,545 should have been abated because inspection reports
            clearly showed that the units failed to meet the housing quality standards, and
            deficiencies were not corrected within the required time. However, the Authority
            abated only two payments totaling $1,917, resulting in $280,628 ($282,545 minus
            $1,917) being disbursed for substandard housing. Because the Authority failed to
            properly administer its program, we questioned the $26,280 in Section 8
            administrative fees received but not earned to manage housing units that failed to
            meet HUD’s housing quality standards.




                                             32
The Authority Failed To
Annually Inspect All Units



             The Authority has failed to ensure that 20 of its subsidized units were inspected
             within the past year. The Section 8 Inspector failed to perform 18 inspections that
             the Authority requested, and the Authority failed to request the additional two
             inspections. The Authority was not aware of the error because it did not have a
             system in place to ensure that all required inspections were conducted. Therefore, it
             could not verify that these 20 units were in decent, safe, and sanitary condition.


Executive Director Failed To
Take Appropriate Action on
Section 8 Deficiencies

             We determined the Executive Director did little to monitor known Section 8
             inspection deficiencies and did not take appropriate action as the Contracting
             Officer to ensure compliance of the Authority’s contracted Section 8 Inspector.
             The Executive Director was responsible for monitoring, detecting, and correcting
             Section 8 program deficiencies. As a result of the Executive Director’s failure to
             fulfill his assigned duties, tenants were living in unsafe and unsanitary conditions.



Conclusion

             The Executive Director failed to monitor the Section 8 Inspector hired to perform
             Section 8 inspections, and did not ensure that the Section 8 program was
             adequately staffed and properly supervised. As a result, tenants did not receive
             decent, safe, and sanitary housing, and $280,628 in Federal subsidies was
             expended for 63 substandard housing units.




                                              33
Recommendations




          We recommend that HUD’s Director of Public Housing, Boston Regional Office,
          assure that the Authority:

          5A. Reimburse $26,280 to HUD from nonfederal funds for the Section 8
              administrative fees collected by the Authority.

          5B. Establish an effective system to ensure all outstanding housing quality
              standards deficiencies are monitored and corrected within the required time.
              This will result in future housing assistance payments being put to better use
              than the $280,628 paid for substandard housing.

          5C. Implement quality control procedures to ensure inspections are accurate and
              reliable and are performed in a timely manner.

          5D. Abate subsidies for landlords that fail to correct housing quality standards
              deficiencies within the required time.

          5E. Properly supervise and adequately staff its Section 8 program.




                                           34
           Finding 6: The Authority Failed to Lease Section 8 Units at
           an Acceptable Rate

           The Authority’s utilization rate for Section 8 Vouchers is currently at 75 percent,
           which is significantly below the 95 percent level required by HUD. The lease
           rates for fiscal years 2001, 2002, 2003, and a portion of 2004 are listed in the
           following table:


                           Vouchers    Vouchers   Lease Rate
             Period        Available   Leased                    Unused Vouchers
       Fiscal year 2001    266         187        70%            79
       Fiscal year 2002    266         187        70%            79
       Fiscal year 2003    266         180        68%            86
       4/1/03 – 12/31/03   266         199        75%            67


           The Authority did not make sufficient efforts to issue more vouchers. In addition,
           we determined that the Authority was not using the correct rents for Section 8
           units. The Authority’s Family Section 8 Program Assistant did not acknowledge
           the most recent increases in fair market rents. Offering lower rents to prospective
           landlords and low voucher utilization rates resulted in reduced opportunities for
           families to obtain housing. In addition, the Authority lost $114,090 in potential
           administrative fees by not leasing 100 percent of its allocated vouchers. Most
           importantly, needy families are being deprived of housing.


HUD Requirements



           In accordance with HUD Handbook 7420.3m, REV-2, section 5-16(a), authorities
           are required to use 95 percent of their available units. The Authority must work with
           HUD to identify and correct needed adjustments in administration, such as landlord
           outreach methods or use of staff.

HUD Oversight




           On April 23, 2002, the local HUD Office of Public Housing conducted an onsite
           review of the Authority’s Section 8 Management Assessment Program. Based on
           the review, HUD requested that the Authority submit a corrective action plan to

                                            35
            address its low utilization rate. The Authority did not provide the corrective
            action plan.


Insufficient Number of
Applicants Shopping for Units



            During the past 9 months, the Authority has had an average lease rate of two units
            per month with nine applicants shopping for a unit over that period. The
            Authority should strive to increase its number of applicants shopping for units.


Section 8 Program Not
Sufficiently Staffed


            The Authority’s Fee Accountant stated that the Authority could benefit by
            increasing its Section 8 staff. The Section 8 Program Assistant stated that she did
            not have the time to work toward improving the utilization rate with her current
            workload. In addition to her duties as Program Assistant, she took over the duties
            of the Section 8/Family Housing Manager when that person retired on June 28,
            2002. Currently, only a part-time person assists the Section 8 Program Assistant.

            The Section 8 Program Assistant stated that she asked the Executive Director for
            assistance in reducing her workload. The Executive Director has not complied with
            her request.

The Authority Did Not Use
Correct Payment Standards for
Section 8


            The Authority did not use the correct payment standards for Section 8. The
            Authority’s fair market rents increased on October 1, 2003. However, the
            Authority continued to base its exception payment standards on the fair market
            rents from the September 30, 2002, Federal Register for new tenants in January
            and March 2004. The Authority’s Family Section 8 Program Assistant did not
            acknowledge the most recent increases in fair market rents. Offering the lower
            payment standards to potential landlords reduced the Authority’s opportunity to
            increase its utilization rate.




                                             36
The Authority Lost $114,090 in
Potential Administrative Fees
and Is Understaffed



            During the 21-month period of April 2002 through December 2003, the Authority
            lost $114,090 in potential administrative fees. Total administrative fees earned by
            the Authority over the same period was $264,808. Since the Authority earned
            substantial administrative fees over this period and has the potential to earn
            significantly more, the Authority should study the effect of having more staff in
            the Section 8 program, based on the Section 8 program’s current workload and
            poor performance.


Chairman of Board of
Commissioners Questioned High
Number of Unused Vouchers


            The Chairman of the Authority’s Board of Commissioners expressed concern
            regarding the Authority’s low utilization rate and indicated that the Authority
            would strive for improvements in this area. Questions regarding the Authority’s
            low Section 8 utilization rate were frequently raised at Board of Commissioners
            meetings. For example, at a Board of Commissioners meeting conducted on
            January 15, 2002, the Board of Commissioners asked questions regarding the high
            number of unused Section 8 Vouchers. An adequate response was not provided.
            The Executive Director only indicated that issues regarding the Housing Choice
            Voucher program would be addressed in the future.

Outreach Efforts to Landlords
Needed


            The Authority can improve its Section 8 utilization by including more landlords in
            the Section 8 program. One way of accomplishing this is to periodically conduct
            landlord workshops to educate new landlords on the benefits of the Section 8
            program. According to the Section 8 Program Assistant, the last time the Authority
            conducted a landlord workshop was in May 2002. The Section 8 Program Assistant
            stated that when there were two full-time employees, including herself and the
            former Section 8/Family Housing Manager, the Authority conducted landlord
            workshops monthly. The Section 8 Program Assistant could not continue to conduct
            these monthly workshops because she did not have sufficient time.



                                            37
             As a result of the Authority’s underuse of Section 8 Vouchers, low-income families
             are being deprived of affordable housing. In addition, the Authority is losing
             opportunities to earn significant administrative fees.


Conclusion



             The Authority did not make sufficient effort to lease Section 8 units at an
             acceptable rate. In addition, we determined that the Authority was not using the
             correct rents for Section 8. Offering lower rents to prospective landlords and low
             voucher utilization rates resulted in reduced opportunities for families to obtain
             housing. The Authority lost $114,090 in potential administrative fees by not
             leasing 100 percent of its allocated vouchers. Most importantly, needy families
             are being deprived of housing.



Recommendations


             We recommend that HUD’s Director of Public Housing, Boston Regional Office,
             assure that the Authority:

             6A. Submits a monitoring plan to ensure they use all available funding.

             6B. Is using the correct payment standards for Section 8.




                                             38
           Finding 7: The Authority Failed To Comply with HUD
           Procurement Regulations and Its Own Procurement Policy

           The Authority’s procurement practices did not comply with HUD regulations and
           its own procurement policy. The Authority failed to:

              •   Award contracts competitively,
              •   Justify emergency procurements,
              •   Execute or update service contracts and/or written agreements,
              •   Compete contracts fairly,
              •   Adequately evaluate competitive proposals, and
              •   Perform cost/price analysis.

           As Contracting Officer, the Executive Director did not fulfill his responsibility to
           establish and implement effective management controls over the procurement
           process. HUD has no assurances that the Authority’s procurement process is fair
           and equitable and results in the best quality and/or priced services obtained. In
           addition, without formal contract documents, the Authority was at risk for
           overbilling and paying for unauthorized services.

Procurement To Provide Full
and Open Competition


           The Authority’s Annual Contributions Contract requires it to comply with all
           applicable regulations issued by HUD. The Federal procurement regulations are
           contained in the Code of Federal Regulations. These regulations require the
           Authority to:

              •   Conduct all procurements in a manner that provides full and open
                  competition and

              •   Maintain a contract administration system, which ensures that contractors
                  perform in accordance with the terms, conditions, and specifications of
                  their contracts or purchase orders. These records should also include the
                  rationale and justification for the method of procurement, the type of
                  contract, the selection of the contractor, and the basis for the contract
                  price.

           The Authority’s procurement policy states that the Authority will comply with
           HUD’s Annual Contributions Contract; HUD Handbook 7460.8, Procurement
           Handbook for Public Housing Agencies; and the procurement standards of 24
           Code of Federal Regulations, part 85.36. The term “procurement” includes both
           contracts and modifications - including change orders - for construction or
                                            39
            services, as well as purchase, lease, or rental of supplies and equipment. All
            contracts and modifications should be in writing, clearly specifying the desired
            supplies, services, or construction and supported by documentation regarding the
            method of selection, the procurement chosen, the rationale for selecting or
            rejecting offers, and the basis for the contract price.

            The Authority’s procurement policy provides that a cost or price analysis shall be
            performed when only one offer is received or for other procurements as deemed
            necessary by the Authority.

            The Authority’s procurement policy also requires that for small purchases, no less
            than three offerors shall be solicited to submit price quotations, which may be
            obtained orally, by telephone, or in writing. The quotations shall be recorded and
            maintained as a public record. Award shall be made to the offeror providing the
            lowest acceptable quotation.

            HUD Handbook 7460.8, REV-1, paragraph 4-23A, provides that when procuring
            services by competitive proposals, a written plan for evaluating technical and cost
            proposals and an evaluation review process shall be established before the request
            for proposal is issued. This plan shall include a rating sheet for each offeror,
            which lists each of the evaluation criteria and the weight assigned. The rating
            sheets should require the technical evaluator to assign both numerical ratings and
            narrative justifications to support the ratings given.


20 Violations Found for Eight
Procurements


            We reviewed 14 procurements. The cost of procurements totaled $4,249,579.
            For 8 of the 14 procurements, we identified a total of 20 violations of HUD
            regulations and/or the Authority’s procurement policy. The following table lists
            the contract reviewed, cost of the contract, and whether any deficiencies existed in
            the procurement.




                                             40
     # Contract                                                 Cost               Deficiencies


     1 Harrison Avenue A&E Contract                                    $150,000        None
     2 Harrison Avenue Construction Contract                           2,340,000       None

     3 Scattered Sites A&E Contract                                      51,640        None

       Scattered Sites Construction
                                                                                       None
     4 Contract Phases I and II                                         903,900
     5 Clerk of Works                                                    42,897        2,3,4,5
     6 Human Resources Consultant                                        60,553         1,3
     7 Scattered Site Implementation
       Development Program Manager                                      136,000        3,4,5
     8 Modernization Program Manager                                    262,500         4,5
     9 Section 8 Annual Unit Inspections                                 17,700        None
    10 Special Legal Counsel – Employee Lawsuit                          86,688        1,3,6
    11 Special Legal Counsel – Capital Project Funding Issues            25,287         2,6
    12 Special Legal Counsel – Contract Dispute                           3,741          3
    13 General Legal Counsel                                            133,849        1,3,6
       General Legal Counsel – Fair Housing
    14 Settlement Agreement                                              34,824        None
                                Total                            $ 4,249,579       20 deficiencies


              Legend
              1 Awarded contracts without evidence of competition.
              2 Lacked justification for emergency procurements.
              3 Did not formally execute contracts or update contracts.
              4 Did not fairly compete contracts.
              5 Failed to adequately evaluate competitive proposals.
              6 Did not perform cost/price analyses.


Clerk of Works



              The Authority could not justify soliciting for the Clerk of Works services based
              on a noncompetitive emergency procurement. We do not agree that this qualified
              as an emergency procurement. The Authority’s procurement policy states that
              noncompetitive awards may be used only when an emergency exists that seriously
              threatens the public health, welfare, or safety or endangers property or would
              otherwise cause serious injury to the Authority, as may arise by reason of a flood,
              earthquake, epidemic, riot, equipment failure, or similar event. Our review
              disclosed that the Authority paid the Clerk of Works a total of $42,897. The
              Clerk of Works assisted the Project Manager and Architect to make changes on
              plans and specifications and assisted in verifying change order costs, including
              quantity and quality for justifications of an increase in the construction contract.

                                                        41
          The Authority’s former Modernization Coordinator performed Clerk of Works
          duties before his termination on March 8, 2002. Four months passed between the
          termination of the former Modernization Coordinator and the date the Authority
          awarded the Clerk of Works contract on July 8, 2002. Therefore, the Authority
          had ample time to advertise the contract. The Board of Commissioners
          authorized the Authority’s Work Center Supervisor to function as the acting Clerk
          of Works. Our discussions with the Authority’s Modernization Consultant
          disclosed that the Work Center Supervisor was capable of providing satisfactory
          Clerk of Works services. Therefore, the Authority’s rationale for this
          noncompetitive award did not meet its emergency procurement criteria.

          One year later, the Executive Director advertised the Clerk of Works position.
          However, the Executive Director limited competition by advertising and closing
          the contract within 7 days instead of the 25 days required by the Authority’s
          procurement policy. The policy requires that the Authority give public notice for
          each procurement at least 10 days before issuing the solicitation. The policy also
          requires the Authority to provide a minimum of 15 days for preparation and
          submission of the bids.

          The Authority did not complete a narrative justifying the scoring for the
          proposals. The narratives could show that the evaluation process was fair and
          reasonable. In addition, the Authority did not execute the contract, dated July 8,
          2003, until October 10, 2003. Therefore, the Clerk of Works worked for 3
          months without a formal written contract.


Human Resources Consultant




          The Authority provided no evidence that the contract for the Human Resource
          Consultant was ever competed. The Authority’s former Executive Director
          awarded the initial contract without competition for $85 per hour in 1997. The
          current Executive Director renewed the contract without competition for the
          period April 1998 to April 1999. From April 1999 through March 2001, no
          contract or agreement was provided. In April 2002, the 1998 contract was
          converted, without competition, from $85 per hour to a fixed amount of $1,500
          per month plus out-of-pocket costs. A new agreement was not in place until the
          Board of Commissioners’ approval was received on May 22, 2002. In February
          2003, the contract was increased, without competition, to $2,000 per month,
          retroactive to January 1, 2003. The reason given for the increase was additional
          responsibilities brought on by the certification of the International Association of
          Machinists union. Therefore, the consultant has worked for the Authority for 7
          years without competing for a contract.
                                           42
Scattered Site Implementation
Development Program
Manager

            The Executive Director contracted with a Consultant in September 1999 to
            provide management and relocation assistance services for scattered sites. The
            contract was not fairly competed. The request for proposal was advertised for 18
            days with only two proposals received.

            Only one Board member evaluated the proposals, and narrative reports were not
            issued to explain how the scores were determined. There was no explanation as
            to why the Consultant’s $136,000 proposal was selected over a lower proposal bid
            of $135,000. Also, we determined that the contractor signed the contract in blue
            ink. However, the effective date of September 15, 1999, was written in blue felt
            tip marker. The Consultant acknowledged on February 2, 2000, that he started
            work before a written contract was established. Therefore, it appears that this
            contract award may have been predetermined.


Modernization Program
Manager


            The Executive Director awarded the same Consultant a $262,500 contract on
            September 5, 2002, to provide modernization management and consulting
            services. The request for proposal was advertised for only 12 days instead of the
            required 25 days. Therefore, contractors not privy to the impending award had
            little time to prepare and submit competitive proposals. The Authority’s files
            lacked a narrative evaluation report to show how the scores were determined and
            failed to show that the Consultant’s proposal provided the best value for the
            Authority. Finally, the Executive Director awarded the contract 5 days before the
            Board of Commissioners evaluated the Consultant’s proposals, indicating that the
            award may have been predetermined.

Special Legal Counsel –
Employee Lawsuit


            The Authority did not solicit bids or quotes for $86,688 in legal services it
            received from the Special Legal Counsel. The Authority received legal services
            to defend against a Federal whistle blower retaliation lawsuit. The Executive
            Director provided no evidence that the services were properly competed or quotes
            solicited.



                                            43
            Also, the Executive Director did not maintain a contract or agreement for the
            $86,688 paid to defend the Authority in the lawsuit. The Authority’s Special
            Legal Counsel eventually provided a signed engagement letter specifying the
            scope of services and rates to be provided. However, there was no written
            documentation indicating the Authority’s acceptance. In addition, no cost/price
            analysis was performed to ensure price reasonableness.


Special Legal Counsel – Capital
Project Funding Issue


            The Authority could not justify soliciting for legal services as a noncompetitive
            emergency procurement. The Authority paid the Special Legal Counsel $25,287
            for legal advice related to the funding of capital projects and to assess its legal
            position regarding a potential lawsuit with National Association for the
            Advancement of Colored People. The Executive Director stated that competition
            was not required due to emergency repairs at Foran Towers. However, we
            determined that there was insufficient evidence that the procurement was an
            emergency. Under these conditions, prospective vendors were improperly denied
            access to federally funded contracts. In addition, no cost/price analysis was
            performed to ensure price reasonableness.


Special Legal Counsel –
Contract Dispute


            The Executive Director did not execute and maintain a contract for legal services
            regarding a construction contract dispute handled by the Special Legal Counsel.
            The Special Legal Counsel started work in November of 2003. However, the
            Special Legal Counsel and the Executive Director did not sign and formally
            execute a contract until 3 months later in February of 2004. Therefore, a formal
            contract or agreement establishing the services provided was not in place.


General Legal Counsel



            The Authority provided no evidence that the procurement for General Legal
            Counsel was ever competed, and the General Legal Counsel did not always have a
            contract in place. The General Legal Counsel was first hired on September 30,
            1994, for the period of October 1, 1994, to September 30, 1995, for $6,300. The
            General Legal Counsel continued to work for the Authority without a contract for
            an additional 6 years through September 30, 2001. The General Legal Counsel’s
                                             44
             contract was noncompetitively renewed for each of the next 2 years through
             September 30, 2003, for $7,500 per year. Since the most recent agreement
             expired September 30, 2003, the General Legal Counsel continued to work for the
             Authority without a contract.

             We note that for the period October 17, 2000, to December 17, 2003, the General
             Legal Counsel was paid $168,673 for legal services of which we questioned
             $100,266 (see finding 3).

             The Authority’s Procurement Policy complies with HUD’s Annual Contributions
             Contract; HUD Handbook 7460.8, Procurement Handbook for Public Housing
             Agencies; and the procurement standard of 24 Code of Federal Regulations, part
             85.36. However, as shown above, the Authority did not follow Federal
             procurement regulations and its own policy in all cases of procured services.
             Therefore, vendors were not provided an equal chance to obtain publicly funded
             contracts, and the Authority was not assured that the best price and quality of
             services available were received.

Conclusion


             The Authority’s Executive Director did not fulfill his responsibility to establish
             and implement effective management controls over the procurement process.
             HUD has no assurances that the Authority’s procurement process is fair,
             equitable, and results in the best quality and/or priced services obtained. In
             addition, without formal contract documents, the Authority was at risk for over
             billing and paying for unauthorized services.



Recommendation


             We recommend that HUD’s Director of Public Housing, Boston Regional Office,
             assure that the Authority:

             7A. Implement procedures and controls to ensure that its contracts are awarded in a
                 manner providing full and open competition as required by HUD’s regulations
                 and its procurement policy.




                                              45
Finding 8: The Authority Had Deficiencies in Several
Administrative Policies and Procedures


The Authority had deficiencies in several administrative areas relating to the
Executive Director’s employment contract and performance evaluations, the
Authority’s handling of personnel functions and employee benefits, and compliance
with requirements for executive sessions conducted during Board of Commissioner
meetings. The deficiencies noted in these areas included:

   •   The Authority did not obtain HUD approval for Executive Director’s long-
       term contract,
   •   The Authority did not establish performance measurements and execute
       performance evaluations for the Executive Director to justify his long-
       term employment contract,
   •   HUD programs were improperly charged for the personal use of the
       Executive Director’s vehicle,
   •   Board of Commissioners meeting minutes did not state the reasons for
       going into executive sessions, and
   •   Employee evaluations were not performed for staff.

The deficiencies were caused by weak management controls and managements’
lack of awareness of HUD requirements and State laws.

As a result:

   •   The Executive Director’s employment contract requires the Authority to
       pay the Executive Director’s salary and benefits for the full contract term
       even in the event of involuntary termination of employment.

   •   HUD programs were charged $25,347 for the Executive Director’s
       personal use of an Authority vehicle.

   •   Board of Commissioners did not publicly disclose its executive sessions,
       ensuring that there was not improper business being conducted.

   •   Authority did not periodically evaluate employee performance.




                                46
Executive Director’s Contract



            The Authority failed to obtain written approval from HUD for the Executive
            Director’s 5-year contract. HUD Handbook 7460.8, REV-1, paragraph 4-27, part
            B(3), states that an Executive Director may be hired as an employee or retained
            under an employment contract and requires HUD approval in writing for
            Executive Director employment contracts exceeding 2 years.

Executive Director’s
Performance and Long-Term
Employment Contract


            On April 1, 1998, the Authority’s Board of Commissioners approved the
            Executive Director’s employment contract with an initial 5-year term. The
            contract contained a “golden parachute” renewal clause. In the event of an
            involuntary termination of the Executive Director, the Authority shall pay the
            Executive Director:

                   The Executive Director’s annual salary multiplied by the unexpired term of
                   the Agreement including any extensions in the Agreement,
               •   Severance pay in an amount of money equal to 2 weeks current salary for
                   each year of the Executive Director’s service to the Authority,
               •   An amount of money equal to the Executive Director’s accumulated sick
                   leave benefits based on his current salary,
               •   An amount of money equal to the Executive Director’s accumulated
                   vacation time based on his current salary,
               •   Recognized retirement status with medical benefits and life insurance
                   benefits identical to all retired Authority employees under the present
                   policy of the Authority, and
               •   Payments to any defined payment plans the Executive Director may have
                   earned based on plan parameters.


Board of Commissioners
Unfamiliar With HUD
Requirements


            Our interpretation of the “third anniversary” clause contained in the Executive
            Director’s contract with the Authority is that once the third anniversary passes,
            the Executive Director has 3 years remaining on his employment contract unless
            the Board of Commissioners votes not to extend his contract. This places the
                                              47
           Authority in the position of paying the Executive Director’s salary and benefits
           for another 3 years or having to buy out the Executive Director’s contract. HUD
           programs are at risk since the vast majority of the Authority's funding is received
           from HUD. The current Board of Commissioners members were not on the
           Board in 1998, at the time the contract was executed. Therefore, they could not
           provide any information regarding the basis for approving the Executive
           Director’s contract.

Two Board of Commissioner
Members Considered Executive
Director’s Contract
Unacceptable


           On December 12, 2002, the Authority’s Chairman of the Board of Commissioners
           initiated a resolution not to grant a 1-year extension on the Executive Director’s
           employment contract beyond April 1, 2005, for the purpose of affording the Board
           of Commissioners the ability to renegotiate that contract at its formal conclusion in
           2004. The Chairman did not understand why Board members would make a long-
           term commitment that would bind future members. In addition to the Chairman, a
           second Board of Commissioner voted not to grant the 1-year extension through
           April 1, 2005, because she concluded that the contract was unacceptable.

           The remaining three Commissioners voted against this resolution. Therefore, the
           Executive Director’s contract was extended. The three Commissioners voted
           against the resolution because they believed that the Executive Director was
           deserving of such a contract, although no specific performance documentation
           was provided.

           The Board of Commissioners did not vote in 2003. Therefore, on April 1, 2004,
           the contract was automatically extended through April 1, 2007.

           The Board of Commissioners did not act prudently in approving and continuing to
           renew a contract that could put the Authority’s funds at risk. Such a long-term
           lucrative contract should contain specific objectives and performance goals that
           are used to measure the Executive Director’s performance to justify the continued
           renewal of the contract.

           The Executive Director’s contract is not valid from HUD’s perspective because
           the Authority failed to obtain prior written approval of the contract from HUD.
           Therefore, HUD should not assume any risk that could occur from involuntary
           termination of the Executive Director’s employment.




                                             48
 HUD Criteria




            HUD programs were charged $25,347 for the personal use of the Executive
            Director’s vehicle. According to his contract, the Executive Director is entitled to
            the use of an automobile and related expenses. However, prudent practice
            dictates that the personal use of the vehicle should not be charged to HUD
            programs. The Authority’s Board of Commissioners failed to establish sufficient
            guidelines for the Executive Director’s personal use of an Authority vehicle.

            Part A, section 2. of the Annual Contributions Contract stipulates that operating
            expenditures shall include all costs incurred by the Housing Authority for
            administration, maintenance, and other costs and charges that are necessary for
            the operation of the public housing authority.

            The Finance Director said the Authority had not calculated and withdrawn the
            value provided by the Executive Director’s personal use of the automobile. In
            fact, the Finance Director was not aware of the value of benefits provided to the
            Executive Director for the use of the vehicle. According to the Finance Director,
            the Authority’s Fee Accountant planned to calculate the benefits for personal use
            of Authority vehicles in April of 2004 when compiling the Authority’s year-end
            accounting statements.

Executive Director Received
Benefits of $25,347


            The Authority paid the Executive Director for driving 79 miles per day to and
            from work as well as the personal use of the vehicle on weekends, vacations, and
            holidays. Therefore, HUD programs are charged with the costs associated with
            the Executive Director’s personal use of the Authority’s vehicle. We estimated
            that the Executive Director received $25,347 in benefits. The following table
            explains the method used to calculate the amount of benefit derived by the
            Executive Director. We excluded personal use on weekends, vacations, and
            holidays from our computations.




                                             49
            Year    Daily     Work Days             Total        Internal       Benefits
                    Commuting (52 wks @ 5 days/wk Commuting      Revenue       (Miles x Rate)
                              less 20 vacation days
                    Miles     & 10 holidays)
                                                    Miles        Service
                                                                 Mileage
                                                                 Rate
            2000         79            230             18,170    $ 0.360             $ 6,541
            2001         79            230             18,170    $ 0.365             $ 6,632
            2002         79            230             18,170    $ 0.345             $ 6,269
            2003         79            230             18,170    $ 0.325             $ 5,905
            Total                                                                    $ 25,347



Reasons for Going into
Executive Sessions Not
Established


            The minutes of the general meetings for the Authority’s Board of Commissioners
            did not contain the reason(s) why the Board went into an executive session. The
            Board’s minutes only show the times that the motions were made to adjourn to
            executive sessions and the time the executive sessions were completed. The
            Executive Director was not aware of any specific disclosure requirements related
            to executive sessions.

            Prudent practice dictates that the Board minutes should provide an adequate
            reason for going into executive session. Otherwise, the public cannot be assured
            that the Authority’s Board is conducting business properly. Also, section 1-225
            of the State of Connecticut’s Freedom of Information Act states that public
            meetings, such as Board of Commissioners meetings, must state the reasons for
            such executive sessions. Executive sessions cannot be used to shield public
            employees from disclosure of substance of Board votes taken as result of
            nonpublic discussions.

Personnel Issues



            The Authority did not perform employee evaluations for staff. We interviewed
            five key employees, and all expressed concern that they failed to receive an
            annual performance rating in writing. The Authority’s failure to perform periodic
            employee performance appraisals was unfair to employees. It also created
            confusion among employees as to their eligibility for promotions or salary
            increases and could lead to employee grievances and disputes. The Authority
            failed to follow its personnel policies, which state that employees shall receive an
            annual performance rating in writing and performance ratings shall be included in
            employee service records.

                                             50
Conclusion


             Weak management controls and lack of familiarity with HUD requirements and
             State laws created deficiencies related to the Executive Director’s performance
             evaluations and related employment contract, the Authority’s handling of
             personnel functions and employee benefits, and compliance with requirements for
             executive sessions conducted during Board of Commissioner meetings.

             The impact of these deficiencies includes the fact that the Executive Director’s
             current employment contract places the Authority in the position of having to pay
             the Executive Director’s salary and benefits for several years in the event of
             involuntary termination of the Executive Director’s employment. HUD’s
             programs are at risk because the vast majority of the Authority's funding is from
             HUD programs. In addition, the Authority’s Board of Commissioners’ failure to
             enforce proper guidelines for the Executive Director’s personal use of an
             Authority vehicle resulted in HUD programs being charged with ineligible costs
             of $25,347. This resulted in fewer funds available for the Authority to provide
             affordable housing to tenants.

             In addition, without proper disclosure of executive sessions, the public cannot be
             assured that the Authority’s Board of Commissioners is not conducting improper
             business.

             The Authority’s failure to perform periodic employee performance appraisals was
             unfair to employees. It created confusion among employees as to the eligibility
             for promotions or salary increases and could lead to employee grievances and
             disputes.



Recommend


             We recommend that HUD’s Director of Public Housing, Boston Regional Office,
             assure that the Authority:

             8A. Submit the Executive Director’s current contract for HUD approval.

             8B. Establish specific goals and measurements to evaluate the Executive Director’s
                 performance.

             8C. Reimburse the applicable HUD programs $25,347 from nonfederal funds for
                 the Executive Director’s personal use of the Authority’s vehicle.

                                             51
8D. Establish a policy to identify charges for personal benefits and withdraw
    amounts to ensure that HUD programs are not charged.

8E. Ensure that Board of Commissioners’ minutes state the reason(s) for going
    into an executive session.

8F. Ensure that all staff receive annual performance evaluations.




                                 52
SCOPE AND METHODOLOGY

      Our overall audit objective was to determine whether the Authority was operating
      its Capital Fund program, Development Fund program, and Section 8 Voucher
      program in an effective and efficient manner and in compliance with HUD
      regulations, applicable laws, and contractual requirements. We also reviewed
      specific administrative policies and procedures at the Authority.

      To accomplish the audit objectives, we

         •   Reviewed Federal requirements including HUD Handbooks and Public
             and Indian Housing Notices and Directives. In addition, we reviewed the
             Housing Authority’s organizational and administrative structure,
             administrative plans, and personnel policies; 24 Code of Federal
             Regulations, part 941 - Public Housing Development; and recorded
             minutes of the Board of Commissioner meetings.

         •   Interviewed Massachusetts and Connecticut State Office of Counsel and
             Public Housing personnel to obtain information relating to the Authority’s
             operations and management controls.

         •   Reviewed independent public accountant audit reports, as well as
             monitoring reviews conducted by the HUD Field Office, to determine the
             status of the Authority’s management and financial operations.

      For the Capital Fund program, we

         •   Determined whether the Authority’s procurement practices complied with
             HUD regulations and its own procurement policy.

         •   Interviewed the Harrison Avenue construction company related to the
             contract dispute for Phase III.

         •   Examined a nonrepresentative sample of Capital Fund program contracts.
             A nonrepresentative selection was appropriate because the items of
             interest that had a high degree of risk were readily apparent. We did not
             project the sample results to the universe.




                                     53
For the development of scattered sites, we

   •   Evaluated the Authority’s development procurement practices related to
       architectural and construction services, appraisals, program management
       and relocation assistance, legal service, and acquired real estate to
       determine whether procurements were conducted in accordance with
       requirements of 24 Code of Federal Regulations, part 85.36.

   •   Evaluated 100 percent of income and related expenses for the Scattered
       Site Development program because we considered this a high-risk area.

   •   Performed physical inspections to determine if units were occupied and
       work completed and if at least one unit was handicapped accessible as
       required by the Settlement Agreement.


For the Section 8 program, we

   •   Evaluated the Authority’s management controls and overall performance
       of its Section 8 program.

   •   Evaluated the Section 8 inspections for assurance that housing quality
       standards deficiencies were corrected in a timely manner and whether
       subsidy payments were abated when deficiencies were not corrected
       within the required period. We limited testing to Section 8 inspection
       reports performed by an independent contractor during the period of
       October 15, 2001, to December 31, 2003. We used the contractor’s web
       site as our source document for inspection because the Authority’s files
       were incomplete. The period tested was limited to inspections conducted
       after October 15, 2001, because the web site only listed inspections after
       that date.

To evaluate the Authority’s administrative policies and procedures, we

   •   Conducted interviews with the Board of Commissioners, Executive
       Director, and Authority’s employees.

   •   Reviewed 100 percent of legal payments ($168,673) made to the
       Authority’s General Legal Counsel covering the period from October
       2000 to December 2003 and 100 percent of legal payments ($119,451)
       made to the Authority’s Special Legal Counsel covering the period from
       November 2002 through February 2004. We reviewed 100 percent
       because we considered this a high-risk area.



                                54
   •   Reviewed the Executive Director’s employment contract and fringe
       benefits. Also, we reviewed the Authority’s compliance with its personnel
       policies and executive sessions.

We analyzed the Authority’s computer system to ensure accurate and reliable data
were maintained for its Federal programs and to determine at a minimum, 1) the
type of computers the Authority used, 2) how the computer system was organized,
3) the main characteristics of the system and environment, 4) how management
controlled computer system activities, and 5) any known problems with the
system.

The audit was conducted between June 2003 and February 2004 and covered the
period January 1, 2000, through December 31, 2003. When appropriate, the audit
was extended to include other periods.

We conducted our audit in accordance with all generally accepted government
auditing standards.




                               55
INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls
              We determined the following internal controls were relevant to our audit objectives:

              •   Administrative controls to assure proper management,

              •   Financial controls to assure proper accounting,

              •   Management controls over program receipts and expenditures,

              •   Management controls over procurement and contract administration, and

              •   Safeguards over assets; records; and compliance with applicable laws,
                  regulations, and contractual agreements.

              We assessed the relevant controls identified above.


 Significant Weaknesses


              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.

              Our review identified significant weaknesses in the management control areas we
              assessed. Specific control weaknesses related to HUD programs are described in
              the findings sections of this report.

                                               56
                   FOLLOWUP ON PRIOR AUDITS


Prior Independent Public
Accountant Report Findings


           The Annual Audit Financial Statements for fiscal years 2001 to 2003 contained
           findings that the Authority’s Section 8 tenant files were not properly maintained.
           Our audit determined that this condition had not been corrected. We focused our
           review on the lack of housing quality standards inspection reports. (see finding 5)




                                            57
                                     APPENDIXES

Appendix A

                SCHEDULE OF QUESTIONED COSTS
               AND FUNDS TO BE PUT TO BETTER USE



Recommendation Ineligible   Unsupported Unnecessary  Funds To Be Put to Better
Number         1/           2/          3/           Use 4/
1A                                                                      $838,000
3A                                          $135,824
4A                $115,716
4B                $100,266
4C                               $3,735
5A                  $26,280
5B                                                                      $280,628
8C                  $25,347
Total             $267,609       $3,735     $135,824                  $1,118,628


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
      polices or regulations.

2/    Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
      or activity when we cannot determine eligibility at the time of audit. Unsupported costs
      require a decision by HUD program officials. This decision, in addition to obtaining
      supporting documentation, might involve a legal interpretation or clarification of
      departmental policies and procedures.

3/    Unreasonable/unnecessary costs are those costs not generally recognized as ordinary,
      prudent, relevant, and/or necessary within established practices. Unreasonable costs
      exceed the costs that would be incurred by a prudent person in conducting a competitive
      business.

4/    “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an
      OIG recommendation is implemented, resulting in reduced expenditures later for the
      activities in question. This includes costs not incurred, deobligation of funds, withdrawal
      of interest, reductions in outlays, avoidance of unnecessary expenditures, loans and
      guarantees not made, and other savings.




                                               58
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 1




                              59
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 2




Comment 3



Comment 4


Comment 5




Comment 6



Comment 7




                              60
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        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                              61
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 5




Comment 5


Comment 5




                             62
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 7




Comment 7




Comment 7




                              63
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 8



Comment 9




Comment 9




                             64
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 9




Comment 10




                             65
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                             66
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 11




                              67
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                             68
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                              69
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                             70
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                             71
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                              72
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                              73
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                              74
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 12




Comment 13



Comment 13




Comment 13




                              75
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 14




                              76
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 14




Comment 14




                             77
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




Comment 14




                              78
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              79
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              80
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              81
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              82
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




Comment 14




                              83
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 14




Comment 14




                              84
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 14




Comment 14




                              85
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              86
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                              87
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 14




                             88
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 15




Comment 16




Comment 17




                             89
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 18




Comment 19




                              90
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 20



Comment 21



Comment 22




                              91
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 23




                              92
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                              93
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




                             94
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                              95
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Refer to OIG Evaluation   Auditee Comments




Comment 24




                             96
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




                              97
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 25




Comment 26




                              98
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Refer to OIG Evaluation   Auditee Comments




Comment 27




Comment 28




Comment 29




                             99
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments

Comment 1   The Authority submitted a three-ring binder containing the response and
            approximately 250 associated exhibits. Due to their volume, we did not
            include the Authority’s exhibits in the report. However, we will make the
            exhibits available to HUD upon request and to the public through a freedom of
            information request.

Comment 2   The Authority’s assertion of drastically reduced subsidies is incorrect. The
            subsidies have remained constant over the past 5 years.

Comment 3   The Authority’s statement on the amount of time spent conducting the audit is
            an incorrect statement. We were only on-site at the Authority for a period of 8
            months.

Comment 4   The statements on the Authority’s operation and accounting system are
            misleading and give the impression that OIG made these representations in the
            report. We did not make any representations on the Authority’s accounting
            system in the report, and did not express any opinon regarding the existence of
            irregularities or improprieties in the operation, or on the accuracy and reliablity
            of data, or on its effective use of the data in managing its programs.

Comment 5   We strongly disagree with the Authority’s statements that the life threatening
            conditions of the building were unsupported. The life threatening conditions at
            Foran Towers were supported by three engineering studies performed at the
            building. The life threatening conditions identified in the studies were the
            poor condition of the building’s sanitary piping and the poor condition of the
            building’s outer structure. The studies also point out that the temporary
            solution of the canopy and fence did not eliminate the life threatening
            condition of the building’s outer structure, and the building’s condition would
            continue deteriorate until permanent replacement or repairs to the brick facde
            were completed. In addition, we did consider the NATCOMM study on the
            outer structure of the the building completed over one year ago. The Authority
            trys to use the NATCOMM’s “Envelope Study,” to discount the life
            threatening conditions described in the previous engineering studies. The
            Authority points to the statement made by NATCOMM that there was “no
            evidence of loose damage brick units” and “at this we are not of the opinion
            that the veneer is in eminent danger of collapse”. However, NATCOMM
            noted major deficiencies in the masonry construction, similar to those
            identified in the three previous engineering studies. The NATCOMM study
            stated “This condition (Façade Repair) must be addressed within the next 12
            months.” Since the study was completed over one year ago, we believe our
            assertions are supported and this work must be addressed immediately.
                                           100
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

                          OIG Evaluation of Auditee Comments

Comment 5     We believe the NATCOMM study supported that Foran Towers be prioritized
(Continued)   ahead of the Harrison Avenue redevelopment due to the masonry construction
              deficiencies, and necessary window and roof replacements. The Authority
              needs to address and eliminate all of the poor conditions and the threats to
              human life at Foran Towers.

              In addition, we disagree with the Authority’s statement that it has consistently
              included funds for modernization and repairs at Foran Towers in its five-year
              Capital Plan. The Authority failed to fund renovations at Foran Towers when
              serious health and safety issues first became evident. The Authority
              reallocated 2000 and 2001 Program funds that were designated for repairs of
              the brick facade at Foran Towers to Harrison Avenue. In fact, the Authority
              did not allocate any funding for Program Years 1996 through 2003 for repairs
              of the damaged brick facade or the sanitary piping at Foran Towers. Instead,
              the Authority funded a construction contract for modernization at Harrison
              Avenue. The Authority continues to disregard HUD program officials and
              OIG recommendations to prioritize Foran Towers poor conditions, and
              recently the Authority decided to vacate Harrison Avenue and go forward with
              additional renovations estimated to cost $1.5 million for phase III. These
              costly renovations will leave little funding for the elimination of Foran
              Towers’ life threatening conditions for several years.

Comment 6     The Authority states that the continued deterioration of the Harrison Avenue
              Development resulted from the heavy use of residing families for over thirty
              years. However, the Authority needs to accept the responsibility for the
              deterioration of the housing stock which is the result of the Authority’s failure
              to enforce the lease and conduct periodic rehabilitation efforts of its housing
              stock during the thirty years. In addition, the heavy use by families does not
              warrant the diversion of funds needed to address the exigent health and safety
              conditions at Foran Towers.




                                             101
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                       OIG Evaluation of Auditee Comments

            The dispute and Authority’s need to defend itself was the result of the
Comment 7
            Authority’s failure to notify the Harrison Avenue Construction Company of its
            decision to deduct Phase III in writing. In fact, the Authority’s General
            Counsel informed OIG that it was his mistake that the Contractor was only
            notified orally, and was not notified in writing regarding the elimination of
            Phase III. The Authority was responsible for the litigation and the legal
            expenses incurred are considered unnecessary. However, the dispute was
            settled, and we withdraw our recommendation. Our position regarding
            counsel’s litigation fees is that the fees were unnecessary, ineligible program
            costs and should be repaid from nonfederal funds (Recommendation 4A).

            We maintain that the Authority’s failure to monitor construction
            activities and make timely decisions contributed to significant delays in
            completing Phase I & II. We disagree with the Authority’s statement that
            rehabilitation work on Phase I & II was completed efficiently and effectively
            since the work was not completed until approximately 8 months past the
            revised completion date of May 19, 2003. Further evidence of the Authority’s
            inefficiency and ineffectiveness were the failure to obtain required
            construction progress schedules and timely enforce the liquidating damages
            clause of the contract for contractor caused delays during the construction
            period. This is further supported by the arbitrator’s decision not to award
            liquidating damages clauses that the Authority ultimately sought.

Comment 8   The Authority’s representation that HUD imposed a $100,00 threshold
            requirement due to their effective procurement practices is incorrect. The
            threshold requirement is a limit established for everyone and is not reflective
            of how good the Authority’s practices are, or how well they were being
            followed. In addition, the procurement was not in accordance with the
            Authority’s procurement policy because a formal contract was not in place
            until 3 months after legal work was started. (See Finding 7) We do concur that
            HUD Regional Counsel concurrence is required prior to the award of litigation
            services contracts expected to exceed the $100,000 threshold. However, the
            issue here is not the award of the contract that required the HUD Regional
            Counsel concurrence but rather that concurrence was required before
            expending funds for litigation.




                                          102
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments

Comment 9
             We disagree with the Authority’s statement that OIG’s method was flawed
             because certain variables there were not taken into consideration. The
             Architect committed an error and a change order was necessary to correct the
             error. The Authority acknowledged that the Architect omitted a portion of the
             required asbestos abatement from project specifications, and is
             misrepresenting our statement on the need for a change order. If the Architect
             had properly computed the area for asbestos replacement, the original bid may
             have been lower due to the normal volume discount for the replacement. If the
             Authority believed that the Architect was at fault, it should have attempted to
             recover the increased cost from the Architect. The Army Corp stated that the
             change order was acceptable and cited the 30% reduction achieved through
             negotiations. We believe this supports our original premise that the omission
             may have resulted in excessive costs bid for the change order. In addition, the
             Authority failed to provide documentation in support of its statement that the
             cost to abate asbestos would be in excess of $4,000 per unit at the time of our
             audit. However, based on the additional factual data submitted in the
             Authority’s written response, we removed recommendation 2B regarding the
             overpayment.


Comment 10    The Authority stated that OIG did not provide any support for its estimate of
             $19,500 required to bring the 9 units in Phase III up to Uniform Property
             Condition Standards. We maintain that 9 vacant units in Phase III of Harrison
             should be prepared for occupancy. We consider the estimate to repair units as
             reliable based on the input received from two qualified sources. In fact, one of
             the Authority’s own staff (Work Center Supervisor) provided us the $19,500
             estimate to bring the 9 units on line. OIG, and two employees from the local
             HUD field office, including a Construction Analyst, concurred that the units
             could be brought up to Uniform Property Condition Standards at a minimal
             cost. These units have been vacant for two years and the Authority has lost
             significant rental income and the opportunity to house families. We note that
             seven of the adjacent units were occupied during our review. Therefore, we do
             not understand the need for complete asbestos removal. We contend that the
             units can be brought up to physical conditions standards at minimal cost until
             the Authority has the funding for major renovations.




                                           103
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments


Comment 11   The Authority states in the response that “the decision to replace certain
             fixtures and equipment were both adequately supported and prudent.” The
             Authority provided approximately 40 photographs, and several change order
             documents as evidence that they did not prematurely replace capital assets.
             However, the photographs provided with the Authority’s response were
             difficult to view or not clearly marked, dated, or traceable to the properties in
             question. During the audit, the Architect and Appraiser provided extensive
             photographs that indicated that the fixtures did not have to be replaced. In
             addition, the Authority repeatedly stated, “Due to the unknown age, condition,
             and efficiency of all appliances MHA commissioners made the determination
             to replace and standarize all appliances.” The response clearly supports our
             determination that the capital assets were replaced regardless of their physical
             condition and that no cost benefit analysis was performed as required by
             HUD’s Public Housing Modernization Standards Handbook 7485.2,
             concerning premature replacement. The Authority’s response also fails to
             clearly present the condition of capital assests that were known. For example,
             the Authority’s response cites 3 locations (136 Merwin Ave, 76-78 Atwater St,
             and 79-81 Elaine St.) but fails to include the appraiser and architect reports
             which indicated that the furnaces were only 2 years old, yet they were
             replaced. The Authority’s response only provided anecdotal evidence,
             pictures, and a few change order proposals prepared by the renovations
             contractor. They did not provide any factual data to change our position.

Comment 12   We acknowledge the Authority’s intent to comply with our recommendation to
             update and maintain an inventory for the scattered site equipment.

             The Authority contends that scattered site units are not subject to the
Comment 13
             handicapped accessible rule. The Authority also stated that all project plans
             and specifications submitted were approved by HUD, and received no notice
             of alleged Section 504 non-compliance prior to receipt of the draft audit report.

             We disagree. The governing criteria is contained in the Authority’s Plan for
             the Development of Scattered Site Properties (Part II, Section A) that stated
             “The MHA intends to satisfy the section 504 requirement that 5% of all newly
             developed, acquired, or rehabilitated units (in this case, 2 of the 28 units) be
             accessible or adaptable to the mobility impaired.”




                                            104
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                          OIG Evaluation of Auditee Comments

Comment 13    In addition, the Settlement Agreeement between the Authority, the Department
(Continued)   of Justice and the National Association For the Advancement of Colored
              People states that the Authority is “to ensure that persons with disabilities have
              equal opportunity to live in the Authority’s subsidized housing units for
              families, those units will comply with the Fair Housing Act, Section 504 of the
              Rehabilitation Act, and HUD’s accesibility guidelines set forth in 24 CFR Part
              40 and 24 CFR Part 100.205.” These guidelines also contain the 5%
              requirement. Furthermore, HUD is not responsible for detecting Section 504
              violations. Compliance with Section 504 is the responsibility of the
              Authority. We also disagree with the Authority’s response that they are in
              compliance with Section 504. The Authority contends that scattered site units
              do not constitute new construction and are not subject to the 5% handicapped
              accessibility requirement based on the PIH notice. In this case, the Settlement
              Agreement between the Authority, the Department of Justice and the National
              Association For the Advancement of Colored People takes precidence.

Comment 14    The Authority contends that the legal costs are eligible and supported, but no
              additional documentation was provided with the response. In addition to the
              costs being ineligible and unsupported, we continue to maintain that the
              services were not properly procured (See Finding 7). Since we coordinated
              this finding with HUD Regional Counsel, we have forwarded the Authority’s
              response to them for final analysis and resolution.

              The Authority contends that the hourly rate paid to General Counsel is
              reasonable. However, OIG’s concern is not whether the hourly rate is
              reasonable, but whether the Authority is contractually obligated to pay for
              these services and whether documentation is adequate to support the billings
              for legal services outside of the retainer contract to determine eligibility.

              The Authority contends that they complied with federal regulations for
              General and Special Legal Counsel, and the legal charges are eligible because
              the attorney advised the Authority of all charges exceeding the scope of the
              services contract. We disagree. The legal charges are not eligible because they
              were not supported by proper documentation. The Authority improperly paid
              for additional costs for services contained in General Counsel’s annual retainer
              contract and did not did comply with the requirements of the HUD Litigation
              Handbook for litigation services.




                                             105
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

                           OIG Evaluation of Auditee Comments

Comment 14
            The Authority contends that fees paid to legal counsel were eligible because of
(continued)
            the HUD litigation handbook criteria, HUD’s requirement for allowable
            expenses, OMB Circular A-87 attachment B item 10(B), HUD’s Settlement
            Agreement, and potential investigation by the City. In addition, the Authority
            contends that budgetary and actual costs and billings were provided to the
            Executive Director and discussed and approved by the Board of
            Commissioners. This response is not relevant to our findings because it gives
            the impression that the Board was fully informed. We interviewed the Board
            of Commissioner’s and determined that they were unaware of the requirements
            contained in HUD’s Litigation Handbook requiring prior HUD approval for
            expenditures. In addition, the Board was not familiar with what was contained
            in General Legal Counsel’s retainer contract but rather relied on the Executive
            Director’s and General Counsel’s assertions.

               The Authority contends that litigation HUD does not allow is limited to court
               litigation and they (Authority) were not involved in court litigation. We
               disagree. HUD policy and Federal cost principles as established by the Office
               of Management and Budget do not permit a public housing authority to use
               project or program funds to pay the costs of litigation against HUD.

               The Authority contends that they never threatened litigation against HUD.
               The finding states that the Authority paid for legal services to defend against
               HUD because they erroneously believed that HUD was going to bring suit
               against them. Regardless of the Authority’s misintrepretation of the facts in
               the finding, the legal service cost they spent under the erroneous belief of
               possible ligitation against HUD are not an allowable program cost.

               The Authority is responsible for managing the program to ensure that costs are
               allowable program costs. The Authority cannot transfer this responsibiltiy to
               HUD by claiming that HUD Regional Counsel did not communicate to the
               Authority that the Authority was not in compliance or by claiming that they
               (Authority) did not have to comply with the litigation handbook because they
               intrepreted the handbook differently. The Authority did not comply with HUD
               requirements for procuring the services of an attorney.




                                              106
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                           OIG Evaluation of Auditee Comments


Comment 15     The Authority feels that an appropriate system was in place but not followed
               and is taking steps to implement a more effective system. Also, they did not
               agree with our calculation of $26,280 for administrative fees. The Authority
               stated that they did not believe we took into account the 30 days in which the
               owner had to make repairs.

               Management should have realized that procedures were not followed, and by
               their own admission, these deficiencies “resulted in housing assistance payments
               being provided for units that did not currently meet housing quality standards”.
               We contend that our calculation did provide the 30 day grace period. In addition,
               we offered to provide support and further discussion for any of our findings at the
               time the discussion draft report was transmitted as well as at the exit conference.
               In fact, data was requested and provided to the Authority for another finding
               (asbestos omission). Detailed computations will be furnished upon request.

Comment 16 The Authority feels that it had an appropriate system in place. However, the
           Authority has taken steps to implement a more effective system by
           subcontracting this effort to the Ansonia, Connectiuct Housing Authority and
           working with its inpection firm, Kelson and Associates. In addition, the
           Authority states that the Section 8 staff took actions that had the effect of
           concealing the non-abatement from the Executive Director.

               We strongly disagree with the Authority’s statement that it had an appropriate
               system in place. We contend that the Executive Director did little to monitor
               known inspection deficiencies and did not take appropriate action when he was
               apprised by his Section 8 staff. We found no evidence that the Section 8 staff
               took actions to conceal non-abatements from the Executive Director. In
               conclusion, it is ultimately the responsibility of the Executive Director to
               ensure that the Section 8 staff follows established procedures.

Comment 17 The Authority stated that a new system has been implemented that should
           improve the quality control procedures over inspections and abatements.
           We concur.

               The Authority stated that with the assistance of its Section 8 Administrator, the
Comment 18
               new system should allow the Authority to abate subsidies for units that do not
               meet housing quality standards. We concur.




                                              107
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                         OIG Evaluation of Auditee Comments


Comment 19   Prior to its hiring Ansonia Housing Authority, the Authority stated that the
             Section 8 Program was adequately staffed and that the staff received
             appropriate training. We disagree with the Authority’s assessment. Our report
             did not comment or question whether or not staff received appropriate training.
             However, we contend that the Authority’s Section 8 Program could have
             benefited by having more staff available to process Section 8 applicants and
             have more applicants out shopping for units.

Comment 20   The Authority states that it is currently at 99.7% of its monthly budget
             authority and will monitor this on a monthly basis. The Authority also stated
             that on May 28, 2002, the Executive Director requested a 119% payment
             standard from HUD due to difficulty in leasing units. In addition, in
             September 2003, the Authority drafted a Section 8 Project Based Assistance
             Program Request for Proposal that was put on hold due to funding constraints.

             In fiscal year 2005, HUD revised its method of funding the Section 8 Program
             due to budgetary constraints. Because the Authority historically underutilized
             it’s authorized funding, HUD significantly reduced its FY05 funding to its
             historical baseline. As a result, the Authority is leased at 99.7% of its monthly
             budget authority and is serving 211 eligible families.

             We maintain that had the Authority made sufficient efforts to lease Section 8
             Program units at an acceptable rate their current funding would not have been
             reduced. As a result, we estimate that the Authority has lost the ability to
             house approximately 55 additional families (266 – 211) in the City of Milford.

             In addition, we disagree that the Authority was proactive to the April 23, 2002
             onsite review by HUD. The Authority’s May 28, 2002 letter requesting a
             119% payment standard was in direct response to the local HUD field office’s
             May 3, 2002 e-mail informing the Authority that they could increase rents to
             119% of the published Fair Market Rents without completing a survey.

             Based on the Authority’s response, we revised our recommendation to
             require the Authority to submit a monitoring plan to ensure they use all
             available funding.




                                            108
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments


Comment 21   The Authority stated that they reviewed the payment standards currently in use
             in conjunction with its new Section 8 contract administrator and is now using
             the correct standards. In addition, the Authority stated they complied with
             HUD’s recommended practice for annual re-certifications. Although our
             finding and recommendation referred to using proper payment standards for
             new tenants, not re-certifications, the Authority’s corrective actions should
             result in the use of proper payment standards.

Comment 22   We agree with the Authority that the Section 8 Program Assistant was made
             aware of changes in Fair Market Rents for existing housing. The Executive
             Director recently provided OIG emails sent to the Section 8 Program Assistant
             with regard to the annual changes required by HUD in the FMR’s. Based on
             the emails, OIG agrees with the Authority’s assertion and has removed the
             statement from the report.

             The Authority asserted that the Executive Director and Board of
Comment 23
             Commissioners worked continuously to manage its procurement policy. The
             Authority states that it provided extensive evidence that the organization
             procured goods and services in a manner that resulted in the best quality and/or
             prices for services obtained. The Authority stated that the procurement of
             Clerk of Works was an emergency procurement. The Authority added that the
             procurement resulted in fair and reasonable rates.

             We strongly disagree. Based on our review, it was evident that the Authority’s
             procurement practices did not comply with HUD regulations and its own
             procurement policy. The Authority’s response contained no more factual data
             than what we obtained during the course of our audit. Contrary to the
             statements made by the Authority, the evidence we received was not sufficient
             to assure that the Authority procured goods and services in a manner that
             resulted in the best quality and/or prices for services. Therefore, our
             recommendation remains unchanged.

             We disagree that the procurement of Clerk of Works qualified as an
             emergency procurement. Consideration of rates is not the main focus in this
             situation. The Authority did not comply with HUD regulations and its own
             procurement policy which states that noncompetitive awards may be used only
             when an emergency exists that seriously threatens the public health, welfare,
             or safety or endangers property or would otherwise cause serious injury to the
             Authority, as may arise by reason of a flood, earthquake, epidemic, riot,
             equipment failure, or similar event.
                                           109
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments


Comment 24   The Authority stated that the Executive Director’s 5-year employment contract
             was not subject to HUD review and approval under Handbook 7640.8 Rev-1.
             Also, the Authority stated that multi-year contracts for Executive Directors do
             not violate any federal statute or regulation of HUD. The Executive Director
             utilizes Part II, Section 14 of the ACC, applicable to conditions of employment
             and benefit plans, to contend that HUD has no jurisdiction over the
             employment contract. The Authority stated that the procurement Handbook is
             not applicable to employment contracts nor are the procurement regulations at
             24 CFR 85.36.

             We disagree. HUD requirements limit multi-year contracts for the Execuitve
             Directors to 2 years. We believe that the Handbook is applicable, and states
             that an Executive Director may be hired as an employee or retained under an
             employment contract and, if such agreement exceeds two years, approval from
             HUD is required. OIG utilized handbook criteria, handbook 7460.8, Section
             4-27B, as criteria without reference to the ACC. Therefore, there is no conflict
             between the handbook and the ACC. Contrary to Authority’s assertions, HUD
             does have authority over the employment contract. The Executive Director is
             correct that HUD did abolish the Personnel Policies handbook containing the
             criterion being used in the finding. However, the provision in the Handbook
             was reinstated in the procurement handbook when it was revised. The revision
             to the handbook does address employment contracts for executive directors of
             housing authorities with more than 250 units and this Authority is subject to
             this provision. We confirmed our understanding with HUD legal in Hartford,
             Connecticut who had contacted HUD Legal in headquaters for an opinion.

Comment 25   The Authority stated that it established specific goals and measurements to
             evaluate the Executive Director’s performance. We disagree with the
             Authority’s response. Other than anectdotal evidence, no documentation was
             provided to support this statement.

Comment 26   The Authority stated that since the Executive Director is on call 24 hours a
             day, seven days a week the use of a vehicle for commuting to and from work
             should be an eligible expense. We disagree. We consider the Executive
             Director’s normal commute to be a personal expense and any reasonble
             method to calculate the expense amount to be withdrawn for the period is
             acceptable. In those rare instances when the Executive Director uses the
             vehicle to respond to emergencies, we would consider the cost to be an eligible
             business expense.


                                           110
Appendix B

       AUDITEE COMMENTS AND OIG’S EVALUATION

                        OIG Evaluation of Auditee Comments


Comment 27   The Authority stated that it will continue to accurately prorate and allocate
             expenses between activities and W-2’s will be issued to employees who have
             personal use of a vehicle. We concur these personal costs should be reported
             on employee W 2’s. However, the personal costs should not be charged to
             programs.

Comment 28   The Authority stated that it will continue to comply with the Freedom of
             Information Act and that the reasons for the executive sessions were included
             on their agendas. We disagree. Agendas are planned events that may not
             occur. The Board Minutes are a permanent record of what actually transpired.
             Therefore, the minutes need to reflect the reasons for going into executive
             session.

Comment 29   The Authority stated it will comply with its union agreements and provide
             evaluations in accordance with its personnel policy. Although the Authority’s
             prior personnel policy dictated that all employees of the Authority were to
             receive annual performance ratings in writing and they did not, the policy
             needs to be enforced.




                                           111
Appendix C
    SCHEDULE OF PREMATURE REPLACEMENTS FOR
                 SCATTERED SITES
      Property       Refrig-   Kitchen   Furnaces Roofs Hot                        Total
      Address        erators/ Cabinets &                Water                      Costs
                     Ranges Countertops                System
   136 Merwin           1,300            3,300        4,750                            9,350
   Avenue (single
   family)
   Appraiser’s Report 4/6/2000, Property has new appliances. The furnace and oil tank were
   replaced in 1998. Architect’s Report 2/8/2000, Kitchen cabinets and appliances were in
   good condition. The Mechanical and Electrical Report indicated that the oil-fired furnace
   was 2 years old.
   176-178 Platt          2,600            9,200         6,100                         17,900
   Street (two
   family)
   Appraiser’s Report 4/6/2000, Property is in average/good condition overall. All
   appliances, mechanicals, and utilities are in average condition. Current condition has no
   adverse effect on marketability of property. Architect’s Report 1/28/2000, Kitchen
   cabinets and countertops were in good condition. The Mechanical and Electrical Report
   indicated that the two gas-fired furnaces used are 12 to 15 years and 15 to 20 years old,
   respectively.
   20 White Oaks        1,300             4,500                                      5,800
   Terrace (single
   family)
   Appraiser’s Report 4/12/2000, No obsolescence noted for property and no repairs or
   improvements are recommended at this time. The effective age of the property reflects
   regular maintenance and repairs of the improvements. Architect’s Report 2/3/2000,
   Kitchen cabinets were in good condition.
   22-24 Casco            2,600           12,318                                      14,918
   Street (two
   family)
   Appraiser’s Report 4/10/2000, Property is in good overall condition. All appliances,
   mechanicals, and utilities are in average condition. Current condition has no adverse
   effect on marketability of property. No repairs or upgrades were required. Architect’s
   Report 1/28/2000, Kitchen cabinets and countertops were in good condition.
   86-88 West            2,600            4,600        4,600                          11,800
   Town Street
   (two family)




                                          112
Appendix C
      SCHEDULE OF PREMATURE REPLACEMENTS FOR
                   SCATTERED SITES
      Property       Refridg   Kitchen   Furnaces Roofs Hot                        Total
      Address        erators/ Cabinets &                Water                      Costs
                     Ranges Countertops                System
   Appraiser’s Report 12/15/2000, Property in good condition overall. All appliances,
   mechanicals, and utilities in average condition. Current condition has no adverse effect
   on marketability of property. No needed repairs or upgrades. Architect’s Report
   10/13/2000, Kitchen cabinets and countertops were in good condition. Mechanical and
   Electrical Report indicated heating supplied by two furnaces; age of which are unknown.
   76-78 Atwater            2,600           4,222        5,000             1,100      12,922
   Street (two
   family)
   Appraiser's Report 1/2/2000, Unit was remodeled within the past 2 years. Kitchens,
   including cabinets, and furnaces are 2 years old. All appliances, mechanicals, and
   utilities are reported in good condition. No repairs or upgrades are required. Architect’s
   Report 11/14/2000, Kitchen cabinets and countertops were in good condition. Architect
   indicated property was remodeled within the past 2 years.
   79-81 Elaine          2,600                        5,000              2,300         9,900
   Street (two
   family)
   Appraiser's Report 1/2/2000, Unit was remodeled within the past 2 years. Property
   reported to be in good condition. Kitchens and furnaces are only 2 years old, and
   property has new kitchen cabinets/countertops. No needed repairs or upgrades noted.
   Architect’s Report 11/14/2000, Kitchen cabinets and appliances reported in good
   condition. Mechanical and Electrical Report indicated that the furnace was installed in
   1998.
   10 Housatonic        7,800           27,000                 18,434                53,234
   Avenue (6
   units)
   Appraiser’s Report 12/22/2000, Property is in great condition. Appraiser reported that
   property is approximately 10 years old and has new appliances. Architect’s Report
   2/5/2001, Kitchen cabinets/countertops and appliances were in good condition.


    Grand Totals      $23,400          $65,140      $25,450 $18,434     $3,400     $135,824




                                          113
Appendix D
   SCHEDULE OF FEDERAL SUBSIDIES EXPENDED FOR
             SUBSTANDARD HOUSING
                                    Date          Date     Months           Total        Exigent?
             Address               Failed       Passed Lapsed HAPAssistance Yes/No
                                                                           Payment
                                                                           Amount
   27 Lansdale Avenue                 3/20/02      6/7/02      2                  $ 674      No
   27 Lansdale Avenue                 4/10/03 9/12/03          4                  1,956      No
   71 Bridgeport Avenue               3/21/02      6/7/02      3                    978      Yes
   27 Wildwood Avenue                   5/9/02     4/8/03     11                  8,965      Yes
                    nd
   27 Broadway 2                      1/29/02      4/8/02      2                  2,087      No
   27 Broadway 2nd                    5/20/03       *          6                  6,150      No
   52 A Locust Street                 8/20/02 11/15/02         2                  1,536      No
   52 A Locust Street                 4/21/03       *          7                  5,376      No
   43 Laurel Avenue                   9/19/01 11/1/02         13                  9,571      No
   12 Bridgeport Avenue                 4/9/03     6/2/03      1                    456      No
   180 Melba Street #218              9/13/02 12/13/02         2                    608      No
   308 Meadowside #201                3/18/02 5/10/02          1                    603      No
   308 Meadowside #201                4/22/03 5/23/03          1                    725      Yes
   137 Edgefield Avenue               4/18/02 7/10/03         15                11,760       Yes
   757 Milford Point Road             4/15/02 5/31/02          1                    422      Yes
   152 Broad Street Rear             12/13/02 5/19/03          5                  1,830      Yes
   118 Naugatuck Avenue 2nd 11/18/02               4/1/03      5                  3,975      Yes
   22 Darina Place                   11/19/02 12/31/02         1                    694      Yes
   22 Darina Place                    5/28/02       *         19                12,878       Yes
   68 Cooper Avenue                   7/19/02 11/18/02         4                  3,992      Yes
   101-103 Bridgeport Ave               4/9/03      *          8                  7,800      Yes
   155 West Main Street               3/20/02 6/11/02          3                  1,470      Yes
   183 Broadway 1st Floor             1/14/02      4/8/02      3                    882      Yes
   33 Broadway #3                     9/19/01 10/30/02        12                  8,424      No
   33 Broadway #3                     4/23/03 5/29/03          1                  1,144      Yes
   33 Broadway #3                     9/23/03       *          2                  2,288      No
   92 Opal Street                     3/21/02 1/21/04         22                  6,525      Yes
   95 Naugatuck Avenue                1/30/02 4/15/02          2                  1,550      No
   4 Elm Street #1                    4/18/02 6/11/02          2                  1,924      Yes
   4 Elm Street #1                    4/23/03       *          7                  7,875      No
   300 Meadowside #208                4/21/03       *          7                  5,915      No
   58 Laurel Avenue                  12/13/02 3/13/03          2                  2,088      No
   121 Seemans Lane #14               5/19/03 8/11/03          2                    958      No
   82 West Town Street                4/21/03 8/11/03          3                  3,000      No
   180 Melba Street #303              3/25/02 6/11/02          2                    492      No
   180 Melba Street #303                4/7/03 8/11/03         3                    861      No
   218 West Main Street 1st           4/21/03      6/2/03      1                    683      No
   107 Bridgeport Avenue              4/15/02 7/19/02          3                  2,050      Yes
   19 James Street                   11/18/02 4/10/03          4                  3,608      No
   *An asterisk indicates that deficiencies have not been corrected as of December 31, 2003.

                                         114
Appendix D
     SCHEDULE OF FEDERAL SUBSIDIES EXPENDED FOR
               SUBSTANDARD HOUSING
                                      Date          Date     Months Total Assistance Exigent
              Address                Failed       Passed Lapsed             Payment          ?
                                                                             Amount        Yes/No
   138 Melba Street 1st                 3/25/02 6/11/02          2                    710 No
   105 Bridgeport Avenue                  4/9/03 9/23/03         4                  3,300 No
   44 Harkness Avenue                   1/28/02 9/23/03         19                 17,822 No
   49 A Fairwood Avenue                   4/8/02      *         19                 13,129 No
                                  st
   601 Milford Point Road, 1            4/10/03       *          8                  6,496 Yes
   27 Peck Street                       4/21/03 7/10/03          2                  2,588 No
   1 Park Circle #2                     3/21/02 6/11/02          2                  1,138 No
   33 Broadway, Rear                    1/14/02      4/8/02      2                  1,144 No
   54 A Naugatuck Avenue               11/18/02       *         12                  5,376 No
   92 B Robert Treat Drive              4/22/03       *          8                  4,216 Yes
   194 A Cherry Street                  4/21/03      6/2/03      1                    251 No
   216 Naugatuck Avenue, 1st            1/28/02 5/31/02          3                  1,791 No
   91 C Robert Treat Drive              3/20/02 5/10/02          1                    351 No
   91 C Robert Treat Drive              4/22/03       *          7                  5,505 No
   27 Broadway, 1st                     1/14/02      4/8/02      3                  2,700 Yes
                     st
   27 Broadway, 1                       4/23/03 9/12/03          5                  4,500 Yes
   122 Naugatuck Avenue                 1/28/02      6/7/02      4                  2,500 No
   122 Naugatuck Avenue                 5/20/03       *          7                  4,995 Yes
   273 Seaside Avenue, 2nd              4/19/02 8/20/02          3                    936 No
                         st
   27 Kittery Street, 1                11/18/02 3/13/03          4                  3,300 Yes
   106C Merwin Avenue                   4/19/02       *         19                 11,006 No
   52 Hawley Avenue #6                  4/19/02 7/19/02          2                    822 No
   76 Dunbar Road                       3/21/02 9/12/02          6                  6,768 Yes
   76 Dunbar Road                         4/8/03      *          8                  9,024 Yes
   308 Meadowside #103                  4/22/03 8/11/03          3                  2,127 No
   180 Melba Street #301                  4/7/03 10/21/03        5                  3,260 No
   180 Melba Street #301                3/20/02 9/12/02          5                  4,000 No
   16 Wall Street 2nd Floor #2          3/25/02 6/11/02          2                    862 No
   36 Beechland Avenue                  3/25/02      7/8/02      3                  3,351 No
   36 Beechland Avenue                    4/7/03 7/15/03         2                  1,184 No
   180 Melba Street #309                9/13/02 12/13/02         2                  1,614 No
   519 Naugatuck Avenue 2nd             3/20/02      6/7/02      2                  1,162 No
   24 Lenox Avenue 2nd Fl               3/21/02      5/9/02      2                  1,086 Yes
   24 Darina Place                      3/20/02 9/12/02          5                  5,000 No
   1070 New Haven #76                     4/8/03     6/2/03      1                    851 No
   106B Merwin Avenue                   7/19/02 3/13/03          8                  6,992 Yes
   180 Melba Street #105                9/13/02 12/13/02         2                  1,650 No
                    rd
   27 Broadway 3 Floor                  5/20/03 9/12/03          4                  2,348 Yes
   Grand Total                                                 391              $280,628
   *An asterisk indicates that deficiencies have not been corrected as of December 31, 2003.

                                        115
Appendix E
   SCHEDULE OF QUESTIONED ADMINISTRATIVE FEES
   AUTHORITY RECEIVED TO MANAGE SUBSTANDARD
                    HOUSING

            Address            Months of   Admin.      Questioned
                               Abatement    Fees         Fees
   27 Lansdale Avenue              2          $65.67           $131
   27 Lansdale Avenue              4           67.83            271
   71 Bridgeport Avenue            3           65.67            197
   27 Wildwood Avenue             11           67.83            746
   27 Broadway, 2nd                2           65.67            131
   27 Broadway, 2nd                6           67.83            407
   52 A Locust Street              2           67.83            136
   52 A Locust Street              7           67.83            475
   43 Laurel Avenue               13           65.67            854
   12 Bridgeport Avenue            1           67.83             68
   180 Melba Street #218           2           67.83            136
   308 Meadowside #201             1           65.67             66
   308 Meadowside #201             1           67.83             68
   137 Edgefield Avenue           15           65.67            985
   757 Milford Point Road          1           65.67             66
   152 Broad Street Rear           5           67.83            339
   118 Naugatuck Avenue 2nd        5           67.83            339
   22 Darina Place                 1           67.83             68
   22 Darina Place                19           67.83          1,289
   68 Cooper Avenue                4           65.67            263
   101-103 Bridgeport Avenue       8           67.83            543
   155 West Main Street            3           65.67            197
   183 Broadway Street             3           67.83            203
   33 Broadway #3                 12           65.67            788
   33 Broadway #3                  1           67.83             68
   33 Broadway #3                  2           67.83            136
   92 Opal Street                 22           67.83          1,492
   95 Naugatuck Avenue             2           65.67            131
   4 Elm Street #1                 2           65.67            131
   4 Elm Street #1                 7           67.83            475
   300 Meadowside #208             7           67.83            475
   58 Laurel Avenue                2           67.83            136
   121 Seemans Lane #14            2           67.83            136
   82 West Town Street             3           67.83            203
   180 Melba Street #303           2           65.67            131
   180 Melba Street #303           3           67.83            203
   218 West Main Street 1st        1           67.83             68
   107 Bridgeport Avenue           3           65.67            197
   19 James Street                 4           67.83            271
   138 Melba Street 1st            2           65.67            131
                                116
Appendix E
   SCHEDULE OF QUESTIONED ADMINISTRATIVE FEES
   AUTHORITY RECEIVED TO MANAGE SUBSTANDARD
                    HOUSING
             Address             Months of   Admin. Fees Questioned Fees
                                 Abatement
   105 Bridgeport Avenue             4            $67.83            $271
   44 Harkness Avenue               19             67.83           1,289
   49 A Fairwood Avenue             19             67.83           1,289
   601 Milford Point Road 1st        8             67.83             543
   27 Peck Street                    2             67.83             136
   1 Park Circle #2                  2             65.67             131
   33 Broadway, Rear                 2             65.67             131
   54 A Naugatuck Avenue            12             67.83             814
   92 B Robert Treat Drive           8             67.83             543
   194 A Cherry Street               1             67.83              68
   216 Naugatuck Avenue 1st          3             65.67             197
   91 C Robert Treat Drive           1             65.67              66
   91 C Robert Treat Drive           7             67.83             475
   27 Broadway 1st Floor             3             65.67             197
   27 Broadway 1st Floor             5             67.83             339
   122 Naugatuck Avenue              4             65.67             263
   122 Naugatuck Avenue              7             67.83             475
   273 Seaside Avenue 2nd            3             65.67             197
   27 Kittery Street 1st Floor       4             67.83             271
   106 C Merwin Avenue              19             67.83           1,289
   52 Hawley Avenue #6               2             65.67             131
   76 Dunbar Road                    6             65.67             394
   76 Dunbar Road                    8             67.83             543
   308 Meadowside Road 103           3             67.83             203
   180 Melba Street #301             5             67.83             339
   180 Melba Street #301             5             65.67             328
   16 Wall Street 2nd Floor #2       2             65.67             131
   36 Beechland Avenue               3             65.67             197
   36 Beechland Avenue               2             67.83             136
   180 Melba Street #309             2             67.83             136
   519 Naugatuck Avenue 2nd          2             65.67             131
   24 Lenox Avenue 2nd Floor         2             65.67             131
   24 Darina Place                   5             65.67             328
   1070 New Haven Ave #76            1             67.83              68
   106 B Merwin Avenue               8             67.83             543
   180 Melba Street #105             2             67.83             136
   27 Broadway 3rd Floor             4             67.83             271
   Total                            391                          $26,280



                                 117